S-3869               _______________________________________________

                                                   SENATE BILL NO. 5022

                        _______________________________________________

State of Washington                              49th Legislature                              1986 Regular Session

By Senators Vognild, Newhouse and Warnke

Read first time 1/24/86 and referred to Committee on Commerce & Labor.

AN ACT Relating to default by self-insured employers; amending RCW 51.14.060 and 51.14.070; and adding a new section to chapter 51.14 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

        Sec. 1.  Section 31, chapter 289, Laws of 1971 ex. sess. and RCW 51.14.060 are each amended to read as follows:

          (1) The director may, in cases of default upon any obligation under this title by the self-insurer, after ten days notice by certified mail to the defaulting self-insurer of ((his)) the intention to do so, bring suit upon such bond or collect the interest and principal of any of the securities as they may become due or sell the securities or any of them as may be required or apply the money deposited, all in order to pay compensation((,)) and discharge the obligations of the defaulting self-insurer under this title((, and pay premiums for future insurance of the employer's obligations)).

          (2) The director shall be authorized to fulfill the defaulting self-insured employer's obligations under this title((, paying the necessary premium)) from the defaulting self-insured employer's deposit or from other funds provided under this title for the satisfaction of claims against the defaulting self-insured employer((, and having subrogation rights against the defaulting employer to the extent of any funds, other than the employer's deposit, expended for the payment of premiums or compensation in performance of the defaulting employer's obligations)).  The defaulting self-insured employer is liable to and shall reimburse the director for the amounts necessary to fulfill the obligations of the defaulting self-insured employer that are in excess of the amounts received by the director from any bond filed, or securities or money deposited, by the defaulting self-insured employer pursuant to chapter 51.14 RCW.  The amounts to be reimbursed shall include all amounts paid or payable as compensation under this title together with administrative costs and shall be considered taxes due the state of Washington.

        Sec. 2.  Section 36, chapter 289, Laws of 1971 ex. sess. and RCW 51.14.070 are each amended to read as follows:

          (((1))) Whenever compensation due under this title is not paid because of an uncorrected default of a self-insurer, such compensation shall be paid from the medical aid and accidents funds ((only after the moneys available from the bonds or other security provided under RCW 51.14.020 have been exhausted.

          (2) Such defaulting self-insurer or surety, if any, shall be liable for payment into the appropriate fund of the amounts paid therefrom by the director, and for the purpose of enforcing this liability the director, for the benefit of the appropriate fund, shall be subrogated to all of the rights of the person receiving such compensation)), and any moneys obtained by the director from the bonds or other security provided under RCW 51.14.020 shall be deposited to the appropriate fund for the payment of compensation and administrative costs.

NEW SECTION. Sec. 3.  A new section is added to chapter 51.14 RCW to read as follows:

          (1) In all cases of probate, insolvency, assignment for the benefit of creditors, or bankruptcy, the claim of the state for the amounts necessary to fulfill the obligations of a defaulting self-insured employer together with administrative costs is a lien prior to all other liens or claims and on a parity with prior tax liens and the mere existence of a default by a self-insured employer is sufficient to create the lien without any prior or subsequent action by the state.  All administrators, receivers, and assignees for the benefit of creditors shall notify the director of such administration, receivership, or assignment within thirty days of their appointment or qualification.

          (2) Separate and apart and in addition to the lien established by this section, the department may issue an assessment, as provided for in RCW 51.48.120, for the amount necessary to fulfill the defaulting self-insured employer's obligations, including all amounts paid and payable as compensation under this title and administrative costs.