HOUSE BILL REPORT

HB 2485

BYRepresentatives Rector, Vekich, Prentice, Leonard, Jones and Dellwo

Qualifying as a self-insurer of industrial insurance.

House Committe on Commerce & Labor

Majority Report:  Do pass.  (11)

      Signed by Representatives Vekich, Chair; Cole, Vice Chair; Smith, Ranking Republican Member; Forner, Jones, R. King, Leonard, O'Brien, Prentice, Walker and Wolfe.

House Staff:Chris Cordes (786-7117)

AS REPORTED BY COMMITTEE ON COMMERCE & LABOR JANUARY 16, 1990

BACKGROUND:

Qualified employers are allowed to self-insure their workers' compensation programs.  To obtain certification as a self-insurer, an employer must establish to the director of the Department of Labor and Industries' satisfaction that the employer has sufficient financial resources to meet all present and future obligations under the industrial insurance law. The department may also require a self-insurer to supplement its financial ability by depositing cash, securities, or a surety bond in an escrow account.

Information contained in industrial insurance claim files is confidential.  Specific exemptions to the confidentiality requirement are provided for treating physicians, the worker's employer, and department personnel.  The injured worker may receive information from the file only through an authorized representative.

SUMMARY:

Beginning January 1, 1991, qualified self-insurers may deposit an irrevocable letter of credit (other options are money, securities, or a bond) to guarantee their future ability to meet industrial insurance obligations.  The issuer of the letter of credit must be a state or federally chartered bank authorized to do business in Washington.  To qualify for the letter of credit option, self-insurers must have a net worth of not less than $500 million and meet any requirements adopted by the Department of Labor and Industries.  The option is not available to self-insurers who are public employers.

Injured workers may review their claim files if the director determines, pursuant to criteria in department rules, that the review is in the claimant's interest.

Fiscal Note:      Available.

Effective Date:Section 1 of the bill takes effect on January 1, 1991.

House Committee ‑ Testified For:    Melanie Stewart, Washington Self-Insurers Association (with concerns);  Jody Moran, Department of Labor and Industries.

House Committee - Testified Against:      Wayne Lieb, Washington State Trial Lawyers.

House Committee - Testimony For:    The bond market has made it increasingly difficult for self- insured employers to purchase the required security bond for industrial insurance.  A letter of credit option would help meet those security requirements.  However, the option should be applied to all employers, not just the largest employers.  Industrial insurance claim files should be available to the injured worker, but some definition of the "file" should be developed.

House Committee - Testimony Against:      The scope of the letter of credit option is very broad and, while it will provide a large monetary benefit to the employers, the option will not provide any increase in benefits to the workers.  The complete industrial insurance claim file should be available to the worker, not just part of the file.