S-3793.1  _______________________________________________

                         SENATE BILL 6723

          _______________________________________________

State of Washington   57th Legislature        2002 Regular Session

By Senators Honeyford, Rasmussen, Hochstatter and Winsley

Read first time 01/29/2002.  Referred to Committee on Labor, Commerce & Financial Institutions.

Providing for the management of claims of insolvent self-insured employers by a service organization or third-party administrator.

    AN ACT Relating to management of claims of insolvent self-insurers; and amending RCW 51.14.077.

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

    Sec. 1.  RCW 51.14.077 and 1986 c 57 s 6 are each amended to read as follows:

    (1) A self-insurers' insolvency trust is established to provide for the unsecured benefits paid to the injured workers of self-insured employers under this title for insolvent or defaulting self-insured employers and for the department's associated administrative costs, including attorneys' fees.  The self-insurers' insolvency trust shall be funded by an insolvency assessment which shall be levied on a post-insolvency basis and after the defaulting self-insured employer's security deposit, assets, and reinsurance, if any, have been exhausted.  Insolvency assessments shall be imposed on all self-insured employers, except school districts, cities, and counties.  The manner of imposing and collecting assessments to the insolvency fund shall be set forth in rules adopted by the department to ensure that self-insured employers pay into the fund in proportion to their claim costs.  The department's rules shall provide that self-insured employers who have surrendered their certification shall be assessed for a period of not more than three calendar years following the termination date of their certification.

    (2) The director shall adopt rules to carry out the purposes of this section, including but not limited to:

    (a) Governing the formation of the self-insurers' insolvency trust for the purpose of this chapter;

    (b) Governing the organization and operation of the self-insurers' insolvency trust to assure compliance with the requirements of this chapter;

    (c) Requiring adequate accountability of the collection and disbursement of funds in the self-insurers' insolvency trust; and

    (d) Any other provisions necessary to carry out the requirements of this chapter.

(3) The department shall contract with a service organization or third-party administrator with a certified Washington claims administrator to manage the claims of insolvent self-insured employers.  The director shall select the service organization or third-party administrator through a competitive bidding process in which at least two service organizations or third-party administrators submit bids.  If an insufficient number of bids is submitted, the claims shall be managed by the self-insurance section of the department.  The service organization or third-party administrator has authority to make all decisions regarding claims of an insolvent self-insured employer.

(4) The self-insurers' insolvency trust board has the right to audit the claim files of any claim of an insolvent self-insured employer for which benefits are or may be payable to determine whether the claims are being properly managed, to make recommendations for handling of any claim, to improve the program, and to ensure compliance with the requirements of this chapter.

(5) The department shall perform an annual audit at the office of each service organization or third-party administrator of the claims of insolvent self-insured employers that are being managed by that service organization or third-party administrator.

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