New York lawmakers last night gave final approval to legislation stiffening penalties and regulation of employers’ self-insured workers’ compensation trusts, 12 of which have lately gone into default.

The measure now goes to Gov. David Paterson, who had requested it.

Passage of the reform measure drew immediate praise from Workers’ Compensation Board Chairman Zachary S. Weiss, who said in a statement that the legislation “will help reinforce the self-insurance industry in New York by granting the board enhanced regulatory powers, while addressing our funding needs. I am also pleased it contains an additional $4 million for the occupational health clinics that help New York’s injured workers get back on the job quickly and safely.”

“On behalf of the board, I applaud Gov. Paterson and legislative leaders, as well as the labor and business communities, for this sensible agreement and look forward to a long-term solution based upon the task force’s recommendations,” he said.

The legislation, which was drafted after negotiations involving business, labor, the governor’s office and both houses of the legislature, provides a mechanism for the Workers’ Compensation Board to fill the financial hole left by the defaulting trusts.

It was passed in a last-minute flood of legislation before lawmakers took off for the summer adjournment.

According to WCB estimates, the present value of unpaid liabilities for the defaulted trusts is approximately $363 million, which it said is spread out over the life of claims and could take decades to see through.

Under the measure, the board will have the ability to borrow up to $52 million from the Fund for Uninsured Employers to pay claims against defaulted trusts and offset assessments against trusts that remain viable.

In addition to the 12 trusts that have failed since 2006, according to WCB figures, another 10 currently fail to meet or exceed the board’s 90 percent threshold for reserve levels. The board has said it was limited by the current law in how it oversaw the trusts.

The Fund for Uninsured Employers is said to be adequately funded as the result of legislation last year, which beefed up fines against employers that were found to have failed to purchase required workers’ comp insurance.

Among other language in the bill is a provision putting a moratorium on new group self-insurers until April 1, 2009. It would also establish a Task Force on Group Self-Insurance to examine the group self-insurance program and issue recommendations for reform by Feb. 1, 2009.

The legislation is expected to put an end to legal action brought by financially sound trusts to prevent the WCB from assessing them in order to pay claims of the operations that have gone into default.

Provisions of the legislation range in when they will become effective–some as soon as the law is signed, others within 90 days, and some on Jan. 1, 2009.

A spokesman for the board said he was hopeful that the bill would put an end to litigation over funding claims against the defaulted trusts.