New York lawmakers were poised yesterday to move on legislation toughening penalties and regulation of employers' self-insured workers' compensation trusts, some of which have lately gone into default.
The legislation–which was worked out in talks involving business, labor, the governor's office and both houses of the legislature–also provides a mechanism for the Workers' Compensation Board to fill the financial hole left by the defaulting trusts.
It was introduced yesterday with in a last minute flood of legislation as lawmakers moved towards 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.
Twelve trusts have failed since 2006, and according to WCB figures, 10 trusts currently fail to meet or exceed the board's 90 percent threshold for reserve levels. The board has said it has been limited by the current law in how it handles the trusts.
The Fund for Uninsured Employers is said to be well fixed 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.
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