October 19, 2020
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Senate Bill 2270

Senate Bill sb2270e1

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    CS for CS for SB 2270                          First Engrossed



  1                      A bill to be entitled

  2         An act relating to workers' compensation;

  3         amending s. 440.107, F.S.; authorizing the

  4         department to issue an order of conditional

  5         release from a stop-work order if an employer

  6         complies with coverage requirements and a

  7         penalty payment agreement; amending s. 627.311,

  8         F.S.; establishing three tiers of employers

  9         eligible for coverage under the plan; providing

10         for criteria and rates for each tier; deleting

11         references to subplans; providing for

12         assessments to cover deficits in tiers one and

13         two; providing procedures to collect the

14         assessment; exempting the plan from specified

15         premium tax and assessments; amending s.

16         627.0915, F.S., relating to drug-free workplace

17         discounts; providing for notice by insurers to

18         employers of the availability of premium

19         discounts where certain drug-free workplace

20         programs are used; appropriating moneys from

21         the Workers' Compensation Administration Trust

22         Fund to fund plan deficits; providing

23         transitional provisions to subplan "D"

24         policies; providing legislative intent to

25         create a state workers' compensation mutual

26         fund under certain conditions; establishing the

27         Workers' Compensation Insurance Market

28         Evaluation Committee; providing for appointment

29         of members; requiring the committee to monitor

30         and report; requiring the Office of Insurance

31         Regulation and workers' compensation insurers


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    CS for CS for SB 2270                          First Engrossed



 1         to report certain information; specifying

 2         meeting dates and interim reports for the

 3         committee; providing for reimbursement for

 4         travel and per diem; providing legislative

 5         intent as to the type of mutual fund it intends

 6         to create; prohibiting insurers from providing

 7         coverage to any person who is an affiliated

 8         person of a person who is delinquent in the

 9         payment of premiums, assessments, penalties, or

10         surcharges owed to the plan; amending s.

11         440.16(7), F.S., which limits workers'

12         compensation benefits to a nonresident alien

13         for the death of the worker; providing

14         effective dates.

15  

16  Be It Enacted by the Legislature of the State of Florida:

17  

18         Section 1.  Paragraph (a) of subsection (7) of section

19  440.107, Florida Statutes, is amended to read:

20         440.107  Department powers to enforce employer

21  compliance with coverage requirements.--

22         (7)(a)  Whenever the department determines that an

23  employer who is required to secure the payment to his or her

24  employees of the compensation provided for by this chapter has

25  failed to secure the payment of workers' compensation required

26  by this chapter or to produce the required business records

27  under subsection (5) within 5 business days after receipt of

28  the written request of the department, such failure shall be

29  deemed an immediate serious danger to public health, safety,

30  or welfare sufficient to justify service by the department of

31  a stop-work order on the employer, requiring the cessation of


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    CS for CS for SB 2270                          First Engrossed



 1  all business operations. If the department makes such a

 2  determination, the department shall issue a stop-work order

 3  within 72 hours. The order shall take effect when served upon

 4  the employer or, for a particular employer work site, when

 5  served at that work site. In addition to serving a stop-work

 6  order at a particular work site which shall be effective

 7  immediately, the department shall immediately proceed with

 8  service upon the employer which shall be effective upon all

 9  employer work sites in the state for which the employer is not

10  in compliance. A stop-work order may be served with regard to

11  an employer's work site by posting a copy of the stop-work

12  order in a conspicuous location at the work site. The order

13  shall remain in effect until the department issues an order

14  releasing the stop-work order upon a finding that the employer

15  has come into compliance with the coverage requirements of

16  this chapter and has paid any penalty assessed under this

17  section. The department may issue an order of conditional

18  release from a stop-work order to an employer upon a finding

19  that the employer has complied with coverage requirements of

20  this chapter and has agreed to remit periodic payments of the

21  penalty pursuant to a payment agreement schedule with the

22  department. If an order of conditional release is issued,

23  failure by the employer to meet any term or condition of such

24  penalty payment agreement shall result in the immediate

25  reinstatement of the stop-work order and the entire unpaid

26  balance of the penalty shall become immediately due. The

27  department may require an employer who is found to have failed

28  to comply with the coverage requirements of s. 440.38 to file

29  with the department, as a condition of release from a

30  stop-work order, periodic reports for a probationary period

31  that shall not exceed 2 years that demonstrate the employer's


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    CS for CS for SB 2270                          First Engrossed



 1  continued compliance with this chapter. The department shall

 2  by rule specify the reports required and the time for filing

 3  under this subsection.

 4         Section 2.  Subsection (5) of section 627.311, Florida

 5  Statutes, is amended to read:

 6         627.311  Joint underwriters and joint reinsurers;

 7  public records and public meetings exemptions.--

 8         (5)(a)  The office shall, after consultation with

 9  insurers, approve a joint underwriting plan of insurers which

10  shall operate as a nonprofit entity. For the purposes of this

11  subsection, the term "insurer" includes group self-insurance

12  funds authorized by s. 624.4621, commercial self-insurance

13  funds authorized by s. 624.462, assessable mutual insurers

14  authorized under s. 628.6011, and insurers licensed to write

15  workers' compensation and employer's liability insurance in

16  this state. The purpose of the plan is to provide workers'

17  compensation and employer's liability insurance to applicants

18  who are required by law to maintain workers' compensation and

19  employer's liability insurance and who are in good faith

20  entitled to but who are unable to procure purchase such

21  insurance through the voluntary market. The plan must have

22  actuarially sound rates that are not competitive with approved

23  voluntary market rates so that the plan functions as a

24  residual market mechanism assure that the plan is

25  self-supporting.

26         (b)  The operation of the plan is subject to the

27  supervision of a 9-member board of governors. The board of

28  governors shall be comprised of:

29         1.  Three members appointed by the Financial Services

30  Commission. Each member appointed by the commission shall

31  serve at the pleasure of the commission;


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    CS for CS for SB 2270                          First Engrossed



 1         2.  Two of the 20 domestic insurers, as defined in s.

 2  624.06(1), having the largest voluntary direct premiums

 3  written in this state for workers' compensation and employer's

 4  liability insurance, which shall be elected by those 20

 5  domestic insurers;

 6         3.  Two of the 20 foreign insurers as defined in s.

 7  624.06(2) having the largest voluntary direct premiums written

 8  in this state for workers' compensation and employer's

 9  liability insurance, which shall be elected by those 20

10  foreign insurers;

11         4.  One person appointed by the largest property and

12  casualty insurance agents' association in this state; and

13         5.  The consumer advocate appointed under s. 627.0613

14  or the consumer advocate's designee.

15  

16  Each board member shall serve a 4-year term and may serve

17  consecutive terms. A vacancy on the board shall be filled in

18  the same manner as the original appointment for the unexpired

19  portion of the term. The Financial Services Commission shall

20  designate a member of the board to serve as chair. No board

21  member shall be an insurer which provides services to the plan

22  or which has an affiliate which provides services to the plan

23  or which is serviced by a service company or third-party

24  administrator which provides services to the plan or which has

25  an affiliate which provides services to the plan. The minutes,

26  audits, and procedures of the board of governors are subject

27  to chapter 119.

28         (c)  The operation of the plan shall be governed by a

29  plan of operation that is prepared at the direction of the

30  board of governors. The plan of operation may be changed at

31  any time by the board of governors or upon request of the


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    CS for CS for SB 2270                          First Engrossed



 1  office. The plan of operation and all changes thereto are

 2  subject to the approval of the office. The plan of operation

 3  shall:

 4         1.  Authorize the board to engage in the activities

 5  necessary to implement this subsection, including, but not

 6  limited to, borrowing money.

 7         2.  Develop criteria for eligibility for coverage by

 8  the plan, including, but not limited to, documented rejection

 9  by at least two insurers which reasonably assures that

10  insureds covered under the plan are unable to acquire coverage

11  in the voluntary market. Any insured may voluntarily elect to

12  accept coverage from an insurer for a premium equal to or

13  greater than the plan premium if the insurer writing the

14  coverage adheres to the provisions of s. 627.171.

15         3.  Require notice from the agent to the insured at the

16  time of the application for coverage that the application is

17  for coverage with the plan and that coverage may be available

18  through an insurer, group self-insurers' fund, commercial

19  self-insurance fund, or assessable mutual insurer through

20  another agent at a lower cost.

21         4.  Establish programs to encourage insurers to provide

22  coverage to applicants of the plan in the voluntary market and

23  to insureds of the plan, including, but not limited to:

24         a.  Establishing procedures for an insurer to use in

25  notifying the plan of the insurer's desire to provide coverage

26  to applicants to the plan or existing insureds of the plan and

27  in describing the types of risks in which the insurer is

28  interested. The description of the desired risks must be on a

29  form developed by the plan.

30         b.  Developing forms and procedures that provide an

31  insurer with the information necessary to determine whether


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    CS for CS for SB 2270                          First Engrossed



 1  the insurer wants to write particular applicants to the plan

 2  or insureds of the plan.

 3         c.  Developing procedures for notice to the plan and

 4  the applicant to the plan or insured of the plan that an

 5  insurer will insure the applicant or the insured of the plan,

 6  and notice of the cost of the coverage offered; and developing

 7  procedures for the selection of an insuring entity by the

 8  applicant or insured of the plan.

 9         d.  Provide for a market-assistance plan to assist in

10  the placement of employers. All applications for coverage in

11  the plan received 45 days before the effective date for

12  coverage shall be processed through the market-assistance

13  plan. A market-assistance plan specifically designed to serve

14  the needs of small, good policyholders as defined by the board

15  must be finalized by January 1, 1994.

16         5.  Provide for policy and claims services to the

17  insureds of the plan of the nature and quality provided for

18  insureds in the voluntary market.

19         6.  Provide for the review of applications for coverage

20  with the plan for reasonableness and accuracy, using any

21  available historic information regarding the insured.

22         7.  Provide for procedures for auditing insureds of the

23  plan which are based on reasonable business judgment and are

24  designed to maximize the likelihood that the plan will collect

25  the appropriate premiums.

26         8.  Authorize the plan to terminate the coverage of and

27  refuse future coverage for any insured that submits a

28  fraudulent application to the plan or provides fraudulent or

29  grossly erroneous records to the plan or to any service

30  provider of the plan in conjunction with the activities of the

31  plan.


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    CS for CS for SB 2270                          First Engrossed



 1         9.  Establish service standards for agents who submit

 2  business to the plan.

 3         10.  Establish criteria and procedures to prohibit any

 4  agent who does not adhere to the established service standards

 5  from placing business with the plan or receiving, directly or

 6  indirectly, any commissions for business placed with the plan.

 7         11.  Provide for the establishment of reasonable safety

 8  programs for all insureds in the plan. All insureds of the

 9  plan must participate in the safety program.

10         12.  Authorize the plan to terminate the coverage of

11  and refuse future coverage to any insured who fails to pay

12  premiums or surcharges when due; who, at the time of

13  application, is delinquent in payments of workers'

14  compensation or employer's liability insurance premiums or

15  surcharges owed to an insurer, group self-insurers' fund,

16  commercial self-insurance fund, or assessable mutual insurer

17  licensed to write such coverage in this state; or who refuses

18  to substantially comply with any safety programs recommended

19  by the plan.

20         13.  Authorize the board of governors to provide the

21  services required by the plan through staff employed by the

22  plan, through reasonably compensated service providers who

23  contract with the plan to provide services as specified by the

24  board of governors, or through a combination of employees and

25  service providers.

26         14.  Provide for service standards for service

27  providers, methods of determining adherence to those service

28  standards, incentives and disincentives for service, and

29  procedures for terminating contracts for service providers

30  that fail to adhere to service standards.

31  


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    CS for CS for SB 2270                          First Engrossed



 1         15.  Provide procedures for selecting service providers

 2  and standards for qualification as a service provider that

 3  reasonably assure that any service provider selected will

 4  continue to operate as an ongoing concern and is capable of

 5  providing the specified services in the manner required.

 6         16.  Provide for reasonable accounting and

 7  data-reporting practices.

 8         17.  Provide for annual review of costs associated with

 9  the administration and servicing of the policies issued by the

10  plan to determine alternatives by which costs can be reduced.

11         18.  Authorize the acquisition of such excess insurance

12  or reinsurance as is consistent with the purposes of the plan.

13         19.  Provide for an annual report to the office on a

14  date specified by the office and containing such information

15  as the office reasonably requires.

16         20.  Establish multiple rating plans for various

17  classifications of risk which reflect risk of loss, hazard

18  grade, actual losses, size of premium, and compliance with

19  loss control. At least one of such plans must be a

20  preferred-rating plan to accommodate small-premium

21  policyholders with good experience as defined in

22  sub-subparagraph 22.a.

23         21.  Establish agent commission schedules.

24         22.  For employers otherwise eligible for coverage

25  under the plan, establish three tiers of employers meeting the

26  criteria and subject to the rate limitations specified in this

27  subparagraph.

28         a.  Tier One.--

29         (I)  Criteria, rated employers.--An employer that has

30  an experience modification rating shall be included in Tier

31  One if it meets all of the following:


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    CS for CS for SB 2270                          First Engrossed



 1         (A)  The experience modification is below 1.00;

 2         (B)  The employer had no lost-time claims subsequent to

 3  the applicable experience modification rating period; and

 4         (C)  The total of the employer's medical-only claims

 5  subsequent to the applicable experience modification rating

 6  period did not exceed 20 percent of premium.

 7         (II)  Criteria, nonrated employers.--An employer that

 8  does not have an experience modification rating shall be

 9  included in Tier One if it meets all of the following:

10         (A)  The employer had no lost-time claims for the

11  3-year period immediately preceding the inception date or

12  renewal date of its coverage under the plan;

13         (B)  The total of the employer's medical-only claims

14  for the 3-year period immediately preceding the inception date

15  or renewal date of its coverage under the plan did not exceed

16  20 percent of premium;

17         (C)  It has secured workers' compensation coverage for

18  the entire three-year period immediately preceding the

19  inception date or renewal date of its coverage under the plan;

20         (D)  It is able to provide the plan with a loss history

21  generated by its prior workers' compensation insurer, except

22  that if the employer is not able to produce a loss history due

23  to the insolvency of an insurer, the employer may, in lieu of

24  the loss history, submit an affidavit from the employer and

25  the employer's insurance agent setting forth the loss history;

26  and

27         (E)  It is not a new business.

28         (III)  Premiums.--The premiums for Tier One insureds

29  shall be set at a premium level 25 percent above the

30  comparable voluntary market premiums until the plan has

31  sufficient, credible experience as determined by the board to


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    CS for CS for SB 2270                          First Engrossed



 1  establish an actuarially sound rate for Tier One, at which

 2  point the board shall, subject to paragraph (e), adjust the

 3  rate, if necessary, to produce actuarially sound rates;

 4  provided the rate adjustment does not take effect until

 5  January 1, 2007.

 6         b.  Tier Two.--

 7         (I)  Criteria, rated employers.--An employer that has

 8  an experience modification rating shall be included in Tier

 9  Two if it meets all of the following:

10         (A)  The experience modification is equal to or greater

11  than 1.00 but not greater than 1.10;

12         (B)  The employer had no lost-time claims subsequent to

13  the applicable experience modification rating period; and

14         (C)  The total of the employer's medical-only claims

15  subsequent to the applicable experience modification rating

16  period did not exceed 20 percent of premium.

17         (II)  Criteria, non-rated employers.--An employer that

18  does not have any experience modification rating shall be

19  included in Tier Two if it is a new business. An employer

20  shall be included in Tier Two if it has less than 3 years of

21  loss experience in the 3-year period immediately preceding the

22  inception date or renewal date of its coverage under the plan

23  and it meets all of the following:

24         (A)  The employer had no lost-time claims for the

25  3-year period immediately preceding the inception date or

26  renewal date of its coverage under the plan;

27         (B)  The total of the employer's medical-only claims

28  for the 3-year period immediately preceding the inception date

29  or renewal date of its coverage under the plan did not exceed

30  20 percent of premium; and

31  


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    CS for CS for SB 2270                          First Engrossed



 1         (C)  It is able to provide the plan with a loss history

 2  generated by the workers' compensation insurer that provided

 3  coverage for the portion or portions of such period during

 4  which the employer had secured workers' compensation coverage.

 5  If the employer is not able to produce a loss history due to

 6  the insolvency of an insurer, the employer may, in lieu of the

 7  loss history, submit an affidavit from the employer and the

 8  employer's insurance agent setting forth the loss history.

 9         (IV)  Premiums.--The premiums for Tier Two insureds

10  shall be set at a premium level 50 percent above the

11  comparable voluntary market premiums until the plan has

12  sufficient, credible experience as determined by the board to

13  establish an actuarially sound rate for Tier Two, at which

14  point the board shall, subject to paragraph (e), adjust the

15  rate, if necessary, to produce actuarially sound rates;

16  provided the rate adjustment does not take effect until

17  January 1, 2007.

18         c.  Tier Three.--

19         (I)  Eligibility.--An employer shall be included in

20  Tier Three if it does not meet the criteria for Tier One or

21  Tier Two.

22         (II)  Rates.--The board shall establish, subject to

23  paragraph (e), and the plan shall charge actuarially sound

24  rates for the Tier Three insureds. Establish four subplans as

25  follows:

26         a.  Subplan "A" must include those insureds whose

27  annual premium does not exceed $2,500 and who have neither

28  incurred any lost-time claims nor incurred medical-only claims

29  exceeding 50 percent of their premium for the immediate 2

30  years.

31  


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    CS for CS for SB 2270                          First Engrossed



 1         b.  Subplan "B" must include insureds that are

 2  employers identified by the board of governors as high-risk

 3  employers due solely to the nature of the operations being

 4  performed by those insureds and for whom no market exists in

 5  the voluntary market, and whose experience modifications are

 6  less than 1.00.

 7         c.  Subplan "C" must include all insureds within the

 8  plan that are not eligible for subplan "A," subplan "B," or

 9  subplan "D."

10         d.  Subplan "D" must include any employer, regardless

11  of the length of time for which it has conducted business

12  operations, which has an experience modification factor of

13  1.10 or less and either employs 15 or fewer employees or is an

14  organization that is exempt from federal income tax pursuant

15  to s. 501(c)(3) of the Internal Revenue Code and receives more

16  than 50 percent of its funding from gifts, grants, endowments,

17  or federal or state contracts. The rate plan for subplan "D"

18  shall be the same rate plan as the plan approved under ss.

19  627.091-627.151, and each participant in subplan "D" shall pay

20  the premium determined under such rate plan, plus a surcharge

21  determined by the board to be sufficient to ensure that the

22  plan does not compete with the voluntary market rate for any

23  participant, but not to exceed 25 percent. However, the

24  surcharge shall not exceed 10 percent for an organization that

25  is exempt from federal income tax pursuant to s. 501(c)(3) of

26  the Internal Revenue Code.

27         23.  For Tier One or Tier Two employers which employ no

28  nonexempt employees or which report payroll which is less than

29  the minimum wage hourly rate for one full-time employee for

30  one year at 40 hours per week, the plan shall establish

31  actuarially sound premiums, provided, however, that the


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    CS for CS for SB 2270                          First Engrossed



 1  premiums may not exceed $2,500. These premiums shall be in

 2  addition to the fee specified in subparagraph 26. When the

 3  plan establishes actuarially sound rates for all employers in

 4  Tier One and Tier Two, the premiums for employers referred to

 5  in this paragraph are no longer subject to the $2,500 cap.

 6         24.23.  Provide for a depopulation program to reduce

 7  the number of insureds in the plan. subplan "D." If an

 8  employer insured through the plan subplan "D" is offered

 9  coverage from a voluntary market carrier:

10         a.  During the first 30 days of coverage under the plan

11  subplan;

12         b.  Before a policy is issued under the plan subplan;

13         c.  By issuance of a policy upon expiration or

14  cancellation of the policy under the plan subplan; or

15         d.  By assumption of the plan's subplan's obligation

16  with respect to an in-force policy,

17  

18  that employer is no longer eligible for coverage through the

19  plan. The premium for risks assumed by the voluntary market

20  carrier must be no greater than the same premium the insured

21  would have paid under the plan, and shall be adjusted upon

22  renewal to reflect changes in the plan rates and the tier for

23  which the insured would qualify as of the time of renewal. The

24  insured may be charged such premiums only for the first 2

25  years of coverage in the voluntary market plus, for the first

26  2 years, the surcharge as determined in sub-subparagraph 22.d.

27  A premium under this subparagraph, including surcharge, is

28  deemed approved and is not an excess premium for purposes of

29  s. 627.171.

30         25.24.  Require that policies issued under subplan "D"

31  and applications for such policies must include a notice that


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    CS for CS for SB 2270                          First Engrossed



 1  the policy issued under subplan "D" could be replaced by a

 2  policy issued from a voluntary market carrier and that, if an

 3  offer of coverage is obtained from a voluntary market carrier,

 4  the policyholder is no longer eligible for coverage through

 5  the plan. subplan "D." The notice must also specify that

 6  acceptance of coverage under the plan subplan "D" creates a

 7  conclusive presumption that the applicant or policyholder is

 8  aware of this potential.

 9         26.  Require that each application for coverage and

10  each renewal premium be accompanied by a nonrefundable fee of

11  $475 to cover costs of administration and fraud prevention.

12  The board may, with the approval of the office, increase the

13  amount of the fee pursuant to a rate filing to reflect

14  increased costs of administration and fraud prevention. The

15  fee is not subject to commission and is fully earned upon

16  commencement of coverage.

17         (d)1.  The funding of the plan shall include premiums

18  as provided in subparagraph (c)22. and assessments as provided

19  in this paragraph.

20         2.a.  If the board determines that a deficit exists in

21  Tier One or Tier Two or that there is any deficit remaining

22  attributable to the former subplan "D" and that the deficit

23  cannot reasonably be funded without the use of deficit

24  assessments, the board shall request the Office of Insurance

25  Regulation to levy, by order, a deficit assessment against

26  premiums charged to insureds for workers' compensation

27  insurance by insurers as defined in s. 631.904(5). The office

28  shall issue the order after verifying the amount of the

29  deficit. The assessment shall be specified as a percentage of

30  future premium collections, as recommended by the board and

31  approved by the office. The same percentage shall apply to


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    CS for CS for SB 2270                          First Engrossed



 1  premiums on all workers' compensation policies issued or

 2  renewed during the 12-month period beginning on the effective

 3  date of the assessment, as specified in the order.

 4         b.  With respect to each insurer collecting premiums

 5  that are subject to the assessment, the insurer shall collect

 6  the assessment at the same time as it collects the premium

 7  payment for each policy and shall remit the assessments

 8  collected to the plan as provided in the order issued by the

 9  Office of Insurance Regulation. The office shall verify the

10  accurate and timely collection and remittance of deficit

11  assessments and shall report the information to the board.

12  Each insurer collecting assessments shall provide the

13  information with respect to premiums and collections as may be

14  required by the office to enable the office to monitor and

15  audit compliance with this paragraph.

16         c.  Deficit assessments are not considered a part of an

17  insurer's rate, are not premium and are not subject to the

18  premium tax, to the assessments under ss. 440.49 and 440.51,

19  to the surplus lines tax, to any fees, or to any commissions.

20  The deficit assessment imposed becomes plan funds at the

21  moment of collection and does not constitute income for any

22  purpose, including financial reporting on the insurer's income

23  statement. An insurer is liable for all assessments that it

24  collects and must treat the failure of an insured to pay an

25  assessment as a failure to pay premium.  An insurer is not

26  liable for uncollectible assessments.

27         d.  When an insurer is required to return unearned

28  premium, it shall also return any collected assessments

29  attributable to the unearned premium.

30         3.a.  All policies issued to Tier Three insureds shall

31  be assessable. All Tier Three assessable policies must be


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    CS for CS for SB 2270                          First Engrossed



 1  clearly identified as assessable by containing, in contrasting

 2  color and in not less than 10-point type, the following

 3  statements: "This is an assessable policy. If the plan is

 4  unable to pay its obligations, policyholders will be required

 5  to contribute on a pro rata earned premium basis the money

 6  necessary to meet any assessment levied."

 7         b.  The board may from time to time assess Tier Three

 8  insureds to whom the plan has issued assessable policies for

 9  the purpose of funding plan deficits. Any assessment shall be

10  based upon a reasonable actuarial estimate of the amount of

11  the deficit, taking into account the amount needed to fund

12  medical and indemnity reserves and reserves for incurred but

13  not reported claims, and allowing for general administrative

14  expenses, the cost of levying and collecting the assessment, a

15  reasonable allowance for estimated uncollectible assessments,

16  and both allocated and unallocated loss adjustment expenses.

17         c.  Each Tier Three insured's share of a deficit shall

18  be computed by applying to the premium earned on the insured's

19  policy or policies during the period to be covered by the

20  assessment the ratio of the total deficit to the total

21  premiums earned during the period upon all policies subject to

22  the assessment. In the event one or more Tier Three insureds

23  fail to pay an assessment, the other Tier Three insureds shall

24  be liable on a proportionate basis for additional assessments

25  to fund the deficit. The plan may compromise and settle

26  individual assessment claims without affecting the validity of

27  or amounts due on assessments levied against other insureds.

28  The plan may offer and accept discounted payments for

29  assessments which are promptly paid. The plan may offset the

30  amount of any unpaid assessment against unearned premiums

31  which may otherwise be due to an insured. The plan shall


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    CS for CS for SB 2270                          First Engrossed



 1  institute legal action when necessary and appropriate to

 2  collect the assessment from any insured who fails to pay an

 3  assessment when due.

 4         d.  The venue of a proceeding to enforce or collect an

 5  assessment or to contest the validity or amount of an

 6  assessment shall be in the Circuit Court of Leon County.

 7         e.  If the board finds that a deficit in Tier Three

 8  exists for any period and that an assessment is necessary, it

 9  shall certify to the office the need for an assessment. No

10  sooner than 30 days after the date of the certification, the

11  board shall notify in writing each insured who is to be

12  assessed that an assessment is being levied against the

13  insured, and informing the insured of the amount of the

14  assessment, the period for which the assessment is being

15  levied, and the date by which payment of the assessment is

16  due. The board shall establish a date by which payment of the

17  assessment is due, which may not be sooner than 30 days or

18  later than 120 days after the date on which notice of the

19  assessment is mailed to the insured. The plan must be funded

20  through actuarially sound premiums charged to insureds of the

21  plan.

22         2.  The plan may issue assessable policies only to

23  those insureds in subplans "C" and "D." Subject to

24  verification by the department, the board may levy assessments

25  against insureds in subplan "C" or subplan "D," on a pro rata

26  earned premium basis, to fund any deficits that exist in those

27  subplans. Assessments levied against subplan "C" participants

28  shall cover only the deficits attributable to subplan "C," and

29  assessments levied against subplan "D" participants shall

30  cover only the deficits attributable to subplan "D." In no

31  event may the plan levy assessments against any person or


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    CS for CS for SB 2270                          First Engrossed



 1  entity, except as authorized by this paragraph. Those

 2  assessable policies must be clearly identified as assessable

 3  by containing, in contrasting color and in not less than

 4  10-point type, the following statements: "This is an

 5  assessable policy. If the plan is unable to pay its

 6  obligations, policyholders will be required to contribute on a

 7  pro rata earned premium basis the money necessary to meet any

 8  assessment levied."

 9         3.  The plan may issue assessable policies with

10  differing terms and conditions to different groups within

11  subplans "C" and "D" when a reasonable basis exists for the

12  differentiation.

13         4.  The plan may offer rating, dividend plans, and

14  other plans to encourage loss prevention programs.

15         (e)  The plan shall establish and use its rates and

16  rating plans, and the plan may establish and use changes in

17  rating plans at any time, but no more frequently than two

18  times per any rating class for any calendar year. By December

19  1, 1993, and December 1 of each year thereafter, the board

20  shall, except as provided in subparagraph (c)22., establish

21  and use actuarially sound rates for use by the plan to assure

22  that the plan is self-funding while those rates are in effect.

23  Such rates and rating plans must be filed with the office

24  within 30 calendar days after their effective dates, and shall

25  be considered a "use and file" filing. Any disapproval by the

26  office must have an effective date that is at least 60 days

27  from the date of disapproval of the rates and rating plan and

28  must have prospective effect only. The plan may not be subject

29  to any order by the office to return to policyholders any

30  portion of the rates disapproved by the office. The office may

31  not disapprove any rates or rating plans unless it


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    CS for CS for SB 2270                          First Engrossed



 1  demonstrates that such rates and rating plans are excessive,

 2  inadequate, or unfairly discriminatory.

 3         (f)  No later than June 1 of each year, the plan shall

 4  obtain an independent actuarial certification of the results

 5  of the operations of the plan for prior years, and shall

 6  furnish a copy of the certification to the office. If, after

 7  the effective date of the plan, the projected ultimate

 8  incurred losses and expenses and dividends for prior years

 9  exceed collected premiums, accrued net investment income, and

10  prior assessments for prior years, the certification is

11  subject to review and approval by the office before it becomes

12  final.

13         (g)  Whenever a deficit exists, the plan shall, within

14  90 days, provide the office with a program to eliminate the

15  deficit within a reasonable time. The deficit may be funded

16  through increased premiums charged to insureds of the plan for

17  subsequent years, through the use of policyholder surplus

18  attributable to any year, through the use of assessments as

19  provided in subparagraph (d)2., and through assessments on

20  insureds in the plan if the plan uses assessable policies as

21  provided in subparagraph (d)3.

22         (h)  Any premium or assessments collected by the plan

23  in excess of the amount necessary to fund projected ultimate

24  incurred losses and expenses of the plan and not paid to

25  insureds of the plan in conjunction with loss prevention or

26  dividend programs shall be retained by the plan for future

27  use.

28         (i)  The decisions of the board of governors do not

29  constitute final agency action and are not subject to chapter

30  120.

31         (j)  Policies for insureds shall be issued by the plan.


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    CS for CS for SB 2270                          First Engrossed



 1         (k)  The plan created under this subsection is liable

 2  only for payment for losses arising under policies issued by

 3  the plan with dates of accidents occurring on or after January

 4  1, 1994.

 5         (l)  Plan losses are the sole and exclusive

 6  responsibility of the plan, and payment for such losses must

 7  be funded in accordance with this subsection and must not

 8  come, directly or indirectly, from insurers or any guaranty

 9  association for such insurers.

10         (m)  Each joint underwriting plan or association

11  created under this section is not a state agency, board, or

12  commission. However, for the purposes of s. 199.183(1) only,

13  the joint underwriting plan is a political subdivision of the

14  state and is exempt from the corporate income tax.

15         (n)  Each joint underwriting plan or association may

16  elect to pay premium taxes on the premiums received on its

17  behalf or may elect to have the member insurers to whom the

18  premiums are allocated pay the premium taxes if the member

19  insurer had written the policy. The joint underwriting plan or

20  association shall notify the member insurers and the

21  Department of Revenue by January 15 of each year of its

22  election for the same year. As used in this paragraph, the

23  term "premiums received" means the consideration for

24  insurance, by whatever name called, but does not include any

25  policy assessment or surcharge received by the joint

26  underwriting association as a result of apportioning losses or

27  deficits of the association pursuant to this section.

28         (o)  Neither the plan nor any member of the board of

29  governors is liable for monetary damages to any person for any

30  statement, vote, decision, or failure to act, regarding the

31  management or policies of the plan, unless:


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    CS for CS for SB 2270                          First Engrossed



 1         1.  The member breached or failed to perform her or his

 2  duties as a member; and

 3         2.  The member's breach of, or failure to perform,

 4  duties constitutes:

 5         a.  A violation of the criminal law, unless the member

 6  had reasonable cause to believe her or his conduct was not

 7  unlawful. A judgment or other final adjudication against a

 8  member in any criminal proceeding for violation of the

 9  criminal law estops that member from contesting the fact that

10  her or his breach, or failure to perform, constitutes a

11  violation of the criminal law; but does not estop the member

12  from establishing that she or he had reasonable cause to

13  believe that her or his conduct was lawful or had no

14  reasonable cause to believe that her or his conduct was

15  unlawful;

16         b.  A transaction from which the member derived an

17  improper personal benefit, either directly or indirectly; or

18         c.  Recklessness or any act or omission that was

19  committed in bad faith or with malicious purpose or in a

20  manner exhibiting wanton and willful disregard of human

21  rights, safety, or property. For purposes of this

22  sub-subparagraph, the term "recklessness" means the acting, or

23  omission to act, in conscious disregard of a risk:

24         (I)  Known, or so obvious that it should have been

25  known, to the member; and

26         (II)  Known to the member, or so obvious that it should

27  have been known, to be so great as to make it highly probable

28  that harm would follow from such act or omission.

29         (p)  No insurer shall provide workers' compensation and

30  employer's liability insurance to any person who is delinquent

31  in the payment of premiums, assessments, penalties, or


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    CS for CS for SB 2270                          First Engrossed



 1  surcharges owed to the plan or to any person who is an

 2  affiliated person of a person who is delinquent in the payment

 3  of premiums, assessments, penalties, or surcharges owed to the

 4  plan. For the purposes of this paragraph, the term "affiliated

 5  person" of another person means:

 6         1.  The spouse of such other natural person;

 7         2.  Any person who directly or indirectly owns or

 8  controls, or holds with the power to vote, 5 percent or more

 9  of the outstanding voting securities of such other person;

10         3.  Any person who directly or indirectly owns 5

11  percent or more of the outstanding voting securities that are

12  directly or indirectly owned or controlled, or held with the

13  power to vote, by such other person;

14         4.  Any person or group of persons who directly or

15  indirectly control, are controlled by, or are under common

16  control with such other person;

17         5.  Any officer, director, trustee, partner, owner,

18  manager, joint venturer, or employee, or other person

19  performing duties similar to persons in those positions, of

20  such other person; or

21         6.  Any person who has an officer, director, trustee,

22  partner, or joint venturer in common with such other person.

23         (q)  Effective July 1, 2004, the plan is exempt from

24  the premium tax under s. 624.509 and any assessments under ss.

25  440.49 and 440.51.

26         Section 3.  Section 627.0915, Florida Statutes, is

27  amended to read:

28         627.0915  Rate filings; workers' compensation,

29  drug-free workplace, and safe employers.--

30         (1)  The office shall approve rating plans for workers'

31  compensation and employer's liability insurance that give


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    CS for CS for SB 2270                          First Engrossed



 1  specific identifiable consideration in the setting of rates to

 2  employers that either implement a drug-free workplace program

 3  pursuant to s. 440.102 and rules adopted thereunder by the

 4  commission or implement a safety program pursuant to

 5  provisions of the rating plan or implement both a drug-free

 6  workplace program and a safety program. The plans must be

 7  actuarially sound and must state the savings anticipated to

 8  result from such drug-testing and safety programs.

 9         (2)  An insurer offering a rate plan approved under

10  this section shall notify the employer at the time of a

11  written offer of insurance and at the time of each renewal of

12  the policy of the availability of the premium discount where a

13  drug-free workplace plan is used by the employer pursuant to

14  s. 440.102 and related rules. The commission shall adopt rules

15  to implement this section.

16         Section 4.  Notwithstanding the provisions of sections

17  440.50 and 440.51, Florida Statutes, for the 2004-2005 fiscal

18  year:

19         (1)  The sum of $10 million is appropriated from the

20  Workers' Compensation Administration Trust Fund in the

21  Department of Financial Services for transfer to the workers'

22  compensation joint underwriting plan provided in section

23  627.311(5), Florida Statutes, as a capital contribution to

24  fund any deficit in the plan. The Chief Financial Officer

25  shall transfer the funds to the plan no later than July 31,

26  2004.

27         (2)  The workers' compensation joint underwriting plan

28  set forth in section 627.311(5), Florida Statutes, may request

29  the Department of Financial Services to transfer an amount not

30  to exceed $25 million from the Workers' Compensation

31  Administration Trust Fund to the plan subject to the approval


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    CS for CS for SB 2270                          First Engrossed



 1  of the Legislative Budget Commission under sections 216.181

 2  and 216.292, Florida Statutes. The workers' compensation joint

 3  underwriting plan board of governors and the Office of

 4  Insurance Regulation must first certify to the Department of

 5  Financial Services that a deficit exists in the workers'

 6  compensation joint underwriting plan. The amount requested for

 7  transfer to the plan may not exceed the deficit amount jointly

 8  certified by the board of governors and the Office of

 9  Insurance Regulation to exist in Tier One or Tier Two or for

10  any deficit remaining attributable to the former subplan "D"

11  which cannot be funded without the use of deficit assessments

12  as authorized by section 627.351(5)(d), Florida Statutes.

13         Section 5.  Transitional provisions.--Effective upon

14  this act becoming a law:

15         (1)  Notwithstanding section 627.311(5), Florida

16  Statutes, to the contrary, no policy in subplan "D" of the

17  Florida Workers' Compensation Joint Underwriting Association

18  is subject to an assessment for the purpose of funding a

19  deficit.

20         (2)  Any policy issued by the Florida Workers'

21  Compensation Joint Underwriting Association with an effective

22  date between the date on which this act becomes a law and June

23  30, 2004, shall be rerated and placed in the appropriate tier

24  provided in section 627.311(5), Florida Statues, as amended

25  effective July 1, 2004, and shall be subject to the premiums

26  and charges provided for in that section as amended.

27         Section 6.  Effective upon this act becoming a law:

28         (1)  The Legislature intends to create a state workers'

29  compensation mutual fund if workers' compensation coverage is

30  not generally available and affordable to small employers and

31  organizations that are exempt from federal income tax under s.


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    CS for CS for SB 2270                          First Engrossed



 1  501(c)(3) of the Internal Revenue Code in Florida by October

 2  1, 2005. In order to make this determination, there is

 3  established the Workers' Compensation Insurance Market

 4  Evaluation Committee which shall consist of one member

 5  appointed by the Governor, who shall serve as chair; two

 6  members appointed by the President of the Senate; and two

 7  members appointed by the Speaker of the House of

 8  Representatives. The committee shall monitor and report on the

 9  number of insurers actively writing workers' compensation

10  insurance in this state for small employers and organizations

11  that are exempt from federal income tax under s. 501(c)(3) of

12  the Internal Revenue Code, the number of policies issued,

13  premium volume written, types of underwriting restrictions

14  utilized, and the extent to which actual premiums charged vary

15  from standard rates, such as the use of excess rates pursuant

16  to section 627.171, Florida Statutes, and rate deviations

17  pursuant to section 627.211, Florida Statutes. The Office of

18  Insurance Regulation shall provide such related information to

19  the committee as is requested, and workers' compensation

20  insurers shall report such information to the office in the

21  manner and format specified by the office.

22         (2)  The committee shall meet once each month,

23  beginning in August 2004, and shall provide interim reports to

24  the appointing officers on October 1, 2004, December 1, 2004,

25  and March 1, 2005, and at such additional times as the

26  President of the Senate and the Speaker of the House of

27  Representatives jointly require. Members of the committee

28  shall be entitled to reimbursement for travel and per diem

29  pursuant to section 112.061, Florida Statutes.

30         (3)  If the Legislature determines that workers'

31  compensation coverage is not generally available and


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    CS for CS for SB 2270                          First Engrossed



 1  affordable to small employers and organizations that are

 2  exempt from federal income tax under s. 501(c)(3) of the

 3  Internal Revenue Code in Florida, the Legislature intends to

 4  create a state mutual fund as a nonprofit entity for the

 5  benefit of its policyholders that are a small employer or an

 6  organization that is exempt from the federal income tax under

 7  s. 501(c)(3) of the Internal Revenue Code. The state mutual

 8  fund would compete with private carriers and would be charged

 9  with the public mission of customer service, quality loss

10  prevention, timely claims management, active fighting of

11  fraud, and compassionate care for injured workers, at the

12  lowest cost consistent with actuarial sound rates. The fund

13  should primarily rely on an in-house staff of professional

14  employees, rather than contracting with servicing carriers. It

15  is further intended that the state appropriate adequate

16  initial capitalization for the fund and that the fund be

17  subject to the same financial and other requirements as apply

18  to an authorized insurer.

19         Section 7.  Subsection (7) of section 440.16, Florida

20  Statutes, is amended to read:

21         440.16  Compensation for death.--

22         (7)  Compensation under this chapter to aliens not

23  residents (or about to become nonresidents) of the United

24  States or Canada shall be the same in amount as provided for

25  residents, except that dependents in any foreign country shall

26  be limited to surviving spouse and child or children, or if

27  there be no surviving spouse or child or children, to

28  surviving father or mother whom the employee has supported,

29  either wholly or in part, for the period of 1 year prior to

30  the date of the injury, and except that the judge of

31  compensation claims may, at the option of the judge of


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    CS for CS for SB 2270                          First Engrossed



 1  compensation claims, or upon the application of the insurance

 2  carrier, commute all future installments of compensation to be

 3  paid to such aliens by paying or causing to be paid to them

 4  one-half of the commuted amount of such future installments of

 5  compensation as determined by the judge of compensation

 6  claims, and provided further that compensation to dependents

 7  referred to in this subsection shall in no case exceed

 8  $75,000.

 9         Section 8.  Except as otherwise expressly provided in

10  this act, and except for this section, which shall take effect

11  upon becoming a law, this act shall take effect July 1, 2004.

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