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AB697 Text:

                STATE OF NEW YORK
                               2017-2018 Regular Sessions
                   IN ASSEMBLY
                                     January 9, 2017
        Introduced  by  M.  of  A.  MAGNARELLI  -- read once and referred to the
          Committee on Labor
        AN ACT to amend the general municipal law, the workers' compensation law
          and the insurance law, in relation to participation in a public  group
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
     1    Section 1. Paragraph b of subdivision 2 of section 119-o of the gener-
     2  al municipal law, as amended by chapter 681 of  the  laws  of  1961,  is
     3  amended to read as follows:
     4    b.  The  manner  of employing, engaging, compensating, transferring or
     5  discharging necessary personnel, subject, however, to the provisions  of
     6  the  civil  service  law  where  applicable;  the  making  of employer's
     7  contributions for retirement, social security, health  insurance,  work-
     8  men's  compensation,  including participation in a public group self-in-
     9  surer, and other  similar  benefits;  the  approval  of  attendances  at
    10  conventions,  conferences  and  schools  for  public  officials  and the
    11  approval and payment of  travel  and  other  expenses  incurred  in  the
    12  performance  of  official duties; the bonding of designated officers and
    13  employees; the filing of oaths of  office  and  resignations  consistent
    14  with  general  laws  applicable  thereto;  provisions  that for specific
    15  purposes designated officers or employees of  the  joint  service  or  a
    16  joint water, sewage or drainage project shall be deemed those of a spec-
    17  ified participating corporation or district; and provisions that person-
    18  nel  assigned  to  a  joint service or a joint water, sewage or drainage
    19  project shall possess the same powers, duties, immunities and privileges
    20  they would ordinarily possess (1) if they performed their duties only in
    21  the corporation or district by which they are employed or  (2)  if  they
    22  were  employed by the corporation or district in which they are required
    23  to perform their duties.

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

        A. 697                              2
     1    § 2. Paragraph 1, subparagraphs (a),  (b)  and  (h)  of  paragraph  2,
     2  subparagraph  (a)  and  item  e  of  subparagraph (d) of paragraph 5 and
     3  subparagraph (a) of paragraph 6 of subdivision 3-a of section 50 of  the
     4  workers'  compensation  law, paragraph 1, subparagraph (a) and item e of
     5  subparagraph  (d)  of paragraph 5 and subparagraph (a) of paragraph 6 as
     6  amended by chapter 139 of the laws of 2008 and  subparagraphs  (a),  (b)
     7  and  (h)  of paragraph 2 as amended by section 4 of part G of chapter 57
     8  of the laws of 2011, are amended to read as follows:
     9    (1) Definitions. As used in this chapter the  term  "employers"  shall
    10  include:  (a) employers with related activity in a given industry [which
    11  shall include municipal corporations as that term is defined in sections
    12  two and six-n of the  general  municipal  law,]  employing  persons  who
    13  perform  work in connection with the given industry, (b) an incorporated
    14  or unincorporated association or associations consisting exclusively  of
    15  such  employers  provided  they  employ persons who perform such related
    16  work in the given industry,  and  (c)  a  combination  of  employers  as
    17  described  in subparagraph (a) hereof and an association or associations
    18  of employers as described in subparagraph (b) hereof.
    19    (a) Any group consisting exclusively of such  employers  may  adopt  a
    20  plan  for  self-insurance,  as  a group, for the payment of compensation
    21  under this chapter to their employees, except that  no  new  groups  may
    22  adopt  such  a plan, and no group not composed solely of public entities
    23  set forth in [paragraph a of] subdivision [four] three-f of this section
    24  may insure any liabilities for any employers on and after January first,
    25  two thousand twelve, except as provided for in  paragraph  ten  of  this
    26  subdivision. Under such plan the group shall assume the liability of all
    27  the  employers  within  the group and pay all compensation for which the
    28  said employers are liable under this chapter[, except that in  the  case
    29  of municipal corporations as herein defined no proof of financial abili-
    30  ty or deposit of securities or cash need be made in compliance with this
    31  subdivision]. The group qualifying under this subdivision shall be known
    32  as  a  group  self-insurer  and  the employers participating therein and
    33  covered thereby shall be known as members.
    34    (b) Where such plan is adopted the group self-insurer, except a  group
    35  composed  solely  of public entities set forth in subdivision three-f of
    36  this section, shall furnish satisfactory  proof  to  the  chair  of  its
    37  financial ability to pay such compensation for the members in the indus-
    38  try  covered  by it, its revenues, their source and assurance of contin-
    39  uance. The chair shall require the deposit with the chair of such  secu-
    40  rities as may be deemed necessary of the kind prescribed in subdivisions
    41  one,  two, three, four and five, and subparagraph (a) of paragraph three
    42  of subdivision seven of section two hundred thirty-five of  the  banking
    43  law or the deposit of cash or the filing of irrevocable letters of cred-
    44  it issued by a qualified banking institution as defined by rules promul-
    45  gated  by  the chair or the filing of a bond of a surety company author-
    46  ized to transact business in this state, in an amount to  be  determined
    47  to  secure  its  liability  to  pay the compensation of each employer as
    48  above provided.  Such surety bond must be approved as  to  form  by  the
    49  chair.  The chair shall require each group self-insurer to provide regu-
    50  lar reports no less than annually, which shall include but not be limit-
    51  ed to audited  financial  statements,  actuarial  opinions  and  payroll
    52  information containing proof that it is fully funded. Such reports shall
    53  also  include  a  contribution year analysis detailing contributions and
    54  expenses associated with each specific contribution year.  For  purposes
    55  of this paragraph, proof that a group self-insurer is fully funded shall
    56  at  a minimum include proof of unrestricted cash and investments permit-

        A. 697                              3
     1  ted by regulation of the chair of at least one hundred  percent  of  the
     2  total  liabilities,  including  the  estimate presented in the actuarial
     3  opinion submitted by the group  self-insurer  in  accordance  with  this
     4  chapter.  The  chair  by regulation, may set further financial standards
     5  for group self-insurers. Any group self-insurer that fails to show  that
     6  it  is  fully funded shall be deemed underfunded, and must submit a plan
     7  for achieving fully funded status which may include a deficit assessment
     8  on members of such group self-insurer which shall be subject to approval
     9  or modification by the chair.
    10    (h) Any member terminating membership in a private group  self-insurer
    11  after  less  than four years in such private group self-insurer, and any
    12  member in a group self-insurer that has defaulted,  shall  be  precluded
    13  from  obtaining prospective coverage from any private group self-insurer
    14  for a period of at least three years from the effective date  of  termi-
    15  nation.
    16    (a) Each private group self-insurer shall, and each group self-insurer
    17  may,  secure the services of a group administrator to be responsible for
    18  assisting the group self-insurer in complying  with  the  provisions  of
    19  this  section  and  the rules and regulations promulgated hereunder, and
    20  for coordinating services including but not limited to  claims  process-
    21  ing,  loss control, legal, accounting and actuarial services. No person,
    22  firm or corporation shall coordinate such services  or  otherwise  carry
    23  out  the  tasks of a group administrator as provided in this subdivision
    24  or in the regulations issued pursuant thereto on behalf of a group self-
    25  insurer unless such person shall have obtained from the chair a  license
    26  authorizing  it  to  act  as  a  group self-insurer administrator, which
    27  license may be revoked for good cause. The chair shall promulgate  regu-
    28  lations  setting  forth  any additional qualifications for such license,
    29  governing the conduct and compensation of group self-insurer administra-
    30  tors, and setting a license fee in an amount not less than five thousand
    31  dollars per year for such license for each group self-insurer the admin-
    32  istrator administers. Each administrator shall post a bond in the amount
    33  of five hundred thousand dollars for each  group  self-insurer  adminis-
    34  tered  or such other amount as may be set by the chair based on the cost
    35  and availability of such bond, from which  the  chair  may  recover  any
    36  recoveries  or  penalties  against the administrator under this section.
    37  Nothing in this section shall relieve the trustees of a  group  self-in-
    38  surer of any fiduciary obligation they hold to the other members of such
    39  group self-insurer.
    40    e. the number and amount of rate deviations provided to members during
    41  the  prior  year  and  whether the recipient of any such deviation was a
    42  trustee, provided that the application of rating  factors  in  a  manner
    43  consistent  with  the filed rating plan is not a deviation which must be
    44  reported under this subdivision; and
    45    (a) Group self-insurers must file with the board, as soon as practica-
    46  ble but no later than sixty days prior to the start of the fund  year  a
    47  rating plan which is supported by an actuarial rate study prepared by an
    48  independent,  qualified  actuary  that  is  a fellow or associate of the
    49  casualty actuarial society, that clearly identifies the actuary's  indi-
    50  cated  rate assumptions therein. The rating plan must apply consistently
    51  to all members, and must provide for  a  common  renewal  date  for  all
    52  private  group  self-insurer  members.  The  rates filed can be adjusted
    53  based on an experience  modification  calculated  for  every  member  in
    54  accordance  with  the experience rating plan promulgated by the workers'
    55  compensation rating board.  Experience  modification  formulas  must  be
    56  applied identically to all members. Other rate deviations may be permis-

        A. 697                              4
     1  sible  provided  a  plan has been approved by the board. Such deviations
     2  shall not be in excess of ten percent of the  actuary's  indicated  rate
     3  unless otherwise approved by the board for a fully funded group self-in-
     4  surer,  and  shall in no event result in amounts less than the actuary's
     5  overall indicated rate. The chair by regulation  may  set  further  rate
     6  plan and actuarial reporting standards.
     7    §  3.  Paragraph  (g) of subdivision 3-e of section 50 of the workers'
     8  compensation law, as added by chapter  729  of  the  laws  of  1993,  is
     9  amended and a new subdivision 3-f is added to read as follows:
    10    (g)  The state insurance fund, any other insurer or any group self-in-
    11  surer for municipal corporations as  defined  in  subdivision  [three-a]
    12  three-f  of  this  section  may, at its option, offer a deductible in an
    13  amount specified in paragraph (c) of this subdivision to any policyhold-
    14  er who is not otherwise eligible for a deductible  under  this  subdivi-
    15  sion.
    16    3-f.  (1)  Any  group consisting exclusively of municipal corporations
    17  and public corporations as such terms are defined in  section  sixty-six
    18  of the general construction law, county self-insurance plans established
    19  under  article  five  of this chapter, boards of cooperative educational
    20  services and consortia established by boards of cooperative  educational
    21  services  may  adopt  a  plan  for  self-insurance,  as a group, for the
    22  payment of compensation under this  chapter  to  their  employees.  Such
    23  group shall be known as a "public group self-insurer".  All other groups
    24  established  under  this  section  are  "private group self-insurers". A
    25  county self-insurance plan established under article five of this  chap-
    26  ter is not itself a public group self-insurer, and is not itself subject
    27  to  the  requirements of this section, but may join a public group self-
    28  insurer and, if it does so, shall assume all of the obligations  of  its
    29  participants  to the public group self-insurer. No entity which is not a
    30  municipal corporation as defined in section  sixty-six  of  the  general
    31  construction law, a county self-insurance plan established under article
    32  five  of this chapter, or a consortium established by a board of cooper-
    33  ative educational services, may join a public group self-insurer  unless
    34  it may levy taxes or is otherwise directly capable of generating revenue
    35  in the event of a funding deficiency within the public group self-insur-
    36  er,  or its obligations are guaranteed by another member which is such a
    37  municipal corporation. A public group self-insurer shall comply with all
    38  of the requirements of subdivision three-a  of  this  section;  provided
    39  however  that  no  proof  of  financial  ability to pay the compensation
    40  provided for by this chapter or deposit of securities shall be  required
    41  and,  in  lieu thereof, the liability of the public group self-insurer's
    42  members shall serve as the security  required  under  paragraph  two  of
    43  subdivision  three-a  of  this  section.  The  chair shall implement the
    44  provisions of this subdivision by promulgating  rules  and  regulations,
    45  which  shall  include  provisions  establishing  an  aggregate  security
    46  requirement, guarantee fund, or other mechanism to provide interim fund-
    47  ing whenever the chair shall determine that the compensation  and  bene-
    48  fits  provided by this chapter may be unpaid by reason of the default of
    49  the public group self-insurer, but no such rules and  regulations  shall
    50  be necessary for any provisions of this subdivision to be effective.
    51    (2)  A  public  group self-insurer as defined in paragraph one of this
    52  subdivision may offer, as part  of  the  agreement  or  by  endorsement,
    53  deductibles optional to the member for benefits payable under the agree-
    54  ment, upon a determination by the chair that the plan is supported by an
    55  actuarial  analysis prepared by an independent, qualified actuary who is
    56  a member of the casualty actuarial society that clearly  identifies  the

        A. 697                              5
     1  actuary's  indicated deductible credit and rate assumptions, and subject
     2  to underwriting by the public group self-insurer,  consistent  with  the
     3  following standards or factors:
     4    (a)  claimants'  rights are properly protected and claimants' benefits
     5  are paid without regard to any such deductible;
     6    (b) appropriate premium reductions reflect the type and level  of  any
     7  deductible approved by the chairman and selected by the member;
     8    (c)  premium reductions for deductibles are determined before applica-
     9  tion of any  experience  modification,  premium  surcharge,  or  premium
    10  discount;
    11    (d)  recognition  is  given to member characteristics, including size,
    12  financial capabilities, nature of activities, and number of employees;
    13    (e) if the member selects a deductible, the member is  liable  to  the
    14  public  group  self-insurer for the deductible amount in regard to bene-
    15  fits paid for compensable claims;
    16    (f) the public group self-insurer pays all of the  deductible  amount,
    17  applicable to a compensable claim, to the person or provider entitled to
    18  benefits and requires the member to pay to it in advance an amount actu-
    19  arially  determined  to  be sufficient to pay the portion of the compen-
    20  sation claim that is within the  deductible  amount  as  those  payments
    21  become  due;  provided  that such periodic payments shall be paid to the
    22  public group self-insurer in intervals of no greater of six months; and
    23    (g) failure to reimburse deductible  amounts  by  the  member  to  the
    24  public group self-insurer is treated under the coverage agreement in the
    25  same manner as nonpayment of contributions.
    26    (3) If, in the determination of the chair, a public group self-insurer
    27  becomes  insolvent  or otherwise defaults on its obligations, the insol-
    28  vent group will require each member and each  former  member  to  pay  a
    29  supplemental assessment in an amount sufficient to make the public group
    30  self-insurer solvent based upon a formula to be established by the chair
    31  in  regulations  which  considers  the members' annual contributions and
    32  loss experience; provided however, nothing  herein  shall  preclude  the
    33  chair  from directing that an underfunded public group self-insurer levy
    34  an assessment on its members as part of a plan implemented  pursuant  to
    35  subparagraph  (b)  of  paragraph  two  of  subdivision  three-a  of this
    36  section. As used in this paragraph,  insolvent  means  the  sum  of  the
    37  public group self-insurers' assets being less than the total cost of all
    38  of  the  public  group  self-insurer's anticipated workers' compensation
    39  liabilities that will accrue within the succeeding  six  months.  If  an
    40  assessment is not sufficient to cure the insolvency or default, (i) each
    41  member  and  any  former member will be liable for the remaining deficit
    42  based upon a supplemental assessment formula determined  by  the  chair;
    43  and  (ii)  whenever  the chair shall determine that the compensation and
    44  benefits provided by this chapter may be unpaid by reason of the default
    45  of a public group self-insurer, the chair shall  pay  such  compensation
    46  and  benefits  from  administration  expenses as provided in section one
    47  hundred fifty-one of this chapter upon audit and warrant  of  the  comp-
    48  troller  upon  vouchers  approved  by  the chair. Such payments shall be
    49  considered expenses of administration. The  chair  shall  be  reimbursed
    50  therefor  from any member of the public group self-insurer, first pursu-
    51  ant to the supplemental assessment formula determined by the chair.
    52    § 4. The opening paragraph of section 3443 of the  insurance  law,  as
    53  added by chapter 924 of the laws of 1990, is amended to read as follows:
    54    An  insurer  issuing  a workers' compensation and employers' liability
    55  insurance policy, [and a group self-insurer for  municipal  corporations
    56  as  defined  in  subdivision  three-a  of  section fifty of the workers'

        A. 697                              6

     1  compensation law,] may offer, as part of the policy or  by  endorsement,
     2  deductibles  optional to the policyholder for benefits payable under the
     3  policy, subject to approval by the superintendent and subject to  under-
     4  writing  by  the  insurer,  consistent  with  the following standards or
     5  factors:
     6    § 5. This act shall take effect immediately.
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