PRINTER'S NO. 1
No. 1 Session of 1993
INTRODUCED BY MELLOW AND MADIGAN, JANUARY 5, 1993
REFERRED TO LABOR AND INDUSTRY, JANUARY 5, 1993
AN ACT
1 Amending the act of June 2, 1915 (P.L.736, No.338), entitled, as
2 reenacted and amended, "An act defining the liability of an
3 employer to pay damages for injuries received by an employe
4 in the course of employment; establishing an elective
5 schedule of compensation; providing procedure for the
6 determination of liability and compensation thereunder; and
7 prescribing penalties," adding and amending certain
8 definitions; redesignating referees as workers' compensation
9 judges; further providing for contractors, for insurance and
10 self-insurance, for compensation and for payments for medical
11 services; providing for coordinated care organizations;
12 further providing for procedures for the payment of
13 compensation and for medical services and for procedures of
14 the department, referees and the board; adding provisions
15 relating to insurance, self-insurance pooling, self-insurance
16 guaranty fund, health and safety and the prevention of
17 insurance fraud; further providing for certain penalties;
18 making repeals; and making editorial changes.
19 The General Assembly of the Commonwealth of Pennsylvania
20 hereby enacts as follows:
21 Section 1. Section 101 of the act of June 2, 1915 (P.L.736,
22 No.338), known as The Pennsylvania Workmen's Compensation Act,
23 reenacted and amended June 21, 1939 (P.L.520, No.281) and
24 amended December 5, 1974 (P.L.782, No.263), is amended to read:
25 Section 101. That this act shall be called and cited as [The
1 Pennsylvania Workmen's] the Workers' Compensation Act, and shall
2 apply to all injuries occurring within this Commonwealth,
3 irrespective of the place where the contract of hiring was made,
4 renewed, or extended, and extraterritorially as provided by
5 section 305.2.
6 Section 2. Section 104 of the act, amended March 29, 1972
7 (P.L.159, No.61), is amended to read:
8 Section 104. The term "employe," as used in this act is
9 declared to be synonymous with servant, and includes--
10 All natural persons who perform services for another for a
11 valuable consideration, exclusive of persons whose employment is
12 casual in character and not in the regular course of the
13 business of the employer, and exclusive of persons to whom
14 articles or materials are given out to be made up, cleaned,
15 washed, altered, ornamented, finished or repaired, or adapted
16 for sale in the worker's own home, or on other premises, not
17 under the control or management of the employer. [Every] Except
18 as hereinafter provided in clause (c) of section 302 and
19 sections 305 and 321 of this act, every executive officer of a
20 corporation elected or appointed in accordance with the charter
21 and by-laws of the corporation, except elected officers of the
22 Commonwealth or any of its political subdivisions, shall be an
23 employe of the corporation [except as hereinafter provided in
24 sections 302 (c), 305 and 321]. An executive officer of a
25 corporation may, however, elect not to be an "employe" of the
26 corporation for the purposes of this act. For purposes of this
27 section, an executive officer is an individual who has the power
28 to direct and cause the direction of the management and policies
29 of the business and to make the day-to-day as well as major
30 decisions in matters of policy, management and operations.
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1 Section 3. The act is amended by adding sections to read:
2 Section 105.3. The term "construction design professional,"
3 as used in this act, means a professional engineer or land
4 surveyor licensed by the State Registration Board for
5 Professional Engineers and Professional Land Surveyors under the
6 act of May 23, 1945 (P.L.913, No.367), known as the
7 "Professional Engineers and Professional Land Surveyors
8 Registration Law," a landscape architect who is licensed by the
9 State Board of Landscape Architects under the act of January 24,
10 1966 (1965 P.L.1527, No.535), known as the "Landscape
11 Architects' Registration Law," an architect who is licensed by
12 the Architects Licensure Board under the act of December 14,
13 1982 (P.L.1227, No.281), known as the "Architects Licensure
14 Law," or any corporation or association (including professional
15 corporations) organized or registered under the act of December
16 21, 1988 (P.L.1444, No.177), known as the "General Association
17 Act of 1988," practicing engineering, architecture, landscape
18 architecture or surveying in this Commonwealth.
19 Section 109. The term "sufficient, competent and substantial
20 evidence," as used in this act, shall mean the aggregate of the
21 terms, "sufficient evidence," "competent evidence" and
22 "substantial evidence." The term "sufficient evidence," as used
23 in this act, shall mean more than a scintilla but somewhat less
24 than a preponderance. The term "competent evidence," as used in
25 this act, shall mean evidence which is legally admissible. A
26 technical or scientific opinion given in evidence by an expert
27 must be based upon facts or data of a type reasonably relied
28 upon by experts in the particular field and be logically derived
29 by standard methodological principles. The term "substantial
30 evidence," as used in this act, shall mean such relevant
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1 evidence as a reasonable mind might accept to support a decision
2 upon a review of the record as a whole.
3 Section 110. In addition to the definitions set forth in
4 this Article, the following words and phrases when used in this
5 act shall have the meanings given to them in this section unless
6 the context clearly indicates otherwise:
7 "Bill" means a statement or invoice for payment of services
8 under clause (f) of section 306 of this act which identifies the
9 claimant, the date of injury, the payment codes referred to in
10 clause (f) of section 306 of this act and a description of the
11 services provided on or in standard form prescribed by the
12 Department of Labor and Industry.
13 "Burn facility" means a facility which meets the service
14 standards of the American Burn Association.
15 "Commissioner" means the Insurance Commissioner of the
16 Commonwealth.
17 "Coordinated care organization" or "CCO" means an
18 organization licensed in Pennsylvania and certified by the
19 Secretary of Labor and Industry on a basis of established
20 criteria possessing the capacity to provide primary medical
21 services to an injured worker.
22 "DRG" means diagnosis related groups.
23 "HCFA" means the Health Care Financing Administration.
24 "Health maintenance organization" means an entity defined in
25 and subject to the act of December 29, 1972 (P.L.1701, No.364),
26 known as the "Health Maintenance Organization Act."
27 "Hospital plan corporation" means an entity defined in and
28 subject to Chapter 61 (relating to hospital plan corporations)
29 of Title 40 (relating to insurance) of the Pennsylvania
30 Consolidated Statutes.
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1 "Insurance Company Law of 1921" means the act of May 17, 1921
2 (P.L.682, No.284), known as "The Insurance Company Law of 1921."
3 "Insurer" means an entity subject to the act of May 17, 1921
4 (P.L.682, No.284), known as "The Insurance Company Law of 1921,"
5 including the State Workmen's Insurance Fund, with which an
6 employer has insured liability under this act pursuant to
7 section 305 or a self-insured employer or fund exempted by the
8 Department of Labor and Industry pursuant to section 305 of this
9 act.
10 "Intermediary" means an organization with a contractual
11 relationship with the Health Care Financing Administration to
12 process Medicare Part A or Part B claims.
13 "Life-threatening injury" shall be as defined by the American
14 College of Surgeons' triage guidelines regarding use of trauma
15 centers for the region where the services are provided.
16 "Occupational Disease Act" means the act of June 21, 1939
17 (P.L.566, No.284), known as "The Pennsylvania Occupational
18 Disease Act."
19 "Pass-through costs" means Medicare reimbursed costs to a
20 hospital that "pass through" the prospective payment system and
21 are not included in the diagnosis related group payments. The
22 term includes medical education, capital expenditures, insurance
23 and interest expense on fixed assets.
24 "Peer review," for the purpose of undertaking reviews and
25 reports pursuant to section 420, means review by:
26 (1) an impartial physician, surgeon or other duly licensed
27 practitioner of the healing arts selected by the Secretary of
28 Labor and Industry upon recommendation of the deans of the
29 medical colleges located in this Commonwealth;
30 (2) a panel of such professionals and practitioners selected
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1 by the Secretary of Labor and Industry upon recommendation of
2 the deans of the medical colleges located in this Commonwealth;
3 or
4 (3) a Peer Review Organization approved by the Insurance
5 Commissioner and selected by the Secretary of Labor and
6 Industry.
7 "Professional health service corporation" means an entity
8 defined in and subject to Chapter 63 (relating to professional
9 health services plan corporations) of Title 40 (relating to
10 insurance) of the Pennsylvania Consolidated Statutes.
11 "Provider" means a health care provider licensed by the
12 Commonwealth, including a person or institution providing
13 treatment, accommodations, products or services to a person
14 under clause (f) of section 306 of this act.
15 "Referee" means a workers' compensation judge, as designated
16 under section 401.
17 "Secretary" means the Secretary of Labor and Industry of the
18 Commonwealth.
19 "Trauma center" means a facility accredited by the
20 Pennsylvania Trauma Systems Foundation under the act of July 3,
21 1985 (P.L.164, No.45), known as the "Emergency Medical Services
22 Act."
23 "Urgent injury" shall be as defined by the American College
24 of Surgeons' triage guidelines regarding use of trauma centers
25 for the region where the services are provided.
26 "Usual, customary and reasonable charge" means the charge
27 most often made by providers of similar training, experience and
28 licensure for a specific treatment, accommodation, product or
29 service in the geographic area where the treatment,
30 accommodation, product or service is provided.
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1 "Utilization review organizations" shall be those
2 organizations consisting of an impartial physician, surgeon or
3 other duly licensed practitioner of the healing arts or a panel
4 of such professionals and practitioners as authorized by the
5 Department of Labor and Industry and published as a list in the
6 form of a notice in the Pennsylvania Bulletin, for the purpose
7 of reviewing the reasonableness and necessity of medical
8 treatment pursuant to section 306(f.1)(6).
9 Section 4. Section 204 of the act, amended December 5, 1974
10 (P.L.782, No.263), is amended to read:
11 Section 204. No agreement, composition, or release of
12 damages made before the date of any injury shall be valid or
13 shall bar a claim for damages resulting therefrom; and any such
14 agreement is declared to be against the public policy of this
15 Commonwealth. The receipt of benefits from any association,
16 society, or fund shall not bar the recovery of damages by action
17 at law, nor the recovery of compensation under article three
18 hereof; and any release executed in consideration of such
19 benefits shall be void: Provided, however, That if the employe
20 receives unemployment compensation benefits, such amount or
21 amounts so received shall be credited as against the amount of
22 the award made under the provisions of [section 108.] sections
23 108 and 306, except for benefits payable under section 306(c).
24 Section 5. Section 301(a) and (c)(1) of the act, amended
25 October 17, 1972 (P.L.930, No.223) and December 5, 1974
26 (P.L.782, No.263), are amended to read:
27 Section 301. (a) Every employer shall be liable for
28 compensation for personal injury to, or for the death of each
29 employe, by an injury in the course of his employment, and such
30 compensation shall be paid in all cases by the employer, without
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1 regard to negligence, according to the schedule contained in
2 sections three hundred and six and three hundred and seven of
3 this article: Provided, That no compensation shall be paid when
4 the injury or death is intentionally self inflicted, or is
5 caused by the employe's violation of law, or is caused by the
6 employe's intoxication or illegal use of drugs, but the burden
7 of proof of such fact shall be upon the employer, and no
8 compensation shall be paid if, during hostile attacks on the
9 United States, injury or death of employes results solely from
10 military activities of the armed forces of the United States or
11 from military activities or enemy sabotage of a foreign power.
12 * * *
13 (c) (1) The terms "injury" and "personal injury," as used
14 in this act, shall be construed to mean an injury to an employe,
15 regardless of his previous physical condition, arising in the
16 course of his employment and related thereto, and such disease
17 or infection as naturally results from the injury or is
18 aggravated, reactivated or accelerated by the injury; and
19 wherever death is mentioned as a cause for compensation under
20 this act, it shall mean only death resulting from such injury
21 and its resultant effects, and occurring within three hundred
22 weeks after the injury. The term "injury arising in the course
23 of his employment," as used in this article, shall not include
24 an injury caused by an act of a third person intended to injure
25 the employe because of reasons personal to him, and not directed
26 against him as an employe or because of his employment; nor
27 shall it include injuries sustained while the employe is
28 operating a motor vehicle provided by the employer if the
29 employe is not otherwise in the course of employment at the time
30 of injury; but shall include all other injuries sustained while
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1 the employe is actually engaged in the furtherance of the
2 business or affairs of the employer, whether upon the employer's
3 premises or elsewhere, and shall include all injuries caused by
4 the condition of the premises or by the operation of the
5 employer's business or affairs thereon, sustained by the
6 employe, who, though not so engaged, is injured upon the
7 premises occupied by or under the control of the employer, or
8 upon which the employer's business or affairs are being carried
9 on, the employe's presence thereon being required by the nature
10 of his employment.
11 * * *
12 Section 6. Section 302 of the act, amended December 5, 1974
13 (P.L.782, No.263), is amended to read:
14 Section 302. (a) A contractor who subcontracts all or any
15 part of a contract and his insurer shall be liable for the
16 payment of compensation to the employes of the subcontractor
17 unless the subcontractor primarily liable for the payment of
18 such compensation has secured its payment as provided for in
19 this act. Any contractor or his insurer who shall become liable
20 hereunder for such compensation may recover the amount thereof
21 paid and any necessary expenses from the subcontractor primarily
22 liable therefor.
23 For purposes of this subsection, a person who contracts with
24 another (1) to have work performed consisting of (i) the
25 removal, excavation or drilling of soil, rock or minerals, or
26 (ii) the cutting or removal of timber from lands, or (2) to have
27 work performed of a kind which is a regular or recurrent part of
28 the business, occupation, profession or trade of such person
29 shall be deemed a contractor, and such other person a
30 subcontractor. This subsection shall not apply, however, to an
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1 owner or lessee of land principally used for agriculture who is
2 not a covered employer under this act and who contracts for the
3 removal of timber from such land.
4 (b) Any employer who permits the entry upon premises
5 occupied by him or under his control of a laborer or an
6 assistant hired by an employe or contractor, for the performance
7 upon such premises of a part of such employer's regular business
8 entrusted to that employe or contractor, shall be liable for the
9 payment of compensation to such laborer or assistant unless such
10 hiring employe or contractor, if primarily liable for the
11 payment of such compensation, has secured the payment thereof as
12 provided for in this act. Any employer or his insurer who shall
13 become liable hereunder for such compensation may recover the
14 amount thereof paid and any necessary expenses from another
15 person if the latter is primarily liable therefor.
16 For purposes of this subsection (b), the term "contractor"
17 shall have the meaning ascribed in section 105 of this act.
18 (c) Any employer employing persons in agricultural labor
19 shall be required to provide workmen's compensation coverage for
20 such employes according to the provisions of this act, if such
21 employer is otherwise covered by the provisions of this act or
22 if during the calendar year such employer pays wages to one
23 employe for agricultural labor totaling one hundred fifty
24 dollars ($150) or more or furnishes employment to one employe in
25 agricultural labor on twenty or more days in any of which events
26 the employer shall be required to provide coverage for all
27 employes.
28 (d) A contractor shall not subcontract all or any part of a
29 contract unless the subcontractor has presented proof of
30 insurance under this act.
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1 (e) (1) Prior to issuing a building permit to a contractor,
2 a municipality shall require the contractor to present proof of
3 workers' compensation insurance for the duration of the work or
4 an affidavit that the contractor is the sole proprietor,
5 principal shareholder of a corporation or a partner in a
6 partnership which does not employ other individuals to perform
7 the work pursuant to the building permit.
8 (2) Every building permit issued by a municipality to a
9 contractor shall clearly set forth the name and workers'
10 compensation policy and the contractor's Federal or State
11 Employer Identification Number. This information shall be in
12 addition to any information required by municipal ordinance. If
13 the building permit is issued to a sole proprietor, principal
14 shareholder of a corporation or a partnership which does not
15 employ other individuals to perform the work pursuant to the
16 building permit, and is not otherwise obligated to maintain
17 workers' compensation insurance under this act, the permit shall
18 clearly set forth the contractor's Federal or State Employer
19 Identification Number and state that the sole proprietor,
20 principal shareholder or partner is not required to carry
21 workers' compensation insurance and that the sole proprietor,
22 principal shareholder or partner is not permitted to employ any
23 individual to perform work pursuant to the building permit.
24 (3) Every municipality issuing a building permit shall be
25 named as a workers' compensation policy certificate holder of a
26 contractor-issued building permit. This certificate shall be
27 filed with the municipality's copy of the building permit.
28 (4) A municipality shall issue a stop-work order to a
29 contractor who is performing work pursuant to a building permit,
30 in the event his workers' compensation insurance or self-insured
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1 status is cancelled. If the municipality determines that a sole
2 proprietor, partner or shareholder who is performing work
3 pursuant to a building permit does not maintain required
4 workers' compensation insurance, the municipality may issue a
5 stop-work order. This order shall remain in effect until proper
6 workers' compensation coverage is obtained for all work
7 performed pursuant to the building permit.
8 (f) Where a contractor is performing work for a public body
9 or political subdivision, all contractors and subcontractors
10 shall provide proof of workers' compensation insurance to the
11 public body or political subdivision effective for the duration
12 of the work.
13 (g) Should such policy of workers' compensation insurance be
14 cancelled or expire during the duration of the work or should
15 the workers' compensation self-insurance status change during
16 the said period, the contractor shall immediately notify, in
17 writing, the municipality, public body or political subdivision
18 of such cancellation, expiration or change in status.
19 (h) Nothing in this act shall be the basis of any liability
20 on part of the municipality.
21 (i) For purposes of clauses (d), (e) and (f) of this
22 section, "proof of insurance" shall include a certificate of
23 insurance or self-insurance, demonstrating current coverage and
24 compliance with the requirements of this act, the "Occupational
25 Disease Act" and the "Longshore and Harbor Workers' Compensation
26 Act (44 Stat. 1424, 33 U.S.C. § 901 et seq.), its amendments and
27 supplements, where applicable.
28 (j) For purposes of clauses (d), (e) and (f), "proof of
29 insurance" shall not be required when the employer has been
30 exempted pursuant to section 304.2 of this act.
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1 Section 7. Section 305 of the act, amended December 5, 1974
2 (P.L.782, No.263) and repealed in part April 28, 1978 (P.L.202,
3 No.53), is amended to read:
4 Section 305. (a) (1) Every employer liable under this act
5 to pay compensation shall insure the payment of compensation in
6 the State Workmen's Insurance Fund, or in any insurance company,
7 or mutual association or company, authorized to insure such
8 liability in this Commonwealth, unless such employer shall be
9 exempted by the department from such insurance. Such insurer
10 shall assume the employer's liability hereunder and shall be
11 entitled to all of the employer's immunities and protection
12 hereunder except, that whenever any employer shall have
13 purchased insurance to provide benefits under this act to
14 persons engaged in domestic service, neither the employer nor
15 the insurer may invoke the provisions of section 321 as a
16 defense. An employer desiring to be exempt from insuring the
17 whole or any part of his liability for compensation shall make
18 application to the department, showing his financial ability to
19 pay such compensation, whereupon the department, if satisfied of
20 the applicant's financial ability, shall, upon the payment of a
21 fee of [one hundred dollars ($100.00)] five hundred dollars
22 ($500), issue to the applicant a permit authorizing such
23 exemption.
24 (2) In securing the payment of benefits, the department
25 shall require an employer wishing to self-insure its liability
26 to establish sufficient security by posting a bond or other
27 security, including letters of credit drawn on commercial banks
28 with a Thompson Bank Credit Service rating of C or better or a
29 CD rating of BB/A2 or better by Standard and Poor's. This
30 paragraph shall not apply to municipalities.
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1 (3) The department shall establish a period of twelve (12)
2 calendar months, to begin and end at such times as the
3 department shall prescribe, which shall be known as the annual
4 exemption period. Unless previously revoked, all permits issued
5 under this section shall expire and terminate on the last day of
6 the annual exemption period for which they were issued. Permits
7 issued under this act shall be renewed upon the filing of an
8 application, and the payment of a renewal fee of one hundred
9 dollars ($100.00). The department may, from time to time,
10 require further statements of the financial ability of such
11 employer, and, if at any time such employer appear no longer
12 able to pay compensation, shall revoke its permit granting
13 exemption, in which case the employer shall immediately
14 subscribe to the State Workmen's Insurance Fund, or insure his
15 liability in any insurance company or mutual association or
16 company, as aforesaid.
17 (b) Any employer who fails to comply with the provisions of
18 this section for every such failure, shall, upon [summary
19 conviction before any official of competent jurisdiction, be
20 sentenced to pay a fine of not less than five hundred dollars
21 ($500) nor more than two thousand dollars ($2,000), and costs of
22 prosecution, or imprisonment for a period of not more than one
23 (1) year, or both.] conviction in the court of common pleas, be
24 guilty of a misdemeanor of the third degree. Every day's
25 violation shall constitute a separate offense. A judge of the
26 court of common pleas may, in addition to imposing fines and
27 imprisonment, include restitution in his order: Provided, That
28 there is an injured employe who has obtained an award of
29 compensation. The amount of restitution shall be limited to that
30 specified in the award of compensation. It shall be the duty of
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1 the department to enforce the provisions of this section; and it
2 shall investigate all violations that are brought to its notice
3 and shall institute prosecutions for violations thereof. All
4 fines recovered under the provisions of this section shall be
5 paid to the department, and by it paid into the State Treasury.
6 (c) In any proceeding against an employer under this
7 section, a certificate of non-insurance issued by the official
8 Workmen's Compensation Rating and Inspection Bureau and a
9 certificate of the department showing that the defendant has not
10 been exempted from obtaining insurance under this section, shall
11 be prima facie evidence of the facts therein stated.
12 (d) When any employer fails to secure the payment of
13 compensation under this act as provided in sections 305 and
14 305.2, the injured employe or his dependents may proceed either
15 under this act or in a suit for damages at law as provided by
16 article II.
17 (e) Every employer shall post a notice at its primary place
18 of business and at its sites of employment in a prominent and
19 easily accessible place, including, without limitation, areas
20 used for the treatment of injured employes or for the
21 administration of first aid, containing:
22 (1) Either the name of the employer's carrier and the
23 address and telephone number of such carrier or insurer or, if
24 the employer is self-insured, the name, address and telephone
25 number of the person to whom claims or requests for information
26 are to be addressed.
27 (2) The following statement: "Remember, it is important to
28 tell your employer about your injury."
29 The notice shall be posted in prominent and easily accessible
30 places at the site of employment, including such places as are
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1 used for treatment and first aid of injured employes. Such a
2 listing shall contain the information as specified in this
3 section, typed or printed on eight and one-half inch by eleven
4 inch or eight and one-half inch by thirteen inch paper in
5 standard size type or larger.
6 Section 8. Section 306(a) and (f) of the act, amended
7 December 5, 1974 (P.L.782, No.263) and July 1, 1978 (P.L.692,
8 No.119), are amended and the section is amended by adding
9 clauses to read:
10 Section 306. The following schedule of compensation is
11 hereby established:
12 (a) For total disability, sixty-six and two-thirds per
13 centum of the wages of the injured employe as defined in section
14 three hundred and nine beginning after the seventh day of total
15 disability, and payable for the duration of total disability,
16 but the compensation shall not be more than the maximum
17 compensation payable [nor less than fifty per centum of the
18 Statewide average weekly wage. If at the time of injury, the
19 employe receives wages equal to or less than fifty per centum of
20 the Statewide average weekly wage, then he shall receive ninety
21 per centum of his average weekly wage as compensation, but in no
22 event less than thirty-three and one-third per centum of the
23 maximum weekly compensation payable] as defined in section
24 105.2. Nothing in this clause shall require payment of
25 compensation after disability shall cease. Nothing in this act
26 shall require payment of compensation for any period during
27 which the employe is incarcerated.
28 * * *
29 [(f) (1) The employer shall provide payment for reasonable
30 surgical and medical services, services rendered by duly
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1 licensed practitioners of the healing arts, medicines, and
2 supplies, as and when needed: Provided, That if a list of at
3 least five designated physicians or other duly licensed
4 practitioners of the healing arts or a combination thereof is
5 provided by the employer, the employe shall be required to visit
6 one of the physicians or other practitioners so designated and
7 shall continue to visit the same or another physician or
8 practitioner for a period of fourteen days from the date of the
9 first visit. Subsequent treatment may be provided by any
10 physician or any other duly licensed practitioner of the healing
11 arts or a combination thereof, of the employes own choice, and
12 such treatment shall be paid for by the employer. Any employe
13 who next following the termination of the fourteen-day period is
14 provided treatment from a physician or other duly licensed
15 practitioner of the healing arts who is not one of the
16 physicians or practitioners designated by the employer, shall
17 notify the employer within five days of the first visit to said
18 physician or practitioner. However, if the employe fails to so
19 notify the employer, the employe shall suffer no loss of rights
20 or benefits to which he is otherwise entitled under the act.
21 (2) If and only if the employer has designated at least five
22 physicians or other duly licensed practitioners of the healing
23 arts or a combination thereof as permitted by the preceding
24 paragraph, the following reporting provisions shall apply.
25 Nothing in the following paragraphs shall eliminate rights of
26 the employer to obtain all records and data as permitted under
27 any other sections of this act.
28 (i) The physician or other duly licensed practitioner of the
29 healing arts shall be required to file periodic reports with the
30 employer on a form prescribed by the department which shall
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1 include, where pertinent, history, diagnosis, treatment,
2 prognosis and physical findings. The report shall be filed
3 within twenty-one days of commencing treatment and at least once
4 a month thereafter, as long as treatment continues. The employer
5 shall not be liable to pay for such treatment until a report has
6 been filed.
7 (ii) The employer shall have the right to petition the
8 department for review of the necessity or frequency of treatment
9 or reasonableness of fees for services provided by a physician
10 or other duly licensed practitioner of the healing arts. Such a
11 petition shall in no event act as a supersedeas, and during the
12 pendency of any such petition the employer shall pay all medical
13 bills if the physician or other practitioner of the healing arts
14 files a report or reports as required by subparagraph (i) of
15 paragraph (2) of this subsection.
16 (3) After an employe has elected to be treated by a
17 physician or other duly licensed practitioner of the healing
18 arts who is not one of the physicians or practitioners
19 designated by the employer, he may thereafter elect to be
20 treated by another physician or other duly licensed practitioner
21 of the healing arts upon notice to his employer: Provided,
22 however, That no such notice shall be required in emergencies,
23 or in cases of referrals by one physician or practitioner to
24 another physician or practitioner or if the new physician or
25 practitioner makes a timely report to the employer within
26 twenty-one days after commencing treatment.
27 (4) In addition to the above service, the employer shall
28 provide payment for medicines and supplies, hospital treatment,
29 services and supplies and orthopedic appliances, and prostheses.
30 The cost for such hospital treatment, service and supplies shall
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1 not in any case exceed the prevailing charge in the hospital for
2 like services to other individuals. If the employe shall refuse
3 reasonable services of duly licensed practitioners of the
4 healing arts, surgical, medical and hospital services,
5 treatment, medicines and supplies, he shall forfeit all rights
6 to compensation for any injury or any increase in his incapacity
7 shown to have resulted from such refusal. Whenever an employe
8 shall have suffered the loss of a limb, part of a limb, or an
9 eye, the employer shall also provide payment for an artificial
10 limb or eye or other prostheses of a type and kind recommended
11 by the doctor attending such employe in connection with such
12 injury and any replacements for an artificial limb or eye which
13 the employe may require at any time thereafter, together with
14 such continued medical care as may be prescribed by the doctor
15 attending such employe in connection with such injury as well as
16 such training as may be required in the proper use of such
17 prostheses. The provisions of this section shall apply in
18 injuries whether or not loss of earning power occurs. If
19 hospital confinement is required, the employe shall be entitled
20 to semi-private accommodations but if no such facilities are
21 available, regardless of the patient's condition, the employer,
22 not the patient, shall be liable for the additional costs for
23 the facilities in a private room.
24 (5) The payment by an insurer for any medical, surgical or
25 hospital services or supplies after any statute of limitations
26 provided for in this act shall have expired shall not act to
27 reopen or review the compensation rights for purposes of such
28 limitations.]
29 (f.1) (1) Provided an employer establishes a list of at
30 least five designated physicians, one or more of whom may be a
19930S0001B0001 - 19 -
1 coordinated care organization, or other duly licensed
2 practitioners of the healing arts, the employe shall be required
3 to visit one of the physicians or other practitioners so
4 designated and shall continue to visit the same or another
5 designated physician or practitioner for a period of forty-five
6 days from the date of the first visit. Should the employe not
7 comply with the foregoing, the employer will be relieved from
8 liability for the payment for the services rendered during such
9 forty-five-day period. Subsequent treatment may be provided by
10 any physician or practitioner of the employe's own choice. Any
11 employe who, next following termination of the forty-five-day
12 period, is provided treatment from a nondesignated physician
13 shall notify the employer within five days of the first visit to
14 said physician or practitioner. Failure to so notify the
15 employer will relieve the employer from liability for the
16 payment for the services rendered prior to appropriate notice.
17 (2) Any provider who treats an injured employe shall provide
18 treatment notes, records and progress reports periodically to
19 the employer on the employe's condition and capacity to work as
20 circumstances warrant or on the request of the employer, or at a
21 minimum once a month during such treatment, without charge. The
22 employer shall not be liable to pay for such treatment until a
23 report has been filed.
24 (3) (i) For purposes of this clause, a provider shall not
25 require, request or accept payment for the treatment,
26 accommodations, products or services in excess of one hundred
27 twenty per centum of the prevailing charge at the seventy-fifth
28 percentile; one hundred twenty per centum of the applicable fee
29 schedule, the recommended fee or the inflation index charge; one
30 hundred twenty per centum of the DRG payment, plus pass-through
19930S0001B0001 - 20 -
1 costs and applicable cost or day outliers; or one hundred twenty
2 per centum of any other Medicare reimbursement mechanism, as
3 determined by the Medicare carrier or intermediary, whichever
4 pertains to the specialty service involved, determined to be
5 applicable in this Commonwealth under the Medicare program for
6 comparable services rendered as of the effective date of this
7 act, or the provider's usual, customary and reasonable charge,
8 whichever is less. Future changes or additions to Medicare
9 allowances are not applicable under this section. If the
10 commissioner determines that an allowance for a particular
11 provider group or service under the Medicare program is not
12 reasonable, it may adopt, by regulation, a new percentage
13 allowance. If the prevailing charge, fee schedule, recommended
14 fee, inflation index charge, DRG payment or any other
15 reimbursement has not been calculated under the Medicare program
16 for a particular treatment, accommodation, product or service,
17 the amount of the payment may not exceed eighty per centum of
18 the charge most often made by providers of similar training,
19 experience and licensure for a specific treatment,
20 accommodation, product or service in the geographic area where
21 the treatment, accommodation, product or service is provided.
22 (ii) The maximum allowance for a health care service covered
23 by subparagraph (i) of this paragraph shall be updated as of the
24 first day of January of each year. The update shall be equal to
25 the percentage change in the Statewide average weekly wage.
26 (iii) The secretary shall retain the services of an
27 independent consulting firm to perform an annual accessibility
28 study of medical care provided under this act. The study will
29 review and provide information as to whether there is adequate
30 access to quality health care and products for injured workers.
19930S0001B0001 - 21 -
1 If the secretary determines based on this study that as a result
2 of the medical care fee schedule there is not sufficient access
3 to quality health care or products for persons suffering
4 injuries covered by this act, the secretary may recommend to the
5 commissioner the adoption of regulations providing for a new
6 allowance to be applied against the percentage limitation in
7 this subsection.
8 (iv) An allowance shall be reviewed for reasonableness where
9 the commissioner determines that the use of the allowance would
10 result in payments more than ten per centum lower than the
11 average level of reimbursement the provider would receive from
12 coordinated care insurers, including those entities subject to
13 the act of December 29, 1972 (P.L.1701, No.364), known as the
14 "Health Maintenance Organization Act," and those entities known
15 as preferred provider organizations which are subject to section
16 630 of the act of May 17, 1921 (P.L.682, No.284), known as "The
17 Insurance Company Law of 1921," for like treatments,
18 accommodations, products or services. In making this
19 determination, the commissioner shall consider the extent to
20 which allowances applicable to other providers under this
21 section deviate from the reimbursement such providers would
22 receive from coordinated care insurers. Any information received
23 as a result of this subparagraph shall be confidential.
24 (v) The reimbursement for prescription drugs and
25 professional pharmaceutical services shall be limited to one
26 hundred ten per centum of the average wholesale price of the
27 product: Provided, That a separate charge may be used if a
28 pharmacy provides drug use evaluation or utilization review.
29 (vi) The applicable Medicare fee schedule shall include fees
30 associated with all permissible procedure codes. If the Medicare
19930S0001B0001 - 22 -
1 fee schedule also includes a larger grouping of procedure codes
2 and corresponding charges than are specifically reimbursed by
3 Medicare, a provider may use these codes, and corresponding
4 charges shall be paid by insurers or employers. If a Medicare
5 code exists for application to a specific provider specialty,
6 that code shall be used.
7 (vii) A provider shall not fragment or unbundle charges
8 imposed for specific care except as consistent with Medicare.
9 Changes to a provider's codes by an insurer shall be made only
10 as consistent with Medicare and when the insurer has sufficient
11 information to make the changes and following consultation with
12 the provider.
13 (4) Nothing in this act shall prohibit the provider, self-
14 insured employer, employer or insurer from contracting with a
15 coordinated care organization for reimbursement levels different
16 from those identified above.
17 (5) The employer or insurer shall make payment, and
18 providers shall submit bills and records, in accordance with the
19 provisions of this section. All payments to providers for
20 treatment provided pursuant to this act shall be made within
21 thirty days of receipt of such bills and records, unless the
22 employer or insurer disputes the reasonableness or necessity of
23 treatment provided. A provider who has submitted the reports and
24 bills required by this section and who disputes the amount or
25 timeliness of the payment from the employer or insurer, except
26 in those situations where the reasonableness or necessity of
27 treatment is disputed, shall file an application for fee review
28 with the department. Within thirty days of the filing of such an
29 application, the department shall render an administrative
30 decision.
19930S0001B0001 - 23 -
1 (6) All disputes as to reasonableness or necessity of
2 medical treatment shall be resolved in accordance with the
3 following provisions:
4 (i) The reasonableness or necessity of all medical treatment
5 provided under this act may be subject to prospective,
6 concurrent or retrospective utilization review at the request of
7 an employer or insurer. The department shall authorize
8 utilization review organizations to perform utilization review
9 under this act. Organizations not authorized by the department
10 may not engage in such utilization review.
11 (ii) The utilization review organization shall issue a
12 written report of its findings and conclusions within thirty
13 days of a request. If the provider, employer or insurer
14 disagrees with the finding of the utilization review
15 organization, a request for reconsideration must be filed no
16 later than thirty days after receipt of the utilization review
17 report. The request for reconsideration must be in writing and
18 must contain medical evidence not available at the time of the
19 initial review.
20 (iii) The employer shall pay the cost of the initial
21 utilization review. The party requesting reconsideration of an
22 initial review shall bear the advance costs of such
23 reconsideration where required, which cost shall be recoverable
24 if the party requesting reconsideration prevails.
25 (iv) If the provider, employer or insurer disagrees with the
26 finding of the utilization review organization on
27 reconsideration, a petition for review by the department must be
28 filed within thirty days after receipt of the reconsideration
29 report. The department shall hold an informal hearing on the
30 matter within thirty days of the filing of the petition. The
19930S0001B0001 - 24 -
1 department's decision shall be issued within thirty days of the
2 conclusion of such hearing and shall be based on any and all
3 records and reports from the utilization review organization.
4 (7) A provider shall not hold an employe liable for costs
5 related to care or service rendered in connection with a
6 compensable injury under this act unless the employe has failed
7 to comply with this clause.
8 (8) If the employe shall refuse reasonable services of duly
9 licensed practitioners of the healing arts, surgical, medical
10 and hospital services, treatment, medicines and supplies, he
11 shall forfeit all rights to compensation for any injury or
12 increase or continuation in his incapacity shown to have
13 resulted from such refusal.
14 (9) The payment by an insurer or employer for any medical,
15 surgical or hospital services or supplies after any statute of
16 limitations provided for in this act shall have expired shall
17 not act to reopen or revive the compensation rights for purposes
18 of such limitations.
19 (10) If acute care is provided in an acute care facility to
20 a patient with an immediately life threatening or urgent injury
21 by a Level I or Level II trauma center accredited by the
22 Pennsylvania Trauma Systems Foundation under the act of July 3,
23 1985 (P.L.164, No.45), known as the "Emergency Medical Services
24 Act," or to a major burn injury patient by a burn facility which
25 meets all the service standards of the American Burn
26 Association, or if basic or advanced life support services, as
27 defined and licensed under the "Emergency Medical Services Act,"
28 are provided the amount of payment shall be the usual, customary
29 and reasonable charge.
30 * * *
19930S0001B0001 - 25 -
1 (i) (1) Medical services required by the act may be
2 provided through a coordinated care organization which is
3 certified by the Department of Labor and Industry subject to the
4 following:
5 (i) Each application for certification shall be accompanied
6 by a reasonable fee prescribed by the department. A certificate
7 is valid for such period as the department may prescribe unless
8 sooner revoked or suspended.
9 (ii) Application for certification shall be made in such
10 form and manner as the department shall require and shall set
11 forth information regarding the proposed plan for providing
12 services.
13 (2) The coordinated care organization must include an
14 adequate number and specialty distribution of licensed health
15 care providers in order to assure appropriate and timely
16 delivery of services required under the act and an appropriate
17 flexibility to workers in selecting providers. Services may be
18 provided directly, through affiliates or through contractual
19 referral arrangements with other health care providers.
20 (3) The secretary shall certify an entity as a coordinated
21 care organization if the secretary finds that the entity:
22 (i) Possesses the capacity to provide all primary medical
23 services as designated by the secretary in a manner that is
24 timely and effective.
25 (ii) Maintains a referral capacity to treat other injuries
26 and illnesses not covered by primary services but which are
27 covered by this act.
28 (iii) Provides a case management and evaluation system which
29 includes continuous monitoring of treatment from onset of injury
30 or illness until final resolution.
19930S0001B0001 - 26 -
1 (iv) Provides a case communication system which relates
2 necessary and appropriate information among the employe,
3 employer, health care providers and insurer.
4 (v) Provides appropriate peer and utilization review and a
5 care dispute resolution system.
6 (vi) Complies with any other requirements of law regarding
7 delivery of medical care services.
8 (4) The secretary shall refuse to certify or may revoke or
9 suspend certification of any coordinated care organization if
10 the director finds that:
11 (i) the plan for providing medical or health care services
12 fails to meet the requirements of this section; or
13 (ii) service under the plan is not being provided in
14 accordance with terms of the plan as certified.
15 (5) A person participating in utilization review, quality
16 assurance or peer review activities pursuant to this section
17 shall not be examined as to any communication made in the course
18 of such activities or the findings thereof, nor shall any person
19 be subject to an action for civil damages for actions taken or
20 statements made in good faith.
21 (6) Health care providers designated as rural by HCFA or
22 located in a county with a rural Health Professional Shortage
23 Area, who are attempting to form or operate a coordinated care
24 organization, shall be excluded from meeting all minimum
25 requirements set forth in paragraphs (2) and (3) of this clause,
26 as shall be determined in rules or regulations promulgated by
27 the department.
28 (7) The department shall have the power and authority to
29 promulgate, adopt, publish and use regulations for the
30 implementation of this section.
19930S0001B0001 - 27 -
1 Section 9. Section 307 of the act, amended December 5, 1974
2 (P.L.782, No.263), is amended to read:
3 Section 307. In case of death, compensation shall be
4 computed on the following basis, and distributed to the
5 following persons: Provided, That in no case shall the wages of
6 the deceased be taken to be less than fifty per centum of the
7 Statewide average weekly wage for purposes of this section:
8 1. If there be no widow nor widower entitled to
9 compensation, compensation shall be paid to the guardian of the
10 child or children, or, if there be no guardian, to such other
11 persons as may be designated by the board as hereinafter
12 provided as follows:
13 (a) If there be one child, thirty-two per centum of wages of
14 deceased, but not in excess of the Statewide average weekly
15 wage.
16 (b) If there be two children, forty-two per centum of wages
17 of deceased, but not in excess of the Statewide average weekly
18 wage.
19 (c) If there be three children, fifty-two per centum of
20 wages of deceased, but not in excess of the Statewide average
21 weekly wage.
22 (d) If there be four children, sixty-two per centum of wages
23 of deceased, but not in excess of the Statewide average weekly
24 wage.
25 (e) If there be five children, sixty-four per centum of
26 wages of deceased, but not in excess of the Statewide average
27 weekly wage.
28 (f) If there be six or more children, sixty-six and two-
29 thirds per centum of wages of deceased, but not in excess of the
30 Statewide average weekly wage.
19930S0001B0001 - 28 -
1 2. To the widow or widower, if there be no children, fifty-
2 one per centum of wages, but not in excess of the Statewide
3 average weekly wage.
4 3. To the widow or widower, if there be one child, sixty per
5 centum of wages, but not in excess of the Statewide average
6 weekly wage.
7 4. To the widow or widower, if there be two children, sixty-
8 six and two-thirds per centum of wages but not in excess of the
9 Statewide average weekly wage.
10 4 1/2. To the widow or widower, if there be three or more
11 children, sixty-six and two thirds per centum of wages, but not
12 in excess of the Statewide average weekly wage.
13 5. If there be neither widow, widower, nor children entitled
14 to compensation, then to the father or mother, if dependent to
15 any extent upon the employe at the time of the injury, thirty-
16 two per centum of wages but not in excess of the Statewide
17 average weekly wage: Provided, however, That in the case of a
18 minor child who has been contributing to his parents, the
19 dependency of said parents shall be presumed: And provided
20 further, That if the father or mother was totally dependent upon
21 the deceased employe at the time of the injury, the compensation
22 payable to such father or mother shall be fifty-two per centum
23 of wages, but not in excess of the Statewide average weekly
24 wage.
25 6. If there be neither widow, widower, children, nor
26 dependent parent, entitled to compensation, then to the brothers
27 and sisters, if actually dependent upon the decedent for support
28 at the time of his death, twenty-two per centum of wages for one
29 brother or sister, and five per centum additional for each
30 additional brother or sister, with a maximum of thirty-two per
19930S0001B0001 - 29 -
1 centum of wages of deceased, but not in excess of the Statewide
2 average wage, such compensation to be paid to their guardian, or
3 if there be no guardian, to such other person as may be
4 designated by the board, as hereinafter provided.
5 7. Whether or not there be dependents as aforesaid, the
6 reasonable expense of burial, not exceeding [one thousand five
7 hundred dollars] three thousand dollars ($3,000), which shall be
8 paid by the employer or insurer directly to the undertaker
9 (without deduction of any amounts theretofore paid for
10 compensation or for medical expenses).
11 Compensation shall be payable under this section to or on
12 account of any child, brother, or sister, only if and while such
13 child, brother, or sister, is under the age of eighteen unless
14 such child, brother or sister is dependent because of disability
15 when compensation shall continue or be paid during such
16 disability of a child, brother or sister over eighteen years of
17 age or unless such child is enrolled as a full-time student in
18 any accredited educational institution when compensation shall
19 continue until such student becomes twenty-three. No
20 compensation shall be payable under this section to a widow,
21 unless she was living with her deceased husband at the time of
22 his death, or was then actually dependent upon him and receiving
23 from him a substantial portion of her support. No compensation
24 shall be payable under this section to a widower, unless he be
25 incapable of self-support at the time of his wife's death and be
26 at such time dependent upon her for support. If members of
27 decedent's household at the time of his death, the terms "child"
28 and "children" shall include step-children, adopted children and
29 children to whom he stood in loco parentis, and children of the
30 deceased and shall include posthumous children. Should any
19930S0001B0001 - 30 -
1 dependent of a deceased employe die or remarry, or should the
2 widower become capable of self-support, the right of such
3 dependent or widower to compensation under this section shall
4 cease except that if a widow remarries, she shall receive one
5 hundred four weeks compensation at a rate computed in accordance
6 with clause 2. of section 307 in a lump sum after which
7 compensation shall cease: Provided, however, That if, upon
8 investigation and hearing, it shall be ascertained that the
9 widow or widower is living with a man or woman, as the case may
10 be, in meretricious relationship and not married, or the widow
11 living a life of prostitution, the board may order the
12 termination of compensation payable to such widow or widower. If
13 the compensation payable under this section to any person shall,
14 for any cause, cease, the compensation to the remaining persons
15 entitled thereunder shall thereafter be the same as would have
16 been payable to them had they been the only persons entitled to
17 compensation at the time of the death of the deceased.
18 The board may, if the best interest of a child or children
19 shall so require, at any time order and direct the compensation
20 payable to a child or children, or to a widow or widower on
21 account of any child or children, to be paid to the guardian of
22 such child or children, or, if there be no guardian, to such
23 other person as the board as hereinafter provided may direct. If
24 there be no guardian or committee of any minor, dependent, or
25 insane employe, or dependent, on whose account compensation is
26 payable, the amount payable on account of such minor, dependent,
27 or insane employe, or dependent may be paid to any surviving
28 parent, or such other person as the board may order and direct,
29 and the board may require any person, other than a guardian or
30 committee, to whom it has directed compensation for a minor,
19930S0001B0001 - 31 -
1 dependent, or insane employe, or dependent to be paid, to
2 render, as and when it shall so order, accounts of the receipts
3 and disbursements of such person, and to file with it a
4 satisfactory bond in a sum sufficient to secure the proper
5 application of the moneys received by such person.
6 Section 10. The act is amended by adding a section to read:
7 Section 308.1. (a) The eligibility of professional athletes
8 for compensation under this act shall be limited as provided in
9 this section.
10 (b) The term "professional athlete," as used in this
11 section, shall mean a natural person employed as a professional
12 athlete by a franchise of the National Football League, the
13 National Basketball Association, the National Hockey League, the
14 National League of Professional Baseball Clubs or the American
15 League of Professional Baseball Clubs, under a contract for hire
16 or a collective bargaining agreement, whose wages as defined in
17 section 309 are more than six times the Statewide average weekly
18 wage.
19 (c) In the case of a professional athlete, any compensation
20 payable under this act with respect to total disability, partial
21 disability, permanent injury or death shall be reduced by the
22 after-tax amount of any:
23 (1) Wages payable by the employer during the period of
24 disability under a contract for hire or collective bargaining
25 agreement.
26 (2) Severance benefits payable by the employer.
27 (3) Payments under a self-insurance, wage continuation,
28 annuity, disability or life insurance or similar plan funded by
29 the employer.
30 (4) Injury or death benefits payable by the employer under a
19930S0001B0001 - 32 -
1 contract for hire or collective bargaining agreement.
2 (d) In the case of a professional athlete, the term "wages
3 of the injured employe" as used in section 306(b) for the
4 purpose of computing compensation for partial disability shall
5 mean two times the Statewide average weekly wage.
6 Section 11. Section 314 of the act, amended February 28,
7 1956 (1955 P.L.1120, No.356), is amended to read:
8 Section 314. (a) At any time after an injury the employe,
9 if so requested by his employer, must submit himself for
10 examination, at some reasonable time and place, to a physician
11 or physicians legally authorized to practice under the laws of
12 such place, who shall be selected and paid by the employer. If
13 the employe shall refuse upon the request of the employer, to
14 submit to the examination by the physician or physicians
15 selected by the employer, [the board] a referee assigned by the
16 department may, upon petition of the employer, order the employe
17 to submit to an examination at a time and place set by [it] the
18 referee, and by the physician or physicians selected and paid by
19 the employer, or by a physician or physicians designated by [it]
20 the referee and paid by the employer. The [board] referee may at
21 any time after such first examination, upon petition of the
22 employer, order the employe to submit himself to such further
23 examinations as [it] the referee shall deem reasonable and
24 necessary, at such times and places and by such physicians as
25 [it] the referee may designate; and in such case, the employer
26 shall pay the fees and expenses of the examining physician or
27 physicians, and the reasonable traveling expenses and loss of
28 wages incurred by the employe in order to submit himself to such
29 examination. The refusal or neglect, without reasonable cause or
30 excuse, of the employe to submit to such examination ordered by
19930S0001B0001 - 33 -
1 the [board] referee, either before or after an agreement or
2 award, shall deprive him of the right to compensation, under
3 this article, during the continuance of such refusal or neglect,
4 and the period of such neglect or refusal shall be deducted from
5 the period during which compensation would otherwise be payable.
6 (b) The employe shall be entitled to have a physician or
7 physicians of his own selection, to be paid by him, participate
8 in any examination requested by his employer or ordered by the
9 [board] referee.
10 Section 12. Section 321 of the act, added March 29, 1972
11 (P.L.159, No.61), is amended to read:
12 Section 321. [Nothing contained in this act shall apply to
13 or in any way affect any person who at the time of injury is
14 engaged in domestic service: Provided, however, That in cases
15 where the employer of any such person shall have, prior to such
16 injury, by application to the Workmen's Compensation Board,
17 approved by the board, elected to come within the provisions of
18 the act, such exemption shall not apply.] Nothing contained in
19 this act shall apply to or in any way affect:
20 (1) Any person who at the time of injury is engaged in
21 domestic service: Provided, however, That in cases where the
22 employer of any such person shall have, prior to such injury, by
23 application to the department, and approved by the department,
24 elected to come within the provisions of the act, such exemption
25 shall not apply.
26 (2) Any person who is a licensed real estate salesperson or
27 an associate real estate broker, affiliated with a licensed real
28 estate broker, under a written agreement, remunerated on a
29 commission only basis and who qualifies as an independent
30 contractor for Federal tax purposes.
19930S0001B0001 - 34 -
1 Section 13. The act is amended by adding sections to read:
2 Section 322. It shall be unlawful for any employe to receive
3 compensation under this act and at the same time receive
4 workers' compensation under the laws of the Federal Government
5 or any other state for the same injury. Further, it shall be
6 unlawful for an employe to receive compensation under this act
7 simultaneously from two or more employers or insurers during the
8 same period of disability.
9 Section 323. (a) No construction design professional who is
10 retained to perform professional services on a construction
11 project, or any employe of a construction design professional
12 who is assisting or representing the construction design
13 professional in the performance of professional services on the
14 site of the construction project, shall be liable for any injury
15 or death of a worker not an employe of such design professional
16 on the construction project for which compensation is payable
17 under the provisions of this act.
18 (b) The immunity from liability provided by the above
19 subsection shall not apply if:
20 (1) the injury or death is caused by the negligent
21 preparation of design plans or specifications by the
22 construction design professional;
23 (2) the construction design professional assumes
24 responsibility for safety practices at the construction project
25 by written contract; or
26 (3) the construction design professional actually exercises
27 control over the portion of the construction site where the
28 worker is injured or killed.
29 (c) Notwithstanding any provisions to the contrary, this
30 section shall apply to claims for compensation based on injuries
19930S0001B0001 - 35 -
1 or death which incurred after the effective date of this act.
2 Section 14. Sections 401 first paragraph and 402 of the act,
3 amended February 8, 1972 (P.L.25, No.12), are amended to read:
4 Section 401. The term "referee," when used in this [article]
5 act, shall mean [Workmen's Compensation Referee] a Workers'
6 Compensation Judge of the Department of Labor and Industry,
7 appointed by and subject to the general supervision of the
8 Secretary of Labor and Industry for the purpose of conducting
9 departmental hearings under this act. The secretary may
10 establish different classes of [referees.] these judges. Any
11 reference in any statute to a workmen's compensation referee
12 shall be deemed to be a reference to a workers' compensation
13 judge.
14 * * *
15 Section 402. All proceedings before any referee, except
16 those for which an informal conference has been applied for as
17 provided by section 402.1 of this act, shall be instituted by
18 claim petition or other petition as the case may be or on the
19 department's own motion, and all appeals to the board, shall be
20 instituted by appeal addressed to the board. All claim
21 petitions, requests for informal conferences and other petitions
22 and appeals shall be in writing and in the form prescribed by
23 the department.
24 Section 15. The act is amended by adding a section to read:
25 Section 402.1. (a) In any action for which a petition is
26 required to be filed under this act or in any claim for
27 compensation under sections 406.1, 410 or 411 of this act or
28 where the right to compensation or medical services, or the
29 amount thereof, is in dispute, any party may file a notice of
30 request with the department for an informal conference prior to
19930S0001B0001 - 36 -
1 filing any petition pursuant to this act. The department shall
2 assign the matter to a referee for an informal conference and
3 shall stay any proceedings pending receipt of a petition.
4 (b) At any informal conference held pursuant to this
5 section:
6 (i) the referee may accept the statements of both parties,
7 together with any medical reports, witnesses' statements or
8 other documents which the parties would like to present;
9 (ii) all communications, verbal or written, from the parties
10 to the referee and any information and evidence presented to the
11 referee during the proceedings are confidential; and
12 (iii) each party may be represented, but the employer may
13 only be represented by an attorney at the informal conference if
14 the employe is also represented by an attorney at the informal
15 conference.
16 (c) The referee shall attempt to resolve the issues in
17 dispute between the parties, but in no event shall any
18 recommendations or findings made by the referee be binding upon
19 the parties unless accepted in writing by both parties. If the
20 parties come to agreement, the referee shall reduce such
21 agreement to writing, which shall be signed by all parties and
22 the referee, and such summary report shall be filed with the
23 department.
24 (d) In the event that the parties cannot resolve their
25 dispute, either party may file a petition with the department
26 requesting a hearing on the matter. Such petition will be
27 assigned to a referee for a hearing pursuant to section 414 of
28 this act.
29 (e) The results of the informal conference, as well as the
30 testimony, witnesses and evidence presented at the informal
19930S0001B0001 - 37 -
1 conference, shall not be admissible at any subsequent proceeding
2 on the claim.
3 (f) No referee who participates in an informal conference
4 conducted pursuant to this section shall be compelled or
5 permitted to testify about any matter discussed or revealed
6 during such proceedings in any other proceeding pursuant to this
7 act, except matters involving fraud.
8 Section 16. Sections 406.1 and 420 of the act, amended or
9 added February 8, 1972 (P.L.25, No.12), are amended to read:
10 Section 406.1. (a) The employer and insurer shall promptly
11 investigate each injury reported or known to the employer and
12 shall proceed promptly to commence the payment of compensation
13 due either pursuant to an agreement upon the compensation
14 payable or a notice of compensation payable as provided in
15 section 407 or pursuant to a notice of temporary compensation
16 payable as set forth in clause (d) of this section, on forms
17 prescribed by the department and furnished by the insurer. The
18 first installment of compensation shall be paid not later than
19 the twenty-first day after the employer has notice or knowledge
20 of the employe's disability. Interest shall accrue on all due
21 and unpaid compensation at the rate of ten per centum per annum.
22 Any payment of compensation prior or subsequent to an agreement
23 or notice of compensation payable or a temporary notice of
24 compensation payable or greater in amount than provided therein
25 shall, to the extent of the amount of such payment or payments,
26 discharge the liability of the employer with respect to such
27 case.
28 (b) Payments of compensation pursuant to an agreement or
29 notice of compensation payable may be suspended, terminated,
30 reduced or otherwise modified by petition and subject to right
19930S0001B0001 - 38 -
1 of hearing as provided in section 413.
2 (c) If the insurer controverts the right to compensation it
3 shall promptly notify the employe or his dependent, on a form
4 prescribed by the department, stating the grounds upon which the
5 right to compensation is controverted and shall forthwith
6 furnish a copy or copies to the department.
7 (d) (1) In any instance where an employer is uncertain
8 whether a claim is compensable under this act or is uncertain of
9 the extent of its liability under this act, the employer may
10 initiate compensation payments without prejudice and without
11 admitting liability pursuant to a notice of temporary
12 compensation payable as prescribed by the department.
13 (2) The notice of temporary compensation payable shall be
14 sent to the claimant and a copy filed with the department and
15 shall notify the claimant that the payment of temporary
16 compensation is not an admission of liability of the employer
17 with respect to the injury subject to the notice of temporary
18 compensation payable. The department shall, upon receipt of a
19 notice of temporary compensation payable, send a notice to the
20 claimant informing the claimant that:
21 (i) the payment of temporary compensation and the claimant's
22 acceptance of that compensation does not mean the claimant's
23 employer is accepting responsibility for the injury or that a
24 compensation claim has been filed or commenced;
25 (ii) the payment of temporary compensation entitles the
26 claimant to a maximum of six weeks of compensation; and
27 (iii) the claimant must file a claim petition in a timely
28 fashion under section 315 of this act, enter into an agreement
29 with his employer or receive a notice of compensation payable
30 from his employer to ensure continuation of compensation
19930S0001B0001 - 39 -
1 payments.
2 (3) Payments of temporary compensation shall commence, and
3 the notice of temporary compensation payable shall be sent
4 within the time set forth in clause (a) of this section.
5 (4) Payments of temporary compensation may continue until
6 such time as the employer decides to controvert the claim or six
7 weeks from the date the employer has notice or knowledge of the
8 employe's disability, whichever shall first occur.
9 (5) (i) If the employer ceases making payments pursuant to
10 a notice of temporary compensation payable, a notice in the form
11 prescribed by the department shall be sent to the claimant and a
12 copy filed with the department, but in no event shall this
13 notice be sent or filed later than five days after the last
14 payment.
15 (ii) This notice shall advise the claimant that if the
16 employer is ceasing payment of temporary compensation that the
17 payment of temporary compensation was not an admission of
18 liability of the employer with respect to the injury subject to
19 the notice of temporary compensation payable, and the employe
20 must file a claim to establish the liability of the employer.
21 (iii) If the employer ceases making payments pursuant to a
22 notice of temporary compensation payable, after complying with
23 this clause, the employer and employe retain all the rights,
24 defenses and obligations with regard to the claim subject to the
25 notice of temporary compensation payable, and the payment of
26 temporary compensation may not be used to support a claim for
27 compensation.
28 (iv) Payment of temporary compensation shall be considered
29 compensation for purposes of tolling the statute of limitations
30 under section 315 of this act.
19930S0001B0001 - 40 -
1 (6) If the employer does not file a notice under paragraph
2 (5) of clause (d) of this section within the six-week period
3 during which temporary compensation is paid or payable, the
4 employer shall be deemed to have admitted liability and the
5 notice of temporary compensation payable shall be converted to a
6 notice of compensation payable.
7 Section 420. (a) The board, the department or a referee, if
8 it or he deem it necessary, may, of its or his own motion,
9 either before, during, or after any hearing, make or cause to be
10 made an investigation of the facts set forth in the petition or
11 answer or facts pertinent in any injury under this act. The
12 board, department or referee may appoint one or more impartial
13 physicians or surgeons to examine the injuries of the plaintiff
14 and report thereon, or may employ the services of such other
15 experts as shall appear necessary to ascertain the facts. The
16 referee when necessary or appropriate or upon request of a party
17 in order to rule on petitions filed under clause (f.1) of
18 section 306 of this act, or under other provisions of this act,
19 may ask for an opinion from peer review about the necessity or
20 frequency of treatment under clause (f.1) of section 306 of this
21 act to peer review. The peer review report or the peer report of
22 any physician, surgeon, or expert appointed by the department or
23 by a referee, including the report of a peer review
24 organization, shall be filed with the board or referee, as the
25 case may be, and shall be a part of the record and open to
26 inspection as such.
27 (b) The board or referee, as the case may be, shall fix the
28 compensation of such physicians, surgeons, and experts, and
29 other peer review organizations which, when so fixed, shall be
30 paid out of the sum appropriated to the Department of Labor and
19930S0001B0001 - 41 -
1 Industry for such purpose.
2 Section 17. Section 422 of the act, amended February 8, 1972
3 (P.L.25, No.12) and March 29, 1972 (P.L.159, No.61), is amended
4 to read:
5 Section 422. (a) Neither the board nor any of its members
6 nor any referee shall be bound by the common law or statutory
7 rules of evidence in conducting any hearing or investigation,
8 but all findings of fact shall be based upon sufficient,
9 competent and substantial evidence to justify same. The
10 justification for each disputed finding shall be reasonably
11 explained, and the explanation shall include a cogent written
12 statement of the reasons for acceptance and rejection of
13 evidence.
14 (b) If any party or witness resides outside of the
15 Commonwealth, or through illness or other cause is unable to
16 testify before the board or a referee, his or her testimony or
17 deposition may be taken, within or without this Commonwealth, in
18 such manner and in such form as the department may, by special
19 order or general rule, prescribe. The records kept by a hospital
20 of the medical or surgical treatment given to an employe in such
21 hospital shall be admissible as evidence of the medical and
22 surgical matters stated therein.
23 (c) Where any claim for compensation is at issue before a
24 referee [involves twenty-five weeks or less of disability],
25 either the employe or the employer may submit a certificate by
26 any qualified physician as to the history, examination,
27 treatment, diagnosis and cause of the condition, and sworn
28 reports by other witnesses as to any other facts and such
29 statements shall be admissible as evidence of medical and
30 surgical or other matters therein stated and findings of fact
19930S0001B0001 - 42 -
1 may be based upon such certificates or such reports[.]:
2 Provided, That, any party shall be allowed the opportunity to
3 take a deposition for purposes of cross-examination, upon the
4 tendering to the party offering said report reasonable expenses,
5 including the fee for such deposition: And further provided,
6 That the use of a deposition shall not preclude introduction of
7 a medical report. Should a dispute arise as to the
8 reasonableness of the amounts demanded or tendered, the referee
9 hearing the petition shall issue an order relating to the
10 assessment of costs.
11 (d) Where an employer shall have furnished surgical and
12 medical services or hospitalization in accordance with the
13 provisions of [subsection (f) of] section 306(f.1), or where the
14 employe has himself procured them, the employer or employe
15 shall, upon request, in any pending proceeding, be furnished
16 with, or have made available, a true and complete record of the
17 medical and surgical services and hospital treatment, including
18 X rays, laboratory tests, and all other medical and surgical
19 data in the possession or under the control of the party
20 requested to furnish or make available such data.
21 (e) The department may adopt rules and regulations governing
22 the conduct of all hearings held pursuant to any provisions of
23 this act, and hearings shall be conducted in accordance
24 therewith, and in such manner as best to ascertain the
25 substantial rights of the parties.
26 Section 18. Section 423 of the act, amended March 29, 1972
27 (P.L.159, No.61), is amended to read:
28 Section 423. (a) Any party in interest may, within twenty
29 days after notice of a referee's [award or disallowance of
30 compensation] adjudication shall have been served upon him, take
19930S0001B0001 - 43 -
1 an appeal to the board on the ground: (1) that the [award or
2 disallowance of compensation] adjudication is not in conformity
3 with the terms of this act, or that the referee committed any
4 other error of law; (2) that the findings of fact and [award or
5 disallowance of compensation] adjudication was unwarranted by
6 sufficient, competent and substantial evidence or was procured
7 by fraud, coercion, or other improper conduct of any party in
8 interest. The board may, upon cause shown, extend the time
9 provided in this article for taking such appeal or for the
10 filing of an answer or other pleading.
11 (b) In any such appeal the board may disregard the findings
12 of fact of the referee if not supported by sufficient, competent
13 and substantial evidence and if it deem proper may hear other
14 evidence, and may substitute for the findings of the referee
15 such findings of fact as the sufficient, competent and
16 substantial evidence taken before the referee and the board, as
17 hereinbefore provided, may, in the judgment of the board,
18 require, and may make such [disallowance or award of
19 compensation or other order] adjudication as the facts so
20 [founded] found by it may require.
21 Section 19. Sections 438 and 440 of the act, added February
22 8, 1972 (P.L.25, No.12), are amended to read:
23 Section 438. (a) An employer shall report all injuries
24 received by employes in the course of or resulting from their
25 employment immediately to the employer's insurer. If the
26 employer is self-insured such injuries shall be reported to the
27 person responsible for management of the employer's compensation
28 program.
29 (b) An employer shall report such injuries to the Department
30 of Labor and Industry by filing directly with the department on
19930S0001B0001 - 44 -
1 the form it prescribes a report of injury within forty-eight
2 hours for every injury resulting in death, and mailing within
3 [three] ten days after the date of injury for all other injuries
4 except those resulting in disability continuing less than the
5 day, shift, or turn in which the injury was received. A copy of
6 this report to the department shall be mailed to the employer's
7 insurer forthwith.
8 (c) Reports of injuries filed with the department under this
9 section shall not be evidence against the employer or the
10 employer's insurer in any proceeding either under this act or
11 otherwise. Such reports may be made available by the department
12 to other State or Federal agencies for study or informational
13 purposes.
14 Section 440. (a) In any contested case where the insurer
15 has contested liability in whole or in part, including contested
16 cases involving petitions to terminate, reinstate, increase,
17 reduce or otherwise modify compensation awards, agreements or
18 other payment arrangements or to set aside final receipts, the
19 employe or his dependent, as the case may be, in whose favor the
20 matter at issue has been finally determined shall be awarded, in
21 addition to the award for compensation, a reasonable sum for
22 costs incurred for attorney's fee, witnesses, necessary medical
23 examination, and the value of unreimbursed lost time to attend
24 the proceedings: Provided, That cost for attorney fees may be
25 excluded when a reasonable basis for the contest has been
26 established[: And provided further, That if].
27 (b) If counsel fees are awarded and assessed against the
28 insurer or employer, then the referee must make a finding as to
29 the amount and the length of time for which such counsel fee is
30 payable, based upon the complexity of the factual and legal
19930S0001B0001 - 45 -
1 issues involved, the skill required, the duration of the
2 proceedings and the time and effort required and actually
3 expended: If the insurer has paid or tendered payment of
4 compensation and the controversy relates to the amount of
5 compensation due, costs for attorney's fee shall be based only
6 on the difference between the final award of compensation and
7 the compensation paid or tendered by the insurer.
8 [In contested cases involving petitions to terminate,
9 reinstate, increase, reduce or otherwise modify compensation
10 awards, agreements or other payment arrangements or to set aside
11 final receipts, where the contested issue, in whole or part, is
12 resolved in favor of the claimant, the claimant shall be
13 entitled to an award of reasonable costs as hereinabove set
14 forth.]
15 Section 20. Section 447 of the act, added May 20, 1976
16 (P.L.135, No.61), is amended to read:
17 Section 447. (a) [There is hereby created an advisory
18 council, to be known as the Pennsylvania Workmen's Compensation
19 Advisory Council, and to be composed of men and women with an
20 equal number of employer, employe, and public representatives
21 who may fairly be representative because of their vocation,
22 employment, or affiliations. The council shall consist of a
23 maximum of seven members including the Secretary of the
24 Department of Labor and Industry, who shall be an ex officio
25 member. The members of such council shall be appointed by the
26 secretary within thirty days of the effective date of this
27 amendatory act and shall serve a term of two years and until
28 their successors have been appointed and qualified. The members
29 of the council shall select one of their number to be chairman.
30 Such council shall consider and advise the department upon all
19930S0001B0001 - 46 -
1 matters related to the administration of The Pennsylvania
2 Workmen's Compensation Act and The Pennsylvania Occupational
3 Disease Act. Such council may recommend to the secretary upon
4 its own initiative such changes in the provisions of these acts
5 and the administration thereof as it deems necessary and shall
6 make periodic reports to the secretary regarding the performance
7 of its duties and functions.] There is hereby created an
8 advisory council, to be known as the Pennsylvania Workers'
9 Compensation Advisory Council. The council shall be comprised of
10 no fewer than seven members with at least two members being
11 employe representatives, two members being employer
12 representatives and two members representing insurers. The
13 Secretary of Labor and Industry shall be an ex officio member.
14 Members shall be appointed by the secretary to serve terms of
15 two years and until their successors have been appointed. The
16 members shall elect one of their number to be chairman. The
17 council shall report to the Governor, the General Assembly and
18 the secretary at least on an annual basis on matters relevant to
19 the administration of this act, and may recommend within the
20 report such changes in the provisions of these acts and the
21 administration thereof as the council sees fit.
22 (b) In the performance of its duties, the council may hold
23 hearings, receive testimony, solicit and receive comments and
24 information from interested parties and the general public and
25 shall have full access to information relating to the purpose of
26 these acts. The council shall not have access to confidential
27 medical information pertaining to individual claimants, but may
28 develop statistical studies and surveys concerning the incidence
29 of occupational injuries and diseases generally.
30 (c) [The members of the advisory council shall serve without
19930S0001B0001 - 47 -
1 compensation, but shall be entitled to be reimbursed for all
2 necessary expenses incurred in the discharge of their duties.
3 The secretary shall appoint an executive secretary and such
4 other personnel as he shall deem necessary to aid the council in
5 the performance of its functions. The compensation of such
6 employes and the amounts allowed them and to members of the
7 council for traveling and other council expenses shall be deemed
8 part of the expenses incurred in connection with the
9 administration of The Pennsylvania Workmen's Compensation and
10 The Pennsylvania Occupational Disease Acts.] The members of the
11 advisory council shall serve without compensation but shall be
12 entitled to be reimbursed for all necessary expenses incurred in
13 the discharge of their duties. The secretary shall provide
14 facility, clerical and professional support as needed by the
15 council to perform their duties. The compensation of such staff
16 and the amounts allowed them and to members of the council for
17 travel and expenses shall be deemed part of the expenses
18 incurred in connection with the administration of this act.
19 Section 21. The act is amended by adding a section to read:
20 Section 448. (a) An insurer issuing a workers' compensation
21 and employers' liability insurance policy shall offer, upon
22 request, as part of the policy or by endorsement, deductibles
23 optional to the policyholder for benefits payable under the
24 policy, subject to approval by the Insurance Commissioner and
25 subject to underwriting by the insurer consistent with the
26 principles in clause (b). The commissioner shall promulgate at
27 least three plans with varying deductible options, the least
28 amount of which shall be no less than one thousand dollars
29 ($1,000), nor more than two thousand five hundred dollars
30 ($2,500). The commissioner's authority to promulgate any such
19930S0001B0001 - 48 -
1 plans shall not preclude an insurer from negotiating a
2 deductible in excess of the largest deductible plan herein
3 authorized.
4 (b) The following standards shall govern the commissioner's
5 promulgation, and an insurer's offer, of deductible plans:
6 (1) Claimants' rights are properly protected and claimants'
7 benefits are paid without regard to any such deductible.
8 (2) Appropriate premium reductions reflect the type and
9 level of any deductible approved by the commissioner and
10 selected by the policyholder.
11 (3) Premium reductions for deductibles are determined before
12 application of any experience modification, premium surcharge or
13 premium discount.
14 (4) Recognition is given to policyholder characteristics,
15 including size, financial capabilities, nature of activities and
16 number of employes.
17 (5) If the policyholder selects a deductible, the
18 policyholder is liable to the insurer for the deductible amount
19 in regard to benefits paid for compensable claims.
20 (6) The insurer pays all of the deductible amount,
21 applicable to a compensable claim, to the person or provider
22 entitled to benefits and then seeks reimbursement from the
23 policyholder for the applicable deductible amount.
24 (7) Failure to reimburse deductible amounts by the
25 policyholder to the insurer is treated under the policy in the
26 same manner as non-payment of premiums.
27 Section 22. The act is amended by adding articles to read:
28 ARTICLE VII.
29 LOSS COSTS RATING
30 Section 701. It is the intent of the General Assembly:
19930S0001B0001 - 49 -
1 (1) To protect policyholders and the public against the
2 adverse effect of excessive, inadequate or unfairly
3 discriminatory rates.
4 (2) To encourage, as the most effective way to produce rates
5 that conform to the standards of paragraph (1), independent
6 action by and reasonable price competition among insurers.
7 (3) To provide formal regulatory controls for use if price
8 competition fails.
9 (4) To authorize cooperative action among insurers in the
10 ratemaking process, and to regulate such cooperation in order to
11 prevent practices that tend to bring about monopoly or to lessen
12 or destroy competition.
13 (5) To provide rates that are responsive to competitive
14 market conditions and to improve the availability of insurance
15 in this Commonwealth.
16 Section 702. This article applies to the classification of
17 risks, underwriting rules, expenses, losses and profits for
18 insurance of employers and employes under this act, for
19 insurance under the Occupational Disease Act and for insurance
20 with respect to the Commonwealth as to liability under the
21 Longshore and Harbor Workers' Compensation Act (44 Stat. 1424,
22 33 U.S.C. § 901 et seq.), written as part of a workers'
23 compensation and employers' liability policy and the Federal
24 Coal Mine Health and Safety Act of 1969 (Public Law 91-173, 30
25 U.S.C. § 801 et seq.).
26 Section 703. As used in this article:
27 "Classification system" or "classification" means the plan,
28 system or arrangement for recognizing differences in exposure to
29 hazards among industries, occupations or operations of insurance
30 policyholders.
19930S0001B0001 - 50 -
1 "Competitive market" means a market, except when found to be
2 non-competitive under the standards of section 710 of this
3 article.
4 "Department" means the Insurance Department of the
5 Commonwealth.
6 "Experience rating" means a rating procedure utilizing past
7 insurance experience of the individual policyholder to forecast
8 future losses by measuring the policyholder's loss experience
9 against the loss experience of policyholders in the same
10 classification to produce a prospective premium credit, debit or
11 unity modification.
12 "Market" means the interaction in this State, between buyers
13 and sellers of workers' compensation and employers' liability
14 insurance within this Commonwealth pursuant to the provisions of
15 this article.
16 "Provision for claim payment" means historical aggregate
17 losses projected through development to their ultimate value and
18 through trending to a future point in time, but excluding all
19 loss adjustment or claim management expenses, other operating
20 expenses, assessments, taxes, and profit or contingency
21 allowances.
22 "Rate" or "rates" means rate of premium, policy and
23 membership fee, or any other charge made by an insurer for or in
24 connection with a contract or policy of insurance of the kind to
25 which this article applies.
26 "Rating organization" means one or more organizations situate
27 within this Commonwealth, subject to supervision and to
28 examination by the commissioner and approved by the commissioner
29 as adequately equipped to perform the functions specified in
30 this article on an equitable and impartial basis.
19930S0001B0001 - 51 -
1 "Statistical plan" means the plan, system or arrangement used
2 in collecting data.
3 "Supplementary rate information" means any manual or plan of
4 rates, statistical plan, classification system, rating schedule,
5 minimum premium policy fee, rating rule, rate-related
6 underwriting rule, and any other information, not otherwise
7 inconsistent with the purposes of this article, prescribed by
8 rule of the commissioner.
9 "Supporting information" means the experience and judgment of
10 the filer and the experience or data of other insurers or
11 organizations relied on by the filer, the interpretation of any
12 statistical data relied on by the filer, description or methods
13 used in making the rates, and any other similar information
14 required to be filed by the commissioner.
15 Section 704. (a) The following standards shall apply to the
16 making and use of rates under this article:
17 (1) Rates may not be:
18 (i) excessive or inadequate, as defined under this article;
19 or
20 (ii) unfairly discriminatory.
21 (2) Rates in a competitive market are not excessive. Rates
22 in a market as to which the commissioner has issued a ruling
23 under section 710, that a reasonable degree of competition does
24 not exist, are excessive if they are likely to produce a long
25 run profit that is unreasonably high in relation to the risk
26 undertaken and the services to be rendered.
27 (3) A rate may not be held to be inadequate unless:
28 (i) it is unreasonably low for the insurance provided and
29 continued use of it would endanger solvency of the insurer; or
30 (ii) the rate is unreasonably low for the insurance provided
19930S0001B0001 - 52 -
1 and the use of the rate by the insurer has had or, if continued,
2 will have the effect of destroying competition or of creating
3 monopoly.
4 (b) In determining whether rates comply with standards under
5 clause (a), due consideration shall be given to:
6 (1) Past and prospective loss experience within and outside
7 this Commonwealth in accordance with sound actuarial principles.
8 (2) Catastrophe hazards.
9 (3) A reasonable margin for underwriting profit and
10 contingencies.
11 (4) Dividends, savings or unabsorbed premium deposits
12 allowed or returned by insurers to their policyholders or
13 members or subscribers.
14 (5) Past and prospective expenses, both countrywide and
15 those specially applicable to this Commonwealth.
16 (6) Investment income earned or realized by insurers both
17 from their unearned premium and from their loss reserve funds.
18 (7) All relevant factors within and outside this
19 Commonwealth in accordance with sound actuarial principles.
20 (c) As to the kinds of insurance to which this article
21 applies, the systems of expense provisions included in the rates
22 for use by an insurer or group of insurers may differ from those
23 of any other insurers or groups of insurers to reflect the
24 requirements of the operating methods of the insurer or group of
25 insurers.
26 Section 705. (a) Each authorized insurer shall file with
27 the commissioner all rates and supplementary rate information
28 and all changes and amendments thereof made by it for use in
29 this Commonwealth by the date they become effective. Each rating
30 organization shall file with the commissioner a filing for the
19930S0001B0001 - 53 -
1 provision for claim payment and such other filings as are
2 authorized pursuant to this article. The Secretary of Labor and
3 Industry shall be a member of the board of directors or
4 governing body of any rating organization.
5 (b) An insurer may not make or issue a contract or policy of
6 insurance of the kind to which this article applies, except in
7 accordance with the filings which are in effect for the insurer
8 as provided in this article.
9 Section 706. Each filing and any supporting information
10 filed under this article shall, as soon as filed, be open to
11 public inspection. Copies may be obtained by any person on
12 request and upon payment of a reasonable charge.
13 Section 707. (a) Each workers' compensation insurer shall
14 be a member of a rating organization. Each workers' compensation
15 insurer shall adhere to the policy forms filed by the rating
16 organization.
17 (b) (1) Every workers' compensation insurer shall adhere to
18 the uniform classification system and uniform experience rating
19 plan filed with the commissioner by the rating organization to
20 which it belongs: Provided, That the system and plan have been
21 approved by the commissioner as part of the approval of the
22 rating organization's most recent filing for the provision for
23 claim payment. Together with its first filing for the provision
24 for claim payment made on or after January 1, 1994, each rating
25 organization shall submit a study justifying its classification
26 system. The commissioner shall undertake such investigation as
27 he deems necessary to determine the validity of the study and
28 the reasonableness of the classification system.
29 (2) (i) Subject to the conditions of this paragraph, an
30 insurer may develop subclassifications of the uniform
19930S0001B0001 - 54 -
1 classification system upon which a rate may be made.
2 (ii) Any subclassification developed under subparagraph (i)
3 shall be filed with the rating organization and the commissioner
4 thirty days prior to its use.
5 (iii) If the insurer fails to demonstrate that the data
6 produced under a subclassification can be reported in a manner
7 consistent with the rating organization's uniform statistical
8 plan and classification system, the commissioner shall
9 disapprove the subclassification.
10 (c) Every workers' compensation insurer shall record and
11 report its workers' compensation experience to a rating
12 organization as set forth in the rating organization's uniform
13 statistical plan approved by the commissioner.
14 (d) (1) Subject to the approval of the commissioner, a
15 rating organization shall develop and file rules reasonably
16 related to the recording and reporting of data pursuant to the
17 uniform statistical plan, uniform experience rating plan, and
18 the uniform classification system.
19 (2) Every workers' compensation insurer shall adhere to the
20 approved rules and experience rating plan in writing and
21 reporting its business.
22 (3) An insurer shall not agree with any other insurer or
23 with a rating organization to adhere to rules which are not
24 reasonably related to the recording and reporting of data
25 pursuant to the uniform classification system or the uniform
26 statistical plan.
27 (e) The experience rating plan shall have as a basis:
28 (1) reasonable eligibility standards;
29 (2) adequate incentives for loss prevention;
30 (3) sufficient premium differential so as to encourage
19930S0001B0001 - 55 -
1 safety; and
2 (4) predictive accuracy.
3 (f) (1) The uniform experience rating plan shall be the
4 exclusive means of providing prospective premium adjustment
5 based upon measurement of the loss producing characteristics of
6 an individual insured.
7 (2) An insurer may file a rating plan that provides for
8 retrospective premium adjustments based upon an insured's past
9 experience.
10 Section 708. (a) The commissioner may investigate and
11 determine whether or not rates in this Commonwealth under this
12 article are excessive, inadequate or unfairly discriminatory.
13 (b) In any such investigation and determination the
14 commissioner shall follow the procedures specified in sections
15 709 and 710.
16 Section 709. (a) (1) Except as provided in clause (d), the
17 commissioner shall review each workers' compensation insurance
18 filing made by a rating organization or an insurer as soon as
19 reasonably possible after the filing has been made in order to
20 determine whether it meets the requirements of this article. No
21 filing for the provision for claim payment shall become
22 effective prior to its approval by the commissioner unless the
23 commissioner fails to approve or disapprove the filing within
24 sixty days of the date of filing.
25 (2) Notwithstanding the provisions of paragraph (1), any
26 insurer filing for loss adjustment or claim management expenses,
27 other operating expenses, assessments, taxes and profits or
28 contingency allowances filed with the commissioner with respect
29 to the period after January 1, 1994, shall not be subject to the
30 commissioner's approval unless such insurer's rates are found to
19930S0001B0001 - 56 -
1 be in violation of sections 704 and 711.
2 (b) (1) The effective date of each filing under this
3 article shall be the date specified in the filing. The effective
4 date of the filing may not be earlier than thirty days after the
5 date the filing is received by the commissioner or the date of
6 receipt of the information furnished in support of the filing if
7 such supporting information is required by the commissioner.
8 (2) The period during which the filing may not become
9 effective may be extended by the commissioner for an additional
10 period not to exceed thirty days if the commissioner gives
11 written notice within the period described in paragraph (1) to
12 the insurer or rating organization which made the filing that
13 the commissioner needs additional time for the consideration of
14 the filing. No filing shall be made effective for any period
15 prior to the later of the proposed effective date or the
16 expiration of an extension by the commissioner pursuant to this
17 clause.
18 (3) Upon written application by an insurer or rating
19 organization, the commissioner may authorize a filing which the
20 commissioner has reviewed to become effective before the
21 expiration of the period described in paragraph (1).
22 (4) A filing shall be deemed to meet the requirements of
23 this article unless disapproved by the commissioner within the
24 period described in paragraph (1) or any extension thereof.
25 (c) (1) Subject to approval or disapproval under clause
26 (b), a rating organization shall file with the commissioner:
27 (i) On an annual basis, workers' compensation rates and
28 rating plans that are limited to provision for claim payment.
29 (ii) Each workers' compensation policy form to be used by
30 its members.
19930S0001B0001 - 57 -
1 (iii) The uniform classification system.
2 (iv) The uniform experience rating plan and related rules.
3 (v) Any other information that the commissioner requests
4 relevant to the foregoing and is otherwise entitled to receive
5 under this article.
6 (2) Notwithstanding any other provisions of this article,
7 the commissioner may approve or disapprove any filing by a
8 rating organization without determining whether a reasonable
9 degree of competition exists within the market.
10 (d) If each rate in a schedule of workers' compensation
11 rates for specific classifications of risks filed by an insurer
12 is not lower than the provision for claim payment contained in
13 the schedule of workers' compensation rates for those
14 classifications filed by a rating organization under clause (c)
15 and approved pursuant to the provisions of this article, then
16 the schedule of rates filed by the insurer shall not be subject
17 to clause (b) but shall become effective for the purposes of
18 section 705.
19 (e) Notwithstanding clause (d), the commissioner may
20 investigate and evaluate all workers' compensation filings to
21 determine whether the filings meet the requirements of this
22 article.
23 (f) Notwithstanding the provisions of section 705, the
24 commissioner may require any insurer or rating organization to
25 comply with the requirements of clause (b) if the commissioner
26 has found pursuant to section 710, that a reasonable degree of
27 competition does not exist within the workers' compensation
28 insurance market.
29 Section 710. (a) If the commissioner finds after a hearing
30 that a rate is not in compliance with section 704 or that a rate
19930S0001B0001 - 58 -
1 had been set in violation of section 713, the commissioner shall
2 order that its use be discontinued for any policy issued or
3 renewed after a date specified in the order and the order may
4 prospectively provide for premium adjustment of any policy then
5 in force. Except as provided in clause (b), the order shall be
6 issued within thirty days after the close of the hearing or
7 within a reasonable time extension as fixed by the commissioner.
8 The order shall expire one year after its effective date unless
9 rescinded earlier by the commissioner.
10 (b) (1) Pending a hearing, the commissioner may order the
11 suspension prospectively of a rate filed by an insurer and
12 reimpose the last previous rate in effect if the commissioner
13 has reasonable cause to believe that:
14 (i) an insurer is in violation of section 704;
15 (ii) unless the order of suspension is issued, certain
16 insureds will suffer irreparable harm;
17 (iii) the hardship insureds will suffer absent the order if
18 suspension outweighs any hardship the insurer would suffer if
19 the order of suspension were to issue; and
20 (iv) the order of suspension will cause no substantial harm
21 to the public.
22 (2) In the event the commissioner suspends a rate under this
23 clause, the commissioner must, unless waived by the insurer,
24 hold a hearing within fifteen working days after issuing the
25 order suspending the rate. In addition, the commissioner must
26 make a determination and issue the order as to whether or not
27 the rate should be disapproved within fifteen working days after
28 the close of the hearing.
29 (c) (1) At any hearing to determine compliance with section
30 704, pursuant to clause (a), the commissioner shall first
19930S0001B0001 - 59 -
1 determine whether a reasonable degree of competition exists
2 within the market, and shall give a ruling to that effect. All
3 insurers operating within such market shall have the burden of
4 establishing that a reasonable degree of competition exists
5 within that market. The commissioner shall consider all relevant
6 factors in determining the competitiveness of the market,
7 including:
8 (i) the number of insurers actively engaged in providing
9 coverage;
10 (ii) market shares;
11 (iii) changes in market shares; and
12 (iv) ease of entry.
13 (2) If the commissioner determines that a reasonable degree
14 of competition does not exist in the market, any insurer
15 designated by the commissioner shall have the burden of
16 justifying its rate in such market.
17 (3) All determinations made by the commissioner shall be on
18 the basis of findings of fact and conclusions of law.
19 (4) If the commissioner disapproves a rate, the disapproval
20 shall take effect not less than fifteen days after his order and
21 the last previous rate in effect for the insurer shall be
22 reimposed for a period of one year unless the commissioner
23 approves a rate under clause (d) or (e).
24 (d) Within one year after the effective date of a
25 disapproval order, no rate adopted to replace one disapproved
26 under such order may be used until it has been filed with the
27 commissioner and not disapproved within thirty days thereafter.
28 (e) Whenever an insurer has no legally effective rates as a
29 result of the commissioner's disapproval of rates, the
30 commissioner shall, on the insurer's request, specify interim
19930S0001B0001 - 60 -
1 rates for the insurer that are high enough to protect the
2 interests of all parties and may order that a specified portion
3 of the premiums be placed in a special reserve established by
4 the insurer. When new rates become legally effective, the
5 commissioner shall order the specially reserved funds or any
6 overcharge, in the interim rates to be distributed appropriately
7 to the insureds or insurer as the case may be, except that
8 refunds to policyholders that are minimal may not be required.
9 Section 711. (a) (1) If the commissioner finds after
10 hearing that competition is not an effective regulator of the
11 rates charged or that a substantial number of companies are
12 competing irresponsibly through the rates charged, or that there
13 are widespread violations of this article, the commissioner may
14 adopt a rule requiring that any subsequent changes in the rates
15 or supplementary rate information be filed with the commissioner
16 at least thirty working days before they become effective.
17 (2) In the event that the waiting period is imposed pursuant
18 to paragraph (1), the commissioner may extend the waiting period
19 for a period not to exceed thirty additional working days by
20 written notice to the filer before the first thirty-day period
21 expires.
22 (b) In the event that the commissioner has entered an order
23 pursuant to paragraph (1) of clause (a), the commissioner may
24 require the filing of supporting data as the commissioner deems
25 necessary for the proper functioning of the rate monitoring and
26 regulating process. The supporting data shall include:
27 (1) the experience and judgment of the filer, and to the
28 extent the filer wishes or the commissioner requires, the
29 experience and judgment of other insurers or rate service
30 organizations;
19930S0001B0001 - 61 -
1 (2) the filer's interpretation of any statistical data
2 relied upon;
3 (3) a description of the actuarial and statistical methods
4 employed in setting the rate; and
5 (4) any other relevant matters required by the commissioner.
6 (c) A rule adopted under this section shall expire not more
7 than one year after issue. The commissioner may renew it for an
8 additional one-year period after a hearing and appropriate
9 findings under this section.
10 (d) Whenever a filing is not accompanied by the information
11 as the commissioner has required under clause (a), the
12 commissioner may so inform the insurer and the filing shall be
13 deemed to be made when the information is furnished.
14 Section 712. (a) No rating organization shall provide any
15 service relating to the rates of any insurance subject to this
16 article, and no insurer shall utilize the service of such
17 organization for those purposes unless the organization has
18 obtained a license pursuant to this article.
19 (b) No rating organization shall refuse to supply services
20 for which it is licensed in this Commonwealth to any insurer
21 authorized to do business in this Commonwealth and offering to
22 pay the fair and usual compensation for the services.
23 Section 713. (a) As used in this section, the word
24 "insurer" includes two or more affiliated insurers:
25 (1) under common management; or
26 (2) under common controlling ownership or under other common
27 effective legal control and in fact engaged in joint or
28 cooperative underwriting, investment management, marketing,
29 servicing or administration of their business and affairs as
30 insurers.
19930S0001B0001 - 62 -
1 (b) An insurer or rating organization may not:
2 (1) monopolize or attempt to monopolize, or combine or
3 conspire with any other person or persons, or monopolize the
4 business of insurance of any kind, subdivision, or class
5 thereof;
6 (2) agree with any other insurer or rating organization to
7 charge or adhere to any rate, although insurers and rating
8 organizations may continue to exchange statistical information;
9 (3) make any agreement with any other insurer, rating
10 organization or other person to unreasonably restrain trade;
11 (4) make any agreement with any other insurer, rating
12 organization, or other person where the effect of the agreement
13 may be substantially to lessen competition in the business of
14 insurance of any kind, subdivision, or class; or
15 (5) make any agreement with any other insurer or rating
16 organization to refuse to deal with any person in connection
17 with the sale of insurance.
18 (c) An insurer may not acquire or retain any capital stock
19 or assets of, or have any common management with, any other
20 insurer if such acquisition, retention, or common management
21 substantially lessens competition in the business of insurance
22 of any kind, subdivision, or class.
23 (d) A rating organization or member or subscriber thereof
24 may not interfere with the right of any insurer to make its
25 rates independently of that rating organization or to charge
26 rates different from the rates made by that rating organization.
27 (e) Except as required under section 707, a rating
28 organization may not have or adopt any rule or exact any
29 agreement, formulate or engage in any program which would
30 require any member, subscriber or other insurer to:
19930S0001B0001 - 63 -
1 (1) utilize some or all of its services;
2 (2) adhere to its rates, rating plan, rating systems,
3 underwriting rules; or
4 (3) prevent any insurer from acting independently.
5 Section 714. Any rate in violation of section 713 shall be
6 disapproved by the commissioner in accordance with the
7 procedures prescribed in section 710, and each violator shall be
8 subject to the penalties provided in section 720.
9 Section 715. The commissioner may maintain an action to
10 enjoin any violation of section 713.
11 Section 716. Notwithstanding any other provision of this
12 article, upon written application of an insurer stating its
13 reasons therefor, accompanied by the written consent of the
14 insured or prospective insured, filed with and approved by the
15 commissioner, a rate in excess of that provided by a filing
16 otherwise applicable may be used as to any specific risk.
17 Section 717. (a) Each rating organization and every insurer
18 to which this article applies which makes its own rates shall
19 provide within this Commonwealth reasonable means whereby any
20 person aggrieved by the application of its rating system may be
21 heard in person or by the person's authorized representative on
22 the person's written request to review the manner in which such
23 rating system has been applied in connection with the insurance
24 afforded the aggrieved person.
25 (b) If the rating organization or insurer fails to grant or
26 reject the aggrieved person's request within thirty days after
27 it is made, the applicant may proceed in the same manner as if
28 the application had been rejected.
29 (c) Any party affected by the action of that rating
30 organization or insurer on the request may, within thirty days
19930S0001B0001 - 64 -
1 after written notice of that action, make application, in
2 writing, for an appeal to the commissioner, setting forth the
3 basis for the appeal and the grounds to be relied upon by the
4 applicant.
5 (d) The commissioner shall review the application, and if
6 the commissioner finds that the application is made in good
7 faith, and that it sets forth on its face grounds which
8 reasonably justify holding a hearing, the commissioner shall
9 conduct a hearing held on not less than ten days' written notice
10 to the applicant and to the rating organization or insurer. The
11 commissioner, after hearing, shall affirm or reverse the action.
12 Section 718. (a) Cooperation among rating organizations or
13 among rating organizations and insurers in ratemaking or in
14 other matters within the scope of this article is authorized, if
15 the filings resulting from that cooperation are subject to all
16 the provisions of this article which are applicable to filings
17 generally.
18 (b) The commissioner may review these cooperative activities
19 and practices, and if, after hearing, the commissioner finds
20 that any activity or practice is unfair, unreasonable, or
21 otherwise inconsistent with this article, the commissioner may
22 issue a written order specifying in what respects that activity
23 or practice is unfair, unreasonable, or otherwise inconsistent
24 with this article, and requiring the discontinuance of that
25 activity or practice.
26 Section 719. (a) A person or organization may not wilfully
27 withhold information from or knowingly give false or misleading
28 information which will affect the rates or premiums chargeable
29 under this article to:
30 (1) the commissioner; or
19930S0001B0001 - 65 -
1 (2) any rating organization or any insurer.
2 (b) A violation of this section shall subject the one who
3 commits that violation to the penalties provided in section 720,
4 and anyone who violates this section with intent to deceive
5 commits perjury, and is subject to prosecution therefor in a
6 court of competent jurisdiction.
7 Section 720. (a) Any person, organization, or insurer found
8 by the commissioner after notice and hearing to be guilty of a
9 violation of any provision of this article, including a
10 regulation of the commissioner adopted under this article may be
11 ordered to pay a penalty of five hundred dollars ($500) for each
12 violation. Upon finding such violation to be wilful, the
13 commissioner may impose a penalty of not more than one thousand
14 dollars ($1,000) for each such violation in addition to any
15 other penalty provided by law. The commissioner has the right to
16 suspend or revoke or refuse to renew the license of any person,
17 organization, or insurer for violation of any of the provisions
18 of this article.
19 (b) The commissioner may determine when a suspension or
20 revocation of license will become effective, and the suspension
21 or revocation shall remain in effect for the period fixed by the
22 commissioner unless the commissioner modifies or rescinds the
23 suspension or revocation, or until the order upon which the
24 suspension or revocation is based is modified or reversed as the
25 result of an appeal therefrom.
26 (c) A fine may not be imposed nor a license suspended or
27 revoked by the commissioner except upon written order stating
28 the commissioner's findings, made after a hearing held on not
29 less than ten days' written notice to the person, organization,
30 or insurer specifying the alleged violation.
19930S0001B0001 - 66 -
1 Section 721. All decisions and findings of the commissioner
2 under this article shall be subject to judicial review in
3 accordance with 2 Pa.C.S. (relating to administrative law and
4 procedure).
5 ARTICLE VIII.
6 SELF-INSURANCE POOLING
7 Section 801. The following words and phrases when used in
8 this article shall have the meanings given to them in this
9 section unless the context clearly indicates otherwise:
10 "Actuarially appropriate loss reserves" shall mean those
11 reserves needed to pay known claims for compensation and
12 expenses associated therewith and claims for compensation
13 incurred but not reported and expenses associated therewith.
14 "Administrator" means an individual, partnership or
15 corporation engaged by a fund's plan committee to carry out the
16 policies established by the plan committee and to provide day-
17 to-day management of the fund.
18 "Commissioner" means the Insurance Commissioner.
19 "Compensation" includes compensation paid under this act or
20 the Occupational Disease Act.
21 "Department" means the Department of Labor and Industry of
22 the Commonwealth.
23 "Employer" means an employer as defined in section 103 of
24 this act or as defined in section 103 of the Occupational
25 Disease Act, where applicable.
26 "Excess insurance" means insurance, purchased from an
27 insurance company appropriately approved or authorized or
28 licensed in this Commonwealth covering losses in excess of an
29 amount established between the group and the insurer up to the
30 limits of coverage set forth in the insurance contract on a
19930S0001B0001 - 67 -
1 specific per occurrence or per accident or annual aggregate
2 basis.
3 "Fund" means a group self-insurance fund organized by
4 employers to pool workers' compensation liabilities and approved
5 by the department under the authority of this act. A fund shall
6 not be deemed to be an insurer or insurance company and shall
7 not be subject to the provisions of the insurance laws and
8 regulations, except as specifically otherwise provided herein.
9 "Homogeneous employer" means employers who have been assigned
10 to the same classification series for at least one year or are
11 engaged in the same or similar types of business, including
12 political subdivisions.
13 "Independent actuary" means a member in good standing of the
14 Casualty Actuarial Society and a member in good standing of the
15 American Academy of Actuaries who has been identified by the
16 Academy as meeting its qualification standards for signing
17 casualty loss reserve opinions. Said actuary must not be an
18 officer, director or employe of the fund or a member of the fund
19 for which he or she is providing reports, certifications or
20 services.
21 "Insolvent fund" means the inability of a fund to pay its
22 outstanding liabilities as they mature, as may be shown either
23 by an excess of its required reserves and other liabilities over
24 its assets or by not having sufficient assets to reinsure all of
25 its outstanding liabilities after paying all accrued claims owed
26 by it.
27 "Permit" means the document issued by the department to a
28 fund which authorizes the fund to operate as a fund under the
29 provisions of this act.
30 "Plan committee" means a committee composed of
19930S0001B0001 - 68 -
1 representatives of each employer participating in a fund.
2 "Political subdivision" means any county, city, borough,
3 incorporated town, township, school district, vocational school
4 district and county institution district, municipal authority or
5 other entity created by a political subdivision pursuant to law.
6 "Security" means surety bonds, cash, negotiable securities of
7 the United States Government or the Commonwealth or other
8 negotiable securities, such as letters of credit, acceptable to
9 the Insurance Department which are posted by the fund to
10 guaranty the payment of compensation.
11 "Surplus" means that amount of moneys found in the trust to
12 be in excess of all fixed costs and incurred losses attributed
13 to the pool net any occurrence or aggregate excess insurance.
14 "Trust" means a written contract signed by the members of the
15 fund which separates the legal and equitable rights to the
16 moneys held by an independent trustee as a fiduciary for the
17 benefit of employes of employers participating in the fund.
18 Section 802. (a) Employers shall be permitted to pool their
19 liabilities under this act and the Occupational Disease Act and
20 their employers' liability through participation in a fund
21 approved by the department.
22 (b) A group of homogeneous employers may be approved by the
23 department to act as a fund if the proposed group:
24 (1) Includes five or more homogeneous employers.
25 (2) Is comprised of at least five members of which each have
26 been employers for at least three each years prior to the filing
27 of the group's application.
28 (3) Has been created in good faith for the purpose of
29 becoming a fund.
30 (4) Has, except for political subdivisions, an aggregate net
19930S0001B0001 - 69 -
1 worth of the employers participating calculated according to
2 generally accepted accounting principles which equals or exceeds
3 one million dollars or such amount as may be adjusted and
4 promulgated annually by the department and published in the
5 Pennsylvania Bulletin to take effect January 1 of each year.
6 (5) Has a combined annual payroll of fund members multiplied
7 by the rate utilized by the State Workmen's Insurance Fund which
8 is equal to or greater than $500,000 as adjusted annually by the
9 percentage increase in the Statewide average weekly wage or such
10 amount as may be adjusted and promulgated annually by the
11 department and published in the Pennsylvania Bulletin to take
12 effect January 1 of each year.
13 (6) Guarantees benefit levels equal to those required by
14 this act and the Occupational Disease Act.
15 (7) Demonstrates sufficient aggregate financial strength and
16 liquidity to assure that all obligations under this act and the
17 Occupational Disease Act will be met as required by that act and
18 proposes a plan for the prompt payment of such benefits.
19 Information documenting an individual member's financial
20 strength and liquidity shall be presented to the department upon
21 the department's request or with the application as required by
22 the department.
23 (8) Executes a trust agreement under which each member
24 agrees to jointly and severally assume and discharge the
25 liabilities arising under this act and the Occupational Disease
26 Act of each and every party to such agreement.
27 (9) Files with the department the proposed trust agreement.
28 (10) Provides for excess insurance with retention amounts in
29 such amount as the department deems acceptable on a single
30 accident (single occurrence) and aggregate excess basis. The
19930S0001B0001 - 70 -
1 department may waive the requirement for one or both types of
2 excess insurance if convinced that the fund's financial strength
3 is sufficient to assure payment of its obligations under this
4 act and the Occupational Disease Act.
5 (11) Provides security in a form and amount prescribed by
6 the department.
7 (12) Provides letters of intent from prospective fund
8 members and evidence that each prospective member:
9 (i) Has never defaulted on compensation due under this act
10 or the Occupational Disease Act as an individual self-insurer.
11 (ii) Has not been delinquent in payment of or canceled for
12 nonpayment of workers' compensation premiums for a period of at
13 least two years prior to application.
14 (iii) Has not been found to have violated section 305 or
15 section 435 of this act or the Occupational Disease Act as an
16 individual self-insurer.
17 (iv) Has not been and is not in default on or owes money
18 assessed under this act or the Occupational Disease Act.
19 (13) Provides that the fund will initiate and maintain a
20 loss prevention and safety program of the nature and extent that
21 would be required of members under the provisions of this act,
22 the Occupational Disease Act or regulations promulgated
23 hereunder.
24 (14) Provides for assessment upon employers participating in
25 the fund to establish and maintain actuarially appropriate loss
26 reserves and a plan for payment of such assessments.
27 (15) Provides proof of competent personnel and ample
28 facilities within its own organization with respect to claims
29 administration, underwriting matters, loss prevention and safety
30 engineering or presents a contract with a reputable service
19930S0001B0001 - 71 -
1 company to provide such assistance.
2 (16) Meets the other criteria established by this act or by
3 the department pursuant to regulations promulgated under this
4 act or the Occupational Disease Act.
5 (c) Each application for approval of a fund shall be
6 accompanied by a nonrefundable fee of one thousand dollars,
7 payable to the department which shall be deposited in the
8 Workmen's Compensation Administration Fund.
9 Section 803. (a) (1) The department shall, in accordance
10 with section 802, review, approve or disapprove fund
11 applications under such rules and requirements relating to
12 applications under section 305 of this act and the Occupational
13 Disease Act as may be applicable and such rules and regulations
14 as are specifically adopted with regard to fund applications.
15 (2) During the pendency of the processing of any fund
16 application, the group of employers shall not operate as a fund.
17 (b) Permits shall identify an annual reporting period for
18 the fund as established by the department.
19 Section 804. All permits issued under this article shall
20 remain in effect unless terminated at the request of the fund or
21 revoked by the department.
22 Section 805. (a) If at any time the fund is found to be
23 insolvent, fails to pay any required assessments under this act
24 or the Occupational Disease Act, or fails to comply with any
25 provision of this act or the Occupational Disease Act or with
26 any rules promulgated thereunder, the department may revoke its
27 permit after notice and opportunity for a hearing.
28 (b) In the case of revocation of a permit, the department
29 may require the fund to insure or reinsure all incurred
30 liability with an authorized insurer. All fund members shall
19930S0001B0001 - 72 -
1 immediately obtain coverage required by this act.
2 Section 806. (a) Members of said fund shall pay a minimum
3 of twenty-five per centum of their annual assessment into the
4 fund on or before the inception of the fund. The balance of the
5 annual assessments shall be paid to the fund on a monthly,
6 quarterly or semiannual basis as required by the fund's bylaws
7 and approved by the department.
8 (b) Each member's annual assessment to the fund shall equal
9 such member's annual payroll times the applicable rates utilized
10 by the State Workmen's Insurance Fund minus the premium discount
11 specified in Schedule Y as approved by the commissioner.
12 Dividends may be returned to members in accordance with section
13 809.
14 (c) Nothing contained in this section shall preclude the
15 assessment and payment of supplemental assessments as provided
16 in section 810.
17 Section 807. After the final permit approval date of the
18 fund, prospective new members of the fund shall submit an
19 application for membership to the fund's plan committee or
20 administrator in a form approved by the department. This
21 application shall include an agreement of joint and several
22 liability as required in section 803. The administrator or plan
23 committee may approve the application for membership pursuant to
24 the bylaws of the fund. The application approved by the fund
25 shall be filed with the department. The fund shall retain the
26 authority to reject any applicant.
27 Section 808. (a) Individual members may elect to terminate
28 their participation in a fund or be subject to cancellation by
29 the fund pursuant to the bylaws of the fund for nonpayment of
30 premium or other violations. Any member withdrawing from a fund
19930S0001B0001 - 73 -
1 or member terminated by the fund for nonpayment of assessments
2 shall remain fully obligated for claims incurred during the
3 period of its membership in accord with fund bylaws, including,
4 but not limited to, amounts owed as annual or supplemental
5 assessments. Notice of termination of any participant shall be
6 filed with the fund. The fund shall attach any such notices of
7 termination to the renewal application filed with the
8 department.
9 (b) The fund shall notify the department immediately if
10 termination of a member causes the fund to fail to meet the
11 requirements of clause (b) of section 802. Within fifteen days
12 of the notice of withdrawal or decision to expel, the fund shall
13 advise the department of its plan to bring the fund into
14 compliance with clause (b) of section 802. If the plan does not
15 bring the fund into compliance with the requirements, the
16 department shall immediately review and revoke its permit.
17 (c) The department shall not grant the request of any fund
18 to terminate its permit unless the fund has insured or reinsured
19 all incurred workers' compensation obligations with an
20 authorized insurer under an agreement filed with and approved in
21 writing by the department. These obligations shall include both
22 known claims and expenses associated therewith and claims
23 incurred but not reported and expenses associated therewith.
24 These same requirements shall apply where the department revokes
25 a permit.
26 Section 809. Any fund may return to its members dividends
27 based upon the recommendation of an independent actuary.
28 Dividends shall not be returned if the payment of such dividends
29 would impair the fund's ability to meet its obligations under
30 this act or the Occupational Disease Act, nor shall dividends be
19930S0001B0001 - 74 -
1 returned prior to the beginning of the thirteenth month
2 following the expiration of the preceding annual reporting
3 period. The initial dividend payment for any annual reporting
4 period shall not exceed thirty per centum of the surplus
5 available for the applicable annual reporting period. The fund
6 may, however, seek annual approval for payment of dividends from
7 the surplus remaining from any annual reporting period which has
8 been completed for at least twenty-five months or longer and may
9 include such dividend payments with initial dividend payments
10 from the subsequent annual reporting period.
11 Section 810. (a) If the assets of a fund are at any time
12 insufficient to enable the fund to discharge its legal
13 liabilities and other obligations and to maintain the
14 actuarially appropriate loss reserves required of it under
15 paragraph (14) of clause (b) of section 802, the fund shall
16 forthwith make up the deficiency or levy an assessment upon the
17 fund members for the amount needed to make up the deficiency.
18 (b) In the event of a deficiency in any annual reporting
19 period, such deficiency shall be made up immediately, either
20 from surplus from a year other than the current year, assessment
21 of the fund members if ordered by the fund or such alternate
22 method as the department may approve or direct.
23 (c) If the fund fails to assess its members or to otherwise
24 make up such deficit within thirty days the department shall
25 order it to do so.
26 (d) If the fund fails to make the required assessment of its
27 members within thirty days after the department orders it to do
28 so, or if the deficiency is not fully made up within sixty days
29 after the date on which such assessment is made or within such
30 longer period of time as may be specified by the department, the
19930S0001B0001 - 75 -
1 fund shall be deemed to be insolvent.
2 (e) The department shall proceed against an insolvent fund
3 in the same manner as the department would proceed against an
4 insurer under Article IX.
5 (f) In addition, in the event of the liquidation or default
6 of a fund, the department may levy an assessment upon the fund
7 members for such an amount as the department determines to be
8 necessary to discharge all liabilities of the fund including the
9 reasonable cost of liquidation and shall deposit such
10 assessments into the Self-insurance Guaranty Fund for
11 distribution and payment by the Guaranty Fund as provided for in
12 Article IX.
13 Section 811. The annual assessment of each fund member shall
14 be based upon the annual payroll of fund members multiplied by
15 the rates as utilized by the State Workmen's Insurance Fund for
16 members minus any premium discounts. A fund may deviate from
17 these rates and establish its own rates with the approval of an
18 independent actuary and the department.
19 Section 812. Each fund shall request classifications for its
20 participants from the bureau or bureaus approved by the
21 commissioner and shall utilize those classifications making
22 assessments based upon rates as utilized by the State Workmen's
23 Insurance Fund for such classification except as provided in
24 section 811. The fund shall pay the appropriate bureau a
25 reasonable charge, approved by the department, for this service.
26 The fund may appeal classifications as provided in the
27 applicable sections of the Insurance Company Law of 1921, for
28 other employers.
29 Section 813. Each fund may invest any surplus moneys not
30 needed for current obligations in United States Government
19930S0001B0001 - 76 -
1 obligations, United States Treasury Notes, investment share
2 accounts in any savings and loan association whose deposits are
3 insured by a Federal agency and certificates of deposit issued
4 by a duly chartered commercial bank. Deposits in savings and
5 loan associations and commercial banks shall be limited to
6 institutions in this Commonwealth and shall not exceed the
7 federally insured amount in any one account. Investments may
8 also be made in any permitted investments of capital or surplus
9 of stock casualty insurance companies set forth in section 602
10 or 603 of the Insurance Company Law of 1921, as may be
11 authorized by regulation approved by the commissioner.
12 Section 814. (a) Funds approved under this article shall
13 purchase excess insurance by reason of any single accident or
14 any single occurrence as provided in section 653 of the
15 Insurance Company Law of 1921, and aggregate excess insurance.
16 The department may waive the requirement for either single
17 accident (single occurrence) or aggregate excess insurance or
18 the requirement for both single accident (single occurrence) and
19 aggregate excess insurance.
20 (b) A policy of insurance by an insurance carrier may
21 include provisions for aggregate excess insurance in addition to
22 the single accident (single occurrence) excess insurance which
23 is authorized under section 653 of the Insurance Company Law of
24 1921.
25 Section 815. (a) A report shall be prepared by each fund
26 for each annual reporting period and shall be filed with the
27 department and made available to each fund member.
28 (b) The information contained in the annual report shall
29 include, for each member of the fund and the fund itself:
30 (1) Summary loss reports.
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1 (2) An annual statement of the financial condition of the
2 fund prepared by a certified public accountant and performed in
3 accordance with generally accepted accounting principles.
4 (3) Reports of outstanding liabilities showing the number of
5 claims, amounts paid to date and current reserves as certified
6 by an independent actuary.
7 (4) Such other information as required by regulation of the
8 department as may be applicable to applicants for self-insurance
9 under section 305 of this act and the Occupational Disease Act
10 or regulations in regard to fund applications.
11 (c) The annual report shall be accompanied by a one thousand
12 dollar evaluation fee.
13 (d) The department may, at any time, examine the affairs,
14 transactions, accounts, records and assets of a fund and the
15 fund shall make all such items as are needed for such
16 examination available to the department. The department shall
17 bill the fund for the reasonable costs associated with such
18 examinations.
19 (e) If at any time there is a change in the fund, during an
20 annual reporting period other than as set forth in section 808,
21 that affects the ability of the fund to comply with the
22 requirements of clause (b) of section 802, the fund shall notify
23 the department of the change within thirty days after such
24 change.
25 Section 816. Each fund shall be assessed annually by the
26 department in a like manner and amount as other insurers or
27 self-insurers are now or hereafter assessed under this act and
28 the Occupational Disease Act and shall pay such assessment in
29 accordance with this act and the Occupational Disease Act. All
30 contributions received in accordance with this section shall be
19930S0001B0001 - 78 -
1 deposited into the appropriate fund as required by the
2 applicable provision of law.
3 Section 817. Any group of five homogeneous employers who
4 will provide to the fund an annual volume of premium of at least
5 five hundred thousand dollars ($500,000) may become subscribers
6 as a group to the State Workmen's Insurance Fund for the purpose
7 of insuring therein their liability to those of their employes
8 and any group of employers who shall desire to become
9 subscribers as a group to the said fund for the purpose of
10 insuring therein their liability for all sums. Such group shall
11 become legally obligated to pay any employe damages because of
12 bodily injury by accident or disease, including death at any
13 time resulting therefrom, sustained by such employe arising out
14 of and in the course of his employment. Such group shall make a
15 written application for subscription for group insurance to the
16 said board. Such application shall designate the name of the
17 group subscriber and shall include such information as
18 determined by the board as will allow the board to identify the
19 employers and to adequately assess risks and premiums to be
20 charged to employers to be insured by the fund under the group
21 subscription.
22 Section 818. The department is authorized to promulgate
23 rules and regulations for the administration and enforcement of
24 this article.
25 ARTICLE IX.
26 SELF-INSURANCE GUARANTY FUND
27 Section 901. The following words and phrases when used in
28 this article shall have the meanings given to them in the
29 section unless the context clearly indicates otherwise:
30 "Compensation" means benefits paid pursuant to sections 306
19930S0001B0001 - 79 -
1 and 307.
2 "Employer" means a self-insured employer or the employer as
3 defined in this act.
4 "Guaranty Fund" or "fund" means the Self-Insurance Guaranty
5 Fund established in section 902 for injuries and exposures
6 occurring on or after July 1, 1992.
7 "Security" means surety bonds, cash, negotiable securities of
8 the United States Government or the Commonwealth or other
9 negotiable securities, such as letter of credit, acceptable to
10 the Insurance Department which are posted by the fund to
11 guaranty the payment of workers' compensation benefits.
12 "Self-insurer" means an employer exempted under section 305
13 or a group self-insurance fund permitted to operate under
14 Article VIII.
15 Section 902. (a) (1) There is hereby established a special
16 fund to be known as the Self-Insurance Guaranty Fund.
17 (2) The fund shall be maintained as two distinct custodial
18 accounts in the State Treasury as separate and distinct accounts
19 subject to the procedures and provisions set forth in this
20 article.
21 (b) The moneys in each custodial account shall consist of
22 security and assessments, as defined in section 907 and interest
23 accumulated thereon.
24 (c) The administrator shall establish and maintain the
25 following two distinct and separate custodial accounts. The
26 moneys and other assets in each account are not to be commingled
27 or used to pay claims from the other account.
28 (1) Custodial account for self-insured employers for the
29 exclusive benefit of claims arising from defaulting individual
30 self-insured employers.
19930S0001B0001 - 80 -
1 (2) Custodial account for self-insurance pooling as defined
2 under section 801 for the exclusive benefit of claims arising
3 from defaulting members of pooling arrangements.
4 (d) The secretary shall be the administrator of the fund and
5 shall have the power to collect, dispense and disperse money
6 from the fund.
7 Section 903. The fund shall be maintained to make payments
8 to any claimant or his dependents upon the default of the self-
9 insurer liable to pay compensation due under this act and the
10 Occupational Disease Act or costs associated therewith and shall
11 be maintained in an amount sufficient to pay such compensation
12 and costs or reasonably anticipated to be needed by virtue of
13 default by self-insurers.
14 Section 904. (a) When a self-insurer fails to pay
15 compensation when due, the department shall determine the
16 reasons for such failure.
17 (b) If the department determines that the failure to pay
18 compensation is due to the self-insurer's financial inability to
19 pay compensation, the department shall notify the self-insurer
20 of same and direct compensation to be paid within fifteen days
21 of such notice.
22 (c) If the self-insurer fails to pay the compensation as
23 directed and within the time set forth in this section, the
24 department shall declare the self-insurer in default.
25 (d) Whenever the department determines that a default has
26 occurred it shall:
27 (1) Investigate the circumstances surrounding the default,
28 the amount of security available and the ability of the self-
29 insured to cure the default.
30 (2) Determine whether the liabilities of the self-insurer
19930S0001B0001 - 81 -
1 for compensation exceed or are less than the security:
2 (i) If the liabilities are less than the security, the
3 department shall demand the custodian of the security utilize
4 the security to cure the default and the department shall
5 monitor the situation to insure that compensation is paid as due
6 under this act or the Occupational Disease Act.
7 (ii) If at any time the liabilities exceed or can reasonably
8 be expected to exceed the security, in the opinion of the
9 department, the department may order payment of the security
10 into the fund's appropriate custodial account, and shall order
11 payment from the Guaranty Fund, as appropriate, to cure the
12 default and insure that compensation is paid as due under this
13 act or the Occupational Disease Act.
14 Section 905. (a) When payments are ordered from the
15 Guaranty Fund's appropriate custodial account, the fund assumes
16 the rights and obligations of the self-insurer under this act or
17 the Occupational Disease Act with regard to the payment of
18 compensation and shall have and may exercise the rights set
19 forth in this section.
20 (b) The Guaranty Fund shall have the right to:
21 (1) Institute and prosecute legal action against any self-
22 insurer and each and every member of a fund, jointly and
23 severally, on behalf of the employees of the self-insured
24 employer or fund members' employees and their dependents to
25 require the payment of compensation and the performance of any
26 other obligations of the self-insurer under this act or the
27 Occupational Disease Act.
28 (2) Appear and represent the Guaranty Fund in any
29 proceedings in bankruptcy involving the self-insurer on whose
30 behalf payments were made, including the ability to appear and
19930S0001B0001 - 82 -
1 move to lift any stay orders affecting payment of compensation.
2 (3) Obtain, in any manner or by the use of any process or
3 procedure, including, but not limited to, the commencement and
4 prosecution of legal action, reimbursement from a self-insurer
5 and its successors, assigns and estate all moneys paid on
6 account of the self-insurer's obligation assumed by the fund,
7 including, but not limited to, reimbursement for all
8 compensation paid as well as reasonable administrative and legal
9 costs associated with such payment.
10 (4) Purchase reinsurance and take any and all other action
11 which effects the purpose of the Guaranty Fund.
12 Section 906. (a) (1) Security or funds from security
13 demanded and paid to the department under section 904 shall be
14 deposited into the Guaranty Fund.
15 (2) These funds and interest thereon shall be segregated in
16 individual custodial accounts within the Guaranty Fund by the
17 custodian and maintained solely for the payment of compensation
18 or costs associated therewith upon order of the department to
19 the employes of the defaulting self-insurer providing the
20 security from the appropriate custodial account.
21 (3) If there are funds from security or interest thereon
22 remaining in the individual account after all outstanding
23 obligations of the insolvent self-insurer have been satisfied
24 and the costs of administration and defense have been paid, such
25 amount as remains shall be returned upon order of the department
26 from the Guaranty Fund individual account to the self-insurer.
27 (b) Assessments made under section 907 and interest thereon
28 shall be deposited into the Guaranty Fund's appropriate
29 custodial account.
30 Section 907. (a) On a date to be determined by the
19930S0001B0001 - 83 -
1 department following the effective date of this article,
2 employers who are self-insurers as of that effective date shall
3 pay an initial assessment of one-half per centum of the
4 compensation paid by each self-insurer in the year preceding the
5 assessment. Self-insurers who, prior to such effective date,
6 were not self-insurers, shall pay an assessment based on one-
7 half per centum of their modified manual premium for the twelve
8 months immediately prior to becoming self-insurers.
9 (b) (1) The department may, in addition to the initial
10 assessment, from time to time, assess each self-insurer a pro
11 rata share of the amounts needed for the fund to carry out the
12 requirements of this article.
13 (2) Such assessments shall be based on the ratio that each
14 private self-insurer's payments of compensation bears to the
15 total compensation paid by all self-insurers in the year
16 preceding the year of assessment.
17 (3) In no event shall a self-insurer be assessed in any one
18 calendar year more than one per centum of the compensation paid
19 by that self-insurer during the previous calendar year.
20 (c) A self-insurer which ceases to be a self-insurer shall
21 be liable for any and all assessments made pursuant to this
22 section during the period following the date its authority to
23 self-insure is withdrawn, revoked or surrendered until such time
24 as it has discharged all obligations to pay compensation which
25 arose during the period of time said former self-insurer was
26 self-insured. Assessments of such a former self-insurer shall be
27 based on the compensation paid by the former self-insurer during
28 the preceding calendar year on claims that arose during the
29 period of time said former self-insurer was self-insured.
30 Section 908. The department may promulgate rules and
19930S0001B0001 - 84 -
1 regulations for the administration and enforcement of this
2 article.
3 ARTICLE X.
4 HEALTH AND SAFETY
5 Section 1001. (a) All workers' compensation insurance
6 carriers shall provide safety consultations to each of their
7 policyholders requesting such consultations.
8 (b) This article shall not diminish or replace the
9 employer's responsibility to provide employes a safe place to
10 work.
11 (c) Neither the insurance carrier nor any of its agents or
12 employes shall incur any liability for illness or injury that
13 may result from any of their activities, including any breaches
14 of duty or failure to act, as a result of this section.
15 Section 1002. (a) A safety consultation shall mean a
16 service rendered or being rendered by an insurance carrier to
17 advise and assist a policyholder, management or an established
18 safety consultant of an employer in the identification,
19 evaluation and control of existing and potential accident and
20 occupational health problems. This service may be delivered in
21 person, by mail or by telephone, commensurate with the nature of
22 the risk.
23 (b) Safety consultive services may include the following:
24 (1) On-site surveys and subsequent evaluation of exposures
25 relative to employes, material, equipment, processes and
26 facilities.
27 (2) Recommendations to policyholders with reference to the
28 control of exposures to occupational accident, injury and/or
29 illness.
30 (3) Training aids, programs and materials made available
19930S0001B0001 - 85 -
1 when these assist in the control of exposures.
2 (4) Consultations and advice relative to risk, exposures and
3 experience in the policyholder's business.
4 (5) Accident analysis to include a review of reported
5 accidents to determine causes and trends.
6 (6) Industrial hygiene service for the recognition and
7 evaluation of chemical, physical, biological and ergonomic
8 exposures.
9 Section 1003. (a) (1) A safety consultant shall be a
10 graduate of a four-year accredited degree program, but
11 experience in safety engineering or occupational health may be
12 substituted on a year-for-year basis for the required college
13 training.
14 (2) Persons who do not meet the qualifications set forth in
15 paragraph (1) may perform safety consultative services when
16 working under the supervision of a qualified safety consultant.
17 (b) A consultant shall stay current with the advances in the
18 occupational safety and health field and in government
19 regulations, and is encouraged to attend, either in-house
20 training and education programs or outside conferences, seminars
21 or education courses.
22 Section 1004. (a) The insurance carrier shall notify each
23 policyholder or employer of the type of safety consultive
24 services available and the address of the location where these
25 services can be requested. The notice shall also remind
26 management of their responsibility under applicable Federal and
27 State law to assure safe and healthful working conditions for
28 all employes.
29 (b) The specific services to be utilized shall be within the
30 discretion of the insurer, but shall include consideration of
19930S0001B0001 - 86 -
1 hazard, loss experience and size of policyholder operations.
2 Section 1005. The insurer shall establish a system of
3 priorities to use in responding to requests for work-site
4 consultive services, giving first priority to employers that
5 have an unreasonably high actual or potential loss experience.
6 Within thirty days of receipt of a request, contact should be
7 made with management to arrange for provision of needed
8 services.
9 Section 1006. (a) Following completion of a requested on-
10 site consultive visit, a report should be furnished to the
11 policyholder or employer. The report should indicate the purpose
12 of the visit, a summary of the findings, recommendations
13 developed and reaction of management.
14 (b) A record of all requests for consultive service and
15 action taken in response thereto should be maintained at the
16 carrier office for a minimum of eighteen months.
17 Section 1007. (a) An insurance carrier shall have available
18 adequate facilities and field representatives to provide safety
19 consultive services. The number of consultants should be
20 commensurate to the hazards, loss experience and size of the
21 policyholder's business.
22 (b) Private consultants may be used by insurance carriers
23 who do not have in their employ consultants to provide the
24 required safety consultive services. The insurance carriers
25 shall duly inform their policyholders of available services in
26 the same manner as if the consultants are in their employ. All
27 rules for consultant qualifications, available services,
28 response and reporting shall apply.
29 Section 1008. The insurer shall submit to the department the
30 following:
19930S0001B0001 - 87 -
1 (1) The name of insurer.
2 (2) The business address and telephone number in the state
3 where consultive service may be required.
4 (3) A description of the consultive services to be
5 available.
6 (4) The method to be used to deliver the consultive service.
7 (5) The qualifications of the consultive staff including
8 staff training programs.
9 (6) The specialized technical and professional services that
10 will be available for use in the consultive program.
11 (7) The name and business address of any private consultants
12 or independent contractors who will provide the required service
13 for the insurer.
14 (8) The method of the timetable for notification of
15 available services to policyholders.
16 ARTICLE XI.
17 INSURANCE FRAUD
18 Section 1101. The following words and phrases when used in
19 this article shall have the meanings given to them in this
20 section unless the context clearly indicates otherwise:
21 "Attorney" means an individual admitted by the Pennsylvania
22 Supreme Court to practice law in this Commonwealth.
23 "Health care professional" means a person licensed or
24 certified pursuant to law to perform health care activities.
25 "Insurance claim" means a claim for payment or other benefits
26 pursuant to an insurance policy or agreement for coverage of
27 health or hospital services.
28 "Insurance policy" means a document setting forth the terms
29 and conditions of a contract of insurance or agreement for the
30 coverage of health or hospital services.
19930S0001B0001 - 88 -
1 "Insurer" means a company, association or exchange defined by
2 section 101 of the Insurance Company Law of 1921; an
3 unincorporated association of underwriting members; a hospital
4 plan corporation; a professional health services plan
5 corporation; a health maintenance organization; a fraternal
6 benefit society; and a self-insured health care entity under the
7 act of October 15, 1975 (P.L.390, No.111), known as the "Health
8 Care Services Malpractice Act."
9 "Person" means an individual, corporation, partnership,
10 association, joint-stock company, trust or unincorporated
11 organization. The term includes any individual, corporation,
12 association, partnership, reciprocal exchange, interinsurer,
13 Lloyd's insurer, fraternal benefit society, beneficial
14 association and any other legal entity engaged or proposing to
15 become engaged, either directly or indirectly, in the business
16 of insurance, including agents, brokers, adjusters and health
17 care plans as defined in 40 Pa.C.S. Chs. 61 (relating to
18 hospital plan corporations), 63 (relating to professional health
19 services plan corporations), 65 (relating to fraternal benefit
20 societies) and 67 (relating to beneficial societies) and the act
21 of December 29, 1972 (P.L.1701, No.364), known as the "Health
22 Maintenance Organization Act." For purposes of this article,
23 health care plans, fraternal benefit societies and beneficial
24 societies shall be deemed to be engaged in the business of
25 insurance.
26 "Statement" means any oral or written presentation or other
27 evidence of loss, injury or expense, including, but not limited
28 to, any notice, statement, proof of loss, bill of lading,
29 receipt for payment, invoice, account, estimate of property
30 damages, bill for services, diagnosis, prescription, hospital or
19930S0001B0001 - 89 -
1 doctor records, X-ray, test result or computer-generated
2 documents.
3 Section 1102. A person commits an offense if the person does
4 any of the following:
5 (1) Knowingly and with the intent to defraud a State or
6 local government agency files, presents or causes to be filed
7 with or presented to the government agency a document that
8 contains false, incomplete or misleading information concerning
9 any fact or thing material to the agency's determination in
10 approving or disapproving a workers' compensation insurance rate
11 filing, a workers' compensation transaction or other workers'
12 compensation insurance action which is required or filed in
13 response to an agency's request.
14 (2) Knowingly and with the intent to defraud any insurer,
15 presents or causes to be presented to any insurer any statement
16 forming a part of, or in support of, a workers' compensation
17 insurance claim that contains any false, incomplete or
18 misleading information concerning any fact or thing material to
19 the workers' compensation insurance claim.
20 (3) Knowingly and with the intent to defraud any insurer,
21 assists, abets, solicits or conspires with another to prepare or
22 make any statement that is intended to be presented to any
23 insurer in connection with, or in support of, a workers'
24 compensation insurance claim that contains any false, incomplete
25 or misleading information concerning any fact or thing material
26 to the workers' compensation insurance claim.
27 (4) Engages in unlicensed agent or broker activity as
28 defined by the act of May 17, 1921 (P.L.789, No.285), known as
29 "The Insurance Department Act of one thousand nine hundred and
30 twenty-one," knowingly and with the intent to defraud an insurer
19930S0001B0001 - 90 -
1 or the public.
2 (5) Knowingly benefits, directly or indirectly, from the
3 proceeds derived from a violation of this section due to the
4 assistance, conspiracy or urging of any person.
5 (6) Is the owner, administrator or employe of any health
6 care facility and knowingly allows the use of such facility by
7 any person in furtherance of a scheme or conspiracy to violate
8 any of the provisions of this article.
9 (7) Knowingly assists, abets, solicits or conspires with any
10 person who engages in an unlawful act under this section.
11 (8) Makes or causes to be made any knowingly false or
12 fraudulent statement with regard to entitlement to benefits with
13 the intent to discourage an injured worker from claiming
14 benefits or pursuing a claim.
15 Section 1103. (a) A lawyer may not compensate or give
16 anything of value to a nonlawyer to recommend or secure
17 employment by a client or as a reward for having made a
18 recommendation resulting in employment by a client; except that
19 the lawyer may pay:
20 (1) the reasonable cost of advertising or written
21 communication as permitted by the rules of professional conduct;
22 or
23 (2) the usual charges of a not-for-profit lawyer referral
24 service or other legal service organization.
25 Upon a conviction of an offense under this clause, the
26 prosecutor shall certify the conviction to the disciplinary
27 board of the Supreme Court for appropriate action, including
28 suspension or disbarment.
29 (b) With respect to an insurance benefit or claim, a health
30 care provider may not compensate or give anything of value to a
19930S0001B0001 - 91 -
1 person to recommend or secure the provider's service to or
2 employment by a patient or as a reward for having made a
3 recommendation resulting in the provider's service to or
4 employment by a patient; except that the provider may pay the
5 reasonable cost of advertising or written communication as
6 permitted by rules of professional conduct. Upon a conviction of
7 an offense under this clause, the prosecutor shall certify the
8 conviction to the appropriate licensing board in the Department
9 of State which shall suspend or revoke the health care
10 provider's license.
11 (c) A lawyer or health care provider may not compensate or
12 give anything of value to a person for providing names,
13 addresses, telephone numbers or other identifying information of
14 individuals seeking or receiving medical or rehabilitative care
15 for accident, sickness or disease, except to the extent a
16 referral and receipt of compensation is permitted under
17 applicable professional rules of conduct. A person may not
18 knowingly transmit such referral information to a lawyer or
19 health care professional for the purpose of receiving
20 compensation or anything of value. Attempts to circumvent this
21 clause through use of any other person, including, but not
22 limited to, employes, agents or servants, shall also be
23 prohibited.
24 Section 1104. If an insurance claim is made by means of
25 computer billing tapes or other electronic means, it shall be a
26 rebuttable presumption that the person knowingly made the claim
27 if the person has advised the insurer in writing that claims
28 will be submitted by use of computer billing tapes or other
29 electronic means.
30 Section 1105. (a) A person who violates section 1102 shall
19930S0001B0001 - 92 -
1 be guilty of a felony of the third degree, and, upon conviction
2 thereof, shall be sentenced to pay a fine of not more than fifty
3 thousand dollars or double the value of the fraud, or to undergo
4 imprisonment for a period of not more than seven years, or both.
5 (b) A person who violates section 1103 shall be guilty of a
6 misdemeanor of the first degree, and, upon conviction thereof,
7 shall be sentenced to pay a fine of not more than twenty
8 thousand dollars ($20,000) or double the amount of the fraud, or
9 both.
10 (c) A health care professional or lawyer who is guilty of an
11 offense under section 1102 while acting on behalf of others
12 shall be subject to disciplinary action, including suspension or
13 revocation of a license or certificate or recommendation for
14 disbarment to the Supreme Court.
15 Section 1106. The court may, in addition to any other
16 sentence authorized by law, sentence a person convicted of
17 violating this section to make restitution under 18 Pa.C.S §
18 1106 (relating to restitution for injuries to person or
19 property).
20 Section 1107. An insurer and any agent, servant or employe
21 thereof acting in the course and scope of his employment, and
22 the division, acting pursuant to section 1206, shall be immune
23 from civil or criminal liability arising from the supply or
24 release of written or oral information to any entity duly
25 authorized to receive such information by Federal or State law,
26 or by Insurance Department regulations, only if the information
27 is supplied to the agency in connection with an allegation of
28 fraudulent conduct on the part of any person relating to a
29 violation of this article.
30 Section 1108. Nothing in this article shall be construed to
19930S0001B0001 - 93 -
1 prohibit any conduct by an attorney or law firm which is
2 expressly permitted by the Rules of Professional Conduct of the
3 Supreme Court or prohibit any conduct by a health care
4 professional which is expressly permitted by law or regulation.
5 Section 1109. (a) The district attorneys of the several
6 counties shall have authority to investigate and to institute
7 criminal proceedings for any violation of this article.
8 (b) In addition to the authority conferred upon the Attorney
9 General by the act of October 15, 1980 (P.L.950, No.164), known
10 as the "Commonwealth Attorneys Act," the Attorney General shall
11 have the authority to investigate and to institute criminal
12 proceedings for any violation of this section or any series of
13 such violations involving more than one county of this
14 Commonwealth or involving any county of this Commonwealth and
15 another state. No person charged with a violation of this
16 article by the Attorney General shall have standing to challenge
17 the authority of the Attorney General to investigate or
18 prosecute the case, and, if any such challenge is made, the
19 challenge shall be dismissed and no relief shall be available in
20 the courts of the Commonwealth to the person making the
21 challenge.
22 Section 1110. Nothing contained in this article shall be
23 construed to limit the regulatory or investigative authority of
24 any department or agency of the Commonwealth whose functions
25 might relate to persons, enterprises or matters falling within
26 the scope of this article.
27 ARTICLE XII.
28 FRAUD ENFORCEMENT
29 Section 1201. The following words and phrases when used in
30 this article shall have the meanings given to them in this
19930S0001B0001 - 94 -
1 section unless the context clearly indicates otherwise:
2 "Commissioner" means the Insurance Commissioner of the
3 Commonwealth.
4 "Department" means the Insurance Department of the
5 Commonwealth.
6 "Division" means the Workers' Compensation Fraud Enforcement
7 Division established in section 1202.
8 Section 1202. (a) There is established within the
9 department a Workers' Compensation Fraud Enforcement Division to
10 enforce the provisions of Article XI and to administer the
11 provisions of this article.
12 (b) If, by its own inquiries or as a result of complaints,
13 the division has reason to believe that a person has engaged in
14 or is engaging in an act or practice that violates Article XI,
15 the division may make those investigations within or outside
16 this Commonwealth that it deems necessary to determine whether
17 any person has violated or is about to violate any provision of
18 Article XI, or to aid in the enforcement of this article, and
19 may publish information concerning any violation of either
20 article.
21 (c) For the purposes of an investigation under this article,
22 the commissioner or any officer designated by the commissioner
23 may administer oaths and affirmations, subpoena witnesses,
24 compel their attendance, take evidence and require the
25 production of any books, papers, correspondence, memoranda,
26 agreements or other documents or records which the commissioner
27 deems relevant or material to the inquiry.
28 (d) If any matter which the division seeks to obtain by
29 request is located outside this Commonwealth, the person so
30 requested may make it available to the division or its
19930S0001B0001 - 95 -
1 representative to be examined at the place where it is located.
2 The division may designate representatives, including officials
3 of the state in which the matter is located, to inspect the
4 matter on its behalf, and the division may respond to similar
5 requests from officials of other states.
6 (e) Except as provided in clause (f), the department's
7 papers, documents, reports or evidence relative to the subject
8 of investigation under this section shall not be subject to
9 public inspection for as long a period as the commissioner deems
10 reasonably necessary to complete the investigation, to protect
11 the person investigated from unwarranted injury or to serve the
12 public interest. Such papers, documents, reports or evidence
13 shall not be subject to subpoena or subpoena duces tecum until
14 opened for public inspection by the commissioner and a hearing,
15 unless the commissioner otherwise consents or, after notice to
16 the commissioner and a hearing, the Commonwealth Court
17 determines that the public interest and any ongoing
18 investigation by the commissioner would not be unnecessarily
19 jeopardized by compliance with the subpoena duces tecum.
20 (f) The division shall furnish all papers, documents,
21 reports, complaints or other facts or evidence to any police,
22 sheriff or other law enforcement agency or governmental entity
23 duly authorized to receive such information, when so requested,
24 and shall assist and cooperate with those agencies.
25 (g) The commissioner shall ensure that the division
26 aggressively pursues all reported incidents of probable workers'
27 compensation fraud, as defined in Article XI, and forward to the
28 appropriate disciplinary body the names, along with all
29 supporting evidence, of individuals licensed under the laws of
30 this Commonwealth suspected of actively engaging in fraudulent
19930S0001B0001 - 96 -
1 activity. The division shall report to the commissioner any
2 insurer suspected of actively engaging in the fraudulent denial
3 of claims.
4 Section 1203. (a) To fund the investigation and prosecution
5 of workers' compensation fraud there shall be an annual
6 assessment, payable in each fiscal year in which the assessment
7 is made, on insurers and self-insurers under this act. The
8 commissioner shall make the assessment and collect moneys based
9 on the ratio that such insurer's or self-insurer's payments of
10 compensation bear to the total compensation paid in the
11 preceding calendar year in which the assessment is made. The
12 assessment shall be made in accordance with the following
13 provisions:
14 (1) The aggregate amount of the assessment shall be
15 determined by the commissioner or his designees, pursuant to
16 paragraphs (3), (4) and (5).
17 (2) The amount collected, together with the fines collected
18 for violations of the unlawful acts enumerated in Article XI
19 shall be deposited in the Workers' Compensation Fraud
20 Enforcement Account, which is hereby created as a restricted
21 account, separate and apart from all other public moneys or
22 funds of the Commonwealth, for use in carrying out the
23 provisions of this act.
24 (3) Any funds not expended in the fiscal year for which they
25 have been assessed shall be applied to satisfy, for the
26 immediately following fiscal year, the minimum total amount
27 required by paragraph (4) and thereby reduce the annual
28 assessment by the commissioner.
29 (4) For the 1992-1993 fiscal year the total amount of
30 revenue derived from the annual assessment pursuant to this
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1 clause shall, together with the total funds collected pursuant
2 to fines imposed for unlawful acts enumerated in Article XI, not
3 be less than two million dollars and not more than three million
4 dollars.
5 (5) In subsequent fiscal years the total revenue derived
6 from the assessments shall not increase by a greater percentage
7 than the annual percentage increase in the Consumer Price Index
8 for all Urban Wage Earners during the prior calendar year, as
9 certified by the commissioner as of June 30 of the fiscal year
10 in which the new assessment is to be made.
11 (6) After incidental expenses, sixty per centum of the funds
12 to be used for the purposes of this section shall be provided to
13 the division for investigative work, and forty per centum of the
14 funds shall be distributed to district attorneys, pursuant to a
15 determination by the commissioner as to the most effective
16 distribution of moneys for purposes of the investigation and
17 prosecution of workers' compensation insurance fraud cases. The
18 commissioner shall consider population and historical incident
19 of insurance fraud when awarding money to district attorneys.
20 (b) Each district attorney desiring a portion of the funds
21 shall submit to the division a plan detailing his projected use
22 of any moneys which may be provided. The plan shall include a
23 detailed accounting of assessed funds received and expended in
24 prior years, including at a minimum:
25 (1) the amount of funds received and expended;
26 (2) the uses to which those funds were put, including
27 payment of salaries and expenses, purchase of equipment and
28 supplies and other expenditures by type;
29 (3) result achieved as a consequence of expenditures made,
30 including the number of investigations, arrests, indictments,
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1 convictions and the amounts originally claimed in cases
2 prosecuted compared to payment actually made in those cases; and
3 (4) other relevant information which the division may
4 reasonably require. The plan shall be submitted within ninety
5 days of the deadline established by the division.
6 (c) Any district attorney receiving funds under this section
7 shall submit an annual report to the division regarding the
8 success of their efforts.
9 (d) Documents required under this section shall be public
10 records.
11 Section 1204. The commissioner shall annually compile and
12 report to the General Assembly on or before March 1 the
13 following information for the previous fiscal year:
14 (1) The number of cases reported to the division.
15 (2) The number of cases rejected for which an investigation
16 was not initiated by the division due to insufficient evidence
17 to proceed, and the number of reported cases rejected for which
18 an investigation was not initiated by the division due to any
19 other reason.
20 (3) The number of cases that were prosecuted in cooperation
21 with Commonwealth licensing agencies.
22 (4) The number of cases prosecuted using funds received
23 under Article XI.
24 (5) An estimate of the economic value of insurance fraud by
25 type of insurance fraud.
26 (6) Recommendations on ways insurance fraud may be reduced.
27 (7) A summary of the division's activities aimed at reducing
28 fraud in conjunction with other law enforcement agencies.
29 (8) A summary of the division's activities with respect to
30 the reduction of fraudulent denials and payment of compensation.
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1 Section 1205. Within existing resources, insurers licensed
2 to sell workers' compensation insurance in this Commonwealth and
3 self-insured employers and professional associations shall
4 designate employes to investigate and report to the division
5 regarding possible fraudulent activities relating to workers'
6 compensation insurance. The employes shall actively cooperate
7 with the division in its investigations.
8 Section 1206. (a) The division shall maintain and operate a
9 depository data base containing concluded and current fraudulent
10 claims investigations. The data contained shall be limited to
11 information which the commissioner determines is necessary for
12 the aggressive and effective investigation and monitoring of
13 workers' compensation insurance fraud claims.
14 (b) Upon written request to an insurer by an authorized
15 governmental agency, an insurer or agent authorized by the
16 insurer to act on its behalf shall release to the division all
17 relevant information deemed important to the division by the
18 commissioner relating to any specific workers' compensation
19 fraud investigation.
20 (c) (1) When an insurer knows or reasonably knows the
21 identity of a person who it has reason to believe committed a
22 fraudulent act relating to a workers' compensation insurance
23 claim or has knowledge of a fraudulent act which is reasonably
24 believed not to have been reported to an authorized agency, the
25 insurer or its agent shall notify the local district attorney
26 and the division. The insurer shall state in its notice the
27 basis of its knowledge or reasonable belief.
28 (2) (i) The division shall provide written notification
29 that the notice has been filed to all persons who are implicated
30 in the notice.
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1 (ii) The notification shall include the basis of the notice.
2 (iii) The division shall provide all persons who are
3 implicated in the notice with an opportunity to present
4 exculpatory evidence.
5 (d) An insurer providing information to an authorized
6 governmental agency pursuant to this section shall provide the
7 information within a reasonable time, but no later than thirty
8 days after the date on which the duty to report arose.
9 (e) (1) Any information acquired pursuant to this article
10 shall not be part of the public record. Except as otherwise
11 provided by law, any authorized governmental agency, insurer or
12 agent which receives any information furnished pursuant to this
13 article shall not release that information to any person not
14 authorized to receive the information under this article. A
15 person who violates this clause is guilty of a misdemeanor of
16 the third degree.
17 (2) The evidence or information described in this section
18 shall be privileged and shall not be subject to subpoena or
19 subpoena duces tecum in a civil or criminal proceeding, unless,
20 after reasonable notice to any insurer, an agent or authorized
21 governmental agency which has an interest in the information,
22 and a hearing, the court determines that the public interest and
23 any ongoing investigation by the authorized governmental agency,
24 insurer or agent, will not be jeopardized by its disclosure or
25 by the issuance of and compliance with a subpoena or subpoena
26 duces tecum.
27 (3) No insurer, or agent authorized by an insurer to act on
28 its behalf, who furnishes information, written or oral, pursuant
29 to this article, and no authorized governmental agency or its
30 employes who furnish or receive information, written or oral,
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1 pursuant to this article or assists in any investigation of a
2 suspected violation of Article XI conducted by an authorized
3 governmental agency shall be subject to any civil liability in a
4 cause or action of any kind arising from the submission of
5 information pursuant to this article where the insurer,
6 authorized agent or authorized governmental agency acts in good
7 faith, without malice, and reasonably believes that the action
8 taken was warranted by the then-known facts, obtained by
9 reasonable efforts. Nothing in this article is intended to, nor
10 does in any way or manner, abrogate or lessen the existing
11 common law or statutory privileges and immunities of an insurer
12 or agent authorized by the insurer to act on its behalf, or any
13 authorized governmental agency or its employes.
14 (4) The department shall provide access for the Majority
15 Chairmen and the Minority Chairmen of the Appropriations
16 Committee and the Banking and Insurance Committee of the Senate
17 and the Majority Chairmen and the Minority Chairmen of the
18 Appropriations Committee and the Insurance Committee of the
19 House of Representatives to the depository data base for
20 purposes consistent with this article.
21 Section 1207. This article shall expire on January 31, 1995,
22 unless extended by the General Assembly.
23 Section 23. Notwithstanding any other provision of law to
24 the contrary, regulations promulgated under the authority of
25 section 306(f.1)(3)(ii) of the act, as amended by this act,
26 shall not be subject to the provisions of the act of October 15,
27 1980 (P.L.950, No.164), known as the Commonwealth Attorneys Act,
28 or the act of June 25, 1982 (P.L.633, No.181), known as the
29 Regulatory Review Act.
30 Section 24. (a) In order to provide an efficient
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1 implementation of this act and to assure fair and equitable
2 treatment of insureds and insurers, the order and adjudication
3 issued by the commissioner, dated after the effective date of
4 this act, In re Workers' Compensation Rate Revision Proposal C-
5 330 (Docket No. R91-09-21) and pending, is set aside as being in
6 conflict with this act.
7 (b) The commissioner shall, by March 31, 1993, issue a
8 revised order, based upon the data provided in the rate filing
9 for the order which is set aside under subsection (a) and the
10 record relating to that filing, approving manual rates to be
11 applicable to all new and renewal policies for workers'
12 compensation insurance with effective dates after March 31,
13 1993. In this revised determination of rates, the commissioner
14 shall make an adjustment to reflect the savings estimated to be
15 produced by the limitations on payments to health care providers
16 and by the other changes included in this act and shall give due
17 consideration to the extension of trend factors for an
18 additional year and the change in the Statewide average weekly
19 wage as of January 1, 1993.
20 Section 25. For purposes of the initial filing only,
21 notwithstanding any other provisions of this act, the following
22 provision shall apply:
23 (1) Each rating organization shall file, within 60 days
24 of the effective date of this act, a loss cost filing
25 pursuant to section 709(c) of Article VII of the act for new
26 and renewal policies for workers' compensation insurance.
27 Such filing shall be subject to approval or disapproval by
28 the commissioner pursuant to Article VII of the act, but such
29 approval or disapproval shall be made not later than 120
30 calendar days after first receipt of the loss cost filing.
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1 (2) In the absence of an order approving or disapproving
2 the loss cost filing within 120 calendar days of its first
3 receipt, the filing shall be deemed to meet all the
4 requirements of this act.
5 (3) No later than 30 days from the date of the actual or
6 deemed approval of the above loss cost filing, each
7 individual insurer shall file for the commissioner's approval
8 or disapproval provisions for loss adjustment, expenses,
9 assessments, taxes and profit and contingency allowances. The
10 effective date of such filings shall be the date specified in
11 the filing.
12 (4) On or before March 1, 1993, the commissioner shall
13 publish an aggregate factor for loss adjustment expenses,
14 assessments, taxes, profits and contingency allowances which
15 insurers may use in the foregoing initial filings. Any
16 insurer filing which uses an aggregate factor not in excess
17 of the foregoing factor shall be deemed approved upon filing
18 for purposes of this section.
19 Section 26. (a) The following act and parts of acts are
20 repealed:
21 Section 654 of the act of May 17, 1921 (P.L.682, No.284),
22 known as The Insurance Company Law of 1921.
23 75 Pa.C.S. §§ 1735 and 1737.
24 (b) The provisions of 75 Pa.C.S. §§ 1720 and 1722 are
25 repealed insofar as they relate to workers' compensation
26 payments or other benefits under the Workers' Compensation Act.
27 (c) All other acts and parts of acts are repealed insofar as
28 they are inconsistent with this act.
29 Section 27. This act shall take effect as follows:
30 (1) The addition of Article VII of the act shall take
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1 effect immediately.
2 (2) The addition of Articles VIII and IX of the act
3 shall take effect in 120 days.
4 (3) Sections 23 and 26(a) of this act and this section
5 shall take effect immediately.
6 (4) The remainder of this act shall take effect in 60
7 days.
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