Regular Session 2015-2016 Senate Bill 0876 P.N. 1930

PRIOR PRINTER'S NOS. 1022, 1773

PRINTER'S NO. 1930

THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

No.

876

Session of

2015

INTRODUCED BY GORDNER, BAKER, EICHELBERGER, RAFFERTY, FOLMER,

VULAKOVICH AND MENSCH, JUNE 8, 2015

AS AMENDED ON SECOND CONSIDERATION, JUNE 14, 2016

AN ACT

Amending the act of June 2, 1915 (P.L.736, No.338), entitled, as

reenacted and amended, "An act defining the liability of an

employer to pay damages for injuries received by an employe

in the course of employment; establishing an elective

schedule of compensation; providing procedure for the

determination of liability and compensation thereunder; and

prescribing penalties," in liability and compensation,

further providing for injuries outside this Commonwealth; in

procedure, further providing for the Workmen's Compensation

Administration Fund; and, in the Uninsured Employers Guaranty

Fund, further providing for definitions, for fund, for

claims, for claim petition, for administration and for

assessments and transfers; and providing for uninsured

employer obligations, for administrative penalties and stop-

work orders and for annual reports to General Assembly.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. Section 305.2(c) of the act of June 2, 1915

(P.L.736, No.338), known as the Workers' Compensation Act,

reenacted and amended June 21, 1939 (P.L.520, No.281) and added

December 5, 1974 (P.L.782, No.263), is amended and the section

is amended by adding a subsection to read:

Section 305.2. * * *

reason of an injury sustained in this State in employment by an

employer who is domiciled in another state and who has not

secured the payment of compensation as required by this act, the

[employer or his carrier may file with the director a

certificate, issued by] department may verify with the

commission or agency of such other state having jurisdiction

over [workmen's] workers' compensation claims[, certifying] that

such employer has secured the payment of compensation under the

[workmen's] workers' compensation law of such other state and

that with respect to said injury such employe is entitled to the

benefits provided under such law.

[In such event:

(1) The filing of such certificate shall constitute an

appointment by such employer or his carrier of the Secretary of

Labor and Industry as his agent for acceptance of the service of

process in any proceeding brought by such employe or his

dependents to enforce his or their rights under this act on

account of such injury;

(2) The secretary shall send to such employer or carrier, by

registered or certified mail to the address shown on such

certificate, a true copy of any notice of claim or other process

served on the secretary by the employe or his dependents in any

proceeding brought to enforce his or their rights under this

act;]

(3) The following shall apply:

(i) If such employer is a qualified self-insurer under the

[workmen's] workers' compensation law of such other state, such

employer shall[, upon submission of evidence, satisfactory to

the director, of his ability to meet his liability to such

employe under this act,] be deemed, for the purposes of such

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employe, to be a qualified self-insurer under this act[;].

(ii) If such employer's liability under the workmen's

compensation law of such other state is insured, such employer's

carrier, as to such employe or his dependents only, shall be

deemed to be an insurer authorized to write insurance under and

be subject to this act: Provided, however, That unless its

contract with said employer requires it to pay an amount

equivalent to the compensation benefits provided by this act,

its liability for income benefits or medical and related

benefits shall not exceed the amounts of such benefits for which

such insurer would have been liable under the workmen's

compensation law of such other state[;].

(4) If the total amount for which such employer's insurance

is liable under clause (3) above is less than the total of the

compensation benefits to which such employe is entitled under

this act, the [secretary] department may, if [he deems it]

necessary, require the employer to file security[, satisfactory

to the secretary, to secure] to guarantee the payment of

benefits due such employe or his dependents under this act[;

and].

(5) Upon compliance with the preceding requirements of this

subsection (c), such employer, as to such employe only, shall be

deemed to have secured the payment of compensation under this

act[.], and shall not be an uninsured employer for purposes of

Article XVI.

(c.1) If an employe alleges an injury that is incurred with

an employer which is domiciled in another state and which has

not secured the payment of compensation as required by this act,

such employe shall provide to the Uninsured Employers Guaranty

Fund and to any worker's compensation judge hearing a petition

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against the fund, a written notice, denial , citation of law or

court or administrative ruling from such other state or an

insurer licensed to write insurance in that state as to that

employer, indicating that the employe is not entitled to

workers' compensation benefits in that state. No compensation

shall be payable from the Uninsured Employers Guaranty Fund

until the employe submits the notice, denial, citation or

ruling, however, the employe may file a notice or petition

against the fund under Article XVI of this act prior to the

submission.

* * *

Section 2. Section 446(a) and (b) of the act, amended June

22, 2000 (P.L.390, No.53) and June 22, 2001 (P.L.606, No.49),

are amended to read:

Section 446. (a) There is hereby created a special fund in

the State Treasury, separate and apart from all other public

moneys or funds of this Commonwealth, to be known as the

Workmen's Compensation Administration Fund.

(a.1) The purpose of [this fund] the Workmen's Compensation

Administration Fund shall be to finance:

(1) the Prefund Account established in section 909(a); and

(2) the operating and administrative expenses of the

Department of Labor and Industry, including the Workmen's

Compensation Appeal Board and staff, but not the State Workmen's

Insurance Fund, in the direct administration of The Pennsylvania

Workmen's Compensation Act and The Pennsylvania Occupational

Disease Act [including].

(a.2) The operating and administrative expenses in

subsection (a.1)(2) shall include only the following:

(1) wages and salaries of employes for services performed in

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the administration of these acts;

(2) reasonable travel expenses for employes while engaged in

official business; [and]

(3) moneys expended for office rental, equipment rental,

supplies, equipment, repairs, services, postage, books, and

periodicals[.] AND

(4) OTHER OPERATING AND ADMINISTRATIVE EXPENSES NECESSARY

FOR THE ADMINISTRATION OF THIS ACT.

(b) The [fund] Workmen's Compensation Administration Fund

shall be maintained by no more than one (1) annual assessment

payable in any calendar year on insurers and self-insurers under

this act, including the State Workers' Insurance Fund[. After

the initial term, budgeted expenses shall be approved by the

General Assembly on a fiscal year basis. Thereafter, the] as

follows:

(1) The department shall [make assessments and] submit for

approval to the General Assembly on a fiscal year basis a

proposed budget sufficient to cover the Prefund Account and

other operating and administrative expenses under subsection

(a.1). The total amount approved by the General Assembly shall

be the approved budget. The department shall collect moneys

based on the ratio that such insurer's or self-insurer's

payments of compensation bear to the total compensation paid in

the preceding calendar year in which the annual assessment is

made. [The total amount assessed shall be BASED UPON the

approved budget.]

(2) If on January 31, there exists in the [administration

fund] Workmen's Compensation Administration Fund any money in

excess of one hundred [thirty-three] twenty per centum of the

[current] approved budget, the following fiscal year's

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assessment shall be reduced by [an] A DOLLAR amount equal to

that excess amount.

* * *

Section 3. Sections 1601, 1602, 1603, 1604 and 1605 of the

act, added November 9, 2006 (P.L.1362, No.147), are amended to

read:

Section 1601. Definitions.

The following words and phrases when used in this article

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Compensation." Benefits paid pursuant to sections 306 and

307.

"Employer." Any employer as defined in section 103. The term

does not include a person that qualifies as a self-insured

employer under section 305.

"Fund." The Uninsured Employers Guaranty Fund established in

section 1602. The fund shall not be considered an insurer and

shall not be subject to penalties, unreasonable contest fees,

interest or any reporting and liability requirements under

section 440.

"Policyholder." A holder of a workers' compensation policy

issued by the State Workers' Insurance Fund, or an insurer that

is a domestic, foreign or alien mutual association or stock

company writing workers' compensation insurance on risks which

would be covered by this act.

"Secretary." The Secretary of Labor and Industry of the

Commonwealth.

Section 1602. Fund.

(a) Establishment.--

(1) There is established a special fund to be known as

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the Uninsured Employers Guaranty Fund.

(2) The fund shall be maintained as a separate fund in

the State Treasury subject to the procedures and provisions

set forth in this article.

(b) Source.--The sources of the fund are:

(1) Assessments provided for under section 1607.

(2) Reimbursements or restitution.

(3) Interest on money in the fund.

(4) Administrative penalties provided for under section

1611.

fund for the exclusive purpose of paying to any claimant or his

dependents workers' compensation benefits due and payable under

this act and the act of June 21, 1939 (P.L.566, No.284), known

as The Pennsylvania Occupational Disease Act, and any costs

specifically associated therewith where the employer liable for

the payments failed to insure or self-insure its workers'

compensation liability under section 305 at the time the

injuries took place.

(d) Administration.--The secretary shall be the

administrator of the fund and shall have the power to collect

money for and disburse money from the fund.

(e) Status.--The fund shall have all of the same rights[,

duties, responsibilities and obligations] as an insurer.

Section 1603. Claims.

(a) Scope.--This section shall apply to claims for an injury

or a death which occurs on or after the effective date of this

article.

(b) Time.--An injured worker shall notify the fund within 45

days after the worker [knew] has been advised by the employer or

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another source that the employer was uninsured. The department

shall have adequate time to monitor the claim and shall

determine the obligations of the employer. No employee shall

receive compensation [shall be paid] from the fund [until notice

is given] unless:

(1) the employee notifies the fund within the time

period specified in this subsection; and

(2) the department determines that the employer failed

to voluntarily accept and pay the claim or subsequently

defaulted on payments of compensation. [No compensation shall

be due until notice is given.]

in accordance with the provisions of this act.

(d) Petitions.--

(1) No claim petition may be filed against the fund

until at least 21 days after notice of the claim is made to

the fund.

(2) A claim petition shall be filed within 180 days

after notice of the claim is made to the fund. If the time

requirement under this paragraph is not met, a claim petition

shall not be allowed.

(e) List of providers.--

(1) The fund may establish lists of at least six

designated health care providers that are accessible in each

county in specialties relevant to the treatment of work

injuries in this Commonwealth, as referenced in section

306(f.1)(1).

(2) If the fund establishes a list under paragraph (1),

the fund shall be responsible only to reimburse expenses of

medical treatments, services and accommodations rendered by

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the physicians or other health care providers that are

designated on the list for the period set forth in section

306(f.1)(1) from the date of the employee's notice to the

fund under subsection (b).

(3) On the notice under subsection (b), the fund shall:

(i) provide access to the list of designated

providers to the employee; and

(ii) notify the employee of the requirements of this

subsection.

(4) If the employee receives medical treatments,

services or accommodations from a health care provider that

is not designated on the list, the fund shall be relieved of

liability for the payment of medical treatments, services or

accommodations rendered during the period set forth in

section 306(f.1)(1) from the date of the employee's notice to

the fund under subsection (b).

Section 1604. Claim petition.

(a) Authorization.--If a claim for compensation is filed

under this article and the claim is not voluntarily accepted as

compensable, the employee may file a claim petition naming both

the employer and the fund as defendants. Failure of the

uninsured employer to answer a claim petition shall not serve as

an admission or otherwise bind the fund under section 416.

(b) Amount of wages.--In a proceeding under this article,

the fund shall not be liable for wage loss benefits unless the

amount of wages the employee earned at the time of injury is

established by one of the following:

(1) A check, check stub or payroll record.

(2) A tax return. This paragraph includes IRS form W-2

and form 1099, and successors to those forms.

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(3) Unemployment compensation records, including form

UC-2A.

(4) Bank statements or records showing regular and

recurring deposits.

(5) Written documentation created contemporaneously with

the payment of wages.

(6) Testimony of the uninsured employer presented under

oath at a hearing or deposition.

(7) Testimony of the claimant, if found credible by the

judge , which is provided in addition to one or more of the

items listed in paragraphs (1), (2), (3), (4), (5) and (6) .

TESTIMONY AND FINDS IT TO BE CREDIBLE UNDER SUBSECTION (B)(7) AS

THE SOLE BASIS FOR DETERMINING WAGE LOSS BENEFITS, WITHOUT

SUPPORTING EVIDENCE ESTABLISHED IN SUBSECTION (B)(1), (2), (3),

(4), (5) OR (6), THE WAGE LOSS BENEFIT RATE SHALL BE SIXTY-SIX

AND TWO-THIRDS PERCENT OF THE AVERAGE WEEKLY WAGE FOR THE

CLAIMANT'S OCCUPATION. THE JUDGE MAY REDUCE THE AVERAGE WEEKLY

WAGE LOSS BENEFIT UPON THE SUBMISSION OF EVIDENCE INDICATING A

LESSER WAGE AMOUNT OR BASED ON THE CLAIMANT'S LENGTH OF

EMPLOYMENT WITH THE EMPLOYER. FOR THE PURPOSES OF THIS

SUBSECTION, THE TERM "AVERAGE WEEKLY WAGE" IS THE AVERAGE WEEKLY

WAGE FOR THE CLAIMANT'S OCCUPATION BY METROPOLITAN STATISTICAL

AREA, AS DETERMINED BY THE UNITED STATES DEPARTMENT OF LABOR FOR

THE CALENDAR YEAR PRIOR TO THE YEAR IN WHICH THE CLAIMANT'S

INJURY OCCURRED, AND SHALL BE BASED ON THE METROPOLITAN

STATISTICAL AREA IN WHICH THE CLAIMANT'S INJURY OCCURRED.

Section 1605. Department.

(a) Insurance inquiry.--Within ten days of notice of a

claim, the fund shall demand from the employer proof of

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applicable insurance coverage. Within 14 days from the date of

the fund's request, the employer must provide proof of

insurance. If the employer does not provide proof, there shall

be rebuttable presumption of uninsurance.

(b) Reimbursement.--The department shall, on behalf of the

fund, exhaust all remedies at law against the uninsured employer

in order to collect the amount of a voluntary payment or award,

including voluntary payment or award itself and reimbursement of

costs, interest, penalties, fees under section 440 and costs of

the fund's attorney, which have been paid by the fund. The fund

shall also be reimbursed for costs or attorney fees which are

incurred in seeking reimbursement under this subsection. The

department is authorized to investigate violations of section

305 for prosecution of the uninsured employer pursuant to

section 305(b) and shall pursue such prosecutions through

coordination with the appropriate prosecuting authority. [Any

restitution obtained shall be paid to the fund.] The fund shall

be entitled to restitution of all payments made under this

article as the result of any injury to an employee of an

uninsured employer. Restitution to the fund under section 305

shall not be limited to the amount specified in the award of

compensation and shall include the amount of any voluntary

payment or award and reimbursement of the fund's costs and the

fees of the fund's attorney.

represent the fund as a creditor in a bankruptcy proceeding

involving the uninsured employer.

(d) Liens.--If payments of any nature have been made by the

fund on behalf of an uninsured employer, the fund shall file a

certified proof of payment with the prothonotary of a court of

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common pleas, and the prothonotary shall enter the entire

balance as a judgment against the employer. The judgment shall

be a statutory lien against property of the employer in the

manner set forth in section 308.1 of the act of December 5, 1936

(2nd Sp.Sess., 1937 P.L.2897, No.1), known as the Unemployment

Compensation Law, and execution may issue on it. The fund has

the right to update the amount of the lien as payments are made.

Section 4. Section 1607 of the act is amended to read:

Section 1607. Assessments and transfers.

(a) [For the purpose of establishing and maintaining the

fund, the sum of $1,000,000 is hereby transferred from the

Administration Fund established under section 446 to the fund

for operation of the fund for the period commencing on the

effective date of this section through June 30, 2007.] (1) The

department shall calculate the amount necessary to maintain the

fund and shall assess insurers and self-insured employers as is

necessary to provide an amount sufficient to pay outstanding and

anticipated claims in the following year in a timely manner and

to meet the costs of the department to administer the fund. The

fund shall be maintained in the same manner as the Workmen's

Compensation Administration Fund under section 446 and the

regulations thereunder.

(2) In no event shall any annual assessment exceed

[0.1%] 0.25% of the total compensation paid by all insurers

or self-insured employers during the previous calendar year.

(3) Each fiscal year, the department shall determine the

expenses of the fund for the prior fiscal year. If the total

amount assessed for the prior fiscal year exceeds 130% of the

expenses for that prior fiscal year, the current fiscal year

assessment shall be reduced by an A DOLLAR amount equal to

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that excess amount.

[(b) For the purposes of further maintaining the fund, the

sum of $4,000,000 is hereby transferred to the fund from the

Administration Fund established under section 446.]

Employers Guaranty Fund, the outstanding loan which occurred on

March 15, 2016, from the Workers' Compensation Administration

Fund established under section 446 in the amount of $4,000,000

used to maintain the fund is hereby designated an additional

transfer and shall not be repaid.

Section 5. The act is amended by adding sections to read:

Section 1609. (Reserved).

Section 1610. Uninsured employer obligations.

Nothing in this article shall alter the uninsured employer's

obligations under this act.

Section 1611. Administrative penalties and stop-work orders.

(a) Certification.--

(1) If the department receives information indicating

that an employer has failed to insure the employer's

obligations as required by this act, the department may

require the employer to certify, on a form prescribed by the

department, that the employer meets one of the following:

(i) Possesses the requisite insurance. This

subparagraph shall require the identification of the

insurer, policy period and policy number.

(ii) No longer operates a business. This

subparagraph shall require a statement of the dates of

operation and cessation of operation.

(iii) Does not employ an individual entitled to

compensation under this act.

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(iv) Is otherwise exempt from the requirements of

obtaining insurance under this act. This paragraph shall

require the identification of the applicable exemption.

(2) The employer shall return the form to the department

within 15 days of service of the form by the department.

(i) If an employer does not return the form within

15 days of service by the department, the department may

assess an administrative penalty of $200 per day until

the earlier of:

(A) the date the employer complies; or

(B) 30 days from service under this paragraph.

(ii) If an employer does not comply with this

paragraph within 45 days of service under this paragraph,

the department may proceed with further enforcement under

subsection (d).

(b) Good cause.--If the department's investigation under

section 1605 reveals good cause to believe that the employer is

required and has failed to insure the employer's liabilities as

required by this act, the department may proceed with further

enforcement under subsection (d).

and this article, each department employee or agent charged with

enforcement may enter the premises or worksite of an employer

that is subject to subsection (a)(2)(ii) or (b).

(d) Stop-work order.--The department may issue an order

requiring the cessation of operations of an employer that has

failed to insure its liabilities as required by this act. The

following apply:

(1) The order may require compliance with conditions

necessary to ensure that the employer insures its liabilities

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as required by this act.

(2) The order shall take effect when served upon the

employer by first class mail or posting at the employer's

worksite.

(3) The order shall remain in effect until released by

the department or a court of competent jurisdiction.

(4) The order shall be effective against a successor

entity that:

(i) has one or more of the same principals or

officers as the employer against whom the order was

issued; and

(ii) is engaged in the same or equivalent trade or

activity.

(e) Nonexclusivity.--An order under subsection (d) is in

addition to any penalty which may be imposed pursuant to this

act.

(f) Appeal.--

(1) An order under subsection (d) is subject to 2

Pa.C.S. Ch. 7 Subch. A (relating to judicial review of

Commonwealth agency action).

(2) Except as set forth in paragraph (3), an appeal of a

penalty under subsection (a)(2)(i) or an order under

subsection (d) shall not act as a supersedeas.

(3) Upon application and for cause shown, the department

may issue a supersedeas.

(g) Noncompliance.--

(1) Upon failure to comply with an order under

subsection (d) and (f), the department may institute an

action to enforce the order.

(2) An action under this subsection may be initiated as

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follows:

(i) In Commonwealth Court under 42 Pa.C.S. §

761(a) (2) (relating to original jurisdiction).

(ii) In a court of common pleas under 42 Pa.C.S. §

931(b) (relating to original jurisdiction and venue).

Venue for an action under this subparagraph lies in

either:

(A) the Twelfth Judicial District; or

(B) the judicial district where the violation

occurred.

Section 1612. Annual report to General Assembly.

On or before September 1 of each year, the Department of

Labor and Industry shall submit to the Labor and Industry

Committee of the Senate and the Labor and Industry Committee of

the House of Representatives a report outlining the department's

efforts to identify and prosecute uninsured employers, any

penalties resulting from that activity, the status of claims and

operations, including the number of claims filed, pending and

paid in the past year and an analysis of the administrative

expenses of the fund.

Section 6. Applicability is as follows:

(1) The amendment or addition of section 1603(d) and (e)

of the act shall apply to every claim in which notice under

section 1603 of the act is provided to the fund on or after

the effective date of this paragraph.

(2) The following provisions shall apply retroactively

to claims existing as of the effective date of this paragraph

for which compensation has not been paid or awarded:

(i) The amendment of section 305.2(c) of the act.

(ii) The amendment of section 1601 of the act.

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(iii) The amendment of section 1603(b) of the act.

(iv) The amendment of section 1604 of the act.

Section 7. This act shall take effect immediately.

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