Pennsylvania Act 1937-470 — WORKERS' COMPENSATION SECURITY FUND ACT

Act text

WORKERS' COMPENSATION SECURITY FUND ACT
                 Act of Jul. 1, 1937, P.L. 2532, No. 470              Cl. 77
                                  AN ACT

     To establish funds to provide security for the payment of
        benefits in event of the insolvency of an insurance carrier
        authorized to write workmen's compensation insurance in this
        Commonwealth; and to provide for the administration thereof.

        Section 1.  Be it enacted, &c., That this act shall be known,
     and may be cited, as the "Workers' Compensation Security Fund
     Act."
        (1 amended Apr. 13, 1988, P.L.344, No.48)
        Section 2.  As hereafter used in this act, unless the context
     or subject matter otherwise require--
        "Fund" means the Worker's Compensation Security Fund created
     by this act. (Def. amended Apr. 13, 1988, P.L.344, No.48)
        "Fund year" means the calendar year.
        "Stock Company" means any stock corporation authorized to
     transact the business of workmen's compensation insurance in
     this Commonwealth, except an insolvent stock company.
        "Mutual carrier" means any corporation or association
     organized and operating on the mutual plan, including the State
     Workmen's Insurance Fund, authorized to transact the business of
     workmen's compensation insurance in this Commonwealth, except an
     insolvent mutual carrier.
        "Reciprocal exchange" means any association or group of
     persons exchanging contracts of insurance or indemnity on the
     reciprocal or inter-insurance plan, authorized to transact the
     business of workmen's compensation insurance in this
     Commonwealth, except an insolvent reciprocal exchange.
        "Carrier" means either a stock company, a mutual company, a
     reciprocal exchange, or the State Workmen's Insurance Fund, as
     the context may require.
        "Insolvent stock company," "insolvent mutual carrier," or
     "insolvent reciprocal exchange" means a stock company, a mutual
     company, a reciprocal exchange, or the State Workmen's Insurance
     Fund, as the case may be, which has been determined to be
     insolvent, or for which, or for the assets of which, a receiver
     or liquidator, howsoever entitled, has been appointed by a court
     or public officer of competent jurisdiction and authority, after
     the effective date of this act.
        "Commissioner" means the Insurance Commissioner of this
     Commonwealth.
        "Workmen's Compensation Law," means The Workmen's
     Compensation Act of 1915 or any supplement or amendment thereto
     or revision thereof, the Pennsylvania Occupational Disease Act
     of 1939 or any supplement or amendment thereto or revision
     thereof and the Longshore and Harbor Workers' Compensation Act
     (44 Stat. 1424, 33 U.S.C. § 901 et seq.). (Def. amended Apr. 13,
     1988, P.L.344, No.48)
        (2 amended Oct. 18, 1975, P.L.419, No.117)
        Section 3.  There is hereby created a fund, to be known as
     "The Workers' Compensation Security Fund," for the purpose of
     assuring to persons entitled thereto the compensation provided
     by the Workmen's Compensation Law for employments insured in
     insolvent stock companies; insolvent mutual carriers; insolvent
     reciprocal exchanges; or the State Workmen's Insurance Fund.
     Such fund shall be applicable to the payment of valid claims for
     compensation heretofore or hereafter made pursuant to the
     Workmen's Compensation Law and remaining unpaid, in whole or in
     part, by reason of the default, after the effective date of this
     act of an insolvent stock company; insolvent mutual carrier or
     insolvent reciprocal exchange or the insolvent State Workmen's
     Insurance Fund. Expenses of administration also shall be paid
     from the fund as herein provided. Such fund shall consist of all
     contributions received and paid into the fund by stock
     companies, mutual carriers and reciprocal exchanges as herein
     defined, all property and securities acquired by and through the
     use of moneys belonging to the fund, and of interest earned upon
     moneys deposited or invested, as herein provided. The fund shall
     be administered by the commissioner in accordance with the
     provisions of this act.
        (3 amended Apr. 13, 1988, P.L.344, No.48)
        Section 4.  Every stock company, mutual carrier and
     reciprocal exchange shall, on or before the first day of
     September, one thousand nine hundred and thirty-eight, file with
     the Treasurer of the Commonwealth, and with the commissioner,
     identical returns under oath, on a form to be prescribed and
     furnished by the commissioner, stating the amount of net written
     premiums for the year's period ending June thirtieth, one
     thousand nine hundred and thirty-eight, on policies issued,
     renewed, or extended by such stock company, mutual carrier and
     reciprocal exchange to insure payment of compensation pursuant
     to the Workmen's Compensation Law. For the purposes of this act,
     "net written premiums" shall mean gross written premiums, less
     return premiums on policies returned not taken and on policies
     cancelled. Thereafter on or before the first day of September of
     each year, each such stock company, mutual carrier and
     reciprocal exchange shall file similar identical returns,
     stating the amount of such net written premiums for the year's
     period ending on the preceding June thirtieth on policies
     issued, renewed, or extended by such stock company, mutual
     carrier and reciprocal exchange.
        (4 amended Oct. 18, 1975, P.L.419, No.117)
        Section 5.  (5 deleted by amendment June 22, 2000, P.L.379,
     No.49)

        Compiler's Note:  Section 2 of Act 49 of 2000, which deleted
            section 5, provided that the amendment of section 5 shall
            take effect on the effective date of regulations
            promulgated under section 9(1).
        Compiler's Note:  Section 6(a) of Act 48 of 1981, which
            provided for the fixing of fees charged by administrative
            agencies, provided that section 5 is repealed insofar as
            it establishes a set fee for any activity inconsistent
            with the fees set forth in Act 48.
        Section 6.  (6 repealed Oct. 18, 1975, P.L.419, No.117)
        Section 7.  (7 repealed Oct. 18, 1975, P.L.419, No.117)
        Section 8.  (8 repealed Oct. 18, 1975, P.L.419, No.117)
        Section 9.  (1)  The Insurance Department shall adopt
     regulations as necessary to administer the fund, including
     regulations to establish contributions to be paid to the fund.
     Contributions shall be established on an actuarial basis to
     provide an amount sufficient to pay outstanding and anticipated
     claims in a timely manner, to meet the costs of the Insurance
     Department to administer the fund and to maintain a minimum
     balance in the fund of $500,000,000. Nothing in this section
     shall prevent the department from using money in the fund to pay
     liabilities and claims. If, due to the payment of liabilities or
     claims, the balance of the fund is reduced below $500,000,000,
     the department shall require contributions to maintain the
     actuarial soundness of the fund and to restore, in a timely
     manner, the balance of the fund to a level at or above
     $500,000,000.
        (2)  In the event any carrier shall fail to file any return,
     or make any payment required by this act, or in case the
     commissioner shall have cause to believe that any return or
     other statement filed is false or inaccurate in any particular,
     or that any payment made is incorrect, he shall have full
     authority to examine all the books and records of the carrier
     for the purpose of ascertaining the facts, and shall determine
     the correct amount to be paid, and may proceed in any court of
     competent jurisdiction to recover for the benefit of the fund
     any sums shown to be due upon such examination and
     determination. Any carrier which fails to make any statement as
     required by this act, or to pay any contribution when due, shall
     thereby forfeit to the fund a penalty of five per centum of the
     amount of unpaid contribution determined to be due, as provided
     by this act, plus one per centum of such amount for each month
     of delay or fraction thereof after the expiration of the first
     month of such delay. The commissioner shall revoke the
     certificate of authority to do business in this Commonwealth of
     any carrier which shall fail to comply with the provisions of
     this act or to pay any penalty imposed in accordance with this
     act.
        (9 amended June 22, 2000, P.L.379, No.49)
        Section 10.  (1)  The fund created by this act shall be
     separate and apart from all other Commonwealth moneys. The State
     Treasurer shall be the custodian of said fund, and all
     disbursements from said fund shall be made by the State
     Treasurer upon vouchers signed by the commissioner.
        (2)  The Insurance Commissioner and the State Treasurer
     jointly shall have full and exclusive power to invest moneys of
     the fund with that degree of judgment, skill and care under the
     circumstances then prevailing which persons of prudence,
     discretion and intelligence, who are familiar with such matters,
     exercise in the management of their own affairs, not related to
     speculation, but to the permanent disposition of the funds,
     considering the probable income to be derived and the probable
     safety of their capital. Investments shall be made in accordance
     with a written investment policy approved by the commissioner
     and the State Treasurer. The investment policy shall address
     liquidity, diversification, safety of principal, yield, maturity
     and quality and the capability of investment management with
     primary emphasis on safety and liquidity. The commissioner and
     the State Treasurer shall have the power to hold, purchase,
     sell, lend, assign, transfer or dispose of any: securities and
     investments in which moneys from the fund have been invested;
     proceeds from investments, including commissions which have
     accrued to the benefit of the fund as a result of investments;
     and any other assets belonging to the fund, subject to the
     standard of prudence established under this section.
        (3)  If at any time any contributing carrier, as herein
     defined, shall, upon due notice to the commissioner, cease to
     transact the business of workmen's compensation insurance, the
     contributions of such carrier, at the time such carrier ceases
     to transact the business of workmen's compensation insurance,
     shall be refunded, provided that all its outstanding liability
     on workmen's compensation insurance shall have terminated.
        (10 amended June 22, 2000, P.L.379, No.49)

        Compiler's Note:  Section 2 of Act 49 of 2000, which deleted
            section 10, provided that the amendment of section 10
            shall take effect on the effective date of regulations
            promulgated under section 9(1).
        Section 11.  (1)  A valid claim for compensation or
     installments thereof, heretofore or hereafter made pursuant to
     the Workmen's Compensation Law, as defined herein, which has
     remained or shall remain due and unpaid for sixty days by reason
     of default, after the effective date of this act, by an
     insolvent carrier, shall be paid from the fund in the manner
     provided in this act. Any person in interest may file with the
     commissioner an application for payment of compensation from the
     fund on a form to be prescribed and furnished by the
     commissioner. A certified copy of the award must accompany the
     application. The commissioner shall thereupon certify to the
     State Treasurer such award for payment according to the terms of
     the same, whereupon payment shall be made by the State
     Treasurer, on warrant of the Auditor General and on requisition
     of the commissioner. Claimants receiving benefits from the fund
     by virtue of Longshore and Harbor Workers' Compensation Act (44
     Stat. 1424, 33 U.S.C. § 901 et seq.) awards shall be subject to
     the provisions of this act.
        (1.1)  The insolvency, bankruptcy, or dissolution of the
     insured shall effect a termination of security fund benefits
     provided hereunder for claims arising under the Longshore and
     Harbor Workers' Compensation Act.
        (1.2)  Payment of compensation pursuant to the Longshore and
     Harbor Workers' Compensation Act shall be made by the fund at
     the Federal benefit level or at the maximum State benefit level,
     whichever is lower.
        (2)  Payment of an award from the fund shall not give the
     commissioner of such fund any right of recovery against the
     employer.
        (3)  An employer may pay an award or a part thereof in
     advance of payment from the fund and shall thereupon be
     subrogated to the rights of the employe or other party in
     interest against such fund to the extent of the amount so paid.
        (4)  The commissioner shall be entitled to recover the sum of
     all liabilities of such insolvent carrier assumed by the fund
     from such carrier, its receiver, liquidator, rehabilitator,
     conservator or trustee in bankruptcy and all others, except
     employers, liable under any of the terms of the Workmen's
     Compensation Law, and may prosecute an action or other
     proceedings therefor. All moneys, recovered in any such action
     or proceedings, shall forthwith be placed to the credit of the
     fund which has assumed such liability by the State Treasurer, to
     reimburse the fund which has assumed such liability, to the
     extent of the moneys so recovered and paid. If and when all
     liabilities of all carriers for workmen's compensation losses in
     this Commonwealth shall have been fully liquidated, distribution
     shall be made to all contributing carriers of the remaining
     balance of such fund: Provided, however, That an insolvent
     carrier shall be entitled to share in the said distribution of
     the fund only to the extent that its distributive share of said
     fund is in excess of any losses paid out of said fund for its
     account by the treasurer, in accordance with the terms of this
     act.
        (11 amended Apr. 13, 1988, P.L.344, No.48)
        Section 12.  After the effective date of this act, upon any
     carrier becoming insolvent the commissioner shall so notify the
     Workmen's Compensation Board, which shall immediately advise the
     commissioner--(a) of all claims for compensation pending or
     thereafter made against every employer insured by such insolvent
     carrier, or against such insolvent carrier; (b) of all unpaid or
     continuing awards made upon claims for compensation prior to or
     after the date of such notice from the commissioner; and (c) of
     all appeals from or applications for modification, recision or
     review of such awards.
        (12 amended Oct. 18, 1975, P.L.419, No.117)
        Section 13.  The commissioner, or a representative committee
     of interested carriers which the commissioner may from time to
     time appoint, or both, may investigate and defend before the
     Workmen's Compensation Board or any court, any and all claims
     for compensation against an employer insured by an insolvent
     carrier, or against an insolvent carrier, and may prosecute any
     pending appeal from, or may appeal from, or make application for
     modification, recision or review of any agreement, award or
     decision against any such employer or carrier. Until all such
     claims for compensation are closed and all awards are paid, the
     commissioner, as administrator of the funds, shall be a party in
     interest in respect to all such claims, agreements and awards.
     For the purposes of this section, the commissioner shall have
     exclusive power to select and employ such clerks and assistants
     as may be deemed necessary, and to fix and determine their
     powers and duties.
        Section 14.  The expenses of administering the fund shall be
     paid out of such fund. The commissioner shall serve as
     administrator of the fund without additional remuneration, but
     may be allowed and paid, from the fund, expenses incurred in the
     performance of his duties in connection with the fund. The
     compensation of persons employed by the commissioner, for the
     purposes of this act, in connection with the fund shall be
     deemed administration expenses payable out of such fund, in the
     manner provided in section ten of this act. The commissioner
     shall include in his regular report to the Governor a statement
     of the expenses of administering the fund during the period
     covered by such report.
        (14 amended Oct. 18, 1975, P.L.419, No.117)
        Section 15.  Other than the obligation to contribute to the
     fund as provided in this act, no deposit, bond or other security
     shall be required of any carrier as a condition to authorization
     to transact the business of workmen's compensation insurance in
     this Commonwealth.
        Contributions to the fund created by this act, at the rates
     fixed by this act, shall be allowed in full as expenses of the
     business of workmen's compensation insurance by the commissioner
     in fixing and approving rates for such insurance.
        (15 amended Oct. 18, 1975, P.L.419, No.117)
        Section 15.1.  All assets, moneys, securities, reserves,
     surplus liabilities and the like presently in either the Stock
     Workmen's Compensation Security Fund or the Mutual Carrier and
     Reciprocal Exchange Workmen's Compensation Security Fund shall
     forthwith be transferred to the single Workers' Compensation
     Security Fund created hereby.
        (15.1 amended Apr. 13, 1988, P.L.344, No.48)
        Section 16.  If any part of this act be adjudged
     unconstitutional, it shall not invalidate the remainder of the
     act.
        All acts or parts of acts inconsistent with the provisions of
     this act are hereby repealed.
        Section 17.  This act shall take effect on the first day of
     June, one thousand nine hundred and thirty-seven.