HOUSE BILL No. 2591

      An Act concerning workers compensation; relating to the coverage of self-employed con-
      tractors; death benefits; amending K.S.A. 44-570 and K.S.A. 1997 Supp. 44-503, 44-505,
      44-508, 44-510b and 44-532 and repealing the existing sections.

Be it enacted by the Legislature of the State of Kansas:

    Section 1. K.S.A. 1997 Supp. 44-503 is hereby amended to read as
follows: 44-503. (a) Where any person (in this section referred to as prin-
cipal) undertakes to execute any work which is a part of the principal's
trade or business or which the principal has contracted to perform and
contracts with any other person (in this section referred to as the con-
tractor) for the execution by or under the contractor of the whole or any
part of the work undertaken by the principal, the principal shall be liable
to pay to any worker employed in the execution of the work any com-
pensation under the workers compensation act which the principal would
have been liable to pay if that worker had been immediately employed
by the principal; and where compensation is claimed from or proceedings
are taken against the principal, then in the application of the workers
compensation act, references to the principal shall be substituted for ref-
erences to the employer, except that the amount of compensation shall
be calculated with reference to the earnings of the worker under the
employer by whom the worker is immediately employed. For the pur-
poses of this subsection, a worker shall not include an individual who is
a self-employed subcontractor.

    (b) Where the principal is liable to pay compensation under this sec-
tion, the principal shall be entitled to indemnity from any person who
would have been liable to pay compensation to the worker independently
of this section, and shall have a cause of action under the workers com-
pensation act for indemnification.

    (c) Nothing in this section shall be construed as preventing a worker
from recovering compensation under the workers compensation act from
the contractor instead of the principal.

    (d) This section shall not apply to any case where the accident oc-
curred elsewhere than on, in or about the premises on which the principal
has undertaken to execute work or which are otherwise under the prin-
cipal's control or management, or on, in or about the execution of such
work under the principal's control or management.

    (e) A principal contractor, when sued by a worker of a subcontractor,
shall have the right to implead the subcontractor.

    (f) The principal contractor who pays compensation to a worker of a
subcontractor shall have the right to recover over against the subcontrac-
tor in the action under the workers compensation act if the subcontractor
has been impleaded.

    (g) Notwithstanding any other provision of this section, in any case
where the contractor (1) is an employer who employs employees in an
employment to which the act is applicable, or has filed a written statement
of election with the director to accept the provisions of the workers com-
pensation act pursuant to subsection (b) of K.S.A. 44-505, and amend-
ments thereto, to the extent of such election, and (2) has secured the
payment of compensation as required by K.S.A. 44-532, and amendments
thereto, for all persons for whom the contractor is required to or elects
to secure such compensation, as evidenced by a current certificate of
workers compensation insurance, by a certification from the director that
the contractor is currently qualified as a self-insurer under that statute,
or by a certification from the commissioner of insurance that the con-
tractor is maintaining a membership in a qualified group-funded workers
compensation pool, then, the principal shall not be liable for any com-
pensation under this or any other section of the workers compensation
act for any person for which the contractor has secured the payment of
compensation which the principal would otherwise be liable for under
this section and such person shall have no right to file a claim against or
otherwise proceed against the principal for compensation under this or
any other section of the workers compensation act. In the event that the
payment of compensation is not secured or is otherwise unavailable or in
effect, then the principal shall be liable for the payment of compensation.
No insurance company shall charge a principal a premium for workers
compensation insurance for any liability for which the contractor has se-
cured the payment of compensation.

    (h) (1) For purposes of this section, any individual who is an
owner-operator and the exclusive driver of a motor vehicle that is leased
or contracted to a licensed motor carrier shall not be considered to be a
contractor within the meaning of this section or an employee of the li-
censed motor carrier within the meaning of subsection (b) of K.S.A. 44-
508, and amendments thereto, and the licensed motor carrier shall not
be considered to be a principal within the meaning of this section or an
employer of the owner-operator within the meaning of subsection (a) of
K.S.A. 44-508, and amendments thereto, if the owner-operator is covered
by an occupational accident insurance policy and is not treated under the
terms of the lease agreement or contract with the licensed motor carrier
as an employee for purposes of the federal insurance contribution act, 26
U.S.C. § 3101 et seq., the federal social security act, 42 U.S.C. § 301 et
seq., the federal unemployment tax act, 26 U.S.C. § 3301 et seq., and the
federal statutes prescribing income tax withholding at the source, 26
U.S.C. § 3401 et seq.

    (2) As used in this subsection:

    (A) ``Motor vehicle'' means any automobile, truck trailer, semitrailer,
tractor, motor bus or any other self-propelled or motor-driven vehicle
used upon any of the public highways of Kansas for the purpose of trans-
porting persons or property;

    (B) ``licensed motor carrier'' means any person, firm, corporation or
other business entity that holds a certificate of convenience and necessity,
a contract carrier permit, or an interstate license as a common, contract
or exempt carrier from the state corporation commission or is required
to register motor carrier equipment pursuant to 49 U.S.C. § 11506; and

    (C) ``owner-operator'' means an individual who is the owner of a sin-
gle motor vehicle that is driven exclusively by the owner under a lease
agreement or contract with a licensed motor carrier.

    Sec. 2. K.S.A. 1997 Supp. 44-505 is hereby amended to read as fol-
lows: 44-505. (a) Subject to the provisions of K.S.A. 44-506 and amend-
ments thereto, the workers compensation act shall apply to all employ-
ments wherein employers employ employees within this state except that
such act shall not apply to:

    (1) Agricultural pursuits and employments incident thereto, other
than those employments in which the employer is the state, or any de-
partment, agency or authority of the state;

    (2) any employment, other than those employments in which the em-
ployer is the state, or any department, agency or authority of the state,
wherein the employer had a total gross annual payroll for the preceding
calendar year of not more than $20,000 for all employees and wherein
the employer reasonably estimates that such employer will not have a
total gross annual payroll for the current calendar year of more than
$20,000 for all employees, except that no wages paid to an employee who
is a member of the employer's family by marriage or consanguinity shall
be included as part of the total gross annual payroll of such employer for
purposes of this subsection, except where the employer is a self-employed
subcontractor under circumstances wherein K.S.A. 44-503, and amend-
ments thereto, would otherwise apply;

    (3) any employment, other than those employments in which the em-
ployer is the state, or any department, agency or authority of the state,
wherein the employer has not had a payroll for a calendar year and
wherein the employer reasonably estimates that such employer will not
have a total gross annual payroll for the current calendar year of more
than $20,000 for all employees, except that no wages paid to an employee
who is a member of the employer's family by marriage or consanguinity
shall be included as a part of the total gross annual payroll of such em-
ployer for purposes of this subsection;

    (4) the employment of any firefighters who are members of a fire-
men's relief association for whom a valid statement of election to except
such members from the provisions of the workers compensation act has
been filed with the director by the governing body of such firemen's relief
association as provided in K.S.A. 44-505d and amendments thereto; or

    (5) services performed by a qualified real estate agent as an inde-
pendent contractor. For the purposes of this act a qualified real estate
agent shall be deemed to be an independent contractor if such qualified
real estate agent is licensed by the Kansas real estate commission as a
salesperson under the real estate brokers' and salespersons' license act
and for whom: (A) Substantially all of the remuneration, whether or not
paid in cash, for the services performed by such individual as a real estate
salesperson is directly related to sales or other output, including the per-
formance of services, rather than to the number of hours worked; and
(B) the services performed by the individual are performed pursuant to
a written contract between such individual and the person for whom the
services are performed and such contract provides that the individual will
not be treated as an employee with respect to such services for state tax
purposes.

    (b) Each employer who employs employees in employments which
are excepted from the provisions of the workers compensation act as
provided in subsection (a) of this section, shall be entitled to come within
the provisions of such act by: (1) Becoming a member in and by main-
taining a membership in a qualified group-funded workers' compensation
pool, as provided by K.S.A. 44-581 to 44-591, inclusive, and amendments
thereto; or (2) filing with the director a written statement of election to
accept thereunder. Such written statement of election shall be effective
from the date of filing until such time as the employer files a written
statement withdrawing such election with the director. All written state-
ments of election or of withdrawal of election filed pursuant to this sub-
section shall be in such form as may be required by the director by rules
and regulations.

    (c) This act shall not apply in any case where the accident occurred
prior to the effective date of this act. All rights which accrued by reason
of any such accident shall be governed by the laws in effect at that time.

    Sec. 3. K.S.A. 1997 Supp. 44-508 is hereby amended to read as fol-
lows: 44-508. As used in the workers compensation act:

    (a) ``Employer'' includes: (1) Any person or body of persons, corpo-
rate or unincorporate, and the legal representative of a deceased em-
ployer or the receiver or trustee of a person, corporation, association or
partnership; (2) the state or any department, agency or authority of the
state, any city, county, school district or other political subdivision or
municipality or public corporation and any instrumentality thereof; and
(3) for the purposes of community service work, the entity for which the
community service work is being performed and the governmental agency
which assigned the community service work, if any, if either such entity
or such governmental agency has filed a written statement of election
with the director to accept the provisions under the workers compensa-
tion act for persons performing community service work and in such case
such entity and such governmental agency shall be deemed to be the joint
employer of the person performing the community service work and both
shall have the rights, liabilities and immunities provided under the work-
ers compensation act for an employer with regard to the community serv-
ice work, except that the liability for providing benefits shall be imposed
only on the party which filed such election with the director, or on both
if both parties have filed such election with the director; for purposes of
community service work, ``governmental agency'' shall not include any
court or any officer or employee thereof and any case where there is
deemed to be a ``joint employer'' shall not be construed to be a case of
dual or multiple employment.

    (b) ``Workman'' or ``employee'' or ``worker'' means any person who
has entered into the employment of or works under any contract of serv-
ice or apprenticeship with an employer. Such terms shall include but not
be limited to: Executive officers of corporations; professional athletes;
persons serving on a volunteer basis as duly authorized law enforcement
officers, ambulance attendants, mobile intensive care technicians, fire-
fighters, but only to the extent and during such periods as they are so
serving in such capacities; persons employed by educational, religious and
charitable organizations, but only to the extent and during the periods
that they are paid wages by such organizations; persons in the service of
the state, or any department, agency or authority of the state, any city,
school district, or other political subdivision or municipality or public
corporation and any instrumentality thereof, under any contract of serv-
ice, express or implied, and every official or officer thereof, whether
elected or appointed, while performing official duties; persons in the serv-
ice of the state as volunteer members of the Kansas department of civil
air patrol, but only to the extent and during such periods as they are
officially engaged in the performance of functions specified in K.S.A.
48-3302 and amendments thereto; volunteers in any employment, if the
employer has filed an election to extend coverage to such volunteers;
minors, whether such minors are legally or illegally employed; and per-
sons performing community service work, but only to the extent and dur-
ing such periods as they are performing community service work and if
an election has been filed an election to extend coverage to such persons.
Any reference to an employee who has been injured shall, where the
employee is dead, include a reference to the employee's dependents, to
the employee's legal representatives, or, if the employee is a minor or an
incapacitated person, to the employee's guardian or conservator. Unless
there is a valid election in effect which has been filed as provided in K.S.A.
44-542a and amendments thereto, such terms shall not include individual
employers, limited or general partners or self-employed persons, except
a self-employed subcontractor performing work for a contractor.

    (c) (1) ``Dependents'' means such members of the employee's family
as were wholly or in part dependent upon the employee at the time of
the accident.

    (2) ``Members of a family'' means only surviving legal spouse and
children; or if no surviving legal spouse or children, then parents or grand-
parents; or if no parents or grandparents, then grandchildren; or if no
grandchildren, then brothers and sisters. In the meaning of this section,
parents include stepparents, children include stepchildren, grandchildren
include stepgrandchildren, brothers and sisters include stepbrothers and
stepsisters, and children and parents include that relation by legal adop-
tion. In the meaning of this section, a surviving spouse shall not be re-
garded as a dependent of a deceased employee or as a member of the
family, if the surviving spouse shall have for more than six months willfully
or voluntarily deserted or abandoned the employee prior to the date of
the employee's death.

    (3) ``Wholly dependent child or children'' means:

    (A) A birth child or adopted child of the employee except such a child
whose relationship to the employee has been severed by adoption;

    (B) a stepchild of the employee who lives in the employee's house-
hold;

    (C) any other child who is actually dependent in whole or in part on
the employee and who is related to the employee by marriage or consan-
guinity; or

    (D) any child as defined in subsections (3)(A), (3)(B) or (3)(C) who
is less than 23 years of age and who is not physically or mentally capable
of earning wages in any type of substantial and gainful employment or
who is a full-time student attending an accredited institution of higher
education or vocational education.

    (d) ``Accident'' means an undesigned, sudden and unexpected event
or events, usually of an afflictive or unfortunate nature and often, but not
necessarily, accompanied by a manifestation of force. The elements of an
accident, as stated herein, are not to be construed in a strict and literal
sense, but in a manner designed to effectuate the purpose of the workers
compensation act that the employer bear the expense of accidental injury
to a worker caused by the employment.

    (e) ``Personal injury'' and ``injury'' mean any lesion or change in the
physical structure of the body, causing damage or harm thereto, so that
it gives way under the stress of the worker's usual labor. It is not essential
that such lesion or change be of such character as to present external or
visible signs of its existence. An injury shall not be deemed to have been
directly caused by the employment where it is shown that the employee
suffers disability as a result of the natural aging process or by the normal
activities of day-to-day living.

    (f) The words ``arising out of and in the course of employment'' as
used in the workers compensation act shall not be construed to include
injuries to the employee occurring while the employee is on the way to
assume the duties of employment or after leaving such duties, the prox-
imate cause of which injury is not the employer's negligence. An em-
ployee shall not be construed as being on the way to assume the duties
of employment or having left such duties at a time when the worker is
on the premises of the employer or on the only available route to or from
work which is a route involving a special risk or hazard and which is a
route not used by the public except in dealings with the employer. An
employee shall not be construed as being on the way to assume the duties
of employment, if the employee is a provider of emergency services re-
sponding to an emergency.

    The words, ``arising out of and in the course of employment'' as used
in the workers compensation act shall not be construed to include injuries
to employees while engaged in recreational or social events under cir-
cumstances where the employee was under no duty to attend and where
the injury did not result from the performance of tasks related to the
employee's normal job duties or as specifically instructed to be performed
by the employer.

    (g) ``Burden of proof'' means the burden of a party to persuade the
trier of facts by a preponderance of the credible evidence that such party's
position on an issue is more probably true than not true on the basis of
the whole record.

    (h) ``Director'' means the director of workers compensation as pro-
vided for in K.S.A. 75-5708 and amendments thereto.

    (i) ``Health care provider'' means any person licensed, by the proper
licensing authority of this state, another state or the District of Columbia,
to practice medicine and surgery, osteopathy, chiropractic, dentistry, op-
tometry, podiatry or psychology.

    (j) ``Secretary'' means the secretary of human resources.

    (k) ``Construction design professional'' means any person who is an
architect, professional engineer, landscape architect or land surveyor who
has been issued a license by the state board of technical professions to
practice such technical profession in Kansas or any corporation organized
to render professional services through the practice of one or more of
such technical professions in Kansas under the professional corporation
law of Kansas or any corporation issued a certificate of authorization un-
der K.S.A. 74-7036 and amendments thereto to practice one or more of
such technical professions in Kansas.

    (l) ``Community service work'' means: (1) Public or community serv-
ice performed as a result of a contract of diversion or of assignment to a
community corrections program or conservation camp or suspension of
sentence or as a condition of probation or in lieu of a fine imposed by
court order; or (2) public or community service or other work performed
as a requirement for receipt of any kind of public assistance in accordance
with any program administered by the secretary of social and rehabilita-
tion services.

    (m) ``Utilization review'' means the initial evaluation of appropriate-
ness in terms of both the level and the quality of health care and health
services provided a patient, based on accepted standards of the health
care profession involved. Such evaluation is accomplished by means of a
system which identifies the utilization of health care services above the
usual range of utilization for such services, which is based on accepted
standards of the health care profession involved, and which refers in-
stances of possible inappropriate utilization to the director for referral to
a peer review committee.

    (n) ``Peer review'' means an evaluation by a peer review committee
of the appropriateness, quality and cost of health care and health services
provided a patient, which is based on accepted standards of the health
care profession involved and which is conducted in conjunction with util-
ization review.

    (o) ``Peer review committee'' means a committee composed of health
care providers licensed to practice the same health care profession as the
health care provider who rendered the health care services being re-
viewed.

    (p) ``Group-funded self-insurance plan'' includes each group-funded
workers compensation pool, which is authorized to operate in this state
under K.S.A. 44-581 through 44-592 and amendments thereto, each mu-
nicipal group-funded pool under the Kansas municipal group-funded pool
act which is covering liabilities under the workers compensation act, and
any other similar group-funded or pooled plan or arrangement that pro-
vides coverage for employer liabilities under the workers compensation
act and is authorized by law.

    (q) On and after the effective date of this act, ``workers compensation
board'' or ``board'' means the workers compensation board established
under K.S.A. 1997 Supp. 44-555c and amendments thereto.

    Sec. 4. K.S.A. 1997 Supp. 44-510b is hereby amended to read as
follows: 44-510b. Where death results from injury, compensation shall be
paid as provided in K.S.A. 44-510 and amendments thereto, and as fol-
lows:

    (a) If an employee leaves any dependents wholly dependent upon the
employee's earnings at the time of the accident, all compensation benefits
under this section shall be paid to such dependent persons. Such de-
pendents shall be paid weekly compensation, except as otherwise pro-
vided in this section, in a total sum to all such dependents, equal to 662/3%
of the average gross weekly wage of the employee at the time of the
accident, computed as provided in K.S.A. 44-511 and amendments
thereto, but in no event shall such weekly benefits exceed, nor be less
than, the maximum and minimum weekly benefits provided in K.S.A. 44-
510c and amendments thereto, subject to the following:

    (1) If the employee leaves a surviving legal spouse or a wholly de-
pendent child or children, or both, who are eligible for benefits under
this section, then all death benefits shall be paid to such surviving spouse
or children, or both, and no benefits shall be paid to any other wholly or
partially dependent persons.

    (2) A surviving legal spouse shall be paid compensation benefits for
life or until remarriage, except as otherwise provided in this section.

    (3) Any wholly dependent child of the employee shall be paid com-
pensation, except as otherwise provided in this section, until such de-
pendent child becomes 18 years of age, except that any such dependent
child who is not physically or mentally capable of earning wages in any
type of substantial and gainful employment, or who is enrolled as a full-
time student in an accredited institution of higher education or vocational
education shall be paid compensation until such dependent child be-
comes 23 years of age.

    (4) If the employee leaves no legal spouse or dependent children
eligible for benefits under this section but leaves other dependents wholly
dependent upon the employee's earnings, such other dependents shall
receive weekly compensation benefits as provided in this subsection until
death, remarriage or so long as such other dependents do not receive
more than 50% of their support from any other earnings or income or
from any other source, except that the maximum benefits payable to all
such other dependents, regardless of the number of such other depend-
ents, shall not exceed a maximum amount of $18,500.

    (b) Upon the remarriage of a surviving legal spouse receiving com-
pensation under this section, the benefits being paid to such spouse shall
terminate, except that upon such remarriage 100 weeks of benefits at the
highest rate paid to such spouse under this section shall be paid to such
spouse in one lump sum, except that such lump-sum payment shall be
subject to the maximum amount of compensation payable under this sec-
tion as prescribed by subsection (h) (i).

    (c) Where the employee leaves a surviving legal spouse and depend-
ent children who were wholly dependent upon the employee's earnings
and are eligible for benefits under this section 1/2 of the maximum weekly
benefits payable shall be apportioned to such spouse and 1/2 to such de-
pendent children.

    (d) If an employee does not leave any dependents who were wholly
dependent upon the employee's earnings at the time of the accident but
leaves dependents, other than a spouse or children, in part dependent on
the employee's earnings, such percentage of a sum equal to three times
the employee's average yearly earnings but not exceeding $18,500 but not
less than $2,500, as such employee's average annual contributions which
the employee made to the support of such dependents during the two
years preceding the date of the accident, bears to the employee's average
yearly earnings during the contemporaneous two-year period, shall be
paid in compensation to such dependents, in weekly payments as pro-
vided in subsection (a), not to exceed $18,500 to all such dependents.

    (e) If an employee does not leave any dependents, either wholly or
partially dependent upon the employee, a lump-sum payment of $25,000
shall be made to the legal heirs of such employee in accordance with
Kansas law. However under no circumstances shall such payment escheat
to the state. Notwithstanding the provisions of this subsection, no such
payment shall be required if the employer has procured a life insurance
policy, with beneficiaries designated by the employee, providing coverage
in an amount not less than $18,500.

    (e) (f) The administrative law judge, except as otherwise provided in
this section, shall have the power and authority to apportion and reap-
portion the compensation allowed under this section, either to wholly
dependent persons or partially dependent persons, in accordance with
the degree of dependency as of the date of the accident, except that the
weekly payment of compensation to any and all dependents shall not
exceed the maximum weekly benefits provided in subsection (a).

    (f) (g) In all cases of death compensable under this section, the em-
ployer shall pay the reasonable expense of burial not exceeding $4,300
$5,000.

    (g) (h) The marriage or death of any dependent shall terminate all
compensation, under this section, to such dependent, but shall not in-
crease or decrease the compensation allowed to any other dependents
except that, upon the marriage or death of the surviving legal spouse or
a dependent child, the compensation payable to such spouse or child shall
be reapportioned to those, among the surviving legal spouse and de-
pendent children, who remain eligible to receive compensation under this
section.

    (h) (i) Notwithstanding any other provision in this section to the con-
trary, the maximum amount of compensation benefits payable under this
section to any and all dependents by the employer shall not exceed a total
amount of $200,000 and when such total amount has been paid the lia-
bility of the employer for any further compensation under this section to
dependents, other than minor children of the employee, shall cease ex-
cept that the payment of compensation under this section to any minor
child of the employee shall continue for the period of the child's minority
at the weekly rate in effect when the employer's liability is otherwise
terminated under this subsection and shall not be subject to termination
under this subsection until such child becomes 18 years of age.

    (i) (j) A surviving spouse shall submit an annual statement to the
employer and to the director, in such form and containing such infor-
mation relating to eligibility for compensation under this section as may
be required by rules and regulations of the director. If such spouse fails
to submit such an annual statement, the employer may notify the director
of such failure and the director shall notify such spouse of such failure
by certified mail with return receipt. If such spouse fails to submit the
annual statement or fails to reasonably provide the required information
within 30 days after receipt of the notice from the director, all compen-
sation benefits paid under this section to such spouse shall be suspended
until such statement is submitted in proper form to the employer and the
director.

    Sec. 5. K.S.A. 1997 Supp. 44-532 is hereby amended to read as fol-
lows: 44-532. (a) Where the payment of compensation of the employee
or the employee's dependents is insured by a policy or policies, at the
expense of the employer, or the employer is a member of a qualified
group-funded workers compensation pool, the insurer or the qualified
group-funded workers compensation pool shall be subrogated to the
rights and duties under the workers compensation act of the employer so
far as appropriate, including the immunities provided by K.S.A. 44-501
and amendments thereto.

    (b) Every employer shall secure the payment of compensation to the
employer's employees by insuring in one of the following ways: (1) By
insuring and keeping insured the payment of such compensation with an
insurance carrier authorized to transact the business of workers compen-
sation insurance in the state of Kansas; (2) by showing to the director that
the employer carries such employer's own risk and is what is known as a
self-insurer and by furnishing proof to the director of the employer's
financial ability to pay such compensation for the employer's self; (3) by
maintaining a membership in a qualified group-funded workers compen-
sation pool. The cost of carrying such insurance or risk shall be paid by
the employer and not the employee.

    (c) The knowing and intentional failure of an employer to secure the
payment of workers compensation to the employer's employees as re-
quired in subsection (b) of this section is a class A misdemeanor.

    (d) In addition, whenever the director has reason to believe that any
employer has engaged or is engaging in the knowing and intentional fail-
ure to secure the payment of workers compensation to the employer's
employees as required in subsection (b) of this section, the director shall
issue and serve upon such employer a statement of the charges with
respect thereto and shall conduct a hearing in accordance with the Kansas
administrative procedure act, wherein the employer may be liable to the
state for a civil penalty in an amount equal to twice the annual premium
the employer would have paid had such employer been insured or
$25,000, whichever amount is greater.

    (e) The director shall not assess such a fine against a self-employed
subcontractor for failure of the subcontractor to secure compensation for
the subcontractor personally, however, the director shall enforce the pro-
visions of this section for failure of the subcontractor to secure compen-
sation for any other employee of the subcontractor as otherwise provided
by law.

    (e) (f) Any civil penalty imposed or final action taken under this sec-
tion shall be subject to review in accordance with the act for judicial
review of agency actions in the district court of Shawnee county.

    (f) (g) All moneys received under this section for costs assessed or
monetary penalties imposed shall be deposited in the state treasury and
credited to the workers compensation fund.

    (g) (h) (1) Every insurance carrier writing workers' compensation in-
surance for any employment covered under the workers compensation
act shall file, with the director or the director's designee, written notice
of the issuance, nonrenewal or cancellation of a policy or contract of
insurance, or any endorsement, providing workers compensation cover-
age, within 10 days after such issuance, nonrenewal or cancellation. Every
such insurance carrier shall file, with the director, written notice of all
such policies, contracts and endorsements in force on the effective date
of this act.

    (2) Every employer covered by the workers compensation act who is
a qualified self-insurer shall give written notice to the director or the
director's designee, if such employer changes from a self-insurer status
to insuring through an insurance carrier or by maintaining a membership
in a qualified group-funded workers compensation pool, such notice to
be given within 10 days after the effective date of such change. Every
self-insurer shall file with the director annually a report verifying the
employer's continuing ability to pay compensation to the employer's em-
ployees.

    (3) Every employer covered by the workers compensation act who is
a member of a qualified group-funded workers compensation pool shall
give written notice to the director or the director's designee, if such em-
ployer changes from a group-funded workers compensation pool to in-
suring through an insurance carrier or becoming a self-insurer, such no-
tice to be given within 10 days after the effective date of such change.

    (4) The mailing of any written notice or report required by this sub-
section (d) in a stamped envelope within the prescribed time shall comply
with the requirements of this subsection.

    (5) The director shall provide by regulation for the forms of written
notices and reports required by this subsection (d).

    (h) (i) As used in this section, ``qualified group-funded workers com-
pensation pool'' means any qualified group-funded workers compensation
pool under K.S.A. 44-581 through 44-591 and amendments thereto or
any group-funded pool under the Kansas municipal group-funded pool
act which includes workers compensation and employers' liability under
the workers compensation act.

    (i) (j) A private firm shall not be eligible to apply to become a self-
insurer unless it has been in continuous operation for at least five years
or is purchasing an existing self-insured Kansas firm, plant or facility and
the operation of the purchased firm, plant or facility: (1) Has been in
continuous operation in Kansas for at least 10 years; (2) has generated an
after-tax profit of at least $1,000,000 annually for the preceding three
consecutive years; and (3) has a ratio of debt to equity of not greater than
3.5 to 1. As used in this subsection, ``debt'' means the sum of long-term
borrowing maturing in excess of one year plus the current portion of long-
term borrowing plus short-term financial institution borrowing plus com-
mercial paper borrowing, and ``equity'' means the sum of the book value
of stock plus paid-in capital plus retained earnings. The method for cal-
culating the amount of security required of self-insureds shall be reviewed
by an actuary every five years, beginning in fiscal year 1997. The costs for
these actuarial studies shall be paid from the workers compensation fee
fund.

    (j) (k) A corporation or other entity whose current identity is attrib-
utable to a merger or other transformation whereby the whole or a sub-
stantial part of a previous entity's assets and income have been transferred
to it, and its liabilities have not increased beyond the financial review
requirements of the director, which qualified under its previous identity
as a self-insurer under other provisions of this statute, and amendments
thereto, may apply for renewal as a self-insurer under its new name. The
director may grant the application for renewal if satisfied that the new
entity meets all necessary financial criteria for renewal that would have
been applied to the previous self-insured entity. An application under
these provisions shall be limited to an entity seeking renewal based upon
the prior self-insured status of another entity or entities.

    Sec. 6. K.S.A. 44-570 is hereby amended to read as follows: 44-570.
(a) Every In the event that subsection (e) of K.S.A. 44-510b is inapplicable,
every employer in the state of Kansas operating a trade or business under
the provisions of the workmen's workers compensation act shall pay
within 30 days after the award is made the sum of $18,500 to the com-
missioner of insurance in every case where death results from the accident
and where there are no dependents who are entitled to compensation
under the workmen's workers compensation act.

    (b) The commissioner of insurance shall remit all moneys received
under this section to the state treasurer. Upon receipt of any such re-
mittance the state treasurer shall deposit the entire amount thereof in
the state treasury to the credit of the workers' compensation fund.

    (c) Upon rendering an award under this section, the director shall
transmit immediately a certified copy thereof to the commissioner of
insurance. In case payment is, or has been made, under the provisions of
this section and dependency later is shown, or if payment is made by
mistake or inadvertence, or under such circumstances that justice re-
quires a refund thereof, the commissioner of insurance is hereby author-
ized to refund such payment to the employer, or if insured, to the em-
ployer's insurance carrier.

    Sec. 7. K.S.A. 44-570 and K.S.A. 1997 Supp. 44-503, 44-505, 44-508,
44-510b and 44-532 are hereby repealed.

    Sec. 8. This act shall take effect and be in force from and after its
publication in the Kansas register.

I hereby certify that the above Bill originated in the House,
and passed that body

__________________________________

House concurred in
Senate amendments __________________________

__________________________________

Speaker of the House.

__________________________________

Chief Clerk of the House.

Passed the Senate
as amended __________________________

__________________________________

President of the Senate

__________________________________

Secretary of the Senate.

Aproved __________________________

__________________________________

Governor.