Session of 2000
HOUSE BILL No. 2930
By Committee on Federal and State Affairs
2-9
10 AN ACT
concerning employees and employers; relating to workers com-
11 pensation; amending
K.S.A. 1999 Supp. 44-532 and repealing the ex-
12 isting section.
13
14 Be it enacted by the Legislature of the
State of Kansas:
15 Section
1. K.S.A. 1999 Supp. 44-532 is hereby amended to read as
16 follows: 44-532. (a) Where the payment of
compensation of the employee
17 or the employee's dependents is insured by
a policy or policies, at the
18 expense of the employer, or the employer is
a member of a qualified
19 group-funded workers compensation pool, the
insurer or the qualified
20 group-funded workers compensation pool
shall be subrogated to the
21 rights and duties under the workers
compensation act of the employer so
22 far as appropriate, including the
immunities provided by K.S.A. 44-501
23 and amendments thereto.
24 (b) Every
employer shall secure the payment of compensation to the
25 employer's employees by insuring in one of
the following ways: (1) By
26 insuring and keeping insured the payment of
such compensation with an
27 insurance carrier authorized to transact
the business of workers compen-
28 sation insurance in the state of Kansas;
(2) by showing to the director that
29 the employer carries such employer's own
risk and is what is known as a
30 self-insurer and by furnishing proof to the
director of the employer's
31 financial ability to pay such compensation
for the employer's self; (3) by
32 maintaining a membership in a qualified
group-funded workers compen-
33 sation pool. The cost of carrying such
insurance or risk shall be paid by
34 the employer and not the employee.
35 (c) The knowing
and intentional failure of an employer to secure the
36 payment of workers compensation to the
employer's employees as re-
37 quired in subsection (b) of this section is
a class A misdemeanor:
38 (1) Class A
nonperson misdemeanor, if the employer had a total gross
39 annual payroll for the preceding year of
$20,000 or more but less than
40 $50,000;
41 (2) severity
level 9, nonperson felony, if the employer had a total
gross
42 annual payroll for the preceding year of
$50,000 or more but less than
43 $100,000;
2
1
(3) severity level 7, nonperson felony, if the employer had a
total gross
2 annual payroll for the preceding
year of $100,000 or more but less than
3 $150,000;
4 (4)severity
level 6, nonperson felony, if the employer had a total
gross
5 annual payroll for the preceding
year of $150,000 or more but less than
6 $200,000;
7
(5) severity level 5, nonperson felony, if the employer had a
total gross
8 annual payroll for the preceding
year of $200,000 or more.
9 (d) In
addition, whenever the director has reason to believe that any
10 employer has engaged or is engaging in the
knowing and intentional fail-
11 ure to secure the payment of workers
compensation to the employer's
12 employees as required in subsection (b) of
this section, the director shall
13 issue and serve upon such employer a
statement of the charges with
14 respect thereto and shall conduct a hearing
in accordance with the Kansas
15 administrative procedure act, wherein the
employer may be liable to the
16 state for a civil penalty in an amount
equal to twice the annual premium
17 the employer would have paid had such
employer been insured or
18 $25,000, whichever amount is greater.
19 (e) The director
shall not assess such a fine against a self-employed
20 subcontractor for failure of the
subcontractor to secure compensation for
21 the subcontractor personally, however, the
director shall enforce the pro-
22 visions of this section for failure of the
subcontractor to secure compen-
23 sation for any other employee of the
subcontractor as otherwise provided
24 by law.
25 (f) Any civil
penalty imposed or final action taken under this section
26 shall be subject to review in accordance
with the act for judicial review
27 of agency actions in the district court of
Shawnee county.
28 (g) All moneys
received under this section for costs assessed or mon-
29 etary penalties imposed shall be deposited
in the state treasury and cred-
30 ited to the workers compensation fund.
31 (h)
(1) Every insurance carrier writing workers' compensation
insur-
32 ance for any employment covered under the
workers compensation act
33 shall file, with the director or the
director's designee, written notice of
34 the issuance, nonrenewal or cancellation of
a policy or contract of insur-
35 ance, or any endorsement, providing workers
compensation coverage,
36 within 10 days after such issuance,
nonrenewal or cancellation. Every such
37 insurance carrier shall file, with the
director, written notice of all such
38 policies, contracts and endorsements in
force on the effective date of this
39 act.
40 (2) Every
employer covered by the workers compensation act who is
41 a qualified self-insurer shall give written
notice to the director or the
42 director's designee, if such employer
changes from a self-insurer status
43 to insuring through an insurance carrier or
by maintaining a membership
3
1 in a qualified group-funded workers
compensation pool, such notice to
2 be given within 10 days after the
effective date of such change. Every
3 self-insurer shall file with the
director annually a report verifying the
4 employer's continuing ability to pay
compensation to the employer's
5 employees.
6 (3) Every
employer covered by the workers compensation act who is
7 a member of a qualified group-funded
workers compensation pool shall
8 give written notice to the director
or the director's designee, if such em-
9 ployer changes from a group-funded
workers compensation pool to in-
10 suring through an insurance carrier or
becoming a self-insurer, such no-
11 tice to be given within 10 days after the
effective date of such change.
12 (4) The mailing
of any written notice or report required by this sub-
13 section (d) in a stamped envelope within
the prescribed time shall comply
14 with the requirements of this
subsection.
15 (5) The director
shall provide by regulation for the forms of written
16 notices and reports required by this
subsection (d).
17 (i) As used in
this section, "qualified group-funded workers compen-
18 sation pool" means any qualified
group-funded workers compensation
19 pool under K.S.A. 44-581 through 44-591 and
amendments thereto or
20 any group-funded pool under the Kansas
municipal group-funded pool
21 act which includes workers compensation and
employers' liability under
22 the workers compensation act.
23 (j) A private
firm shall not be eligible to apply to become a self-insurer
24 unless it has been in continuous operation
for at least five years or is
25 purchasing an existing self-insured Kansas
firm, plant or facility and the
26 operation of the purchased firm, plant or
facility: (1) Has been in contin-
27 uous operation in Kansas for at least 10
years; (2) has generated an after-
28 tax profit of at least $1,000,000 annually
for the preceding three consec-
29 utive years; and (3) has a ratio of debt to
equity of not greater than 3.5
30 to 1. As used in this subsection, "debt"
means the sum of long-term
31 borrowing maturing in excess of one year
plus the current portion of long-
32 term borrowing plus short-term financial
institution borrowing plus com-
33 mercial paper borrowing, and "equity" means
the sum of the book value
34 of stock plus paid-in capital plus retained
earnings. The method for cal-
35 culating the amount of security required of
self-insureds shall be reviewed
36 by an actuary every five years, beginning
in fiscal year 1997. The costs for
37 these actuarial studies shall be paid from
the workers compensation fee
38 fund.
39 (k) A corporation
or other entity whose current identity is attributable
40 to a merger or other transformation whereby
the whole or a substantial
41 part of a previous entity's assets and
income have been transferred to it,
42 and its liabilities have not increased
beyond the financial review require-
43 ments of the director, which qualified
under its previous identity as a self-
4
1 insurer under other provisions of
this statute, and amendments thereto,
2 may apply for renewal as a
self-insurer under its new name. The director
3 may grant the application for renewal
if satisfied that the new entity meets
4 all necessary financial criteria for
renewal that would have been applied
5 to the previous self-insured entity.
An application under these provisions
6 shall be limited to an entity seeking
renewal based upon the prior self-
7 insured status of another entity or
entities.
8 Sec. 2. K.S.A. 1999 Supp.
44-532 is hereby repealed.
9 Sec. 3. This act
shall take effect and be in force from and after its
10 publication in the statute book.