An Act concerning the workers compensation act; relating to certain procedures thereun- der; amending K.S.A. 44-501, 44-510, 44-510d, 44-510e, 44-525, 44-531, 44-532, 44- 534a, 44-543, 44-566a and 44-5,110 and K.S.A. 1995 Supp. 44-508, 44-551 and 44-5,125 and repealing the existing sections; also repealing K.S.A. 44-5,111, 44-5,112, 44-5,113, 44-5,114, 44-5,115 and 44-5,116.

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

Section 1. K.S.A. 44-501 is hereby amended to read as follows: 44- 501. (a) If in any employment to which the workers compensation act applies, personal injury by accident arising out of and in the course of employment is caused to an employee, the employer shall be liable to pay compensation to the employee in accordance with the provisions of the workers compensation act. In proceedings under the workers compen- sation act, the burden of proof shall be on the claimant to establish the claimant's right to an award of compensation and to prove the various conditions on which the claimant's right depends. In determining whether the claimant has satisfied this burden of proof, the trier of fact shall con- sider the whole record.

(b) Except as provided in the workers compensation act, no em- ployer, or other employee of such employer, shall be liable for any injury for which compensation is recoverable under the workers compensation act nor shall an employer be liable to any third party for any injury or death of an employee which was caused under circumstances creating a legal liability against a third party and for which workers compensation is payable by such employer.

(c) Except for liability for medical compensation, as provided for in K.S.A. 44-510 and amendments thereto, the employer shall not be liable under the workers compensation act in respect of any injury which does not disable the employee for a period of at least one week from earning full wages at the work at which the employee is employed. The employee shall not be entitled to recover for the aggravation of a preexisting con- dition, except to the extent that the work-related injury causes increased disability. Any award of compensation shall be reduced by the amount of functional impairment determined to be preexisting.

(d) (1) If the injury to the employee results from the employee's deliberate intention to cause such injury; or from the employee's willful failure to use a guard or protection against accident required pursuant to any statute and provided for the employee, or a reasonable and proper guard and protection voluntarily furnished the employee by the employer, any compensation in respect to that injury shall be disallowed.

(2) The employer shall not be liable under the workers compensation act where the injury, disability or death was contributed to by the em- ployee's use or consumption of alcohol or any drugs, chemicals or any other compounds or substances, including but not limited to, any drugs or medications which are available to the public without a prescription from a health care provider, prescription drugs or medications, any form or type of narcotic drugs, marijuana, stimulants, depressants or hallucin- ogens. In the case of drugs or medications which are available to the public without a prescription from a health care provider and prescription drugs or medications, compensation shall not be denied if the employee can show that such drugs or medications were being taken or used in therapeutic doses and there have been no prior incidences of the em- ployee's impairment on the job as the result of the use of such drugs or medications within the previous 24 months. It shall be conclusively pre- sumed that the employee was impaired due to alcohol if it is shown that at the time of the injury that the employee had an alcohol concentration of .04 or more. An employee's refusal to submit to a chemical test shall not be admissible evidence to prove impairment unless there was prob- able cause to believe that the employee used, possessed or was impaired by a drug or alcohol while working. The results of a chemical test shall not be admissible evidence to prove impairment unless the following con- ditions were met:

(A) There was probable cause to believe that the employee used, had possession of, or was impaired by the drug or alcohol while working;

(B) the test sample was collected at a time contemporaneous with the events establishing probable cause;

(C) the collecting and labeling of the test sample was performed by a licensed health care professional;

(D) the test was performed by a laboratory approved by the United States department of health and human services or licensed by the de- partment of health and environment, except that a blood sample may be tested for alcohol content by a laboratory commonly used for that purpose by state law enforcement agencies;

(E) the test was confirmed by gas chromatography, gas chromatog- raphy-mass spectroscopy or other comparably reliable analytical method, except that no such confirmation is required for a blood alcohol sample; and

(F) the foundation evidence must establish, beyond a reasonable doubt, that the test results were from the sample taken from the em- ployee.

(e) Compensation shall not be paid in case of coronary or coronary artery disease or cerebrovascular injury unless it is shown that the exertion of the work necessary to precipitate the disability was more than the employee's usual work in the course of the employee's regular employ- ment.

(f) Except as provided in the workers compensation act, no construc- tion design professional who is retained to perform professional services on a construction project or any employee of a construction design pro- fessional who is assisting or representing the construction design profes- sional in the performance of professional services on the site of the con- struction project, shall be liable for any injury resulting from the employer's failure to comply with safety standards on the construction project for which compensation is recoverable under the workers com- pensation act, unless responsibility for safety practices is specifically as- sumed by contract. The immunity provided by this subsection to any construction design professional shall not apply to the negligent prepa- ration of design plans or specifications.

(g) It is the intent of the legislature that the workers compensation act shall be liberally construed for the purpose of bringing employers and employees within the provisions of the act to provide the protections of the workers compensation act to both. The provisions of the workers compensation act shall be applied impartially to both employers and em- ployees in cases arising thereunder.

(h) If the employee is receiving retirement benefits under the federal social security act or retirement benefits from any other retirement sys- tem, program or plan which is provided by the employer against which the claim is being made, any compensation benefit payments which the employee is eligible to receive under the workers compensation act for such claim shall be reduced by the weekly equivalent amount of the total amount of all such retirement benefits, less any portion of any such re- tirement benefit, other than retirement benefits under the federal social security act, that is attributable to payments or contributions made by the employee, but in no event shall the workers compensation benefit be less than the workers compensation benefit payable for the employee's per- centage of functional impairment.

New Sec. 2. The provisions of K.S.A. 44-501, as amended by section 1 of this act, shall apply to any claim brought under the Kansas workers compensation act for an injury which occurred prior to the effective date of this act, unless the claim has been fully adjudicated.

Sec. 3. K.S.A. 1995 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 em- ployer has filed an election to extend coverage to such volunteers; minors, whether such minors are legally or illegally employed; and persons per- forming community service work, but only to the extent and during 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 ref- erence to an employee who has been injured shall, where the employee is dead, include a reference to the employee's dependents, to the em- ployee's legal representatives, or, if the employee is a minor or an inca- pacitated 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.

(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. 1995 Supp. 44-555c and amendments thereto.

Sec. 4. K.S.A. 44-510 is hereby amended to read as follows: 44-510. Except as otherwise provided therein, medical compensation under the workers compensation act shall be as follows:

(a) It shall be the duty of the employer to provide the services of a health care provider, and such medical, surgical and hospital treatment, including nursing, medicines, medical and surgical supplies, ambulance, crutches, and apparatus, and transportation to and from the home of the injured employee to a place outside the community in which such em- ployee resides, and within such community if the director in the director's discretion so orders, including transportation expenses computed in ac- cordance with subsection (a) of K.S.A. 44-515 and amendments thereto, as may be reasonably necessary to cure and relieve the employee from the effects of the injury.

(1) The director shall appoint, subject to the approval of the secretary, a specialist in health services delivery, who shall be referred to as the medical administrator. The medical administrator shall be a person li- censed to practice medicine and surgery in this state and shall be in the unclassified service under the Kansas civil service act. The medical ad- ministrator, subject to the direction of the director, shall have the duty of overseeing the providing of health care services to employees in ac- cordance with the provisions of the workers compensation act, including but not limited to:

(A) Preparing, with the assistance of the advisory panel, the fee schedule for health care services as set forth in this section;

(B) developing, with the assistance of the advisory panel, the utili- zation review program for health care services as set forth in this section;

(C) developing procedures for appeals and review of disputed charges or services rendered by health care providers under this section;

(D) developing a system for collecting and analyzing data on expend- itures for health care services by each type of provider under the workers compensation act; and

(E) carrying out such other duties as may be delegated or directed by the director or secretary.

(2) The director shall prepare and adopt rules and regulations, which shall be in effect on or before July 1, 1993, and which establish a schedule of maximum fees for medical, surgical, hospital, dental, nursing, voca- tional rehabilitation or any other treatment or services provided or or- dered by health care providers and rendered to employees under the workers compensation act. The schedule shall include provisions and re- view procedures for exceptional cases involving extraordinary medical procedures or circumstances and shall include costs and charges for med- ical records and testimony.

(3) The schedule of maximum fees shall be reasonable, shall promote health care cost containment and efficiency with respect to the workers compensation health care delivery system, and shall be sufficient to en- sure availability of such reasonably necessary treatment, care and atten- dance to each injured employee to cure and relieve the employee from the effects of the injury.

(4) (A) In every case, all fees, transportation costs, charges under this section and all costs and charges for medical records and testimony shall be subject to approval by the director and shall be limited to such as are fair, reasonable and necessary. The schedule of maximum fees shall be reviewed annually by the director to assure that the schedule is current, reasonable and fair.

(B) There is hereby created an advisory panel to assist the director in establishing a schedule of maximum fees as required by this section. The panel shall consist of the commissioner of insurance and seven mem- bers appointed as follows: (i) One person shall be appointed by the Kansas medical society, (ii) one member shall be appointed by the Kansas asso- ciation of osteopathic medicine, (iii) one member shall be appointed by the Kansas hospital association, (iv) one member shall be appointed by the Kansas chiropractic association, and (v) three members appointed by the secretary. One member appointed by the secretary shall be a repre- sentative of employers recommended to the secretary by the Kansas chamber of commerce and industry. One member appointed by the sec- retary shall be a representative of employees recommended to the sec- retary by the Kansas AFL-CIO. One member appointed by the secretary shall be a representative of entities providing vocational rehabilitation services pursuant to K.S.A. 44-510g and amendments thereto. Each ap- pointed member shall be appointed for a term of office of two years which shall commence on July 1 of the year of appointment.

(C) All fees and other charges paid for such treatment, care and at- tendance, including treatment, care and attendance provided by any health care provider, hospital or other entity providing health care serv- ices, shall not exceed the amounts prescribed by the schedule of maxi- mum fees established under this section or the amounts authorized pur- suant to the provisions and review procedures prescribed by the schedule for exceptional cases. A health care provider, hospital or other entity pro- viding health care services shall be paid either such health care provider, hospital or other entity's usual charge for the treatment, care and atten- dance or the maximum fees as set forth in the schedule, whichever is less. In reviewing and approving the schedule of maximum fees, the director shall consider the following:

(i) The levels of fees for similar treatment, care and attendance im- posed by other health care programs or third-party payors in the locality in which such treatment or services are rendered;

(ii) the impact upon cost to employers for providing a level of fees for treatment, care and attendance which will ensure the availability of treatment, care and attendance required for injured employees;

(iii) the potential change in workers compensation insurance premi- ums or costs attributable to the level of treatment, care and attendance provided; and

(iv) the financial impact of the schedule of maximum fees upon health care providers and health care facilities and its effect upon their ability to make available to employees such reasonably necessary treatment, care and attendance to each injured employee to cure and relieve the em- ployee from the effects of the injury.

(D) Members of the advisory panel attending meetings of the advi- sory panel, or attending a subcommittee of the advisory panel authorized by the advisory panel, shall be paid subsistence allowances, mileage and other expenses as provided in K.S.A. 75-3223 and amendments thereto.

(5) Any contract or any billing or charge which any health care pro- vider, vocational rehabilitation service provider, hospital, person, or in- stitution enters into with or makes to any patient for services rendered in connection with injuries covered by the workers compensation act or the fee schedule adopted under this section, which is or may be in excess of or not in accordance with such act or fee schedule, is unlawful, void and unenforceable as a debt.

(6) The director shall have jurisdiction to hear and determine all dis- putes as to such charges and interest due thereon and shall prescribe procedural rules to be followed by the parties to such disputes. In the event of any controversy arising under this section, payments shall not be delayed for any amounts not in dispute or controversy. Acceptance by any provider of services of a payment amount under this section which is less than the full amount charged for the services, shall not affect the right to have a review of the claim for the outstanding or remaining amounts. In the event of a dispute as to such charges, the health care provider, hospital, institution, person or other provider under this section may appear and be represented in the action under the workers com- pensation act.

(7) If the director finds, after utilization review and peer review, that a provider or facility has made excessive charges or provided or ordered unjustified treatment, services, hospitalization or visits, the provider or facility shall not receive payment pursuant to this section from an insur- ance carrier, employer or employee for the excessive fees or unjustified treatment, services, hospitalization or visits and such provider or facility shall repay any fees or charges collected therefor.

(8) Not later than December 31, 1993, the director shall develop and implement, or contract with a qualified entity to develop and implement, utilization review and peer review procedures relating to the services rendered by providers and facilities, which services are paid for in whole or in part pursuant to the workers compensation act. The director may contract with one or more private foundations or organizations to provide utilization review, as appropriate, of entities providing health care services or vocational rehabilitation services, or both, pursuant to the workers compensation act.

(9) By accepting payment pursuant to this section for treatment or services rendered to an injured employee, a health care provider or health care facility shall be deemed to consent to submitting all necessary records to substantiate the nature and necessity of the service or charge and other information concerning such treatment to utilization review and peer re- view under this section. Such health care provider shall comply with any decision of the director pursuant to subsection (a)(10).

(10) If it is determined by a peer review committee that a provider improperly overutilized or otherwise rendered or ordered unjustified treatment or services or that the fees for such treatment or services were excessive, the director may order the provider to show cause why the provider should not be required to repay the amount which was paid for rendering or ordering such treatment or services and shall provide the provider a hearing thereon if requested. If a hearing is not requested within 30 days of receipt of the order and the director decides to proceed with the matter, a hearing shall be conducted and if a prima facie case is established a final order shall be issued by the director. If the final order is adverse to a health care provider, the director shall provide a report to the licensing board of the health care provider with full documentation of any such determination, except that no such report shall be provided until after judicial review if the order is appealed. Any order of the di- rector under this section shall be subject to review by the board.

(11) Except as provided by K.S.A. 60-437 and amendments thereto or this section, all reports, information, statements, memoranda, pro- ceedings, findings and records which relate to utilization review or peer review conducted pursuant to this section, including any records of peer review committees, shall be privileged and shall not be subject to discov- ery, subpoena, or other means of legal compulsion for release to any person or entity and shall not be admissible in evidence in any judicial or administrative proceeding, except those proceedings authorized pursuant to this section.

(12) A provider or facility may not improperly charge or overcharge a workers compensation insurer or charge for services which were not provided, for the purpose of obtaining additional payment.

(13) Any violation of the provisions of this section which is willful or which demonstrates a pattern of improperly charging or overcharging workers compensation insurers constitutes grounds for the director to impose a civil fine not to exceed $5,000. Any civil fine imposed under this section shall be subject to review in accordance with the act for judicial review and civil enforcement of agency actions in the district court for Shawnee county. All moneys received for civil fines imposed under this section shall be deposited in the state treasury to the credit of the workers compensation fund.

(14) As used in this subsection (a), unless the context or the specific provisions require otherwise, ``provider'' means any health care provider or vocational rehabilitation service provider, and ``facility'' means any fa- cility providing health care services or vocational rehabilitation services, or both, including any hospital.

(b) Any health care provider, nurse, physical therapist, any entity pro- viding medical, physical or vocational rehabilitation services or providing reeducation or training pursuant to K.S.A. 44-510g and amendments thereto, medical supply establishment, surgical supply establishment, am- bulance service or hospital who accept the terms of the workers compen- sation act by providing services or material thereunder shall be bound by the fees approved by the director and no injured employee or dependent of a deceased employee shall be liable for any charges above the amounts approved by the director. If the employer has knowledge of the injury and refuses or neglects to reasonably provide the services of a health care provider required by this section, the employee may provide the same for such employee, and the employer shall be liable for such expenses subject to the regulations adopted by the director. No action shall be filed in any court by a health care provider or other provider of services under this section for the payment of an amount for medical services or materials provided under the workers compensation act and no other action to obtain or attempt to obtain or collect such payment shall be taken by a health care provider or other provider of services under this section, in- cluding employing any collection service, until after final adjudication of any claim for compensation for which an application for hearing is filed with the director under K.S.A. 44-534 and amendments thereto. In the case of any such action filed in a court prior to the date an application is filed under K.S.A. 44-534 and amendments thereto, no judgment may be entered in any such cause and the action shall be stayed until after the final adjudication of the claim. In the case of an action stayed hereunder, any award of compensation shall require any amounts payable for medical services or materials to be paid directly to the provider thereof plus an amount of interest at the rate provided by statute for judgments. No period of time under any statute of limitation, which applies to a cause of action barred under this subsection, shall commence or continue to run until final adjudication of the claim under the workers compensation act.

(c) (1) If the director finds, upon application of an injured employee, that the services of the health care provider furnished as provided in subsection (a) and rendered on behalf of the injured employee are not satisfactory, the director may authorize the appointment of some other health care provider. In any such case, the employer shall submit the names of three health care providers that are not associated in practice together. The injured employee may select one from the list who shall be the authorized treating health care provider. If the injured employee is unable to obtain satisfactory services from any of the health care pro- viders submitted by the employer under this subsection (c)(1), the injured employee may apply for a benefit review conference for the purpose of obtaining satisfactory health care services. The benefit review officer shall attempt to obtain agreement between the parties on the name of another health care provider to be the authorized treating health care provider.

If the benefit review officer is unable to obtain agreement, the benefit review officer may request the assistance of a peer review service pro- vider, who has contracted to provide peer review services under subsec- tion (a)(8), to assist in determining whether the injured employee is in need of medical care and, if so, the adequacy and appropriateness of further medical care. If the parties are thereafter unable to agree on a treating health care provider, either party or both parties may request the director to select a treating health care provider from the names previ- ously submitted by the parties to the benefit review officer.

(2) Without application or approval, an employee may consult a health care provider of the employee's choice for the purpose of exami- nation, diagnosis or treatment, but the employer shall only be liable for the fees and charges of such health care provider up to a total amount of $500. The amount allowed for such examination, diagnosis or treatment shall not be used to obtain a functional impairment rating. Any medical opinion obtained in violation of this prohibition shall not be admissible in any claim proceedings under the workers compensation act.

(d) An injured employee whose injury or disability has been estab- lished under the workers compensation act may rely, if done in good faith, solely or partially on treatment by prayer or spiritual means in accordance with the tenets of practice of a church or religious denomination without suffering a loss of benefits subject to the following conditions:

(1) The employer or the employer's insurance carrier agrees thereto in writing either before or after the injury;

(2) the employee submits to all physical examinations required by the workers compensation act;

(3) the cost of such treatment shall be paid by the employee unless the employer or insurance carrier agrees to make such payment;

(4) the injured employee shall be entitled only to benefits that would reasonably have been expected had such employee undergone medical or surgical treatment; and

(5) the employer or insurance carrier that made an agreement under paragraph (1) or (3) of this subsection may withdraw from the agreement on 10 days' written notice.

(e) In any employment to which the workers compensation act ap- plies, the employer shall be liable to each employee who is employed as a duly authorized law enforcement officer, ambulance attendant, mobile intensive care technician or firefighter, including any person who is serv- ing on a volunteer basis in such capacity, for all reasonable and necessary preventive medical care and treatment for hepatitis to which such em- ployee is exposed under circumstances arising out of and in the course of employment.

(f) No person shall be subject to civil liability for libel, slander or any other relevant tort cause of action by virtue of performing utilization review or peer review under contract with the director pursuant to sub- section (a)(7).

Sec. 5. K.S.A. 44-510d is hereby amended to read as follows: 44- 510d. (a) Where disability, partial in character but permanent in quality, results from the injury, the injured employee shall be entitled to the compensation provided in K.S.A. 44-510 and amendments thereto, but shall not be entitled to any other or further compensation for or during the first week following the injury unless such disability exists for three consecutive weeks, in which event compensation shall be paid for the first week. Thereafter compensation shall be paid for temporary total loss of use and as provided in the following schedule, 662/3% of the average gross weekly wages to be computed as provided in K.S.A. 44-511 and amend- ments thereto, except that in no case shall the weekly compensation be more than the maximum as provided for in K.S.A. 44-510c and amend- ments thereto. If there is an award of permanent disability as a result of the injury there shall be a presumption that disability existed immediately after the injury and compensation is to be paid for not to exceed the number of weeks allowed in the following schedule:

(1) For loss of a thumb, 60 weeks.

(2) For the loss of a first finger, commonly called the index finger, 37 weeks.

(3) For the loss of a second finger, 30 weeks.

(4) For the loss of a third finger, 20 weeks.

(5) For the loss of a fourth finger, commonly called the little finger, 15 weeks.

(6) Loss of the first phalange of the thumb or of any finger shall be considered to be equal to the loss of 1/2 of such thumb or finger, and the compensation shall be 1/2 of the amount specified above. The loss of the first phalange and any part of the second phalange of any finger, which includes the loss of any part of the bone of such second phalange, shall be considered to be equal to the loss of 2/3 of such finger and the com- pensation shall be 2/3 of the amount specified above. The loss of the first phalange and any part of the second phalange of a thumb which includes the loss of any part of the bone of such second phalange, shall be consid- ered to be equal to the loss of the entire thumb. The loss of the first and second phalanges and any part of the third proximal phalange of any finger, shall be considered as the loss of the entire finger. Amputation through the joint shall be considered a loss to the next higher schedule.

(7) For the loss of a great toe, 30 weeks.

(8) For the loss of any toe other than the great toe, 10 weeks.

(9) The loss of the first phalange of any toe shall be considered to be equal to the loss of 1/2 of such toe and the compensation shall be 1/2 of the amount above specified.

(10) The loss of more than one phalange of a toe shall be considered to be equal to the loss of the entire toe.

(11) For the loss of a hand, 150 weeks.

(12) For the loss of a forearm, 200 weeks.

(13) For the loss of an arm, excluding the shoulder joint, shoulder girdle, shoulder musculature or any other shoulder structures, 210 weeks, and for the loss of an arm, including the shoulder joint, shoulder girdle, shoulder musculature or any other shoulder structures, 225 weeks.

(14) For the loss of a foot, 125 weeks.

(15) For the loss of a lower leg, 190 weeks.

(16) For the loss of a leg, 200 weeks.

(17) For the loss of an eye, or the complete loss of the sight thereof, 120 weeks.

(18) Amputation or severance below the wrist shall be considered as the loss of a hand. Amputation at the wrist and below the elbow shall be considered as the loss of the forearm. Amputation at or above the elbow shall be considered loss of the arm. Amputation below the ankle shall be considered loss of the foot. Amputation at the ankle and below the knee shall be considered as loss of the lower leg. Amputation at or above the knee shall be considered as loss of the leg.

(19) For the complete loss of hearing of both ears, 110 weeks.

(20) For the complete loss of hearing of one ear, 30 weeks.

(21) Permanent loss of the use of a finger, thumb, hand, shoulder, arm, forearm, toe, foot, leg or lower leg or the permanent loss of the sight of an eye or the hearing of an ear, shall be equivalent to the loss thereof. For the permanent partial loss of the use of a finger, thumb, hand, shoul- der, arm, toe, foot or leg, or the sight of an eye or the hearing of an ear, compensation shall be paid as provided for in K.S.A. 44-510c and amend- ments thereto, per week during that proportion of the number of weeks in the foregoing schedule provided for the loss of such finger, thumb, hand, shoulder, arm, toe, foot or leg, or the sight of an eye or the hearing of an ear, which partial loss thereof bears to the total loss of a finger, thumb, hand, shoulder, arm, toe, foot or leg, or the sight of an eye or the hearing of an ear; but in no event shall the compensation payable here- under for such partial loss exceed the compensation payable under the schedule for the total loss of such finger, thumb, hand, arm, toe, foot or leg, or the sight of an eye or the hearing of an ear, exclusive of the healing period. As used in this paragraph (21), ``shoulder'' means the shoulder joint, shoulder girdle, shoulder musculature or any other shoulder struc- tures.

(22) For traumatic hernia, compensation shall be limited to the com- pensation under K.S.A. 44-510 and amendments thereto, compensation for temporary total disability during such period of time as such employee is actually unable to work on account of such hernia, and, in the event such hernia is inoperable, weekly compensation during 12 weeks, except that, in the event that such hernia is operable, the unreasonable refusal of the employee to submit to an operation for surgical repair of such hernia shall deprive such employee of any benefits under the workers compensation act.

(23) Loss of a scheduled member shall be based upon permanent impairment of function to the scheduled member as determined using the third edition, revised, of the American Medical Association Guidelines for the Evaluation of Physical Impairment, if the impairment is contained therein the fourth edition of the American Medical Association Guides to the Evaluation of Permanent Impairment, if the impairment is contained therein.

(b) Whenever the employee is entitled to compensation for a specific injury under the foregoing schedule, the same shall be exclusive of all other compensation except the benefits provided in K.S.A. 44-510 and amendments thereto, and no additional compensation shall be allowable or payable for any temporary or permanent, partial or total disability, except that the director, in proper cases, may allow additional compen- sation during the actual healing period, following amputation. The healing period shall not be more than 10% of the total period allowed for the scheduled injury in question nor in any event for longer than 15 weeks. The return of the employee to the employee's usual occupation shall terminate the healing period.

Sec. 6. K.S.A. 44-510e is hereby amended to read as follows: 44- 510e. (a) If the employer and the employee are unable to agree upon the amount of compensation to be paid in the case of injury not covered by the schedule in K.S.A. 44-510d and amendments thereto, the amount of compensation shall be settled according to the provisions of the workers compensation act as in other cases of disagreement, except that in case of temporary or permanent partial general disability not covered by such schedule, the employee shall receive weekly compensation as determined in this subsection during such period of temporary or permanent partial general disability not exceeding a maximum of 415 weeks. Weekly com- pensation for temporary partial general disability shall be 662/3% of the difference between the average gross weekly wage that the employee was earning prior to such injury as provided in the workers compensation act and the amount the employee is actually earning after such injury in any type of employment, except that in no case shall such weekly compen- sation exceed the maximum as provided for in K.S.A. 44-510c and amend- ments thereto. Permanent partial general disability exists when the em- ployee is disabled in a manner which is partial in character and permanent in quality and which is not covered by the schedule in K.S.A. 44-510d and amendments thereto. The extent of permanent partial general disa- bility shall be the extent, expressed as a percentage, to which the em- ployee, in the opinion of the physician, has lost the ability to perform the work tasks that the employee performed in any substantial gainful em- ployment during the fifteen-year period preceding the accident, averaged together with the difference between the average weekly wage the worker was earning at the time of the injury and the average weekly wage the worker is earning after the injury. In any event, the extent of permanent partial general disability shall not be less than the percentage of functional impairment. Functional impairment means the extent, expressed as a per- centage, of the loss of a portion of the total physiological capabilities of the human body as established by competent medical evidence and based on the third edition, revised, of the American Medical Association Guide- lines for the Evaluation of Physical Impairment, if the impairment is con- tained therein and based on the fourth edition of the American Medical Association Guides to the Evaluation of Permanent Impairment, if the impairment is contained therein. An employee shall not be entitled to receive permanent partial general disability compensation in excess of the percentage of functional impairment as long as the employee is engaging in any work for wages equal to 90% or more of the average gross weekly wage that the employee was earning at the time of the injury. If the employer and the employee are unable to agree upon the employee's functional impairment and if at least two medical opinions based on com- petent medical evidence disagree as to the percentage of functional im- pairment, such matter shall may be referred by the administrative law judge to an independent health care provider who shall be selected by the administrative law judge from a list of health care providers main- tained by the director. The health care provider selected by the director pursuant to this section shall issue an opinion regarding the employee's functional impairment which shall be considered by the administrative law judge in making the final determination. The amount of weekly com- pensation for permanent partial general disability shall be determined as follows:

(1) Find the payment rate which shall be the lesser of (A) the amount determined by multiplying the average gross weekly wage of the worker prior to such injury by 662/3% or (B) the maximum provided in K.S.A. 44- 510c and amendments thereto;

(2) find the number of disability weeks payable by subtracting from 415 weeks the total number of weeks of temporary total disability com- pensation was paid, excluding the first 15 weeks of temporary total disa- bility compensation that was paid, and multiplying the remainder by the percentage of permanent partial general disability as determined under this subsection (a); and

(3) multiply the number of disability weeks determined in paragraph (2) of this subsection (a) by the payment rate determined in paragraph (1) of this subsection (a).

The resulting award shall be paid for the number of disability weeks at the full payment rate until fully paid or modified. If there is an award of permanent disability as a result of the compensable injury, there shall be a presumption that disability existed immediately after such injury. In any case of permanent partial disability under this section, the employee shall be paid compensation for not to exceed 415 weeks following the date of such injury, subject to review and modification as provided in K.S.A. 44- 528 and amendments thereto.

(b) If an employee has received an injury for which compensation is being paid, and the employee's death is caused by other and independent causes, any payment of compensation already due the employee at the time of death and then unpaid shall be paid to the employee's dependents directly or to the employee's legal representatives if the employee left no dependent, but the liability of the employer for the payments of com- pensation not yet due at the time of the death of such employee shall cease and be abrogated by the employee's death.

(c) The total amount of compensation that may be allowed or awarded an injured employee for all injuries received in any one accident shall in no event exceed the compensation which would be payable under the workers compensation act for 100% permanent total disability re- sulting from such accident.

(d) Where a minor employee or a minor employee's dependents are entitled to compensation under the workers compensation act, such com- pensation shall be exclusive of all other remedies or causes of action for such injury or death, and no claim or cause of action against the employer shall inure or accrue to or exist in favor of the parent or parents of such minor employee on account of any damage resulting to such parent or parents on account of the loss of earnings or loss of service of such minor employee.

(e) In any case of injury to or death of a female an employee, where the female employee or her the employee's dependents are entitled to compensation under the workers compensation act, such compensation shall be exclusive of all other remedies or causes of action for such injury or death, and no claim or action shall inure, accrue to or exist in favor of the surviving husband spouse or any relative or next of kin of such female employee against such employer on account of any damage resulting to such surviving husband spouse or any relative or next of kin on account of the loss of earnings, services, or society of such female employee or on any other account resulting from or growing out of the injury or death of such female employee.

Sec. 7. K.S.A. 44-525 is hereby amended to read as follows: 44-525. (a) Every finding or award of compensation shall be in writing signed and acknowledged by the administrative law judge and shall specify the amount due and unpaid by the employer to the employee up to the date of the award, if any, and the amount of the payments thereafter to be paid by the employer to the employee, if any, and the length of time such payment shall continue. The award of the administrative law judge shall be effective the day following the date noted in the award.

(b) No award shall be or provide for payment of compensation in a lump sum, except as to such portion of the compensation as shall be found to be due and unpaid at the time of the award, or except at the discretion of the director on settlement agreements, and credit shall be given to the employer in such award for any amount or amounts paid by the employer to the employee as compensation prior to the date of the award.

(c) In the event the employee has been overpaid temporary total dis- ability benefits as described in subsection (b) of K.S.A. 44-534a, and amendments thereto, and the employee is entitled to additional disability benefits, the administrative law judge shall provide for the application of a credit against such benefits. The credit shall first be applied to the final week of any such additional disability benefit award and then to each preceding week until the credit is exhausted.

Sec. 8. K.S.A. 44-531 is hereby amended to read as follows: 44-531. (a) Where all parties agree to the payment of all or any part of compen- sation due under the workers compensation act or under any award or judgment, and where it has been determined at a hearing before the administrative law judge that it is for the best interest of the injured employee or the dependents of a deceased employee, or that it will avoid undue expense, litigation or hardship to any party or parties, the admin- istrative law judge may permit the employer to redeem all or any part of the employer's liability under the workers compensation act by the pay- ment of compensation in a lump sum, except that no agreement for pay- ment of compensation in a lump sum shall be approved for two years nine months after an employee has returned to work in cases in which the employee, who would otherwise be entitled to compensation for work disability, is not entitled to work disability compensation because of being returned to work at a comparable wage by any employer the employer who employed the worker at the time of the injury giving rise to the claim being settled. The employer shall be entitled to an 8% discount on the amount of any such lump-sum payment that is not yet due at the time of the award. Upon paying such lump sum the employer shall be released and discharged of and from all liability under the workers compensation act for that portion of the employer's liability redeemed under this sec- tion.

(b) No lump-sum awards, unless agreed to by the parties, shall be rendered under the workers compensation act except: (1) As provided in subsection (a) of this section, (2) in cases of remarriage of a surviving spouse as provided in K.S.A. 44-510b and amendments thereto, (3) in cases involving compensation due the employee at the time the award is rendered as provided in K.S.A. 44-525 and amendments thereto and in cases of past due compensation as provided in K.S.A. 44-529 and amend- ments thereto.

Sec. 9. K.S.A. 44-532 is hereby amended to read as follows: 44-532. (a) Where the payment of compensation of the employee or the employ- ee'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 work- ers 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 C 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 re- spect 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) Any civil penalty imposed or final action taken under this section shall be subject to review in accordance with the act for judicial review of agency actions in the district court of Shawnee county.

(f) All moneys received under this section for costs assessed or mon- etary penalties imposed shall be deposited in the state treasury and cred- ited to the workers compensation fund.

(d) (g) (1) Every insurance carrier writing workers' compensation in- surance for any employment covered under the workers compensation act shall file, with the director, written notice of the issuance, nonrenewal or cancellation of a policy or contract of insurance, or any endorsement, providing workers compensation coverage, within 10 days after such is- suance, 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 if such employer changes from a self-insurer status to insuring through an in- surance 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 employees.

(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 if such employer changes from a group- funded workers compensation pool to insuring through an insurance car- rier or becoming a self-insurer, such notice 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).

(e) (h) 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.

(f) (i) 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.

Sec. 10. K.S.A. 44-534a is hereby amended to read as follows: 44- 534a. (a) (1) After an application for a hearing has been filed pursuant to K.S.A. 44-534 and amendments thereto, the employee or the employer may make application for a preliminary hearing, in such form as the di- rector may require, on the issues of the furnishing of medical treatment and the payment of temporary total disability compensation. At least seven days prior to filing an application for a preliminary hearing, the applicant shall give written notice to the adverse party of the intent to file such an application. Such notice of intent shall contain a specific state- ment of the benefit change being sought that is to be the subject of the requested preliminary hearing. If the parties do not agree to the change of benefits within the seven-day period, the party seeking a change in benefits may file an application for preliminary hearing which shall be accompanied by a copy of the notice of intent and the applicant's certi- fication that the notice of intent was served on the adverse party or that party's attorney and that the request for a benefit change has either been denied or was not answered within seven days after service. Copies of medical reports or other evidence which the party intends to produce as exhibits supporting the change of benefits shall be included with the ap- plication. The director shall conduct a benefit review conference within 15 days after receipt of the application for preliminary hearing, to attempt to resolve the issues raised. If the issues cannot be resolved by the benefit review conference, the director shall assign the application to an admin- istrative law judge who shall set the matter for a preliminary hearing and shall give at least seven days' written notice by mail to the parties of the date set for such hearing.

(2) Such preliminary hearing shall be summary in nature and shall be held by an administrative law judge in any county designated by the ad- ministrative law judge, and the administrative law judge shall exercise such powers as are provided for the conduct of full hearings on claims under the workers compensation act. Upon a preliminary finding that the injury to the employee is compensable and in accordance with the facts presented at such preliminary hearing, the administrative law judge may make a preliminary award of medical compensation and temporary total disability compensation to be in effect pending the conclusion of a full hearing on the claim, except that if the employee's entitlement to medical compensation or temporary total disability compensation is disputed or there is a dispute as to the compensability of the claim, no preliminary award of benefits shall be entered without giving the employer the op- portunity to present evidence, including testimony, on the disputed is- sues. A finding with regard to a disputed issue of whether the employee suffered an accidental injury, whether the injury arose out of and in the course of the employee's employment, whether notice is given or claim timely made, or whether certain defenses apply, shall be considered ju- risdictional, and subject to review by the board. Such review by the board shall not be subject to judicial review. If an appeal from a preliminary order is perfected under this section, such appeal shall not stay the pay- ment of medical compensation and temporary total disability compen- sation from the date of the preliminary award. If temporary total com- pensation is awarded, such compensation may be ordered paid from the date of filing the application, except that if the administrative law judge finds from the evidence presented that there were one or more periods of temporary total disability prior to such filing date, temporary total com- pensation may be ordered paid for all periods of temporary total disability prior to such date of filing. The decision in such preliminary hearing shall be rendered within five days of the conclusion of such hearing. Except as provided in this section, no such preliminary findings or preliminary awards shall be appealable by any party to the proceedings, and the same shall not be binding in a full hearing on the claim, but shall be subject to a full presentation of the facts.

(b) If compensation in the form of medical benefits or temporary total disability benefits has been paid by the employer or the employer's insurance carrier either voluntarily or pursuant to an award entered under this section or pursuant to an interlocutory order entered by a benefit review officer under K.S.A. 44-5,114 and amendments thereto and, upon a full hearing on the claim, the amount of compensation to which the employee is entitled is found to be less than the amount of compensation paid or is totally disallowed, the employer and the employer's insurance carrier shall be reimbursed from the workers compensation fund estab- lished in K.S.A. 44-566a and amendments thereto, for all amounts of compensation so paid which are in excess of the amount of compensation the employee is entitled to less any amount deducted from additional disability benefits due the employee pursuant to subsection (c) of K.S.A. 44-525, and amendments thereto, as determined in the full hearing on the claim. The director shall determine the amount of compensation paid by the employer or insurance carrier which is to be reimbursed under this subsection, and the director shall certify to the commissioner of in- surance the amount so determined. Upon receipt of such certification, the commissioner of insurance shall cause payment to be made to the employer or the employer's insurance carrier in accordance therewith.

Sec. 11. K.S.A. 44-543 is hereby amended to read as follows: 44-543. (a) As used in this section:

(1) ``Nonprofit organization'' means those nonprofit organizations ex- empt from federal income tax pursuant to section 501(c) of the internal revenue code of 1986, as in effect on the effective date of this act.

(2) ``Compensation'' does not include actual and necessary expenses that are incurred by a volunteer officer, director or trustee in connection with the services that the volunteer performs for a nonprofit organization and that are reimbursed to the volunteer or otherwise paid.

(3) ``Volunteer officer, director or trustee'' means an officer, director or trustee who performs services for a nonprofit organization but does not receive compensation, either directly or indirectly, for those services.

(b) Any employee of a corporate employer who owns ten percent (10%) 10% or more of the outstanding stock of such employer, may file with the director, prior to injury, a written declaration that he the em- ployee elects not to accept the provisions of the workmen's workers com- pensation act, and at the same time, he the employee shall file a duplicate of such election with the employer. Such election shall be valid only dur- ing his the employee's term of employment with such employer. Any em- ployee so electing and thereafter desiring to change his the employee's election may do so by filing a written declaration to that effect with the director and a duplicate of such election with the employer. Any contract in which an employer requires of an employee as a condition of employ- ment that he the employee elect not to come within the provisions of the workmen's workers compensation act, shall be void. Any written decla- rations filed pursuant to this section shall be in such form as may be required by regulation of the director.

(c) Any noncompensated volunteer officer, director or trustee of a nonprofit corporation as defined in clause 3 of subsection (a) may elect to be covered by the provisions of the workers compensation act by filing with the director, prior to injury, a written declaration that the officer, director or trustee elects to accept the provisions of the workers compen- sation act, and at the same time, the person shall file a duplicate of such election with the employer and the employer's insurance company or qual- ified group-funded workers compensation pool.

Sec./007006/K.S.A. 1995 Supp. 44-551 is hereby amended to read as follows: 44-551. (a) The duties of the assistant directors of workers com- pensation shall include but not be limited to acting in the capacity of an administrative law judge.

(b) (1) Administrative law judges shall have power to administer oaths, certify official acts, take depositions, issue subpoenas, compel the attendance of witnesses and the production of books, accounts, papers, documents and records to the same extent as is conferred on the district courts of this state, and may conduct an investigation, inquiry or hearing on all matters before the administrative law judges. All acts, findings, awards, decisions, rulings or modifications of findings or awards made by an administrative law judge shall be subject to review by the board upon written request of any interested party within 10 days and if no such request is made, then the board shall approve such actions, findings, awards, decisions, rulings or modifications of findings or awards of the administrative law judge. Review by the board shall be a prerequisite to judicial review as provided for in K.S.A. 44-556 and amendments thereto. On any such review, the board shall have authority to grant or refuse compensation, or to increase or diminish any award of compensation or to remand any matter to the administrative law judge for further pro- ceedings.

(2) (A) If an administrative law judge has entered a preliminary award under K.S.A. 44-534a and amendments thereto, a review by the board shall not be conducted under this section unless it is alleged that the administrative law judge exceeded the administrative law judge's ju- risdiction in granting or denying the relief requested at the preliminary hearing. Such an appeal from a preliminary award may be heard and decided by a single member of the board. Members of the board shall hear such preliminary appeals on a rotating basis and the individual board member who decides the appeal shall sign each such decision. The orders of the board on any acts, findings, awards, decisions, rulings or modifi- cations of findings or awards shall be issued within 30 days from the date arguments were presented by the parties.

(B) If an order on review is not issued by the board within the ap- plicable time period prescribed by subsection (b)(2)(A), medical com- pensation and any disability compensation as provided in the award of the administrative law judge shall be paid commencing with the first day after such time period and shall continue to be paid until the order of the board is issued, except that no payments shall be made under this provision for any period before the first day after such time period. Noth- ing in this section shall be construed to limit or restrict any other remedies available to any party to a claim under any other statute.

(C) In any case in which the final award of an administrative law judge is appealed to the board for review under this section and in which the compensability is not an issue to be decided on review by the board, medical compensation shall be payable in accordance with the award of the administrative law judge and shall not be stayed pending such review. The employee may proceed under K.S.A. 44-534a and amendments thereto and may have a hearing in accordance with that statute to enforce the provisions of this subsection.

(c) Each assistant director and each administrative law judge or spe- cial administrative law judge shall be allowed all reasonable and necessary expenses actually incurred while in the actual discharge of official duties in administering the workers compensation act, but such expenses shall be sworn to by the person incurring the same and be approved by the secretary.

(d) In case of emergency the director may appoint special local ad- ministrative law judges and assign to them the examination and hearing of any designated case or cases. Such special local administrative law judges shall be attorneys and admitted to practice law in the state of Kansas and shall, as to all cases assigned to them, exercise the same pow- ers as provided by this section for the regular administrative law judges. Special local administrative law judges shall receive a fee commensurate with the services rendered as fixed by rules and regulations adopted by the director. The fees prescribed by this section prior to the effective date of this act shall be effective until different fees are fixed by such rules and regulations.

(e) All special local administrative law judge's fees and expenses shall be taxed as cost in each case heard by such special local administrative law judge and when collected shall be paid directly to such special local administrative law judge by the party charged with the payment of the same.

(f) Except as provided for judicial review under K.S.A. 44-556 and amendments thereto, the decisions and awards of the board shall be final.

Sec./007006/K.S.A. 44-566a is hereby amended to read as follows: 44- 566a. (a) There is hereby created in the state treasury the workers com- pensation fund. The commissioner of insurance shall be responsible for administering the workers compensation fund, and all payments from the workers compensation fund shall be upon warrants of the director of accounts and reports issued pursuant to vouchers approved by the com- missioner of insurance or a person or persons designated by the com- missioner. The commissioner of insurance annually shall report to the governor and the legislature the receipts and disbursements from the workers compensation fund during the preceding fiscal year.

(b) (1) On June 1 of each year, the commissioner of insurance shall impose an assessment against all insurance carriers, self-insurers and group-funded workers compensation pools insuring the payment of com- pensation under the workers compensation act, and the same shall be due and payable to the commissioner on the following July 1, the proceeds of which shall be credited to the workers compensation fund. The total amount of each such assessment shall be equal to an amount sufficient, in the opinion of the commissioner of insurance, to pay all amounts, in- cluding attorney fees and costs, which may be required to be paid from such fund during the current fiscal year, less the amount of the estimated unencumbered balance in the workers compensation fund as of the June 30 immediately preceding the date the assessment is due and payable under this section. The total amount of each such assessment shall be apportioned among those upon whom it is imposed, such that each is assessed an amount that bears the same relation to such total assessment as the amount of money paid or payable in workers compensation claims by such insurance carrier, self-insurer or group-funded workers compen- sation pool in the immediately preceding calendar year bears to all such claims paid or payable during such calendar year. The commissioner of insurance may establish experience-based rates of assessments under this subsection and make adjustments in the assessments imposed under this subsection based on the success of accident prevention programs under K.S.A. 44-5,104 and amendments thereto and other employer safety pro- grams.

(2) The commissioner of insurance shall remit all moneys received by or for such commissioner under this subsection to the state treasurer. Upon receipt of any such remittance the state treasurer shall deposit the entire amount thereof in the state treasury to the credit of the workers compensation fund.

(c) (1) Whenever the workers compensation fund may be made lia- ble for the payment of any amounts in proceedings under the workers compensation act, the commissioner of insurance, in the capacity of ad- ministrator of such fund, shall be impleaded in such proceedings and shall represent and defend the workers compensation fund. The commissioner of insurance shall be deemed impleaded in any such proceedings when- ever written notice of the proceedings setting forth the nature of the liability asserted against the workers compensation fund, is given to the commissioner of insurance. The commissioner of insurance may be made a party in this manner by any party to the proceedings. A copy of the written notice shall be given to the director and to all other parties to the proceedings.

(2) The administrative law judge shall dismiss the workers compen- sation fund from any proceeding where the administrative law judge has determined that there is insufficient evidence to indicate involvement by the workers compensation fund.

(3) In any case in which the workers compensation fund has been impleaded, if the liability of the fund has not been established within five years of the date of the employee filing a written notice of claim, the commissioner of insurance may cause to be filed with an administrative law judge a motion to dismiss the fund from the case. The administrative law judge shall notify counsel of record not less than 10 days prior to issuing any order dismissing the fund from a case. The administrative law judge shall dismiss the fund from any such case absent a showing by one of the parties that the case should be left open due to medical necessity or other just cause.

(d) The commissioner of insurance, in the capacity of administrator of the workers compensation fund, may make settlements of any amounts which may be payable from the workers compensation fund with regard to any claim under the workers compensation act, subject to the approval of the director.

(e) The workers compensation fund shall be liable for:

(1) Payment of awards to handicapped employees in accordance with the provisions of K.S.A. 44-569 and amendments thereto for claims aris- ing prior to July 1, 1994;

(2) payment of workers compensation benefits to an employee who is unable to receive such benefits from such employee's employer under the conditions prescribed by K.S.A. 44-532a and amendments thereto;

(3) reimbursement of an employer or insurance carrier pursuant to the provisions of K.S.A. 44-534a and amendments thereto, subsection (d) of K.S.A. 44-556 and amendments thereto, subsection (c) of K.S.A. 44- 569 and amendments thereto and K.S.A. 44-569a and amendments thereto;

(4) payment of the actual expenses of the commissioner of insurance which are incurred for administering the workers compensation fund, subject to the provisions of appropriations acts; and

(5) any other payments or disbursements provided by law.

(f) If it is determined that the workers compensation fund is not liable as described in subsection (e), attorney fees incurred by the workers com- pensation fund may be assessed against the party who has impleaded the workers compensation fund other than impleadings pursuant to K.S.A. 44-532a and amendments thereto.

(g) The commissioner of insurance shall provide for the implemen- tation of the workers compensation fund as provided in this section and shall be responsible for ensuring the fund's adequacy to meet and pay claims awarded against it.

Sec./007006/K.S.A. 44-5,110 is hereby amended to read as follows: 44- 5,110. (a) The director of workers compensation shall establish an om- budsman program within the division of workers compensation to assist injured employees and persons claiming death benefits in obtaining ben- efits under the workers compensation act. The director shall employ qual- ified persons as ombudsmen for the program.

(b) Each ombudsman shall meet with or otherwise provide infor- mation to injured employees, shall investigate complaints and shall com- municate with employers, insurance carriers and health care providers. An ombudsman may assist claimants in benefit review mediation confer- ences and otherwise assist unrepresented claimants, employers and other parties to protect the rights of such parties under the workers compen- sation act.

(c) In cases of emergency, on a case-by-case basis, the director may enter into contracts with trained mediators or other qualified persons to perform services under the ombudsman program as special ombudsmen. Each special ombudsman shall receive a fee commensurate with the serv- ices rendered in accordance with the contracts for services. The fee for a special ombudsman shall be taxed as costs in the claim to which the special ombudsman is assigned against the respondent.

(d) The director of workers compensation shall widely disseminate information about the ombudsman program.

New Sec./007006/(a) Upon the request of any party to a workers com- pensation claim and the acceptance of the other party, the director of workers compensation shall schedule the parties for a mediation confer- ence. The purpose of the mediation shall be to assist the parties in reach- ing agreement on any disputed issues in a workers compensation claim. If the director is advised that one party does not wish to participate in the mediation, the director is authorized to encourage that party to par- ticipate.

(b) Mediation conferences shall be conducted by mediators ap- pointed by the director. Such mediators shall be qualified as mediators pursuant to the dispute resolution act, K.S.A. 5-501 et seq., and amend- ments thereto, and any relevant rules of the Kansas supreme court as authorized pursuant to K.S.A. 5-510, and amendments thereto.

(c) Persons with final settlement authority for each party shall be present, in person, at the mediation conference.

(d) All mediation conferences shall be conducted by a mediator in accordance with the dispute resolution act, K.S.A. 5-501, and amend- ments thereto.

(e) The director shall widely disseminate information about the me- diation conference procedure.

Sec./007006/K.S.A. 1995 Supp. 44-5,125 is hereby amended to read as follows: 44-5,125. (a) (1) Any person who obtains or attempts to obtain any payment of compensation under the workers compensation act for such person or who denies or attempts to deny the obligation to make any payment of workers compensation benefits; who obtains or attempts to obtain a more favorable workers compensation benefit rate or insur- ance premium rate than that to which such person is otherwise entitled; who prevents, reduces, avoids or attempts to prevent, reduce or avoid the payment of any compensation under the workers compensation act; or who fails to communicate a settlement offer or similar information to a claimant under the workers compensation act, by, in any such case, know- ingly or intentionally: (A) Making a false or misleading statement, (B) misrepresenting or concealing a material fact, or (C) fabricating, altering, concealing or destroying a document; and (2) any person who conspires with another person to commit any act described by clause (1) of this subsection (a), shall be guilty of:

(A) A class C A nonperson misdemeanor, if the amount received as a benefit or other payment under the workers compensation act as a result of such act or the amount that the person otherwise benefited monetarily as a result of a violation of this subsection (a) is $500 or less; or

(B) a severity level 9, nonperson felony, if such amount is more than $500.

(b) Any person who has received any amount of money as a benefit or other payment under the workers compensation act as a result of a violation of subsection (a) and any person who has otherwise benefited monetarily as a result of a violation of subsection (a) shall be liable to repay an amount equal to the amount so received by such person or the amount by which such person has benefited monetarily, with interest thereon. Any such amount, plus any accrued interest thereon, shall bear interest at the current rate of interest prescribed by law for judgments under subsection (e)(1) of K.S.A. 16-204 and amendments thereto per month or fraction of a month until repayment of such amount, plus any accrued interest thereon. The interest shall accrue from the date of over- payment or erroneous payment of any such amount or the date such person benefited monetarily.

(c) Any person aggrieved by a violation of subsection (a) shall have a cause of action against any other person to recover any amounts of money erroneously paid as benefits or any other amounts of money paid under the workers compensation act, and to seek relief for other monetary dam- ages, for which liability has accrued under this section against such other person.

(d) Nothing in this section shall prohibit an employer from exercising a right to reimbursement under K.S.A. 44-534a, 44-556 or 44-569a and amendments thereto.

Sec./007006/K.S.A. 44-501, 44-510, 44-510d, 44-510e, 44-525, 44-531, 44-532, 44-534a, 44-543, 44-566a, 44-5,110, 44-5,111, 44-5,112, 44-5,113, 44-5,114, 44-5,115 and 44-5,116 and K.S.A. 1995 Supp. 44-508, 44-551 and 44-5,125 are hereby repealed.

Sec./007006/This act shall take effect and be in force from and after its publication in the Kansas register.

Approved March 29, 1996.

Published in the Kansas Register: April 4, 1996.