(1) CREATION OF ASSOCIATION
(b) A member may voluntarily withdraw from the association when the member voluntarily terminates the self-insurance privilege and pays all assessments due to the date of such termination. However, the withdrawing member shall continue to be bound by the provisions of this section relating to the period of his or her membership and any claims charged pursuant thereto. The withdrawing member who is a member on or after January 1, 1991, shall also be required to provide to the association upon withdrawal, and at 12-month intervals thereafter, satisfactory proof, including, if requested by the association, a report of known and potential claims certified by a member of the American Academy of Actuaries, that it continues to meet the standards of s. 440.38(1)(b) in relation to claims incurred while the withdrawing member exercised the privilege of self-insurance. Such reporting shall continue until the withdrawing member demonstrates to the association that there is no remaining value to claims incurred while the withdrawing member was self-insured. If a withdrawing member fails or refuses to timely provide an actuarial report to the association, the association may obtain an order from a circuit court requiring the member to produce such a report and ordering any other relief that the court determines appropriate. The association is entitled to recover all reasonable costs and attorney fees expended in such proceedings. If during this reporting period the withdrawing member fails to meet the standards of s. 440.38(1)(b), the withdrawing member who is a member on or after January 1, 1991, shall thereupon, and at 6-month intervals thereafter, provide to the association the certified opinion of an independent actuary who is a member of the American Academy of Actuaries of the actuarial present value of the determined and estimated future compensation payments of the member for claims incurred while the member was a self-insurer, using a discount rate of 4 percent. With each such opinion, the withdrawing member shall deposit with the association security in an amount equal to the value certified by the actuary and of a type that is acceptable for qualifying security deposits under s. 440.38(1)(b). The withdrawing member shall continue to provide such opinions and to provide such security until such time as the latest opinion shows no remaining value of claims. The association has a cause of action against a withdrawing member, and against any successor of a withdrawing member, who fails to timely provide the required opinion or who fails to maintain the required deposit with the association. The association shall be entitled to recover a judgment in the amount of the actuarial present value of the determined and estimated future compensation payments of the withdrawing member for claims incurred during the time that the withdrawing member exercised the privilege of self-insurance, together with reasonable attorney fees. The association is also entitled to recover reasonable attorney fees in any action to compel production of any actuarial report required by this section. For purposes of this section, the successor of a withdrawing member means any person, business entity, or group of persons or business entities, which holds or acquires legal or beneficial title to the majority of the assets or the majority of the shares of the withdrawing member.
(2) BOARD OF DIRECTORS
The board of directors of the association shall consist of nine persons and shall be organized as established in the plan of operation. Each director must be experienced in self-insurance in this state. Each director shall serve for a 4-year term and may be reappointed. After July 1, 2023, the department shall approve and appoint directors upon recommendation of members of the association or shall approve and appoint other persons with experience in self-insurance as determined by the Chief Financial Officer. These appointments are deemed to be within the scope of the exemption provided in s. 112.313(7)(b). Any vacancy on the board shall be filled for the remaining period of the term in the same manner as appointments other than initial appointments are made. Each director shall be reimbursed for expenses incurred in carrying out the duties of the board on behalf of the association.(b) Directors are subject to the code of ethics under part III of chapter 112, including, but not limited to, the code of ethics and public disclosure and reporting of financial interests, pursuant to s. 112.3145. For purposes of applying part III of chapter 112 to activities of members of the board of directors, those persons are considered public officers and the association is considered their agency. Notwithstanding s. 112.3143(2), a director may not vote on any measure that he or she knows would inure to his or her special private gain or loss; that he or she knows would inure to the special private gain or loss of any principal by which he or she is retained, other than an agency as defined in s. 112.312; or that he or she knows would inure to the special private gain or loss of a relative or business associate of the public officer. Before the vote is taken, such director shall publicly state to the board the nature of his or her interest in the matter from which he or she is abstaining from voting and, within 15 days after the vote occurs, disclose the nature of his or her interest as a public record in a memorandum filed with the person responsible for recording the minutes of the meeting, who shall incorporate the memorandum in the minutes.
(c) Notwithstanding s. 112.3148, s. 112.3149, or any other law, an employee of the association or a director may not knowingly accept, directly or indirectly, any gift or expenditure from a person or an entity, or an employee or a representative of such person or entity, which has a contractual relationship with the association or which is under consideration for a contract.
(d) A director who fails to comply with paragraph (b) or paragraph (c) is subject to the penalties provided under ss. 112.317 and 112.3173.
(3) POWERS AND DUTIES
(b) The association may:
2. Borrow funds necessary to effect the purposes of this section in accord with the plan of operation.
3. Sue or be sued.
4. Negotiate and become a party to such contracts as are necessary to carry out the purposes of this section.
5. Purchase such reinsurance as is determined necessary pursuant to the plan of operation.
6. Review all applicants for membership in the association to determine whether the applicant is qualified for membership under the law. The association shall recommend to the department that the application be accepted or rejected based on the criteria set forth in s. 440.38(1)(b). The department shall approve or disapprove the application as provided in paragraph (6)(a).
7. Collect and review financial information from employers and make recommendations to the department regarding the appropriate security deposit and reinsurance amounts necessary for an employer to demonstrate that it has the financial strength necessary to ensure the timely payment of all current and future claims. The association may audit and examine an employer to verify the financial strength of its current and former members. If the association determines that a current or former self-insured employer does not have the financial strength necessary to ensure the timely payment of all current and estimated future claims, the association may recommend to the department that the department:
b. Require the employer to provide a certified opinion of an independent actuary who is a member of the American Academy of Actuaries as to the actuarial present value of the employer’s estimated current and future compensation payments, using a 4-percent discount rate.
c. Require an increase in the employer’s security deposit in an amount determined by the association to be necessary to ensure payment of compensation claims. The department shall act on such recommendations as provided in paragraph (6)(a). The association has a cause of action against an employer, and against any successor of an employer, who fails to provide an additional security deposit required by the department. The association shall file an action in circuit court to recover a judgment in the amount of the requested additional security deposit together with reasonable attorney’s fees. For the purposes of this section, the successor of an employer is any person, business entity, or group of persons or business entities which holds or acquires legal or beneficial title to the majority of the assets or the majority of the shares of the employer.
9. Charge an applicant for membership in the association a fee sufficient to cover the actual costs of examining the financial condition of the applicant.
10. Implement any procedures necessary to ensure compliance with regulatory actions taken by the department.
2. If, in any one year, funds available from such assessments, together with funds previously raised, are not sufficient to make all the payments or reimbursements then owing, the funds available shall be prorated, and the unpaid portion shall be paid as soon thereafter as sufficient additional funds become available.
3. Funds may be allocated or paid from the Workers’ Compensation Administration Trust Fund to contract with the association to perform services required by law. However, no state funds of any kind shall be allocated or paid to the association or any of its accounts for payment of covered claims or related expenses except those state funds accruing to the association by and through the assignment of rights of an insolvent employer. The department may not levy any assessment on the association.
(4) INSOLVENCY FUND
Upon the adoption of a plan of operation, there shall be created an Insolvency Fund to be managed by the association.(b) The department shall have the authority to audit the financial soundness of the Insolvency Fund annually.
(c) The department may offer certain amendments to the plan of operation to the board of directors of the association for purposes of assuring the ongoing financial soundness of the Insolvency Fund and its ability to meet the obligations of this section.
(5) PLAN OF OPERATION
The association shall operate pursuant to a plan of operation approved by the board of directors. The plan of operation must be approved by the Department of Financial Services, and any amendments to the plan shall not become effective until approved by the department.(b) All member employers shall comply with the plan of operation.
(c) The plan of operation shall:
2. Establish procedures for handling assets of the association.
3. Establish the amount and method of reimbursing members of the board of directors under subsection (2).
4. Establish procedures by which claims may be filed with the association and establish acceptable forms of proof of covered claims. Notice of claims to the receiver or liquidator of the insolvent employer shall be deemed notice to the association or its agent, and a list of such claims shall be submitted periodically to the association or similar organization in another state by the receiver or liquidator.
5. Establish regular places and times for meetings of the board of directors.
6. Establish procedures for records to be kept of all financial transactions of the association and its agents and the board of directors.
7. Provide that any member employer aggrieved by any final action or decision of the association may appeal to the department within 30 days after the action or decision.
8. Establish the procedures whereby recommendations of candidates for the board of directors shall be submitted to the department.
9. Contain additional provisions necessary or proper for the execution of the powers and duties of the association.
(6) POWERS AND DUTIES OF DEPARTMENT
The department shall:(b) Contract with the association for services, which may include, but are not limited to:
2. Collecting and reviewing financial statements and loss reserve information from individual self-insurers.
3. Collecting and maintaining files for original security deposit documents and reinsurance policies from individual self-insurers and, if necessary, perfecting security interests in security deposits.
4. Processing compliance documentation for individual self-insurers and providing copies of such documentation to the department.
5. Collecting all data necessary to calculate annual premium for all individual self-insurers, including individual self-insurers that are public utilities or governmental entities, and providing such calculated annual premium to the department for assessment purposes.
6. Inspecting and auditing annually, if necessary, the payroll and other records of each individual self-insurer, including individual self-insurers that are public utilities or governmental entities, in order to determine the wages paid by each individual self-insurer, the premium such individual self-insurer would have to pay if insured, and all payments of compensation made by such individual self-insurer during each prior period with the results of such audit provided to the department. For purposes of this section, the payroll records of each individual self-insurer shall be open to inspection and audit by the association and the department, or their authorized representatives, during regular business hours.
7. Processing applications and making recommendations with respect to the qualification of a business to be approved to provide or continue to provide services to individual self-insurers in the areas of underwriting, claims adjusting, loss control, and safety engineering.
8. Providing legal representation to implement the administration and audit of individual self-insurers and making recommendations regarding prosecution of any administrative or legal proceedings necessitated by the regulation of the individual self-insurers by the department.
(d) Direct the association to require from each individual self-insurer, at such time and in accordance with such regulations as the department prescribes, reports relating to wages paid, the amount of premiums such individual self-insurer would have to pay if insured, and all payments of compensation made by such individual self-insurer during each prior period and to determine the amounts paid by each individual self-insurer and the amounts paid by all individual self-insurers during such period. For purposes of this section, the payroll records of each individual self-insurer shall be open to annual inspection and audit by the association and the department, or their authorized representative, during regular business hours, and if any audit of such records of an individual self-insurer discloses a deficiency in the amount reported to the association or in the amounts paid to the department by an individual self-insurer for its assessment for the Workers’ Compensation Administration Trust Fund, the department or the association may assess the cost of such audit against the individual self-insurer.
(e) Require that the association notify the member employers and any other interested parties of the determination of insolvency and of their rights under this section. Such notification shall be by mail at the last known address thereof when available; but, if sufficient information for notification by mail is not available, notice by publication in a newspaper of general circulation shall be sufficient.
(f) Suspend or revoke the authority of any member employer failing to pay an assessment when due or failing to comply with the plan of operation to self-insure in this state. As an alternative, the department may levy a fine on any member employer failing to pay an assessment when due. Such fine shall not exceed 5 percent of the unpaid assessment per month, except that no fine shall be less than $100 per month.
(g) Revoke the designation of any servicing facility if the department finds that claims are being handled unsatisfactorily.
(7) EFFECT OF PAID CLAIMS
(b) The receiver, liquidator, or statutory successor of an insolvent member shall be bound by settlements of covered claims by the association or a similar organization in another state. The court having jurisdiction shall grant such claims priority against the assets of the insolvent member equal to that to which the claimant would have been entitled in the absence of this section. The expense of the association or similar organization in handling claims shall be accorded the same priority as the expenses of the liquidator.
(c) The association shall file periodically with the receiver or liquidator of the insolvent member statements of the covered claims paid by the association and estimates of anticipated claims on the association, which shall preserve the rights of the association against the assets of the insolvent member.
(8) NOTIFICATION OF INSOLVENCIES
To aid in the detection and prevention of employer insolvencies: Upon determination by majority vote that any member employer may be insolvent or in a financial condition hazardous to the employees thereof or to the public, it shall be the duty of the board of directors to notify the department of any information indicating such condition.(9) CONTRACTS AND PURCHASES
(b) All contracts and purchases valued at or more than $100,000 require competition through a formal bid solicitation conducted by the association. The association must undergo a formal bid solicitation process. The formal bid solicitation process must include all of the following:
2. All the contractual terms and conditions applicable to the procurement.
(d) Contracts that are required by law are exempt from this section.
