Chapter 509

2007 -- S 1103 AS AMENDED

Enacted 10/30/07

 

A N A C T

RELATING TO LABOR AND LABOR RELATIONS

          

     Introduced By: Senator Roger R. Badeau

     Date Introduced: June 13, 2007

    

It is enacted by the General Assembly as follows:

 

     SECTION 1. Title 28 of the General Laws entitled "LABOR AND LABOR

RELATIONS" is hereby amended by adding thereto the following chapter:

 

     CHAPTER 53

RHODE ISLAND UNINSURED EMPLOYERS FUND

 

     28-53-1. Preamble and legislative findings. WHEREAS, The system of workers'

compensation in the state of Rhode Island was once in a state of acute crisis until legislative

intervention and oversight produced what is now a nationally recognized model of a well-

managed economical program that provides injured workers with appropriate compensation,

health care and rehabilitative services without unduly burdening employers, insurers and the

citizens of Rhode Island; and

     WHEREAS, Legislative and policy changes have corrected the abuses and misuse of the

workers' compensation system while assisting injured workers, restoring fiscal stability, and

eliminating waste and unnecessary costs; and

     WHEREAS, Professionals providing services covered under the provisions of the

Workers' Compensation Act have taken into account, in the performance of their service, the

important public policy benefit of a sound and properly functioning workers' compensation

system in this state, and have tirelessly committed themselves to protect and maintained the

integrity of this system; and

     WHEREAS, Abuse and misuse of the workers' compensation system by non-complying

employers has been reduced through the state's mandatory requirement that employers subject to

the law either self-insure or maintain a policy of workers' compensation insurance to ensure that

legitimately injured workers receive all the rights and benefits provided in the Workers'

Compensation Act; and

     WHEREAS, Substantive efforts have already been undertaken by the general assembly,

the workers' compensation court and the department of labor and training to eliminate the illegal,

irresponsible and unscrupulous behavior of employers who openly and deliberately operate

businesses in Rhode Island without workers' compensation insurance for their employees; and

     WHEREAS, The actions of non-complying employers are illegal and deprive not only

injured employees of the workers' compensation benefits to which they are entitled but also cause

greater social and financial costs to all citizens of Rhode Island including employers and health

care providers who incur uncompensated expenses in treating the victims of the uninsured

employer; and

     WHEREAS, Additional reform is required to provide appropriate compensation, health

care and rehabilitative services to employees who are injured while in the service of uninsured

employers and to eliminate the flagrant abuse of the system by illegally uninsured employers by

requiring them to accept their legal responsibility to pay the appropriate benefits to their insured

employees; now, therefore be it

     RESOLVED, That it is declared to be the intent of the legislature that an uninsured

employers fund be created to ensure that injured workers who are employed by illegally

uninsured employers are not deprived of workers' compensation benefits. The fund shall have

enforcement mechanisms as are necessary to induce illegally uninsured employers to

acknowledge their malfeasance, provide legally mandated benefits for injured; and to assure that

all participants in the system recognize their obligation to conduct themselves in a manner

consistent with the overall integrity of the compensation system. All amounts owed to the

uninsured employers fund from illegally uninsured employers are intended to be excise taxes and

as such, all ambiguities and uncertainties are to be resolved in favor of a determination that such

assessments are excise taxes.

 

     28-53-2. Establishment Sources -- Administration. (a) There shall be established

within the department of labor and training a special restricted receipt account to be known as the

Rhode Island uninsured employers fund. The fund shall be capitalized from excise taxes assessed

against uninsured employers pursuant to the provisions of section 28-53-9 of this chapter and

from general revenues appropriated by the legislature. Beginning in state fiscal year ending June

30, 2009, the legislature may appropriate up to two million dollars ($2,000,000) in general

revenue funds annually for deposit into the Rhode Island uninsured employers fund.

     (b) All moneys in the fund shall be mingled and undivided. The fund shall be

administered by the director of the department of labor and training or his or her designee, but in

no case shall the director incur any liability beyond the amounts paid into and earned by the fund.

     (c) All amounts owed to the uninsured employers fund from illegally uninsured

employers are intended to be excise taxes and as such, all ambiguities and uncertainties are to be

resolved in favor of a determination that such assessments are excise taxes.

 

     28-53-3. Powers and duties of the fund. The fund shall:

     (a) Be obligated to pay covered claims as determined by the director or the workers'

compensation court pursuant to the provisions of this section;

     (b) Investigate claims brought against the fund and adjust, compromise, settle and pay

covered claims to the extent of the fund's allocation;

     (c) Establish procedures for managing the assets of the fund;

     (d) Sue or be sued; and

     (e) Perform any and all acts necessary to effectuate the humanitarian purposes of this

chapter.

 

     28-53-4. Payor of last resort. The fund shall not distribute funds of any kind to any

insured, insurer, or self-insured employer and shall not be deemed an insurer for any purpose

noted in this act.

 

     28-53-5. Establishment of reserves Disbursement of excess funds. When the

balance of the fund, following the deduction of operating expenses, reserves, claims,

administration costs and all other reasonable and necessary costs and expenses, exceeds the sum

of five million dollars ($5,000,000) the director is authorized to determine by experience or other

appropriate accounting and actuarial method what percentage of the payment collected by the

fund pursuant to the provisions of Rhode Island general laws subsection 28-53-2(a) is needed to

maintain the fund at the five million dollar ($5,000,000) level for the following twelve (12)

months and shall certify the same and shall make such calculations on or before May 10 of each

year thereafter.

 

     28-53-6. Custodian Orders for payment. The general treasurer of the State of

Rhode Island and Providence Plantations shall be the custodian of such fund and the state

controller is hereby authorized and empowered to draw orders upon the general treasurer upon

receipt of duly authenticated vouchers.

 

     28-53-7. Payments to employees of uninsured employers. (a) Where it is determined

that the employee was injured in the course of employment while working for an employer who

fails to maintain a policy of workers' compensation insurance as required by Rhode Island general

laws section 28-36-1, et seq., the uninsured employers fund shall pay the benefits to which the

injured employee would be entitled pursuant to chapters 29 to 38 of this title subject to the

limitations set forth herein.

     (b) The workers' compensation court shall hear all petitions for payment from the fund

pursuant to Rhode Island general laws section 28-30-1, et seq., provided, however, that the

uninsured employers fund and the employer shall be named as parties to any petition seeking

payment of benefits from the fund.

     (c) Where an employee is deemed to be entitled to benefits from the uninsured employers

fund, the fund shall pay benefits for disability and medical expenses as provided pursuant to

chapters 29 to 38 of this title except that the employee shall not be entitled to receive benefits for

loss of function and disfigurement pursuant to the provisions of Rhode Island general laws

section 28-33-19.

     (d) The fund shall pay cost, counsel and witness fees as provided in Rhode Island general

laws section 28-35-32 to any employee who successfully prosecutes any petitions for

compensation, petitions for medical expenses, petitions to amend a pretrial order or memorandum

of agreement and all other employee petitions and to employees who successfully defend, in

whole or in part, proceedings seeking to reduce or terminate any and all workers' compensation

benefits; provided, however, that the attorney's fees awarded to counsel who represent the

employee in petitions for lump sum commutation filed pursuant to Rhode Island general laws

section 28-33-25 or in the settlement of disputed cases pursuant to Rhode Island general laws

section 28-33-25.1 shall be limited to the maximum amount paid to counsel who serve as court

appointed attorneys in workers' compensation proceedings as established by rule or order of the

Rhode Island supreme court.

     (e) In the event that the uninsured employer makes payment of any monies to the

employee to compensate the employee for lost wages or medical expenses, the fund shall be

entitled to a credit for all such monies received by or on behalf of the employee against any future

benefits payable directly to the employee.

 

     28-53-8. Limitations on payments to injured employees. Where the director

determines by experience or other appropriate accounting and actuarial methods that the reserves

in the fund are insufficient to pay all claims presented or pending, the director shall petition the

workers' compensation court for an order to make appropriate, proportionate reductions in the

payments being made to injured employees by the fund or to suspend all payments to injured

employees until such time as the reserves maintained by the fund are sufficient to resume the

payment of benefits. The matter shall be heard by the chief judge. If the court determines that

the monies held by the fund are insufficient to fully pay all claims as they fall due, the court shall

issue an order directing that a proportionate reduction be made in the payments made to those

employees receiving benefits from the fund. In considering the fund's request for relief, the court

shall give due weight to the policy of the workers' compensation act that benefits are to be paid

weekly and that the unwarranted reduction or interruption in the employee's weekly

compensation benefit will impose financial hardship upon the injured worker.

     The chief judge shall hear the director's petition within twenty-one (21) days of the date

the matter is filed with the court. The petition shall set forth the names and addresses of each

employee who may be affected by the reduction in benefits and the court shall provide notice to

each employee. The attorney general shall appear on behalf of the employees receiving benefits

from the fund and shall take such action as he or she feels is necessary to protect the rights of the

injured employees.

     In the event that the court determines that a reduction or suspension of payments is

necessary to maintain the fiscal integrity of the fund, the court shall schedule a mandatory review

date to determine whether the financial status of the fund warrants a continuation of the order

reducing such payments and shall reinstitute payments only upon finding that the reserves

maintained by the fund are sufficient to pay all future claims as they fall due.

 

     28-53-9. Penalties, taxes and assessments against non-complying employers. (a)

Where it is determined that an employer has failed to maintain a policy of workers' compensation

insurance as required by Rhode Island general laws section 28-36-1 et seq. and that while the

employer was uninsured in violation of the statute, an employee suffered a compensable injury,

the uninsured employers fund shall commence the payment of weekly benefits and medical

expenses necessary to cure, relieve or rehabilitate the employee from the effects of the work

related injury to the employee as set forth herein, subject to fund availability. The fund shall

acquire a lien against the goods and chattels of the uninsured employer to the extent of any

payments made by it to the injured employee. The lien(s) shall arise and attach as of the date on

which the fund makes payment to the injured employee without further action by the fund or the

court. The lien shall have priority over all subsequently perfected liens and security interests.

     (b) Prior to the lien being filed with the office of the secretary of state, the employer shall

be notified by certified mail, return receipt requested that a lien will be filed against all goods

situated in the state if the outstanding tax is not paid within seven (7) business days of receipt of

the notice.

     (c) The liens shall become perfected at the time when a notice of lien is filed pursuant to

the filing provisions of Rhode Island general laws section 6A-9-501. The notice of lien shall

include the following:

     (1) The name of the debtor, as governed by Rhode Island general laws section 6A-9-503;

     (2) The name of the director of the department of labor and training as the party claiming

the lien; and

     (3) A description of the property so encumbered as governed by the Rhode Island general

laws section 6A-9-504.

     (d) The director shall be entitled to effectively file the lien and to amend the lien quarterly

as additional payments are made or terminate it as necessary.

     (e) No filing fee shall be charged for the filing of a lien authorized by this section.

     (f) Where the employer is a corporation, the president, vice president, secretary and

treasurer of the corporation shall be severally personally liable, jointly with a corporation for any

payments made to the injured employee by the fund, and the fund shall acquire a lien against the

goods and chattels of said president, vice president, secretary and treasurer to the extent of any

payments so made.

     (g) Where the employer is a limited liability company, the managers and managing

members shall be severally personally liable, jointly with the limited liability company for any

payments made to the injured employee by the fund and the fund shall acquire a lien against the

goods and chattels of said manager and managing member to the extent of any payments so

made.

     (h) The liens and excise taxes levied against the non-complying party pursuant to this

section shall be in addition to any and all other fines, penalties and assessments, to which the

party would otherwise be liable in particular the penalties mandated by Rhode Island general laws

section 28-36-15.

 

     SECTION 2. Section 28-29-26 of the General Laws in Chapter 28-29 entitled "Workers'

Compensation - General Provisions" is hereby amended to read as follows:

 

     28-29-26. Supervision of enforcement. -- (a) Department of labor and training. - The

director, as provided for in chapters 29 -- 38 of this title, and chapter 53 of this title and chapter

16.1 of title 42, shall have supervision over the enforcement of the provisions of those chapters,

and the director shall have the power and authority to adopt and enforce all reasonable rules,

regulations, and orders necessary and suitable to the administration of the department's

responsibilities as described in those chapters.

      (b) (1) Workers' compensation court. - The workers' compensation court, as provided for

in chapters 29 -- 38 of this title, shall have supervision over the enforcement of the provisions of

the chapters, and shall have the power and authority to adopt and enforce all reasonable rules,

regulations, and orders necessary and suitable to the administration of its responsibilities

described in the chapters. The court shall remain judicially and administratively independent. The

Workers' compensation court shall have original jurisdiction over all civil actions filed pursuant

to sections 28-36-15 and 28-37-28 and pursuant to the provisions of chapter 53 of this title.

      (2) Any petition arising from any dispute regardless of date of injury, unless specifically

excepted, shall be filed with the administrator of the workers' compensation court in accordance

with chapter 35 of this title and any rules and regulations promulgated by the workers'

compensation court.

      (3) The enactment of this subsection shall not affect the rights of the parties established

by any existing memorandum of agreement, suspension agreement and receipt, preliminary

determination of the department of workers' compensation, order or decree, or any existing right

to the payment of compensation acquired pursuant to section 28-29-6 or 28-35-9.

 

     SECTION 3. Section 28-30-13 of the General Laws in Chapter 28-30 entitled "Workers'

Compensation Court" is hereby amended to read as follows:

 

     28-30-13. Controversies submitted to court. -- (a) Any controversy over which the

workers' compensation court has jurisdiction in accordance with chapters 29 38 and chapter 53

of this title, including compensation, reasonableness of medical and hospital bills, degree of

functional impairment and/or disability, a dispute between an insurance carrier and an employer

under a workers' compensation insurance contract, except disputes under the jurisdiction of the

workers' compensation appeals board established pursuant to section 27-9-29, failure of an

employer to secure the payment of compensation under chapters 29 38 and chapter 53 of this

title and any controversy in which the state or any of its political subdivisions is a party, shall be

submitted to the court in the manner provided in chapters 33 and 35 of this title.

      (b) Disputes between an insurance carrier and an employer under a workers'

compensation insurance contract shall not be subject to a pretrial conference in accordance with

section 28-35-20, but shall be assigned consistent with the rules and regulations of the workers'

compensation court.

 

     SECTION 4. Section 28-35-32 of the General Laws in Chapter 28-35 entitled "Workers'

Compensation - Procedure" is hereby amended to read as follows:

 

     28-35-32. Costs -- Counsel and witness fees. -- No fee shall be charged by the clerk of

any court or by the administrator of the workers' compensation court for the performance of any

service required by this chapter, except for certified copies of decrees and copies of transcripts.

Notwithstanding any provisions of law to the contrary, the workers' compensation court shall be

allowed a filing fee of twenty dollars ($20.00) for the filing of a petition under chapters 29 -- 38

of this title, and a filing fee of twenty-five dollars ($25.00) for the filing of an appeal under

section 28-35-28, which sums shall be deposited into "the court improvement project fund"

established pursuant to chapter 29.1 of title 9. These sums shall be used exclusively for the

automated civil information system (ACIS), pursuant to chapter 108 of title 42 to provide

additional funding to the uninsured employers fund as established by chapter 28-53. In

proceedings under this chapter, and in proceeding under chapter 37 of this title, costs shall be

awarded, including counsel fees and fees for medical and other expert witnesses including

interpreters, to employees who successfully prosecute petitions for compensation, petitions for

medical expenses, petitions to amend a preliminary order or memorandum of agreement, and all

other employee petitions, except petitions for lump sum commutation, and to employees who

successfully defend, in whole or in part, proceedings seeking to reduce or terminate any and all

workers' compensation benefits, and to medical services providers who successfully prosecute

petitions for the payment of medical expenses except that medical services providers shall not be

paid expert witness fees for testimony in support of petitions filed in their behalf. These costs

shall be assessed against the employer by a single judge, by an appellate panel and by the

supreme court on appeal consistent with the services rendered before each tribunal and shall be

made a part of the decree. No employee's attorney shall accept any other or additional fees for his

services for the particular petition for which the fees are awarded in each tribunal.

 

     SECTION 5. Sections 28-37-1 and 28-37-28 of the General Laws in Chapter 28-37

entitled "Workers' Compensation Administrative Fund" are hereby amended to read as follows:

 

     28-37-1. Establishment -- Sources -- Administration. -- (a) There is established in the

department of labor and training a special account to be known as the workers' compensation

administrative account, an account within the general fund. This account, referred to as the

"workers' compensation administrative account", shall consist of payments made to it as provided

in this chapter, or penalties paid pursuant to this chapter, and of all other moneys paid into and

received by the fund, of property and securities acquired by and through the use of moneys

belonging to the fund, and of interest earned upon the moneys belonging to the fund. All moneys

in the fund shall be mingled and undivided. The fund shall be administered by the director of

labor and training or his or her designee.

      (b) The purposes for which this fund shall be used are as follows:

      (1) To provide funds to the Dr. John E. Donley rehabilitation center for suitable

structures, personnel, and equipment necessary for the rendering of rehabilitative services,

including, but not limited to, physical therapy, psychotherapy, and occupational therapy to injured

workers coming within the purview of chapters 29 -- 38 of this title;

      (2) To provide funds for all expenditures of the education unit created pursuant to

section 42-16-4 and all expenditures of the workers' compensation fraud prevention unit created

pursuant to section 42-16.1-12;

      (3) To provide funds for all expenditures of the workers' compensation court. The

administrator of the fund shall on July 1st of each fiscal year transfer those funds that are

reasonable and necessary to fund all expenditures of the workers' compensation court for the

fiscal year from the administrative account, to a restricted receipt account to be established in the

judicial department. The administrator of the workers' compensation court is authorized to draw

funds from the restricted receipt account for all court expenditures;

      (4) To provide funds to the department of labor and training for all expenditures incurred

in administering its responsibilities under chapters 29 -- 38 of this title;

      (5) To provide funds to the department of labor and training for all expenditures incurred

in investigating and processing or otherwise administering its responsibilities regarding claims for

benefits or payments under sections 28-35-20, 28-37-4, and 28-37-8;

      (6) To provide funds to the department of labor and training for the maintenance and

operation of a system of data collection as provided for in section 28-37-31. The director shall be

authorized to purchase and/or lease equipment necessary to effectuate the purposes of section 28-

37-31;

      (7) To provide funds for loans to the state compensation insurance fund as provided in

sections 27-7.2-19 and 27-7.2-20.1; and

      (8) To provide funds for the payment or reimbursement of actual incremental costs of

COLA increases mandated by section 28-33-17 respecting injuries occurring prior to September

1, 1990, in such amounts as the director, in his or her sole discretion, deems appropriate. These

amounts may be paid out of the fund by order of the director and shall be made by order drawn on

the general treasury to be charged against the fund.

      (9) To provide funds to the workers' compensation advisory council created pursuant to

the provisions of section 28-29-30 for expenditures to carry out its responsibilities.

      (10) To provide funds to the department of business regulation relating to the evaluation

of rate filings, reviews, and pricing procedures pursuant to the provisions of section 27-9-52.

 

     28-37-28. Prosecution of actions. -- All actions for any violations of this chapter or of

any of the rules or regulations promulgated by the director, or for the collection of payments in

accordance with section 28-37-13 or section 28-53-9 or other penalties under this chapter, shall

be prosecuted by any qualified member of the Rhode Island bar whom the director may designate,

in the name of the director, and the director shall be exempt from giving surety for costs in any

proceedings. The workers' compensation court shall have jurisdiction over all civil actions filed

pursuant to this section.

 

     SECTION 6. This act shall take effect on July 1, 2007 and shall apply to injuries that

occur on or after January 1, 2009.

     

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LC03333

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