71st OREGON LEGISLATIVE ASSEMBLY--2001 Regular Session
SA to SB 608
LC 2517/SB 608-3
SENATE AMENDMENTS TO
SENATE BILL 608
By COMMITTEE ON BUSINESS, LABOR, AND ECONOMIC DEVELOPMENT
March 27
On page 1 of the printed bill, line 2, after the semicolon
delete the rest of the line and insert 'creating new provisions;
and amending ORS 656.506, 656.605, 734.360, 734.510, 734.570,
734.630, 734.635 and 734.695.'.
In line 10, after 'premiums' insert 'and a claim by the
Workers' Benefit Fund for payments made pursuant to ORS chapter
656'.
In line 23, after '(C)' insert 'Except for claims arising out
of workers' compensation policies subject to ORS chapter 656,'
and delete 'guaranty fund' and insert 'association'.
In line 25, delete '$10 million' and insert '$25 million'.
On page 2, line 22, after '(2)' insert 'Notwithstanding the
provisions of subsection (1) of this section, and except for
claims arising out of workers' compensation policies subject to
ORS chapter 656,'.
In line 24, delete '$10 million' and insert '$25 million'.
In line 32, delete 'debts and'.
In line 33, delete 'debts or'.
Delete line 41 and insert:
' (2) All claims under policies, including third party claims
and claims under nonassessable policies for unearned premiums,
and all claims by the Oregon Insurance Guaranty Association, the
Oregon Life and Health Insurance Guaranty Association or any
similar organization in another state for payment of covered
claims or contractual obligations;'.
In line 42, delete 'Taxes' and insert 'Claims'.
On page 3, line 4, delete 'Taxes and other debts' and insert
'Claims'.
In line 5, delete 'Debts or'.
After line 25, insert:
' { + SECTION 5. + } { + Section 6 of this 2001 Act is added
to and made a part of ORS chapter 656. + }
' { + SECTION 6. + } { + (1) If an insurer defaults in
payment of compensation due an injured worker, the Director of
the Department of Consumer and Business Services may advance
funds from the Workers' Benefit Fund to injured workers who have
not received payment of compensation due from the insurer in
default.
' (2) The maximum expenditures that may be made under this
section may not exceed the amount of securities on deposit for
the insurer pursuant to ORS 731.628.
' (3) The director shall adopt rules to regulate, manage and
disburse moneys in the Workers' Benefit Fund for the purposes of
subsection (1) of this section. The rules shall include but not
be limited to eligibility criteria, procedures for distributing
funds, accounting procedures and a maximum expenditure limitation
on payments made under subsection (1) of this section from the
fund. + }
' { + SECTION 7. + } ORS 656.506 is amended to read:
' 656.506. (1) As used in this section:
' (a) 'Employee' means a subject worker as defined in ORS
656.005 (28).
' (b) 'Employer' means a subject employer as defined in ORS
656.005 (27).
' (2) Every employer shall retain from the moneys earned by all
employees an amount determined by the Director of the Department
of Consumer and Business Services for each hour or part of an
hour the employee is employed and pay the money retained in the
manner and at such intervals as the Director of the Department of
Consumer and Business Services shall direct.
' (3) In addition to all moneys retained under subsection (2)
of this section, the director shall assess each employer an
amount equal to that assessed pursuant to subsection (2) of this
section. The assessment shall be paid in such manner and at such
intervals as the director may direct.
' (4) Moneys collected pursuant to subsections (2) and (3) of
this section, and any accrued cash balances, shall be deposited
by the Department of Consumer and Business Services into the
Workers' Benefit Fund. Subject to the limitations in subsections
(2) and (3) of this section, the amount of the hourly assessments
provided in subsections (2) and (3) of this section annually may
be adjusted to meet the needs of the Workers' Benefit Fund for
the expenditures of the department in carrying out its functions
and duties pursuant to subsection (7) of this section and ORS
656.622, 656.625, 656.628 and 656.630 { + and section 6 of this
2001 Act + }. Factors to be considered in making such adjustment
of the assessments shall include, but not be limited to, the cash
balance as determined by the director and estimated expenditures
and revenues of the Workers' Benefit Fund.
' (5) It is the intent of the Legislative Assembly that the
department set rates for the collection of assessments pursuant
to subsections (2) and (3) of this section in a manner so that at
the end of the period for which the rates shall be effective, the
cash balance shall be an amount approximating 12 months of
projected expenditures from the Workers' Benefit Fund in regard
to its functions and duties under subsection (7) of this section
and ORS 656.622, 656.625, 656.628 and 656.630 { + and section 6
of this 2001 Act + }, in a manner that minimizes the volatility
of the rates assessed. The department may set the assessment rate
at a higher level if the department determines that a higher rate
is necessary to avoid unintentional program or benefit reductions
in the time period immediately following the period for which the
rate is being set.
' (6) Every employer required to pay the assessments referred
to in this section shall make and file a quarterly report of
employee hours worked and amounts due under this section upon a
combined quarterly report form prescribed by the Department of
Revenue. The report shall be filed with the Department of Revenue
at the times and in the manner prescribed in ORS 316.168 and
316.171.
' (7) There is established a Retroactive Program for the
purpose of providing increased benefits to claimants or
beneficiaries eligible to receive compensation under the benefit
schedules of ORS 656.204, 656.206, 656.208 and 656.210 which are
lower than currently being paid for like injuries. However,
benefits payable under ORS 656.210 shall not be increased by the
Retroactive Program for claimants whose injury occurred on or
after April 1, 1974. Notwithstanding the formulas for computing
benefits provided in ORS 656.204, 656.206, 656.208 and 656.210,
the increased benefits payable under this subsection shall be in
such amount as the director considers appropriate. The director
annually shall compute the amount which may be available during
the succeeding year for payment of such increased benefits and
determine the level of benefits to be paid during such year. If,
during such year, it is determined by the director that there are
insufficient funds to increase benefits to the level fixed by the
director, the director may reduce the level of benefits payable
under this subsection. The increase in benefits to workers shall
be payable in the first instance by the insurer or self-insured
employer subject to reimbursement from the Workers' Benefit Fund
by the director. If the insurer is a member of the Oregon
Insurance Guaranty Association and becomes insolvent and the
Oregon Insurance Guaranty Association assumes the insurer's
obligations to pay covered claims of subject workers, including
Retroactive Program benefits, such benefits shall be payable in
the first instance by the Oregon Insurance Guaranty Association,
subject to reimbursement from the Workers' Benefit Fund by the
director.
' { + SECTION 8. + } ORS 656.605 is amended to read:
' 656.605. (1) The Workers' Benefit Fund is created in the
State Treasury, separate and distinct from the General Fund.
Moneys in the fund shall be invested in the same manner as other
state moneys and investment earnings shall be credited to the
fund. The fund shall consist of the following:
' (a) Moneys received pursuant to ORS 656.506.
' (b) Moneys recovered under ORS 656.054.
' (c) Fines and penalties recovered under ORS 656.735.
' (d) All moneys received by the Director of the Department of
Consumer and Business Services pursuant to law or from any other
source for purposes for which the fund may be expended.
' (2) Moneys in the Workers' Benefit Fund may be expended for
the following purposes:
' (a) Expenses of programs under ORS 656.506, 656.622, 656.625,
656.628 and 656.630 { + and section 6 of this 2001 Act + }.
' (b) Proceedings against noncomplying employers pursuant to
ORS 656.054 and 656.735.
' (c) Expenses of vocational assistance on claims, the cost of
which was imposed pursuant to section 15, chapter 600, Oregon
Laws 1985.
' (3) Subject to the following provisions, all moneys in the
fund are appropriated continuously to the Director of the
Department of Consumer and Business Services to carry out the
activities for which the fund may be expended:
' (a) Moneys received pursuant to ORS 656.054 and 656.735 and
transfers made pursuant to ORS 705.148 may be expended only to
carry out the provisions of ORS 656.054 and 656.735 and section
15, chapter 600, Oregon Laws 1985.
' (b) Moneys received pursuant to ORS 656.506 and the transfers
of unexpended and unobligated moneys in the Retroactive Reserve,
Reemployment Assistance Reserve, Reopened Claims Reserve and
Handicapped Workers Reserve referred to in ORS 656.506, 656.622,
656.625 and 656.628 (All 1993 Edition) may be expended only to
carry out the programs referred to in ORS 656.506, 656.622,
656.625, 656.628 and 656.630.
' (4) Notwithstanding any other provision of this chapter, if
the director determines at any time that there are insufficient
moneys in the Workers' Benefit Fund to pay the expenses of
programs for which expenditure of the fund is authorized, the
director may reduce the level of benefits payable accordingly.
' { + SECTION 9. + } ORS 734.570 is amended to read:
' 734.570. The Oregon Insurance Guaranty Association shall:
' (1) Be obligated to pay covered claims existing at the time
of determination of insolvency of an insurer or arising within 30
days after the determination of insolvency. Except for covered
claims arising out of workers' compensation policies, such
obligation shall include only that amount of each covered claim
that is less than $300,000. The association shall pay the full
amount of any covered claim arising out of a workers'
compensation policy { + , less any amount paid on a covered claim
by the Workers' Benefit Fund pursuant to ORS chapter 656 + }. In
no event shall the association be obligated in an amount in
excess of the obligation of the insolvent insurer under the
policy from which the claim arises, or for claims arising after
the policy expiration, policy replacement by the insured or
policy cancellation caused by the insured.
' (2) Be the insurer to the extent of the association's
obligation on the covered claims and to such extent have all the
rights, duties and obligations of the insolvent insurer as if the
insurer had not become insolvent.
' (3) Assess member insurers the amounts necessary to pay the
expenses incurred by the association in meeting its obligations
and exercising its duties and powers under ORS 734.510 to
734.710. The assessments of each member insurer shall be in the
proportion that the net direct written premiums of the member
insurer for the preceding calendar year bears to the net direct
written premiums of all member insurers for the preceding
calendar year, but shall in no event exceed in any one year two
percent of the member insurer's net direct written premiums for
the preceding calendar year. Each member insurer shall be
notified of an assessment not later than the 30th day before the
day it is due. If the funds of the association do not provide in
any one year an amount sufficient to pay the obligations and
expenses of the association, the funds available shall be
prorated among the obligations and expenses, and the unpaid
portions shall be paid as soon thereafter as funds become
available. If an assessment would cause a member insurer's
financial statement to reflect amounts of capital or surplus less
than the minimum amounts required for a certificate of authority
by any jurisdiction in which the member insurer is authorized to
transact insurance, the association may exempt from or defer
payment of the assessment, in whole or in part, by the member
insurer. However, if the member insurer is a controlled insurer,
the association, in making determinations regarding the exemption
or deferral of assessments, shall treat all dividends paid during
the three calendar years immediately preceding the year in which
the assessment is made as assets of the insurer just as if such
dividends had not been paid. Each member insurer designated as a
servicing facility may set off against any assessment authorized
payments made on covered claims and expenses incurred in the
payment of such claims by the member insurer in its capacity as a
servicing facility.
' (4) Investigate claims brought against the association and
adjust, compromise, settle and pay covered claims to the extent
of the association's obligation, and review settlements, releases
and judgments to which the insolvent insurer or its insureds were
parties to determine the extent to which such settlements,
releases and judgments may be properly contested.
' (5) Reimburse servicing facilities and employees of the
association for obligations and expenses incurred and paid in the
handling of claims on behalf of the association, and pay all
other expenses the association incurs in carrying out ORS 734.510
to 734.710.
' { + SECTION 10. + } ORS 734.635 is amended to read:
' 734.635. (1) Not later than 120 days from the date the order
of liquidation of a member insurer is filed in the office of the
clerk of the court by which the order was made, that insurer's
receiver shall make application to the court for approval of a
proposal to disburse the insurer's marshalled assets to the
Oregon Insurance Guaranty Association from time to time as those
assets become available.
' (2) A proposal made by a receiver under subsection (1) of
this section shall include, but not be limited to, provisions
for:
' (a) Reserving amounts for the payment of those { - debts
and - } claims described in ORS 734.360;
' (b) Disbursing the marshalled assets of the insolvent insurer
to the association in an amount estimated to be at least equal to
the claim payments to be made by the association for which the
association could assert a claim against the insolvent insurer;
' (c) Disbursing the marshalled assets in the amount available
when the marshalled assets do not equal the amount of the claim
payments to be made by the association for which the association
could assert a claim against the insolvent insurer;
' (d) Securing an agreement from the association to return to
the receiver any assets previously disbursed that may be required
to pay the claims of secured creditors and the { - debts
and - } claims described in ORS 734.360; and
' (e) A complete report by the association to the receiver
accounting for all assets disbursed to the association under this
section, expenditures made from those assets and any interest
earned by the association on those assets.
' (3) When an insurer's receiver intends to make application to
a court for approval of a proposal to disburse the insurer's
marshalled assets to the association under this section, the
receiver shall give notice of the application, at least 30 days
prior to filing the application with the court, to the insurance
supervisory official and the insurance guaranty agency that
performs functions similar to that of the association of each
state in which the insolvent insurer was authorized.'.
----------