Assembly Bill No. 505-Committee on Labor and Management
May 19, 1997
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Referred to Committee on Labor and Management
SUMMARY--Revises requirements for imposition of solvency surcharge for state industrial insurance system. (BDR 53-955)
FISCAL NOTE: Effect on Local Government: No.
Effect on the State or on Industrial Insurance: Yes.
EXPLANATION - Matter in italics is new; matter in brackets [ ] is material to be omitted.
AN ACT relating to industrial insurance; transferring the authority to impose a surcharge to ensure the solvency of the state industrial insurance system to the legislative committee on workers' compensation; requiring the committee to establish the formula to calculate the surcharge based on a percentage of the total amount of claims paid for certain industrial injuries or occupational diseases; and providing other matters properly relating thereto.
THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:
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Section 1 NRS 616B.110 is hereby amended to read as follows:
616B.110 1. If, after conducting an examination of the affairs, transactions, accounts, funds, records and assets of the system, the commissioner determines that the system is insolvent, he shall give written notice of his determination to the [manager and administrator.
2. Except as otherwise provided in this subsection, upon] legislative committee on workers' compensation.
2. The legislative committee shall review the determination of the commissioner at its next scheduled meeting or at a meeting specified by a call of the chairman of the committee. If, after considering all other reasonable methods for ensuring the solvency of the system, the committee determines that the imposition of a solvency surcharge is necessary, it shall give written notice to the administrator requiring him to collect a solvency surcharge pursuant to the provisions of this section.
3. Upon receipt of such a notice, the administrator shall [impose and] collect a solvency surcharge from [:
(a) Each employer who was insured by the Nevada industrial commission or the system at any time during the period beginning on July 1, 1979, and ending on July 1, 1995;
(b) Each employer who is insured by the system at any time after July 1, 1995;
(c) Each self-insured employer; and
(d) Each association of self-insured public or private employers,
in an amount calculated to produce the revenue that is required to pay the outstanding obligations of the system as they become due.] each employer doing business in this state. The formula used by the administrator to calculate the surcharge required to be paid must be [approved] established by the legislative committee on workers' compensation [created pursuant to NRS 218.5375.] based on a percentage of the total amount of claims paid for industrial injuries or occupational diseases to the employer's employees and their beneficiaries during the immediately preceding calendar quarter. Any claims paid for a disease of the heart or lungs pursuant to NRS 617.455 or 617.457 must not be included in the calculation. Each employer shall provide to the administrator such information as the administrator deems necessary to determine the amount of any surcharge required to be collected pursuant to this section.
4. The administrator shall collect the surcharge quarterly until he receives notice to cease the collection of the surcharge pursuant to subsection 6. The surcharge must be paid in the manner prescribed by the administrator. [The manager shall collect the surcharge imposed against those employers who are insured by the system at any time after July 1, 1995.
3.] 5. All money received by the administrator [and manager] from any surcharge imposed pursuant to this section must be credited on the records of the system to the account for solvency surcharges, which is hereby created in the state insurance fund. The money in the account:
(a) Constitutes a part of the assets of the state insurance fund.
(b) Must be used solely to pay the operating expenses of the system and any obligations of the system as they become due. The money in the account may not be used by the system to incur any additional obligations.
[4. If, at any time after the imposition of a surcharge pursuant to this section, the manager determines that the system is no longer insolvent, he shall file a request with the commissioner to cease the collection of any surcharge imposed pursuant to this section. Upon the receipt of the request, the commissioner shall, for the purpose of determining the financial condition of the system, conduct an examination of the affairs, transactions, accounts, funds, records and assets of the system. If, after conducting the examination, the commissioner determines that the system is no longer insolvent, the commissioner shall approve the request.
5.] 6. If the manager wishes to continue the collection of a surcharge imposed pursuant to this section, he shall, not later than January 15 of the year following the imposition of the surcharge, and annually thereafter, file a request with the legislative committee on workers' compensation to continue the collection of the surcharge. If such a request is filed, the commissioner shall, for the purpose of determining the financial condition of the system, conduct an examination of the affairs, transactions, accounts, funds, records and assets of the system and report his findings to the legislative committee on workers' compensation. The legislative committee shall give written notice to the administrator ordering him to cease the collection of the solvency surcharge if:
(a) A request for the continuation of the collection of the surcharge is not filed by the manager as required by this subsection; or
(b) After reviewing the findings of the commissioner, the legislative committee determines that the imposition of a solvency surcharge is no longer necessary.
7. Any employer [, self-insured employer or association of self-insured public or private employers that] who fails to pay any surcharge imposed pursuant to this section is liable in a civil action commenced by the administrator for:
(a) The amount owed pursuant to this section;
(b) The reasonable expenses incurred by the administrator in enforcing this section; and
(c) Payment of interest on the amount due at the rate fixed pursuant to NRS 99.040 for the period from the date upon which the surcharge was due to the date upon which the surcharge is paid.
Any money collected by the administrator pursuant to this subsection must be deposited into the account for solvency surcharges.
[6.] 8. For the purposes of this section, the system is insolvent if the system is required to sell or otherwise liquidate any of the invested assets or real property of the system for the purpose of paying its outstanding obligations as they mature in the regular course of business.
Sec. 2 NRS 218.5377 is hereby amended to read as follows:
218.5377 The committee:
1. May review issues related to workers' compensation.
2. May study the desirability of establishing a preferred employee program which provides exemptions from the payment of premiums and other financial incentives for employers who provide suitable employment for injured employees and any other program for returning injured employees to work.
3. May review the manner used by the division of industrial relations of the department of business and industry to rate physical impairments of injured employees.
4. Shall, to ensure the solvency of the state industrial insurance system:
(a) Review and study the financial condition of the state industrial insurance system;
(b) Determine the extent of any apparent insolvency of the system; and
(c) Establish a formula [which will be applied to calculate a surcharge that is equal in amount to any deficiency in the cumulative amount of premiums paid by an employer who is subject] to be used to calculate any solvency surcharge required to be paid pursuant to the provisions of NRS 616B.110.
5. May conduct investigations and hold hearings in connection with carrying out its duties pursuant to this section.
6. May direct the legislative counsel bureau to assist in its research, investigations, hearings and reviews.
Sec. 3 This act becomes effective upon passage and approval.