Senate Bill No. 3–Committee on Commerce and
Labor
Prefiled January 11, 2001
____________
Referred to Committee on Commerce and Labor
SUMMARY—Revises provisions governing qualification
as association of self-insured private employers. (BDR 53‑305)
FISCAL NOTE: Effect on Local Government: No.
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EXPLANATION
– Matter in bolded italics is new; matter
between brackets [omitted material] is material to be omitted.
Green numbers along
left margin indicate location on the printed bill (e.g., 5-15 indicates page 5, line 15).
AN ACT relating to industrial insurance; revising the requirements for a group of
employers to qualify as an association of self-insured private employers; and
providing other matters properly relating thereto.
THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN
SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:
1-1 Section
1. NRS 616B.350 is hereby
amended to read as follows:
1-2 616B.350 1. A
group of five or more employers may not act as an
1-3 association of self-insured public employers unless
the group:
1-4 (a) Is
composed of employers engaged in the same or similar
1-5 classifications of employment; and
1-6 (b) Has been
issued a certificate to act as such an association by the
1-7 commissioner.
1-8 2. A group of five or more employers may not act
as an association of
1-9 self-insured private employers unless [each member of the group:
1-10 (a) Is a member or associate member of a bona
fide trade association, as
1-11 determined by the
commissioner, which:
1-12 (1) Is incorporated in this state; and
1-13 (2) Has been in existence for at least 5
years; and
1-14 (b) Has] the group has been issued a certificate to act
as such an
1-15 association by the commissioner.
1-16 3. An association of public or private employers
that wishes to be
1-17 issued a certificate must file with the commissioner
an application for
1-18 certification.
1-19 4. The application must include:
1-20 (a) The name
of the association.
2-1 (b) The address
of:
2-2 (1) The
principal office of the association.
2-3 (2) The
location where the books and records of the association will
2-4 be maintained.
2-5 (c) The date
the association was organized.
2-6 (d) The name
and address of each member of the association.
2-7 (e) The names
of the initial members of the board of trustees and the
2-8 name of the initial association’s administrator.
2-9 (f) Such
other information as the commissioner may require.
2-10 5. The application must be accompanied by:
2-11 (a) A
nonrefundable filing fee of $1,000.
2-12 (b) Proof of
compliance with NRS 616B.353.
2-13 (c) Proof
that the association or its third-party administrator is licensed
2-14 or otherwise authorized to conduct business in this
state pursuant to Title
2-15 57 of NRS.
2-16 (d) A copy of
the agreements entered into with the association’s
2-17 administrator and a third-party administrator.
2-18 (e) A copy of
the bylaws of the association.
2-19 (f) A copy of
an agreement jointly and severally binding the association
2-20 and each member of the association to secure the
payment of all
2-21 compensation due pursuant to chapters 616A to 617,
inclusive, of NRS.
2-22 (g) A pro
forma financial statement prepared by an independent
2-23 certified public accountant in accordance with
generally accepted
2-24 accounting principles that shows the financial
ability of the association to
2-25 pay all compensation due pursuant to chapters 616A
to 617, inclusive, of
2-26 NRS.
2-27 (h) A
reviewed financial statement prepared by an independent certified
2-28 public accountant for each proposed member of the
association or evidence
2-29 of the ability of the association or its proposed
members to provide a
2-30 solvency bond pursuant to subsection 3 of NRS
616B.353.
2-31 (i) Proof
that each member of the association will make the initial
2-32 payment to the association required pursuant to NRS
616B.416 on a date
2-33 specified by the commissioner. The payment shall be
deemed to be a part
2-34 of the assessment required to be paid by each member
for the first year of
2-35 self-insurance if certification is issued to the
association.
2-36 6. Any financial information relating to a
member of an association
2-37 received by the commissioner pursuant to the
provisions of this section is
2-38 confidential and must not be disclosed.
2-39 [7. For the purposes
of this section, “associate member of a bona fide
2-40 trade association”
means a supplier whose business, as determined by the
2-41 commissioner:
2-42 (a) Is limited to a specific industry; and
2-43 (b) Primarily involves providing a product or
service that is directly
2-44 used or consumed
by substantially all of the members of the trade
2-45 association or
bears a direct relationship to the business of the members of
2-46 the association.]
2-47 Sec. 2. NRS
616B.386 is hereby amended to read as follows:
2-48 616B.386 1. If
an employer wishes to become a member of an
2-49 association of self-insured public or private
employers, the employer must:
3-1 (a) Submit an
application for membership to the board of trustees or
3-2 third-party administrator of the association; and
3-3 (b) Enter
into an indemnity agreement as required by NRS 616B.353.
3-4 2. The membership of the applicant becomes
effective when each
3-5 member of the association approves the application
or on a later date
3-6 specified by the association. The application for
membership and the action
3-7 taken on the application must be maintained as
permanent records of the
3-8 board of trustees.
3-9 3. Each member who is a member of an association
during the 12
3-10 months immediately following the formation of the
association must:
3-11 (a) Have a
tangible net worth of at least $500,000; or
3-12 (b) Have had
a reported payroll for the previous 12 months which
3-13 would have resulted in a manual premium of at least
$15,000, calculated in
3-14 accordance with a manual prepared pursuant to
subsection 4 of
NRS 686B.1765.
3-15 4. An employer who seeks to become a member of
the association
3-16 after the 12 months immediately following the
formation of the association
3-17 must meet the requirement set forth in paragraph (a)
or (b) of subsection 3
3-18 unless the commissioner adjusts the requirement for
membership in the
3-19 association after conducting an annual review of the
actuarial solvency of
3-20 the association pursuant to subsection 1 of NRS
616B.353.
3-21 5. An association of self-insured private
employers may apply to the
3-22 commissioner for authority to determine the amount
of tangible net worth
3-23 and manual premium that an employer must have to
become a member of
3-24 the association. The commissioner shall approve the
application if the
3-25 association:
3-26 (a) Has been
certified to act as an association for at least the 3
3-27 consecutive years immediately preceding the date on
which the association
3-28 filed the application with the commissioner;
3-29 (b) Has a
combined tangible net worth of all members in the association
3-30 of at least $5,000,000;
3-31 (c) Has at
least 15 members; and
3-32 (d) Has not
been required to meet informally with the commissioner
3-33 pursuant to subsection 1 of NRS 616B.431 during the
18-month period
3-34 immediately preceding the date on which the
association filed the
3-35 application with the commissioner or, if the
association has been required
3-36 to attend such a meeting during that period, has not
had its certificate
3-37 withdrawn before the date on which the association
filed the application.
3-38 6. An association of self-insured private
employers may apply to the
3-39 commissioner for authority to determine the
documentation demonstrating
3-40 solvency that an employer must provide to become a
member of the
3-41 association. The commissioner shall approve the
application if the
3-42 association:
3-43 (a) Has been
certified to act as an association for at least the 3
3-44 consecutive years immediately preceding the date on
which the association
3-45 filed the application with the commissioner;
3-46 (b) Has a
combined tangible net worth of all members in the association
3-47 of at least $5,000,000; and
3-48 (c) Has at
least 15 members.
4-1 7. The commissioner may withdraw his approval of
an application
4-2 submitted pursuant to subsection 5 or 6 if he
determines the association has
4-3 ceased to comply with any of the requirements set
forth in subsection 5 or
4-4 6, as applicable.
4-5 8. A member of an association may terminate his
membership at any
4-6 time. To terminate his membership, a member must
submit to the
4-7 association’s administrator a notice of intent to
withdraw from the
4-8 association at least 120 days before the effective
date of withdrawal. The
4-9 association’s administrator shall, within 10 days
after receipt of the notice,
4-10 notify the commissioner of the employer’s intent to
withdraw from the
4-11 association.
4-12 9. The members of an association may cancel the
membership of any
4-13 member of the association in accordance with the
bylaws of the
4-14 association.
4-15 10. The association shall:
4-16 (a) Within 30
days after the addition of an employer to the membership
4-17 of the association, notify the commissioner of the
addition and:
4-18 (1) If the
association has not received authority from the
4-19 commissioner pursuant to subsection 5 or 6, as
applicable, provide to the
4-20 commissioner all information and assurances for the
new member that
4-21 were required from each of the original members of
the association upon
4-22 its organization; or
4-23 (2) If the
association has received authority from the commissioner
4-24 pursuant to subsection 5 or 6, as applicable,
provide to the commissioner
4-25 [evidence that is
satisfactory to the commissioner that the new member is a
4-26 member or
associate member of the bona fide trade association as required
4-27 pursuant to
paragraph (a) of subsection 2 of NRS 616B.350,] a copy of the
4-28 indemnity agreement that jointly and severally binds
the new member, the
4-29 other members of the association and the association
that is required to be
4-30 executed pursuant to paragraph (a) of subsection 1
of NRS 616B.353 and
4-31 any other information the commissioner may
reasonably require to
4-32 determine whether the amount of security deposited
with the commissioner
4-33 pursuant to paragraph (d) or (e) of subsection 1 of
NRS 616B.353 is
4-34 sufficient, but such information must not exceed the
information required
4-35 to be provided to the commissioner pursuant to
subparagraph (1);
4-36 (b) Notify
the commissioner and the administrator of the termination or
4-37 cancellation of the membership of any member of the
association within 10
4-38 days after the termination or cancellation; and
4-39 (c) At the
expense of the member whose membership is terminated or
4-40 canceled, maintain coverage for that member for 30
days after notice is
4-41 given pursuant to paragraph (b), unless the
association first receives notice
4-42 from the administrator that the member has:
4-43 (1) Been
certified as a self-insured employer pursuant to
NRS 616B.312;
4-44 (2) Become
a member of another association of self-insured public or
4-45 private employers; or
4-46 (3) Become
insured by a private carrier.
4-47 11. If a member of an association changes his
name or form of
4-48 organization, the member remains liable for any
obligations incurred or
5-1 any responsibilities imposed pursuant to chapters
616A to 617, inclusive,
5-2 of NRS under his former name or form of
organization.
5-3 12. An association is liable for the payment of
any compensation
5-4 required to be paid by a member of the association
pursuant to chapters
5-5 616A to 616D, inclusive, or chapter 617 of NRS
during his period of
5-6 membership. The insolvency or bankruptcy of a member
does not relieve
5-7 the association of liability for the payment of the
compensation.
5-8 Sec. 3. NRS
616B.401 is hereby amended to read as follows:
5-9 616B.401 1. An
association of self-insured public employers may
5-10 merge with another association of self-insured
public employers or an
5-11 association of
self-insured private employers may merge with another
5-12 association of
self-insured private employers if:
5-13 (a) The
resulting association assumes in full all obligations of the
5-14 merging associations; and
5-15 (b) The merger is approved by the commissioner.
5-16 2. [An
association of self-insured private employers may merge with
5-17 another
association of self-insured private employers if:
5-18 (a) The members of the merging associations
are engaged in the same or
5-19 similar trade;
5-20 (b) The resulting association assumes in full
all obligations of the
5-21 merging
associations; and
5-22 (c) The merger is approved by the commissioner.
5-23 3.] The commissioner shall conduct a hearing on the proposed merger
5-24 if any member of the merging associations so
requests. The commissioner
5-25 may on his own motion conduct such a hearing.
5-26 Sec. 4. This
act becomes effective on July 1, 2001.
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