342.908 Default or insolvency of fund member -- Assumption of obligations by
866 words·~4 min read·
/ky/342-908A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
fund -- Assessments to finance funds -- Limitation on income distributions --
Effect of payment on liability to fund for reimbursement.
(1)The commissioner shall notify a guaranty fund if the commissioner has knowledge
that any member of the guaranty fund has failed to timely pay workers'
compensation benefits required by this chapter or if a court of competent
jurisdiction has declared the member to be bankrupt or insolvent.
(2)In the event of issuance of a certificate of default, the commissioner shall call all
security and transfer it to the appropriate guaranty fund created pursuant to this
section. The commissioner shall also immediately notify, by certified mail, the
guaranty fund and order the guaranty fund to assume the workers' compensation
obligations of the member required in this chapter. The guaranty fund shall
commence payment of these obligations within fourteen
(14)days of receipt of
notification and order of the commissioner. Payment shall be made to claimants
whose entitlement to benefits can be ascertained by the guaranty fund with or
without proceedings before the Department of Workers' Claims or a court of
competent jurisdiction. Upon assumption of the obligations of a member by a
guaranty fund, the guaranty fund shall have the right to immediate possession of any
security, and the custodian, surety, or issuer of any irrevocable letter of credit shall
turn over the security, proceeds of the surety bond, or letter of credit to the guaranty
fund, together with the interest that has accrued since the date of the member's
insolvency. The guaranty fund may administer payment of benefits or it may retain
a third party to do so.
(3)Notwithstanding any other provision of law, any cash, securities, irrevocable letters
of credit, specific excess or aggregate excess insurance proceeds, or any other
security deposited or posted in accordance with this section shall be used first, when
due, to pay workers' compensation claims. After the security has been exhausted,
the payment of workers' compensation claims from member assessments may be
made. Where the guaranty fund member-assessment account is used to pay workers'
compensation claims on an emergency or an interim basis, pending receipt by the
guaranty fund of security which is due but not yet received, the member-assessment
account shall be reimbursed for payment from the security when it is received, and
the priorities stated above shall thereafter apply.
(4)To the extent necessary to secure funds for the initial establishment of each
guaranty fund member-assessment account, the board of directors of each guaranty
fund created pursuant to this section shall levy assessments based on the premium
of each individual self-insured employer, as defined and calculated pursuant to KRS
342.0011(28), for members of the Kentucky individual self-insurers guaranty fund
and for the Kentucky coal employers self-insurance guaranty fund, and KRS
342.0011(24) for the Kentucky group self-insurance guaranty fund, but no such
assessments shall ever exceed, in the aggregate, from all members of a single
guaranty fund, an amount in excess of one million dollars ($1,000,000) at any given
time. The assessments shall be made at a maximum annual assessment of: one-half
of one percent (0.5%) of the premium for each member of the Kentucky individual
self-insurance guaranty fund as defined and calculated pursuant to KRS
342.0011(28); two percent (2%) of the premium for each member of the Kentucky
coal employers guaranty fund as defined and calculated pursuant to KRS
342.0011(28); and three-fourths of one percent (0.75%) of the premium for each
member of the Kentucky group self-insurance guaranty fund as defined and
calculated pursuant to KRS 342.0011(24).
(5)The initial assessment for each guaranty fund created pursuant to this section shall
be for an amount equal to five hundred thousand dollars ($500,000), to be levied
and collected within a one
(1)year period. There shall be no reassessments against
any member unless the current balance of such guaranty fund created pursuant this
section is insufficient after deducting the amount paid for or reserved for
outstanding claims and for administrative and other costs in managing the guaranty
fund at which point the board of directors shall raise assessments sufficient to bring
the minimum amount of the guaranty fund to five hundred thousand dollars
($500,000) or such other amount not to exceed, in any event, one million dollars
($1,000,000) based upon a maximum annual assessment for each guaranty fund.
(6)A guaranty fund created pursuant to this section shall pay no dividends, rebates,
interest, or otherwise distribute income from the guaranty fund to any of its
members, unless the guaranty fund has the assets prescribed in subsection
(5)of this
section and the distributions are approved by the commissioner.
(7)The commissioner shall be provided with any relevant information by the employer,
any excess insurer, any third party administrator, or any issuer of any irrevocable
letter of credit, issuer of any surety bond, or custodian of any security necessary for
the commissioner to carry out the commissioner's obligations under this chapter,
and the commissioner shall provide this information to the guaranty fund as
necessary to carry out its obligations.
(8)The payment of benefits by a guaranty fund does not release any person or entity
from any liability to the individual guaranty fund for full reimbursement.