Kentucky Administrative Regulations
Title 803 - LABOR CABINET
Chapter 25 - Department of Workers' Claims
Section 803 KAR 25:220 - Guaranty funds
Universal Citation: 803 KY Admin Regs Service 25:220
Current through Register Vol. 51, No. 3, September 1, 2024
RELATES TO: KRS 342.900-342.912
NECESSITY, FUNCTION, AND CONFORMITY: KRS 342.260 requires the commissioner to promulgate administrative regulations necessary to implement the provisions of KRS Chapter 342. KRS 342.906(4) requires the commissioner to promulgate administrative regulations to establish a plan of operation for each guaranty fund created pursuant to KRS 342.906. This administrative regulation establishes the requirements for a guaranty fund written plan of operation and regulates the powers and duties of the guaranty funds.
Section 1. Plan of Operation.
(1) Each guaranty fund shall submit to the
commissioner a plan of operation and each amendment necessary to assure the
fair, reasonable, and equitable administration of the fund. The plan of
operation and amendments shall become effective upon approval in writing by the
commissioner.
(2) If a guaranty
fund fails to submit an acceptable plan of operation or fails to submit a
suitable amendment to the plan, the commissioner may, after notice and hearing,
adopt or amend a plan of operation for the guaranty fund. The plan adopted or
amended by the commissioner shall continue in force until modified by the
commissioner or superseded by a plan submitted by the guaranty fund and
approved by the commissioner.
(3) A
member of a guaranty fund shall comply with the plan of operation.
(4) The plan of operation shall establish:
(a) Procedures whereby all the powers and
duties of the guaranty fund established by KRS Chapter 342 shall be
performed;
(b) Procedures for the
collection of assessments, the sound investment, and disbursement of assets of
the guaranty fund;
(c) The amount
and method of reimbursing a member of the board of directors for attendance at
a board meeting or other reasonably necessary function of the guaranty
fund;
(d) Procedures by which a
claim shall be filed with the guaranty fund and acceptable forms for proof of a
claim. Notice of a claim against the insolvent self-insurer to a bankruptcy
court or other court of competent jurisdiction shall be deemed notice to the
guaranty fund;
(e) A regular place
and time for a meeting of the board of directors;
(f) Procedures for a record to be kept of a
financial transaction of the guaranty fund, its agents, or the board of
directors;
(g) Procedures for the
expeditious and informal resolution of a member grievance;
(h) Additional provisions necessary or proper
for the execution of the powers and duties of the guaranty fund.
Section 2. Powers and Duties of the Guaranty Funds.
(1) Each
guaranty fund shall:
(a) Be required to pay
the workers' compensation benefits incurred during the period in which an
insolvent self-insurer was a member of the guaranty fund, subject to the
limitations established by
KRS
342.908(4). For an
individual self-insurer, membership in a guaranty fund shall continue until the
employer:
1. Becomes an insolvent
self-insurer, as defined in KRS 342.901(1); or
2. Secures coverage through an authorized
carrier or self-insurance group;
(b) Have the rights, duties, and obligations
of the insolvent self-insurer, except as otherwise provided by law;
(c) Determine the outstanding liabilities of
the insolvent self-insurer and establish actuarially responsible reserves for
an incurred claim.
1. If an insolvent
self-insurer's security has been exhausted, the guaranty fund shall not be
responsible for payment of a claim incurred prior to March 1, 1997;
and
2. If an insolvent
self-insurer's security has been exhausted, the guaranty fund shall pay a claim
incurred on or after March 1, 1997;
(d) Establish a mechanism consistent with
803 KAR
25:021, Section 12(4), for a distribution of security
proceeds after the commissioner has determined that every claim for which an
insolvent self-insurer is responsible has been fully paid, fully settled, or
lapsed so that the insolvent self-insurer has no possibility of additional
liability.
(e) Take possession of
the books and records of the insolvent self-insurer necessary to fulfill the
duties of the guaranty fund;
(f)
Investigate claims brought against the guaranty fund and adjust, compromise,
settle, and pay workers' compensation benefits which might otherwise be delayed
or terminated due to the failure of an insolvent self-insurer to meet its
obligations under KRS Chapter 342;
(g) Notify a claimant of the insolvent
self-insurer of his rights through the guaranty fund;
(h) Reimburse each servicing facility for an
obligation of the guaranty fund paid by the facility and for an expense
incurred by the facility while handling a claim on behalf of the guaranty fund;
and
(i) Notify the commissioner of
information indicating that a member may be insolvent or in a financial
condition jeopardizing payment of claims.
(2) A guaranty fund may:
(a) Appear in, defend, and appeal an action
on a claim brought against the guaranty fund;
(b) Employ or retain persons necessary to
handle claims and perform other duties of the guaranty fund;
(c) Borrow funds necessary to effect the
purposes of KRS Chapter 342 and this administrative regulation in accordance
with the fund's plan of operation;
(d) Sue or be sued;
(e) Negotiate and become a party to a
contract necessary to carry out the purpose of KRS Chapter 342 and this
administrative regulation; and
(f)
Perform an act necessary to effectuate the purpose of the guaranty
fund.
STATUTORY AUTHORITY: KRS 342.260, 342.900-342.912
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