Current through Register Vol. 46, No. 12, March 20, 2024
(a)
The security deposit posted by a self-insurer shall be a combined deposit to
cover disability benefits and paid family leave, if applicable, obligations,
and liabilities under section 204 of the Workers' Compensation Law.
(b) An applicant which has been approved to
become a self-insurer shall either:
(1)
deposit with the chair, and keep on deposit, securities of the kind specified
in subdivisions 1, 2, 3, 4, and 5 and paragraph (a) of subdivision 7 of section
235 of the New York State Banking Law, in an amount required by the chair.
Securities deposited shall be registered in the name of "Chair, Workers'
Compensation Board, State of New York." Interest paid on securities deposited
with the chair shall be remitted to the self-insurer for whose account they are
deposited, as long as the self-insurer complies with article 9 of the Workers'
Compensation Law and with these regulations and rules; or
(2) deposit with the chair and keep on
deposit cash in an amount required by the chair. Cash deposits shall be
deposited in an interest bearing account in the name of "Chair, Workers'
Compensation Board, State of New York" and shall be in an account authorized by
the Comptroller of the State of New York. Such cash deposit is to be by
certified check, automated clearing house (ACH), or wire transfer. Interest
paid on the cash deposit shall be remitted to the self-insurer for whose
account the cash is deposited, so long as such self-insurer complies with
article 9 of the Workers' Compensation Law and with these regulations and
rules; or
(3) file irrevocable
letters of credit issued by a qualified bank; or
(4) in lieu of securities, cash or letters of
credit and at the discretion of the chair, file with the chair the bond of a
surety company authorized to do business in this State, in form and penal sum
acceptable to the chair and conditioned on the payment by the self-insurer of
all its obligations and the obligations of each and every employer for whose
employees the self-insurer provides benefits under article 9 of the Workers'
Compensation Law. Each surety bond shall be undertaken and may be enforced in
the name of "Chair, Workers' Compensation Board, State of New York";
(i) to be a qualified surety company, the
surety company must have a credit rating of B+ or better from A.M. Best or the
equivalent from any other rating service;
(ii) if the rating of the surety bond issuer
falls below the criteria established in section 361.3(b)(4)(i) of this Part,
the self-insurer will have to replace the surety bond within 60 days of the
rating determination by the chair with another deposit allowable under the law;
or
(5) deposit or file
with the chair a combination of such securities, cash, irrevocable letters of
credit and surety bonds.
(c) To be acceptable, a letter of credit
filed pursuant to paragraph (a)(3) of this section must comply with all
requirements set forth in Regulation 133 of the New York State Insurance
Department, codified as 11 NYCRR Part 79, except that:
(1) the beneficiary shall be
the "Chair, Workers' Compensation Board, State of New York";
(2) the evergreen clause
shall provide for at least 60 days' written notice to the chair of the Workers'
Compensation Board prior to the expiry date for nonrenewal;
(3) a bank, to be a
qualified
bank, may in lieu of a determination by the Securities Evaluation
Office of the National Association of Insurance Commissioners for purposes of
11 NYCRR 79.1(e)(3), have either a long-term debt rating equal to Baa/BBB or
better by Moody's or Standard & Poor's or the equivalent thereto from any
other securities rating service, and/or a short-term debt rating of P2/A2 from
Moody's or Standard & Poor's or the equivalent thereto from any other
securities rating service:
(i) if the rating
of the issuing bank falls below the criteria established in section 361.3(c)(3)
of this Part, the self-insurer will have to replace the letter of credit within
60 days of the rating determination by the chair with another deposit allowable
under the law;
(4) the
letter of credit shall additionally provide that any legal proceedings with
respect thereto be subject to the jurisdiction of the courts of the State of
New York; and
(5) the form, amount
and content thereof shall be acceptable to the chair.
(d) For employers self-insuring for both
disability benefits and paid family leave benefits, the self-insurer shall
deposit securities and/or cash with the chair, and/or file an acceptable surety
bond and/or irrevocable letters of credit, in an aggregate amount and/or penal
sum calculated as follows and subject to the chair's discretion:
(1) employers' full annual wages multiplied
by up to one percentum;
(2) in no
case an amount less than $10,000.
(e) For employers self-insuring for
disability benefits only, the self-insurer shall deposit securities and/or cash
with the chair, and/or file an acceptable surety bond and/or irrevocable
letters of credit, in an aggregate amount and/or penal sum calculated as
follows and subject to the chair's discretion:
(1) one-half the estimated contributions of
the employees of the employer for the ensuing year or one-half of the estimated
or actual contributions of the employees which would have been paid by the
employees during the preceding year, whichever is the greater; or
(2) at the chair's discretion, as determined
under Table 1 in section
376.1(c)
of this Title.
(f)
Consolidation of security deposits.
(1) A corporation which has qualified as, or
has applied to become, a self-insurer pursuant to the provisions of subdivision
(3) of section 211 of the Workers' Compensation Law may apply to the chair for
permission to establish a consolidated deposit with one or more subsidiary
corporations of which it is the owner, directly or indirectly, of at least a
majority of the voting shares. Such application shall be accompanied by an
agreement, in the form prescribed by the chair, duly approved by the board of
directors of each corporation that the corporate parties and the aggregate
amount of securities and/or cash, the aggregate amount of the penal sums of the
surety bonds and/or the aggregate amount of the letters of credit deposited or
to be deposited with the chair by them, individually and collectively, at all
times shall be liable and shall be available, at the discretion of the chair,
for the payment of any and all compensation, death benefits, administrative
expenses, assessments, and/or other charges or obligations for which the
corporation and/or each and every one of the subsidiary corporations shall be
liable under the Workers' Compensation Law and under the rules and regulations
of the Workers' Compensation Board and/or of its chair.
(2) A not-for-profit corporation which has
qualified as, or has applied to become, a self-insurer pursuant to the
provisions of subdivision (3) of section 211 of the Workers' Compensation Law
may apply to the chair for permission to establish a consolidated deposit with
one or more not-for-profit corporations of which it is the owner, directly or
indirectly, of at least a majority interest. For purposes of this section, a
determination of majority interest shall be based on:
(i) the majority of the members of each such
entity; or
(ii) the majority of the
board of directors or comparable governing body of each such entity;
or
(iii) the same central authority
which appoints or controls the appointment of the board of trustees or similar
body and exercises direct, complete and active control over the finances,
properties, operations and activities of separate legal entities.
Such application shall be accompanied by an agreement, in
the form prescribed by the chair, duly approved by the board of directors of
each not-for-profit corporation that the corporate parties and the aggregate
amount of securities and/or cash, the aggregate amount of the penal sums of the
surety bonds and/or the aggregate amount of the letters of credit deposited or
to be deposited with the chair by them, individually and collectively, at all
times shall be liable and shall be available, at the discretion of the chair,
for the payment of administrative expenses, assessment, and/or other charges or
obligations for which the corporation and/or each and every one of the entities
in which the not-for-profit corporation has a majority ownership interest shall
be liable under the Workers' Compensation Law and under the rules and
regulations of the Workers' Compensation Board and/or of its chair.
(3) The chair, in his
or her discretion, may permit the establishment of a consolidated deposit of
securities and/or cash in an amount and/or the filing of surety bonds in an
aggregate penal sum and/or of letters of credit in an aggregate amount which
shall be determined in accordance with the provisions of the Workers'
Compensation Law and with the rules and regulations promulgated
thereunder.
