Current through Register Vol. 54, No. 44, November 2, 2024
(a) The
application of an applicant which meets the requirements of §
125.5 (relating to preliminary
requirements) will be approved if the Bureau determines that the applicant has
demonstrated that it possesses the financial ability to self-insure.
(1) An applicant shall demonstrate that it
has adequate financial capacity by showing one of the following:
(i) The retention amount of the applicant's
current or proposed excess insurance equals or is less than its authorized
retention amount.
(ii) The
applicant's catastrophic loss estimation is equal to or is less than its
maximum quick assets exposure amount.
(2) An applicant shall demonstrate that it
has adequate financial health, as follows:
(i)
If a public employer, the applicant satisfies or will satisfy the requirements
established for it under §
125.10 (relating to funding by
public employers).
(ii) If a
private employer, the applicant's level of financial stability, solvency and
liquidity is such that it satisfies one of the following:
(A) The applicant, or its parent company for
an application being processed under the conditions of §
125.4(e)
(relating to application for affiliates and subsidiaries), possesses an
investment-grade long-term credit or debt rating, or such a rating that is one
generic rating classification below investment grade.
(B) For an applicant who does not receive a
long-term credit or debt rating by an NRSRO, or whose parent company does not
receive a long-term credit or debt rating by an NRSRO for an application being
processed under the conditions of §
125.4(e), the
Bureau estimates that the applicant, or its parent company for an application
being processed under the conditions of §
125.4(e), would
merit an investment grade long-term credit or debt rating, or a rating that is
one generic rating classification below investment grade, if it were
rated.
(C) An applicant that was
approved to self-insure as of September 11, 2010, that possesses an actual or
Bureau-estimated long-term credit or debt rating more than one generic rating
classification below investment grade shall be deemed to possess adequate
financial health if its generic rating does not decline further. This clause
will no longer apply if the applicant's actual or Bureau-estimated long-term
credit or debt rating subsequently increases to one generic rating
classification below investment grade or higher.
(b) The Bureau will
consider the following information in assessing an applicant's financial
ability to self-insure:
(1) The applicant's
level of financial health, or its parent company's level of financial health
for an application being processed under the conditions of §
125.4(e), based
upon the applicant's or its parent's long-term credit or debt rating, if any,
or upon an evaluation by the Bureau of one or more of the following:
(i) The applicant's financial statements, or
its parent company's financial statements for an application being processed
under the conditions of §
125.4(e), which
may include comparisons of the applicant's or its parent company's financial
ratios to general or to industry ratios and cash flow analysis.
(ii) Public documents and reports filed with
other state and Federal agencies including the United States Securities and
Exchange Commission.
(iii) Other
financial analysis information provided to or considered by the Bureau,
including financial analysis comparison databases and evaluation
models.
(2) The amount of
the applicant's quick assets at the end of its last 2 completed fiscal years as
shown on the financial statements provided to the Bureau under §
125.3(c)
(relating to application) or under § 125.4(e).
(3) The terms, conditions and limits of the
applicant's existing or proposed excess insurance.
(4) For a public employer, its ability to
satisfy or its past history in satisfying the requirements established under
§ 125.10.
(c) If the
Bureau finds under subsection (a) that the applicant possesses the financial
ability to self-insure, it will send to the applicant an initial decision
approving the application and a list of conditions as set forth under
subsection (c)(2) that must be met before the applicant will be issued a
permit. The Bureau will issue a permit to a renewal applicant at the time of
the initial decision when the renewal applicant is currently in compliance with
the conditions set forth by the Bureau.
(1) An
applicant has 45 days from the receipt of the initial decision approving the
application to comply with the conditions set forth by the Bureau.
(i) The applicant may toll the 45-day
compliance period by filing a request for a conference or notification of its
intent to submit additional written information under subsection (e).
(ii) An applicant may be granted a 30-day
extension to meet the conditions if the applicant requests an extension in
writing. The Bureau must receive the extension request within the initial
45-day compliance period.
(iii)
Unless a timely reconsideration is initiated under subsection (e), when the
applicant does not meet the conditions within this compliance period, the
application will be deemed denied.
(iv) A renewal applicant that does not meet
the conditions within this compliance period and that has not timely initiated
the procedures outlined in subsection (e) shall obtain workers' compensation
insurance coverage effective the expiration date of the compliance period and
provide evidence of the coverage, such as a certificate of insurance, to the
Bureau no later than the coverage's effective date.
(2) The applicant will be issued a permit
after all of the following have been filed with the Bureau:
(i) Security in an amount as set forth in
§
125.9 (relating to security
requirements) or funding as set forth in § 125.10.
(ii) A certificate providing evidence that
the applicant has obtained excess insurance coverage with limits set forth
under §
125.11(a)
(relating to excess insurance), if required.
(iii) A guarantee agreement executed by its
parent company or an affiliate as set forth in § 125.4, if
required.
(iv) Contact information
on the claims service company or in-house staff that will be handling the
applicant's claims.
(v) Documents
relating to any other requirement set by the Bureau to protect the compensation
rights of employees.
(d) If an applicant does not meet the
requirements of §
125.5 or if upon review under
subsection (a) the Bureau finds that the applicant has not demonstrated that it
possesses the financial ability to self-insure, the Bureau will send to the
applicant an initial decision denying the application. The initial decision
will state the documents, data, information, explanation and corrections
received from the applicant or otherwise reviewed or considered by the Bureau
in rendering its initial decision. A renewal applicant shall obtain workers'
compensation insurance coverage effective no later than 30 days after its
receipt of an initial decision denying the renewal application and shall
provide evidence of the coverage, such as a certificate of insurance, to the
Bureau no later than the coverage's effective date, unless the applicant has
timely initiated the procedures outlined in subsection (e).
(e) The applicant may request a conference
with the Bureau to submit additional materials to support its application or
the alteration of the conditions required in the initial decision, or to
challenge the accuracy of underlying calculations made or data considered by
the Bureau in its decision or conditions. The applicant may also notify the
Bureau of its intention to submit these materials directly in writing without a
conference. The Bureau must receive a request or notification within 20 days of
the date of the Bureau's initial decision.
(1)
Upon its receipt of the request or notification, the Bureau will schedule a
conference. If a conference is not requested, the applicant shall provide the
additional materials within 21 days of its receipt of written notification from
the Bureau of its need to do so, or by a later date if requested by the
applicant and approved by the Bureau.
(2) The prior permit of a renewal applicant
that has filed a timely request for a conference or notification of intent to
submit additional materials will be automatically extended beyond the permit's
original expiration date until the Bureau issues a reconsideration decision on
the renewal application under subsection (f). During the time the permit is
extended, the prior conditions established by the Bureau, as set forth under
subsection (c)(2), shall continue to apply.
(f) After a conference or the receipt of
additional materials, the Chief of the Self-Insurance Division of the Bureau
will review the entire record of the application and will issue a
reconsideration decision on the application.
(1) The applicant shall have 30 days from its
receipt of a reconsideration decision approving an application to comply with
any conditions set forth by the Bureau in that decision.
(i) Unless a timely appeal is filed under
subsection (g), when the applicant does not meet the conditions within this
30-day period, the application will be deemed denied.
(ii) A renewal applicant that does not meet
the conditions within this 30-day period shall obtain workers' compensation
insurance coverage effective the expiration of the compliance period and shall
provide evidence of the coverage, such as a certificate of insurance, to the
Bureau no later than the coverage's effective date, unless the applicant has
timely initiated the procedures outlined in subsection (g).
(2) Upon the issuance of a
reconsideration decision denying a renewal application, the renewal applicant
shall obtain workers' compensation insurance coverage effective no later than
30 days after its receipt of the reconsideration decision and provide evidence
of the coverage, such as a certificate of insurance, to the Bureau no later
than the coverage's effective date unless the applicant has timely initiated
the procedures outlined in subsection (g).
(g) An applicant shall have the right to
appeal a reconsideration decision issued under subsection (f). The Bureau must
receive the appeal within 30 days of the date of the reconsideration decision.
The prior permit of a renewal applicant that filed a timely appeal shall be
automatically extended beyond the permit's original expiration date, until a
presiding officer issues a written decision on the appeal. During the time the
permit is extended, the prior conditions established by the Bureau, as set
forth under subsection (c)(2), shall continue to apply. Untimely appeals will
be dismissed without further action by the Bureau.
(1) The Director of the Bureau will assign
the appeal to a presiding officer who will schedule a hearing on the appeal
from the reconsideration decision. The presiding officer will provide notice to
the parties of the hearing date, time and place.
(2) The hearing will be conducted under this
subsection and 1 Pa. Code Part II (relating to General Rules of Administrative
Practice and Procedure) to the extent not superseded in paragraph (6). The
presiding officer will not be bound by strict rules of evidence.
(3) Hearings will be
stenographically-recorded. The transcript of the proceedings will be part of
the record.
(4) The presiding
officer will issue a written decision and order under 1 Pa. Code Chapter 35,
Subchapters G and H (relating to proposed reports; and agency action) to the
extent not superseded in paragraph (6). The presiding officer will determine
whether the Bureau abused its discretion or acted arbitrarily in the
reconsideration decision. The applicant has the burden to prove that the Bureau
abused its discretion or acted arbitrarily in the reconsideration
decision.
(5) A party aggrieved by
a decision rendered by the presiding officer may appeal the decision to
Commonwealth Court.
(6) This
subsection supersedes 1 Pa. Code §§ 35.131, 35.190, 35.201,
35.211-35.214 and 35.221.
(h) An applicant which has been denied
self-insurance may reapply after audited financial statements are published
subsequent to the latest ones submitted with the denied application.
The provisions of this §125.6 amended under sections
305(a) and 435(a) of the Workers' Compensation Act (77 P. S. §§
501 and
991(a)) and section 2205 of
The Administrative Code of 1929 (71 P. S. §
565).
This section cited in 34 Pa. Code §
125.2 (relating to definitions);
34 Pa. Code §
125.3 (relating to application);
34 Pa. Code §
125.7 (relating to permit); 34 Pa.
Code §
125.10 (relating to funding by
public employers); 34 Pa. Code §
125.16 (relating to reporting by
runoff self-insurer); and 34 Pa. Code §
125.19 (relating to additional
powers of Bureau and orders to show
cause).
