Session of 2000
By Committee on Business, Commerce and Labor

10             AN  ACT concerning workers compensation; relating to the duties of em-
11             ployers; amending K.S.A. 1999 Supp. 44-532 and repealing the existing
12             section.
14       Be it enacted by the Legislature of the State of Kansas:
15             Section  1. K.S.A. 1999 Supp. 44-532 is hereby amended to read as
16       follows: 44-532. (a) Where the payment of compensation of the employee
17       or the employee's dependents is insured by a policy or policies, at the
18       expense of the employer, or the employer is a member of a qualified
19       group-funded workers compensation pool, the insurer or the qualified
20       group-funded workers compensation pool shall be subrogated to the
21       rights and duties under the workers compensation act of the employer so
22       far as appropriate, including the immunities provided by K.S.A. 44-501
23       and amendments thereto.
24             (b) Every employer shall secure the payment of compensation to the
25       employer's employees by insuring in one of the following ways: (1) By
26       insuring and keeping insured the payment of such compensation with an
27       insurance carrier authorized to transact the business of workers compen-
28       sation insurance in the state of Kansas; (2) by showing to the director that
29       the employer carries such employer's own risk and is what is known as a
30       self-insurer and by furnishing proof to the director of the employer's
31       financial ability to pay such compensation for the employer's self; (3) by
32       maintaining a membership in a qualified group-funded workers compen-
33       sation pool. The cost of carrying such insurance or risk shall be paid by
34       the employer and not the employee.
35             (c) The knowing and intentional failure of an employer to secure the
36       payment of workers compensation to the employer's employees as re-
37       quired in subsection (b) of this section is a class A misdemeanor. is:
38             (1) A class A nonperson misdemeanor, if the amount the employer
39       failed to pay is $500 or less;
40             (2) a severity level 9, nonperson felony, if such amount is more than
41       $500 but less than $25,000;
42             (3) a severity level 7, nonperson felony, if the amount is more than
43       $25,000, but less than $50,000;


  1             (4) a severity level 6, nonperson felony if the amount is more than
  2       $50,000, but less than $100,000; or
  3             (5) a severity level 5, nonperson felony if the amount is more than
  4       $100,000.
  5             (d) In addition, whenever the director has reason to believe that any
  6       employer has engaged or is engaging in the knowing and intentional fail-
  7       ure to secure the payment of workers compensation to the employer's
  8       employees as required in subsection (b) of this section, the director shall
  9       issue and serve upon such employer a statement of the charges with
10       respect thereto and shall conduct a hearing in accordance with the Kansas
11       administrative procedure act, wherein the employer may be liable to the
12       state for a civil penalty in an amount equal to twice the annual premium
13       the employer would have paid had such employer been insured or
14       $25,000, whichever amount is greater.
15             (e) The director shall not assess such a fine against a self-employed
16       subcontractor for failure of the subcontractor to secure compensation for
17       the subcontractor personally, however, the director shall enforce the pro-
18       visions of this section for failure of the subcontractor to secure compen-
19       sation for any other employee of the subcontractor as otherwise provided
20       by law.
21             (f) Any civil penalty imposed or final action taken under this section
22       shall be subject to review in accordance with the act for judicial review
23       of agency actions in the district court of Shawnee county.
24             (g) All moneys received under this section for costs assessed or mon-
25       etary penalties imposed shall be deposited in the state treasury and cred-
26       ited to the workers compensation fund.
27             (h)  (1) Every insurance carrier writing workers' compensation insur-
28       ance for any employment covered under the workers compensation act
29       shall file, with the director or the director's designee, written notice of
30       the issuance, nonrenewal or cancellation of a policy or contract of insur-
31       ance, or any endorsement, providing workers compensation coverage,
32       within 10 days after such issuance, nonrenewal or cancellation. Every such
33       insurance carrier shall file, with the director, written notice of all such
34       policies, contracts and endorsements in force on the effective date of this
35       act.
36             (2) Every employer covered by the workers compensation act who is
37       a qualified self-insurer shall give written notice to the director or the
38       director's designee, if such employer changes from a self-insurer status
39       to insuring through an insurance carrier or by maintaining a membership
40       in a qualified group-funded workers compensation pool, such notice to
41       be given within 10 days after the effective date of such change. Every
42       self-insurer shall file with the director annually a report verifying the
43       employer's continuing ability to pay compensation to the employer's


  1       employees.
  2             (3) Every employer covered by the workers compensation act who is
  3       a member of a qualified group-funded workers compensation pool shall
  4       give written notice to the director or the director's designee, if such em-
  5       ployer changes from a group-funded workers compensation pool to in-
  6       suring through an insurance carrier or becoming a self-insurer, such no-
  7       tice to be given within 10 days after the effective date of such change.
  8             (4) The mailing of any written notice or report required by this sub-
  9       section (d) in a stamped envelope within the prescribed time shall comply
10       with the requirements of this subsection.
11             (5) The director shall provide by regulation for the forms of written
12       notices and reports required by this subsection (d).
13             (i) As used in this section, "qualified group-funded workers compen-
14       sation pool" means any qualified group-funded workers compensation
15       pool under K.S.A. 44-581 through 44-591 and amendments thereto or
16       any group-funded pool under the Kansas municipal group-funded pool
17       act which includes workers compensation and employers' liability under
18       the workers compensation act.
19             (j) A private firm shall not be eligible to apply to become a self-insurer
20       unless it has been in continuous operation for at least five years or is
21       purchasing an existing self-insured Kansas firm, plant or facility and the
22       operation of the purchased firm, plant or facility: (1) Has been in contin-
23       uous operation in Kansas for at least 10 years; (2) has generated an after-
24       tax profit of at least $1,000,000 annually for the preceding three consec-
25       utive years; and (3) has a ratio of debt to equity of not greater than 3.5
26       to 1. As used in this subsection, "debt" means the sum of long-term
27       borrowing maturing in excess of one year plus the current portion of long-
28       term borrowing plus short-term financial institution borrowing plus com-
29       mercial paper borrowing, and "equity" means the sum of the book value
30       of stock plus paid-in capital plus retained earnings. The method for cal-
31       culating the amount of security required of self-insureds shall be reviewed
32       by an actuary every five years, beginning in fiscal year 1997. The costs for
33       these actuarial studies shall be paid from the workers compensation fee
34       fund.
35             (k) A corporation or other entity whose current identity is attributable
36       to a merger or other transformation whereby the whole or a substantial
37       part of a previous entity's assets and income have been transferred to it,
38       and its liabilities have not increased beyond the financial review require-
39       ments of the director, which qualified under its previous identity as a self-
40       insurer under other provisions of this statute, and amendments thereto,
41       may apply for renewal as a self-insurer under its new name. The director
42       may grant the application for renewal if satisfied that the new entity meets
43       all necessary financial criteria for renewal that would have been applied


  1       to the previous self-insured entity. An application under these provisions
  2       shall be limited to an entity seeking renewal based upon the prior self-
  3       insured status of another entity or entities. 
  4       Sec.  2. K.S.A. 1999 Supp. 44-532 is hereby repealed.
  5        Sec.  3. This act shall take effect and be in force from and after its
  6       publication in the statute book.