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SPONSOR: |
Romero |
DATE TYPED: |
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HB |
|
||
SHORT TITLE: |
Amend Workers’ Compensation Act |
SB |
771/aSJC/aSFl #1 |
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|
ANALYST: |
Collard |
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APPROPRIATION
Appropriation
Contained |
Estimated
Additional Impact |
Recurring or
Non-Rec |
Fund Affected |
||
FY03 |
FY04 |
FY03 |
FY04 |
|
|
|
($500.0) |
|
|
Non-Recurring |
Workers’
Compensation Administration Fund |
(Parenthesis
( ) Indicate Expenditure Decreases)
REVENUE
Estimated Revenue |
Subsequent Years Impact |
Recurring or
Non-Rec |
Fund Affected |
|
FY03 |
FY04 |
|
|
|
|
$500.0 |
See
Narrative |
Non-Recurring |
Uninsured
Employers’ Fund |
(Parenthesis ( ) Indicate Revenue Decreases)
Responses Received From
Workers’ Compensation Administration (WCA)
SUMMARY
Synopsis
of SFl Amendment
The Senate Floor Amendment #1 to Senate Bill 771
clarifies the intent of the appropriation.
The amendment specifically deletes funding for subsequent fiscal years,
makes the appropriation of $500,000 from the workers’ compensation fund to the
uninsured employers’ fund for FY04 only, and allows the remaining balance,
exclusive of the uninsured employers’ fees, to revert to the workers’ compensation
fund at the end of FY04.
The Senate Floor amendment
makes uninsured employers’ fees, not to exceed one percent of the money paid
out during that quarter as compensation benefits and medical benefits,
exclusive of attorney fees and related benefits solely responsible for the
total amount in the fund.
TECHNICAL ISSUES
The Workers’ Compensation Administration notes
the reversion fund is incorrectly cited in the amendment. The correct name of the fund is the workers’
compensation administration fund.
OTHER
SUBSTANTIVE ISSUES
The Workers’ Compensation Advisory council
supports the bill with this amendment.
Synopsis of SJC Amendment
The Senate Judiciary
Committee amends the bill by making technical corrections. It also directs the superintendent of
insurance to examine and audit the uninsured employers’ fund and clarifies
reimbursement before a workers’ compensation judge. Finally, the bill allows paid penalties to be
deposited in the uninsured employers’ fund rather than the general fund.
The Workers’
Compensation Advisory Council voted to support this bill in a
TECHNICAL ISSUES
On page 6, lines 3
through 5 are unclear on the intent of the appropriation. The legislation, as drafted, has the
appropriation of $500.0 for FY04 “and subsequent fiscal years,” but then states
that the purpose is to carry out the purposes of the uninsured employers’ fund
“in its initial year of operation.” LFC
and WCA recommend the deletion of “and subsequent fiscal years” on page 4,
lines 3 and 4. WCA indicates there are
sufficient funds for FY04, but it is possible that a recurring appropriation
could exceed revenues in the WCA fund.
Synopsis of Original Bill
Senate Bill 771
creates the uninsured employers’ fund and appropriates $500,000 from the workers’
compensation administration fund to the uninsured employers’ fund for the
purpose of providing for claims against uninsured employers. This fund is to be used as a last resort
within the workers’ compensation system.
FISCAL IMPLICATIONS
The appropriation of $500.0
contained in this bill is a recurring expense to the workers’ compensation
administration fund into the uninsured employers’ fund.
WCA notes that the
Taxation and Revenue Department will be responsible for the collection of the
assessment of the uninsured employers’ fund, as they currently are for the
workers’ compensation administration fund.
The department also notes they have no way of currently estimating the
penalties that would be collected under Section 1(H).
Continuing Appropriations
This bill creates a
new fund and provides for continuing appropriations. The LFC objects to including continuing
appropriation language in the statutory provisions for newly created
funds. Earmarking reduces the ability of
the legislature to establish spending priorities.
Further, the bill
establishes uninsured employers’ fees, not to exceed one percent of the money
paid out during that quarter as compensation benefits and medical benefits,
exclusive of attorney fees and related benefits will contribute to the fund. Because it is unclear how much or how little
the fees will contribute to the fund, it may be premature to assume the $500,000
appropriated should be a recurring cost to the workers’ compensation
administration fund.
ADMINISTRATIVE
IMPLICATIONS
The Workers’ Compensation Administration (WCA)
notes a slight increase in administrative efficiency will be anticipated as a
result of this bill. Currently, services are provided on a “next friend” basis
in United States Bankruptcy Court for workers whose uninsured employer is in
bankruptcy. The uninsured employers’ fund
will presumably be able to assert its own bankruptcy claim, but such claims
will be handled more easily, since they are not subject to the automatic stay
in bankruptcy for adjudication and should have administrative priority against
the bankruptcy estate.
Additionally, some coordination between the
Taxation and Revenue Department and WCA will presumably be necessary. Other
activities under the bill either replace current practices to ameliorate the
impact of uncompensated injury upon the worker or reduce the administrative
load on WCA. The net drain on resources
is not likely to be significant for WCA.
TECHNICAL ISSUES
WCA notes on page 4,
line 17, “general fund” should read “uninsured
employers’ fund” and page 4, lines 6 through 9 are problematic because the
mechanism for getting a claim for reimbursement before a workers’ compensation
judge is not clear, given existing procedures. The department indicates it
would be more appropriate to have the director of the workers’ compensation
administration make that determination.
Additionally, on page
6, lines 3 through 5 are unclear on the intent of the appropriation. The legislation, as drafted, has the appropriation
of $500.0 for FY04 “and subsequent fiscal years,” but then states that the
purpose is to carry out the purposes of the uninsured employers’ fund “in its
initial year of operation.” LFC
recommends the deletion of “and subsequent fiscal years” on page 4, lines 3 and
4.
OTHER SUBSTANTIVE
ISSUES
WCA indicates workers caught in the bankruptcy
of an employer that has not purchased workers compensation insurance have the
lowest priority of all bankruptcy creditors and experience substantial delays
in receipt of needed medical care and wage replacement benefits. This bill will reduce or eliminate such
instances.
The Workers’ Compensation Advisory Council has
had a process in place for several years for the review of proposed legislation
affecting the workers’ compensation system, pursuant to its statutory
mandate. The prior council had a series
of public meetings during the summer of 2002 where legislative proposals for
this session were discussed. At the council’s
request, proposals involving changes to workers' compensation benefits were
analyzed for their costs by the Workers' Compensation Administration research
staff, the National Council on Compensation Insurance and New Mexico Mutual
Casualty Company. This proposal has
never been submitted to or reviewed by either the former or current Workers’
Compensation Advisory Council. It is the position of the current Workers’
Compensation Advisory Council that, at the present time, it opposes this bill.
KBC/ls:yr