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§ 9-405. Self-insurance by individual employer

West's Annotated Code of MarylandLabor and EmploymentEffective: October 1, 2013

West's Annotated Code of Maryland
Labor and Employment
Title 9. Workers' Compensation (Refs & Annos)
Subtitle 4. Insurance Coverage (Refs & Annos)
Effective: October 1, 2013
MD Code, Labor and Employment, § 9-405
§ 9-405. Self-insurance by individual employer
Financial ability
(a) Each employer who wants to self-insure under this section shall satisfy the Commission that the employer is financially able to pay compensation.
Security; letter of credit
(b)(1) At any time, the Commission may require an employer who self-insures under this section to secure payment of compensation by depositing with the Commission:
(i) security:
1. in a form accepted by a circuit court for investment of trust money; and
2. in the amount set by the Commission; or
(ii) letters of credit:
1. issued by a financial institution acceptable to the Commission;
2. in a form acceptable to and in the amount set by the Commission; and
3. that meet the requirements of § 9-408(c) of this subtitle.
(2) On application and subject to paragraph (3) of this subsection, the Commission shall return security that an employer has deposited under this subsection if the employer:
(i) ceases to be subject to this title or secures compensation through an authorized insurer; and
(ii) has not been liable on a claim for compensation during the 5 years immediately after the day on which the event described in item (i) of this paragraph occurred.
(3) After reviewing the application and before returning security to an employer the Commission may require the employer to submit to the Commission an indemnity bond in an amount equal to the value of the security.
Excess insurance
(c) The Commission may require an employer who self-insures under this section to maintain and submit to the Commission a policy of excess insurance that is in the amount and contains the provisions that the Commission considers necessary to provide security for the payment of compensation and medical treatment.
Claims handlers and adjusters in state required; toll-free telephone number
(d)(1) Each employer that self-insures under this section shall have in the State competent individuals who:
(i) handle and adjust each disputed workers' compensation claim in the State for the employer; and
(ii) possess the knowledge and experience to handle and adjust each disputed claim.
(2) Each employer that self-insures under this section shall establish a toll-free telephone number through which an employee or claimant, or a representative of an employee or claimant, may make direct telephone inquiries during regular business hours.
(3) The Commission may assess a fine not exceeding $1,000 on a self-insurer that does not comply with this subsection.
Reports; examination of business; assessment
(e)(1) To be informed of the continuing financial responsibility of each employer who self-insures under this section, the Commission:
(i) shall require each employer to submit a report at least once each year; and
(ii) may examine the employer under oath and make other examination of the business of the employer.
(2) Each year, the Commission shall assess each self-insured employer an amount not exceeding $1,500 to be used for actuarial studies and audits.
Revocation of approval
(f)(1) The Commission shall revoke the approval of an employer to self-insure under this section if the employer:
(i) fails to deposit securities or letters of credit with or submit a bond to the Commission in accordance with subsection (b) of this section;
(ii) fails to submit satisfactory reports to the Commission in accordance with subsection (e)(1)(i) of this section; or
(iii) otherwise fails to satisfy the Commission that it is financially able to secure compensation.
(2)(i) On notice to the Commission pursuant to § 9-408(c)(2) of this subtitle that a letter of credit will not be renewed, the Commission shall demand that, within 30 days, the employer provide:
1. other satisfactory proof of the employer's financial ability to pay; or
2. another letter of credit in the same amount from another qualifying financial institution.
(ii) If the employer fails to furnish other satisfactory proof of the financial ability to pay or another acceptable letter of credit within 30 days after receipt of a demand under subparagraph (i) of this paragraph, the Commission shall demand payment from the financial institution of, and the financial institution shall pay, the amount represented by the letter of credit.
(iii) The Commission shall hold as security under this section the amount demanded and received under subparagraph (ii) of this paragraph until the employer can provide:
1. satisfactory proof of the employer's financial ability to pay; or
2. another acceptable letter of credit.
(iv) On provision of satisfactory proof of financial ability to pay or an acceptable letter of credit, the Commission shall return the amount of the letter of credit to the employer or the financial institution, whichever has the equitable right to that amount at the time that the proof or letter of credit is provided.
(3) Whenever the Commission revokes approval for an employer to self-insure under this section, the employer immediately shall secure compensation through an authorized insurer.
(4) If an employer fails to secure compensation as required by paragraph (3) of this subsection, the Commission shall order the employer to secure compensation through an authorized insurer.
Insolvency
(g) If an employer who self-insures under this section becomes insolvent, the Uninsured Employers' Fund shall pay the outstanding obligations of the employer for compensation.

Credits

Added by Acts 1991, c. 8, § 2, eff. Oct. 1, 1991. Amended by Acts 1991, c. 21, § 4; Acts 1991, c. 510; Acts 1991, c. 669; Acts 2000, c. 468, § 1, eff. June 1, 2000; Acts 2001, c. 609, § 1, eff. Oct. 1, 2001; Acts 2006, c. 163, § 1, eff. July 1, 2006; Acts 2012, c. 570, § 6, eff. Oct. 1, 2013; Acts 2013, c. 676, § 1, eff. Oct. 1, 2013.
Formerly Art. 101, §§ 16A, 18.
MD Code, Labor and Employment, § 9-405, MD LABOR & EMPLY § 9-405
Current through legislation effective through June 1, 2024, from the 2024 Regular Session of the General Assembly. Some statute sections may be more current, see credits for details.
End of Document