KRS 304.50-140: Suspension or revocation of certificate of filing -- Civil penalty --

Hearing and appeal -- Notification requirements and exceptions.

(1) After a hearing or upon agreement by the workers' compensation self-insured group,

the commissioner may suspen d or revoke the certificate of filing of a self -insured

group, impose a civil penalty of up to ten thousand dollars ($10,000) per violation,

or both if the group:

(a) Operates significantly in contravention of its basic organizational document or

in a mann er contrary to that described in and reasonably inferred from any

other information submitted under this subtitle, or administrative regulations

relating to this subtitle, unless amendments to the submissions have been filed

with and approved by the commis sioner or there has been a significant and

adverse change in the management of the self-insured group;

(b) Or any person at the direction of the group advertises or merchandises its

services in an untrue, misrepresentative, misleading, deceptive, or unfair

manner, or engages in unfair or deceptive practices as defined in Subtitle 12 of

this chapter;

(c) Violates the provisions of this subtitle or administrative regulations adopted

thereunder;

(d) Obtains a certificate of filing by unfair or deceptive means;

(e) Misappropriates, converts illegally, withholds, or refuses to pay upon proper

demand any moneys that belong to a member, an employee of a member, or a

person otherwise entitled to such moneys by the group or its administrator; or

(f) Violated or faile d to correct a violation of this subtitle or administrative

regulations promulgated under this subtitle within a reasonable time period

established by the commissioner in administrative regulations.

(2) In addition, the commissioner may impose a civil pena lty of up to ten thousand

dollars ($10,000) per day for continuing violations.

(3) The commissioner shall conduct a hearing under this section in accordance with

Subtitle 2 of this chapter. The ruling of the commissioner may be appealed to

Franklin Circuit Court in accordance with KRS 304.2 -370. The commissioner,

during the pendency of an appeal or request for a hearing, may utilize the security

deposit provided by the self -insured group to make payments of any workers'

compensation benefits currently due.

(4) If the commissioner revokes a self -insured group's certification, the commissioner

shall immediately notify the Kentucky group self -insurance guaranty fund as

established in KRS 342.906(2).

(5) When a certificate of filing of a self-insured group is suspended, the group shall not,

during the period of suspension, enroll any new participants or engage in any

advertising or solicitation.

(6) If the certificate of filing of a self -insured group is revoked for reasons other than

hazardous financial conditio n, the group shall proceed, immediately following the

effective date of the order of revocation, to conclude its affairs and shall conduct no

further business, except as may be essential to the orderly conclusion of the affairs

of the group. The group shal l engage in no further advertising or solicitation. The

commissioner may, by written order, prevent further operation of the self -insured

group if further operation is not deemed to be in the best interest of the members,

and the self -insured group's membe rs will be afforded the greatest practical

opportunity to obtain workers' compensation coverage elsewhere. If the

commissioner permits further operation, the workers' compensation self -insured

group shall continue to collect the premiums and assessments re quired of its

members.

(7) The commissioner, in his or her discretion and without advance notice or a hearing,

may suspend or revoke the certificate of filing of any workers' compensation self -

insured group upon commencement of the following proceedings:

(a) Receivership;

(b) Conservatorship;

(c) Rehabilitation; or

(d) Other delinquency proceedings.