KRS 342.1242: Kentucky coal workers' pneumoconiosis fund -- Liability for and manner

of making payments for awards for coal workers' pneumoconiosis --

Assessments to finance fund -- When assessments cease -- Distribution of

excess assessments to employers -- Reimbursement of funding commission by

Kentucky Employers' Mutual Insurance Authority.

(1) There is created the Kentucky coal workers' pneumoconiosis fund which shall have

one-half (1/2) of the liability for income benefits, including retraining benefi ts,

payable for claims brought under KRS 342.732 for last exposure incurred on or

after December 12, 1996, which are filed on or before June 30, 2017. Income

benefit payments by the Kentucky coal workers' pneumoconiosis fund shall be made

contemporaneous w ith the payments made by the employer, except that the

employer shall make all payments due under a final award or approved settlement

for any claims filed after June 30, 2017.

(2) For claims brought under KRS 342.732 for last exposure incurred on or after

December 12, 1996 which are filed on or before June 30, 2017, the employer shall

defend any claim brought under KRS 342.732 and upon conclusion shall seek

participation in payment of the final award or settlement by the Kentucky coal

workers' pneumoconiosis fund by making written request upon the director in the

manner prescribed by administrative regulation to be promulgated by the

commissioner of the Department of Workers' Claims.

(3) (a) For the purpose of funding the liabilities of the Kentucky coal wo rkers'

pneumoconiosis fund and financing the administration and operation of the

Kentucky coal workers' pneumoconiosis fund, as reflected in the budget of the

Commonwealth enacted by the General Assembly, a Kentucky coal workers'

pneumoconiosis fund assess ment at the rate of three percent (3%) is hereby

imposed upon the amount of workers' compensation premiums received on

and after January 1, 1997, through December 31, 1997, by every insurance

carrier writing workers' compensation insurance in the Commonwealth and by

every self-insured group operating under the provisions of KRS 342.350(4)

and Chapter 304, from employers engaged in the severance or processing of

coal. Likewise, on and after January 1, 1997, through December 31, 1997, an

assessment at the rate of three percent (3%) of premium shall be paid by every

employer engaged in the severance or processing of coal who is carrying his

or her own risk.

(b) In addition to the assessment imposed in paragraph (a) of this subsection, an

additional Kentucky coal workers' pneumoconiosis fund assessment at the rate

of two and one -half cents ($0.025) per ton is hereby imposed upon the total

annual amount of tons of coal severed on or after January 1, 1997, through

December 31, 1997, by every entity engaged in the s everance of coal as

required pursuant to KRS Chapter 143.

(c) As of June 30, 2018, and each year thereafter until the liabilities of the fund

are fully funded, the Funding Commission and the Kentucky Employers'

Mutual Insurance Authority shall determine th e assets of the fund and the

claim liability incurred by the fund for all previous years and shall establish

the rates under the provisions of paragraphs (a) and (b) of this subsection

necessary as of January 1 of the next year to fund claim liabilities th rough

December 31 of the next year of operations. The assessment rate authorized

by this section for premiums received and tons of coal severed shall be set so

as to receive fifty percent (50%) of the needed revenue from each assessment.

Notice of any rate changes shall be provided no later than October 1 of the

year preceding the rate change.

(4) All assessments imposed by this section shall be paid to the Kentucky Workers'

Compensation Funding Commission and shall be transferred to the Kentucky

Employers' Mutual Insurance Authority, which is administering the coal workers'

pneumoconiosis fund. In addition, the powers and responsibilities of the Kentucky

Workers' Compensation Funding Commission including its fiduciary duties and

responsibilities relating to assessments collected for the special fund pursuant to

KRS 342.122, 342.1221, 342.1222, 342.1223, 342.1226, 342.1229, and 342.1231

shall apply to assessments collected for the Kentucky coal workers' pneumoconiosis

fund created pursuant to this section. Ea ch entity subject to assessments for the

Kentucky coal workers' pneumoconiosis fund shall provide any and all information

requested by the Kentucky Workers' Compensation Funding Commission necessary

to carry out its powers and responsibilities relating thereto.

(5) These assessments shall be paid quarterly not later than the thirtieth day of the

month following the end of the quarter in which the premium is received or the coal

is processed or severed. Receipt shall be considered timely through actual physi cal

receipt or by postmark by the United States Postal Service. Employers carrying their

own risk and employers defined in KRS 342.630(2) shall pay the annual

assessments in four (4) equal quarterly installments. Penalty and interest penalties

imposed purs uant to KRS 342.1221 and the authority of the Kentucky Workers'

Compensation Funding Commission to waive part or all of the penalty shall apply

to assessments for the Kentucky coal workers' pneumoconiosis fund in the same

manner and amount as they are impo sed on assessments for the special fund under

KRS 342.122.

(6) Notwithstanding any other provisions of this section or this chapter to the contrary,

the total amount of funds collected pursuant to the assessment rates adopted by the

funding commission shall not be limited to the provisions of this section.

(7) Claims for benefits by reason of the development of coal workers' pneumoconiosis

shall be maintained pursuant to KRS 342.732, and the Kentucky coal workers'

pneumoconiosis fund shall be liable for pay ment of a part of the liability only for

employees of employers engaged in the severance or processing of coal as defined

in KRS 342.0011(23)(a) and (b).

(8) (a) Assessments issued pursuant to this section shall cease to be imposed once the

liabilities of the fund are fully funded. After the liabilities are fully funded,

any excess assessments shall be refunded to the employers on a pro rata basis

as determined from the cumulative amounts of assessments received from

workers' compensation premiums paid by e mployers, whether insured, self -

insured, or carrying their own risk, on or after January 1, 2017.

(b) The Kentucky Employers' Mutual Insurance Authority shall disburse, on a pro

rata basis, the excess assessments to each employer which is engaged in the

severance or processing of coal and which is in good standing with the

Secretary of State and authorized to do business in the Commonwealth as

evidenced by a certificate of existence, certificate of authorization, or other

such certificate issued by the Secr etary of State their pro rata shares of excess

assessments.

(c) Upon a determination by the Kentucky Workers' Compensation Funding

Commission and the Kentucky Employers' Mutual Insurance Authority that

final audits and any resulting litigation are closed o r the liabilities of the fund

are fully funded, the Kentucky Employers' Mutual Insurance Authority shall

send a notice to each employer via first-class United States mail advising each

employer that in order to assert a claim to the employer's pro rata sha re of any

excess assessments the employer must submit a certification under oath to the

Kentucky Employers' Mutual Insurance Authority stating that the employer is

engaged in the severance or processing of coal in the Commonwealth and that

the employer is in good standing with the Secretary of State and authorized to

do business in the Commonwealth. The employer shall also certify whether or

not it has applied for an adjudication of bankruptcy, reorganization,

arrangement, or other relief under the United States Bankruptcy Code.

(d) The employer shall submit to the Kentucky Employers' Mutual Insurance

Authority the employer's certificate obtained from the Secretary of State along

with the certification under oath specified in this subsection.

(e) The Kentucky Employers' Mutual Insurance Authority shall specify in the

notice the date of mailing of the notice to the employer and shall send the

notice to the employer at the address of the statutory agent designated by the

employer with the Secretary o f State or, if the employer has not designated a

statutory agent with the Secretary of State, at the address of the employer on

file with the Kentucky Employers' Mutual Insurance Authority or, if the

address of the employer is not on file with the Kentucky Employers' Mutual

Insurance Authority, at the address of the employer on file with the Kentucky

Workers' Compensation Funding Commission.

(f) The employer's certification must be received by the Kentucky Employers'

Mutual Insurance Authority within thirty (30) days of mailing of the notice

from the Kentucky Employers' Mutual Insurance Authority to the employer.

(g) Within thirty (30) days of receipt of a timely submitted certification from an

employer, the Kentucky Employers' Mutual Insurance Authority sha ll

distribute to the employer the employer's pro rata share of the excess funds. If

the employer is in bankruptcy at the time the certification is provided to the

Kentucky Employers' Mutual Insurance Authority, any funds that would be

distributed to the em ployer shall be distributed to former employees to whom

past due wages are owed, subject to the approval of the bankruptcy judge. If

there are remaining funds in the employer -in-bankruptcy's pro rata share after

payment to the former employees to whom past due wages are owed, the

employer-in-bankruptcy's pro rata share shall be distributed as directed by the

bankruptcy court, and if not directed by the bankruptcy court, to the Kentucky

coal employers self -insurance guaranty fund. If an employer has an

outstanding balance due for taxes or other obligations to the Commonwealth,

for a bond payment, or to a county, city, school system or school district, fire

district, or any special taxing authority, no funds shall be distributed to the

employer unless those ou tstanding balances have been paid in full at the time

of the distribution of the funds by Kentucky Employers' Mutual Insurance

Authority. Any funds that would be distributed to the employer shall first be

distributed to the Commonwealth, for a bond payment , or to a county, city,

school system or school district, fire district, or any special taxing authority,

and then any remaining funds may be distributed as otherwise prescribed in

this section.

(h) If, at any time after the Kentucky Employers' Mutual Insu rance Authority's

distribution of funds to an employer, it is determined that the certification

submitted by the employer to the Kentucky Employers' Mutual Insurance

Authority was materially false at the time of the certification, the Attorney

General is a uthorized to file an action against the employer to recover the

funds distributed to the employer by the Kentucky Employers' Mutual

Insurance Authority along with interest at the rate of twelve percent (12%)

from the date of distribution of the funds to th e employer and a penalty of ten

percent (10%) of the amount of the funds distributed to the employer, plus

reasonable attorney's fees, litigation expenses, and court costs.

(i) For those employers who do not timely submit a certification to the Kentucky

Employers' Mutual Insurance Authority as specified in this subsection, their

pro rata shares shall be transferred to the Kentucky coal employers self -

insurance guaranty fund for the purpose of paying workers' compensation

benefits to employees of insolvent s elf-insured employers engaged in the

severance and processing of coal, and those employers' claims to a distribution

of funds pursuant to this subsection shall be forever barred.

(j) The Kentucky Workers' Compensation Funding Commission shall provide all

available information regarding the employers to the Kentucky Employers'

Mutual Insurance Authority upon the request of the Kentucky Employers'

Mutual Insurance Authority.

(9) The Kentucky Employers' Mutual Insurance Authority shall reimburse the funding

commission for any expenses incurred with regard to the collection of assessments

for the coal workers' pneumoconiosis fund and other incurred expenses related to

the coal workers' pneumoconiosis fund.