Madison, WI (WorkersCompensation.com) - The International Association of Industrial Accident Boards and Commissions (IAIABC) and the Southern Association of Workers' Compensation Administrators (SAWCA) has filed a brief as amici curiae in the U.S. Bankruptcy Appellate Panel of the First Circuit in support of the appellees, the Maine Superintendent of Insurance, Missouri Department of Labor and other organizations in the Prime Tanning bankruptcy case.
The brief affirms the denial of the debtors November 14, 2011 confirmation plan which seeks to claim monies from self-insurance surety bonds as assets of the estate. These assets would then be distributed to creditors which could leave Prime's injured workers without access to medical and indemnity benefits, and create a dangerous precedent for the use of self-insured funds. This is untenable for workers' compensation regulators whose primary responsibility is to ensure statutory benefits are paid.
Regulators have followed this case over the last year because it would fundamentally change the nature of self-insurance. If security mechanisms were not fully accessible in the event of a bankruptcy many states would carefully consider if self-insurance would continue.
It is estimated that $14 billion dollars, or 26% of all non-federal medical and cash benefits, were paid by self-insured employers in the U.S. in 2009. If self-insurance were disallowed it would impact thousands of employers and millions of employees. The IAIABC and SAWCA were compelled for the Court to consider this broad impact and speak as amici curiae, or friends of the court. The brief reads in part:
For self-insurance to remain viable in workers' compensation systems, however, there must be certainties. One such certainty has been the inviolate character of what the Plan calls the “Self Insurance Funds.” It is not hyperbole to report that members of the IAIABC and the SAWCA had hitherto considered it unthinkable that Self Insurance Funds could be the property of the bankruptcy estate upon the filing of bankruptcy by a self-insured employer.
…The certainty that such Funds will be there to cover each and every claim, directly or indirectly, until such Funds are exhausted at the careful direction and permission of state regulators is key to the most basic premise of the workers' compensation system: namely, that employees who trade their tort claims and their more lucrative tort remedies have the certainty that all valid workers' compensation claims for as long as they shall live will be paid in full regardless of whether the employer self-insurers or privately insures.
Dwight Lovan, Commissioner, Kentucky Department of Workers' Claims and Officer for the IAIABC and SAWCA, commented, “The appeal has the potential to impact many IAIABC and SAWCA members, and both organizations believed it was important for the Court to understand the consequences this could have on workers' compensation policy across the country.”
The International Association of Industrial Accident Boards and Commissions is a not-for-profit association representing most of the government agencies charged with the administration of workers' compensation systems throughout the United States, Canada, and other nations and territories as well as other workers' compensation professionals in the private sector. Its mission is to advance the efficiency and effectiveness of workers' compensation systems throughout the world. It is governed by an Executive Committee of jurisdictional agency leaders, and maintains a staff headquarters in Madison, Wisconsin, USA.
The Southern Association of Workers' Compensation Administrators is the oldest regional workers' compensation association in the United States celebrating its 64th year of continual service to the workers' compensation industry. Representing 19 jurisdictions, SAWCA brings together state leaders from across the south and industry professionals from across the nation to discuss workers' compensation's most critical issues creating unique opportunities for discussion.
 Sengupta, Ishita, et al. “Workers' Compensation Benefits, Coverage, and Costs 2009,” National Academy of Social Insurance, 2011, p. 24-25.
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