2009 Maryland Workers' Compensation Laws

Senate Bill (SB) 959, which took effect October 1, requires IWIF to operate, in nearly all respects, like any other commercial insurer, but still allows IWIF to maintain its autonomy in one key area – rates.

The new law clarifies IWIF's role as a "competitive insurer" and requires IWIF to fully comply with producer licensing and appointment laws, as well as all other regulatory provisions in the Insurance Code. IWIF will also be required to pay the annual regulatory assessment to the Maryland Insurance Administration, but IWIF remains exempt from the 2 percent premium tax charged to other insurers.

Under SB 959, IWIF is not required to affiliate with NCCI, and IWIF's Board retains the authority to annually approve IWIF rates, as it has for the last 95 years. IWIF's rates will, however, be reviewed every five years by the Maryland Insurance Administration.

Falsely classifying employees as independent contractors

Senate Bill (SB) 909 amends the Labor and Employment Article to specifically prohibit employers from falsely classifying employees as independent contractors. Substantial civil penalties against the employer are possible with fines up to $20,000.

This bill also creates a presumption in the workers' compensation law that an individual in the service of an employer is an employee and not an independent contractor. As a result, the burden will now be on the employer to prove that a worker is in fact, an independent contractor (free of the employer's control, paid other than hourly, not provided tools or materials, etc). This amendment to the law was effective October 1, 2009.

IWIF will continue to utilize the same tests to determine whether an individual is an employee or an independent contractor. Please refer to IWIF's Guidelines for Validating Independent Contractor Status or Preparing for Your Premium Audit brochure, available on IWIF's web site for more information.

Renewal notice of 45 days

House Bill (HB) 162 amends Insurance Article, §27-608, which currently requires insurers writing commercial and workers' compensation insurance to provide notice of renewal to the named insured and insurance producer at least 45 days prior to the renewal date, when there is a 20 percent or more increase in premium. Effective January 1, 2010, the new statute requires that a 45-day renewal notice be sent regardless of the amount of the premium increase. There is an exception for large commercial policies as defined in Insurance Article, §11-206(j). To be considered an exempt commercial policyholder, the business must:

(1) Pay annual aggregate property and casualty premiums for commercial insurance policies issued in the State during the current or preceding calendar year of $25,000 or more; and

(2) Meet two of the following criteria: (a) generate annual revenues or sales in excess of $10,000,000; (b) possess a net worth in excess of $5,000,000; (c) employ at least 25 full-time employees; (d) be a nonprofit organization or public body with an annual budget of at least $10,000,000; or (e) be a municipal corporation with a population of at least 15,000.

For more information on these new laws, visit http://mlis.state.md.us/.

Summary of New Workers' Compensation laws enacted by the 2008 Maryland Legislature

SB 679- IWIF-Regulation by the Maryland Insurance Commissioner  Senate Bill 679 addresses two major aspects of regulatory authority over IWIF.

1. Effective October 1, 2008, IWIF be subject to the same regulation by the insurance commissioner as all other insurers in Maryland, including: a. Market Conduct Examinations b. Complaint resolution c. Regulatory fines and corrective orders.

"We supported this part of the legislation. We feel it more closely aligns us with the insurance industry and makes it easier for our customers to voice any concerns. I am confident that treating IWIF as an authorized insurer will provide everyone with assurances and recognition that IWIF provides world-class customer service." stated Tom Phelan, IWIF President and CEO.

2. By December 2, 2008, the Maryland Insurance Administration (MIA) is to complete a study of IWIF. This study will include: a. An analysis to determine whether IWIF should be subject to the same ratemaking provisions of the law that apply to authorized insurers, including affiliation with the National Council of Compensation Insurance (NCCI). b. Identification of any remaining provisions of the law that apply to authorized insurers, but do not currently apply to IWIF. Note: IWIF will be involved in the process and provide information to the study group to ensure that the best interests of our policyholders and stakeholders are seriously considered throughout this process.

SB 606/HB 1227- State Government-Investment Services-Use of MBEs  Senate Bill 606 requires the IWIF Board to attempt to use, to the greatest extent feasible, minority business enterprises (MBE's) to provide brokerage and investment management services for the Board. Effective October 1, 2008, our Board must: a. Remove any barrier that limits full participation b. Develop appropriate guidelines in conjunction with the Governor's Office of Business Diversity c. File annual reports detailing IWIF's use of MBE investment services with the Governor's Office.

HB 700 - Workers' Compensation -Permanent Partial Disability Increase House Bill 700 will increase first tier permanent partial disability benefits under the workers' compensation law from a maximum of $114 per week to a three year, phased in increase of 1/7, 1/6.5 and 1/6 of the average weekly wage. NCCI has done a detailed analysis of this bill and concluded that it would increase system costs between $6 million to $14 million.

"Since IWIF currently writes 29% of the insured market, we estimate our cost to be between $1.7 million and $4 million," explained Tom Phelan. "We (IWIF) supported a first-tier increase because the last increase was seven years ago. We recognized that it was the right thing to do for injured workers."

The complete text of each bill is available online at the General Assembly web site mlis.state.md.us under "Bill Information and Status."

Key Workers’ Compensation Legislation 2007

Among bills enacted by the 2007 legislature was one to expand cost-of-living benefits for IWIF-covered workers affected by job-related permanent injuries or illnesses occurring before 1988.

A law adopted in 1988 approved annual cost-of-living increases only in workers’ compensation cases involving accidents and illnesses dating forward from January 1 of that year. The new act would also apply the increases, capped at 3%, to earlier IWIF claim cases.

It is estimated that House Bill 1006 could cost IWIF nearly $10 million over the next 20 years. The legislature decided the law should apply only to IWIF as a state-created entity but not to other private insurers.

Other workers’ comp bills enacted in the 2007 session of the General Assembly included these:

Senate Bill 600, which is intended to streamline the process authorizing release of a claimant’s relevant medical records. Cases in which the claimant refuses to authorize a release currently requires the issuance of a subpoena. This bill would reduce the need for that by requiring a worker, when filing a claim for workers’ compensation, to sign a form authorizing the release of necessary medical information.

SB752/HB1117, modifying the law under which an offset against workers’ compensation benefits is allowed if the worker or a dependent also receives a government pension.
Certain public safety employees – enumerated firefighters, police and correctional officers – are exempt from the offset for amounts up to their weekly salaries. This legislation, which overrides a 2005 court decision, would also exempt dependents of those workers.

HB271, extending workers’ compensation coverage to certain students who are in unpaid, work-based learning experience jobs. Coverage is now provided for students who have been placed in such jobs with the employers by local boards of education. This bill would also provide coverage to students of private, parochial or other schools not under control of the local boards.

SB765, clarifies the requirement of a 45-day notice of renewal to employers covered by and to their insurance producers if the insurer intends to increase a premium by 20% or more.

HB277, raises from $750 to $1,000 the annual compensation level above which a domestic worker must be covered by workers’ compensation insurance.

SB745, extending workers’ compensation benefits to Howard County auxiliary police officers.

SB625/HB345, amending the law on governmental self-insurance groups established by counties, municipal corporations, boards of education and community colleges. This legislation would require the Workers’ Compensation Commission to establish certain guidelines governing the investment of surplus funds by these groups.

HB184, adding a vocational rehabilitation representative to the Workers’ Compensation Oversight Committee.

The complete text of each bill is available online at the General Assembly web site mlis.state.md.us under “Bill Information and Status.”

Key Workers’ Compensation Legislation 2006

Bill HB868, enacted in the 2006 session of the General Assembly, is expected to gradually reduce the effectiveness of the Preferred Provider Organization that IWIF uses as a major cost-cutting instrument.

Signed by Governor Ehrlich on May 16, the new law changes the current practice of providing discounted fees that are negotiated between insurers such as IWIF and health care providers for the treatment of injured workers.

Currently, a provider belonging to the PPO but refusing to accept such a fee may be excluded from future participation in the network.

Under the new law, which becomes effective July 1, a provider may refuse the previously negotiated fee and instead receive the higher fee authorized by the Medical Fee Guide of the Workers’ Compensation Commission – without losing membership in the PPO.

Although the law affects only new PPO contracts between insurers and health providers, it is seen as a long-range detriment to efforts aimed at minimizing increases in health cost and easing burdens on policyholders and their employees. As existing contracts expire, providers may choose to opt out of the workers compensation part of the network and require insurers to pay the higher fees contained in the Medical Fee Guide provided by the Workers’ Compensation Commission.

This legislation, HB868, was among workers’ compensation bills enacted in the 90-day legislative session that adjourned April 10. Others signed into law by the governor include the following:

HB1005/SB849, which makes certain volunteers eligible for workers’ compensation coverage. This measure developed from the realization that such coverage was not provided for the many volunteers who were not state employees and whom Maryland sent to Louisiana and Mississippi after Hurricane Katrina. Under this law, pre-certified and pre-credentialed defense volunteers would be covered.

SB765, provides coverage for certain employees of the Department of Natural Resources afflicted by Lyme disease. Under current law, this is considered a compensable occupational disease only if the employee was not suffering Lyme before being assigned to work in an outdoor wooded environment and if the employee had undergone Lyme disease vaccination that had been “required or made available” by the department. This law removes the vaccination requirement and provides coverage if the employee did not have the disease before being assigned to the outdoor wooded environment.

Maryland Workers' Compensation Legislation: 2005

Under a bill enacted in the 2005 session of the General Assembly, IWIF and other insurers would be allowed to cancel or refuse to renew policies for non-payment of premium after giving a 10-day written notice.

This legislation (Senate Bill 128) was one of 2,656 measures considered during the session and was one of only a handful involving workers' compensation. Dennis Carroll, IWIF executive vice president and general counsel, said the bill clarifies current law, which is ambiguous and may require 30 days' notice.

Other bills related to workers' comp and enacted in the session included the following:

House Bill 348 - Fraud Reporting and Prevention - Strengthens the ability of the Maryland Insurance Administration to enforce certain fraud provisions. Among other features is one which subjects the Uninsured Employers' Fund to provisions on fraudulent insurance acts.

SB264/GB384 - Evaluation of Permanent Impairments - Current law requires that a physician evaluate the extent of impairment; this bill allows a psychologist to also evaluate the emotional or behavioral portion of the impairment.

HB454 - Workers' Compensation, Volunteer Fire and Rescue
Companies - Provides that in certain counties volunteer fire company members while on duty are considered, for workers' compensation purposes, covered employees of the county where the company is located. The affected counties are required to provide coverage through insurance policies.

HB461 - Workers' Compensation - Montgomery County Correctional Officers - Adds these county officers to the list of those whose heart and lung diseases are presumed to be related to their employment.

Maryland Workers' Compensation Legislation: 2004

Of the 25 workers' compensation bills introduced in the 2004 session of the General Assembly, only three became law. But even these even these have little direct impact on Maryland businesses and their employees.

One measure, House Bill 644, affects retired state employees who receive pension benefits in addition to disability payments that are awarded as a result of occupational disease. In such cases, workers' compensation benefits, and not the pension benefits, would be reduced accordingly.

A second bill enacted and signed into law by Gov. Robert Ehrlich (Senate Bill 639) was a proposal intended to strengthen the authority of the Workers' Compensation Commission to refer cases to the Fraud Division of the Maryland Insurance Administration. Since IWIF usually submits fraud cases directly to the state's attorney for investigation and possible prosecution, this measure does not directly affect IWIF .

The third workers' compensation bill which became law (HB776) adds the Montgomery County deputy sheriffs to the group of public safety employees who are entitled to increased benefits as a result of permanent partial disability.

The workers' compensation bills which failed to gain General Assembly approval included legislation designed to override the effects of the Court of Appeals decision in the case of a Howard County school cafeteria worker. In that Howard County case, the court set aside 80 years of precedent and ruled that the worker, who claimed to have sustained an accident injury while at work, did not have to prove that her injury, in order to be compensable as an accidental injury, resulted from "unusual activity."

The issue was addressed in House Bills 13, 749 and 1069 and in Senate Bills 113, 468 and 38, all of which were rejected in committee.

Maryland Workers' Compensation Legislation: 2003

Here is a synopsis of workers' compensation legislation enacted in the 2003 session of the Maryland General Assembly and signed into law by Gov. Robert L. Ehrlich, Jr. For the text of a particular bill, call it up on-line through www.mlis.state.md.us, referring to HB or SB followed by the number as indicated below. Scroll to the end of the text and click on the "enrolled" (final) version.

SB85 - Risk Based Capital- Exemption from penalty for Excessive Premium Growth.

This act temporarily exempts IWIF from the excessive premium growth charge or other penalty associated with premium growth in risk based capital calculation. The exemption extends through Dec. 31, 2004.

HB122 - Subsequent Injury Fund - Effect of Impleading the Fund in Appeal from Workers Compensation Commission Ruling.

This provides that a case on appeal will be automatically suspended and remanded to the Workers' Compensation Commission if the Subsequent Injury Fund is impleaded at least 60 days before trial or a hearing in the Court of Special Appeals.

HB690 - Continuation of Workers' Compensation Benefits for Spouse.

This act continues benefits up to $60,000 for a spouse who was wholly dependent at the time of a worker's death but who later becomes partly self-supporting. Such benefits have been capped at $45,000 until now in cases where the spouse becomes wholly o partially self-supporting.

HB736 - Workers' Compensation Commission - Occupational Disease - Baltimore City.

This act includes Baltimore City deputy sheriffs in the heart disease presumption, which applies to other public safety employees under current law. Because the city is self-insured, the act has no fiscal impact upon IWIF, the State of Maryland or other insurers.

HB Students in Unpaid Work-based Learning Experiences.

This act provides workers' compensation coverage to students in certain unpaid work-based learning experiences coordinated by a county board of education. It also designates the participating employer where the student has been placed as the "employer" for purposes of such coverage.

Maryland Workers' Compensation Legislation: 2002

Spotlight on New IWIF Legislation
The following is a synopsis of the most pertinent workers' compensation legislation that passed the 2002 session of Maryland's General Assembly. The Governor signed SB 371 (IWIF - Phase-In of Regulatory Requirements) at his first signing date on April 9, 2002. It is now Chapter 2 of the Laws of Maryland (2002). The other bills were signed on April 25, May 6, and May 16. Except for SB 371 (IWIF - Phase-In of Regulatory Requirements) and SB 772 (WCC - Budget Process), which were effective June 1, 2002, all bills listed below become effective October 1, 2002. If you have interest in a particular bill, please refer directly to that bill on-line by visiting http://mlis.state.md.us/or consult your legal counsel. (Note: HB = House Bill; SB = Senate Bill)

HB 491 - Workers' Compensation - Principal Contractor - Liability
Limits the liability of a principal contractor for workers' compensation payments if a sole proprietor does not notify the principal contractor of the sole proprietor's status as a covered employee; alters the circumstances under which an individual is presumed to be a sole proprietor who is not a covered employee; etc.

SB 371 - IWIF - Phase-In of Regulatory Requirements
Subjects IWIF to specified provisions of the Insurance Article; requires the Insurance Commissioner to ensure that IWIF has a specified level of excess capital; establishes a specified phase-in schedule for IWIF to comply with specified excess capital requirements; establishes the applicability of specified sections of the Insurance Article to IWIF; requires specified reports under specified circumstances; etc.

HB 887 - Workers' Compensation - Partly Dependent Individuals - Death Benefit
Modifies the calculation of the weekly death benefits payable to a partly dependent individual, and increases from $45,000 to $60,000 the maximum limit of specified death benefits payable to a partly dependent individual and to a surviving spouse who remarries.

HB 1318 - Workers' Compensation Commission - Continuing Jurisdiction
Prohibits the Workers' Compensation Commission from modifying specified awards unless the modification is within 5 years after the later of the date of the accident, the date of disablement, or the last compensation payment.

SB 522 - Workers' Compensation - Construction Carve Out - Sunset Repeal
Repeals a specified termination provision that governs specified types of collective bargaining agreements between an employer and a certified exclusive bargaining representative regarding workers' compensation.

SB 772 - Workers' Compensation - Workers' Compensation Commission (WCC) - Budget Process
Requires the WCC to calculate a specified tax before each fiscal year in a specified manner; establishes a Workers' Compensation Fund; requires the Commission to pay money collected from a specified tax to the Fund; establishes an Advisory Committee on the budget of the Commission; requires the Commission to prepare a specified budget for the Committee; requires the Governor and Commission to take specified information into consideration prior to submitting a budget; etc.

Maryland Workers' Compensation Legislation: 2001

2001 Workers' Compensation Legislation Wrap-up
The following is a synopsis of the most pertinent workers' compensation legislation that passed the 2001 session of Maryland's General Assembly.

Each bill listed below became effective on October 1, 2001. If you have a particular interest in a bill, please refer directly to that bill or consult your legal counsel. (Note: HB = House Bill; SB = Senate Bill)

HB 167-Notice of Decision-Appeal
requires Maryland's Workers' Compensation Commission (WCC) to send a notice of its decision to each party or the party's attorney by first-class mail. The bill also provides that an appeal of the WCC's order must be filed within 30 days after the date the WCC's order is mailed.

HB 1153-Prince George's County Deputy Sheriffs
includes P.G. County deputy sheriffs in the list of public safety employees entitled to enhanced benefits under Maryland's workers' compensation laws.

SB 592-Workers' Compensation Insurers and Self-insurers
Office and Personnel Requirements… alters the office and personnel requirements for employers who self-insure as well as insurers who provide workers' compensation insurance. The bill requires each self-insuring employer and each insurer to have, within the state, competent individuals who:

• Handle and adjust disputed workers' compensation claims for the employer or insurer, and
• Possess the knowledge and experience to handle and adjust disputed claims. This is a change from the requirement that each self-insured employer or workers' compensation insurer have, within the state, an office run by a competent individual who handles all workers' comp work in the state.

  HB 509-Property and Casualty Insurance
  Limitation of Reduction Due to Workers' Compensation Benefits limits the reductions available to personal injury protection and uninsured motorist insurers to the extent that the workers' compensation insurer is able to recover benefits paid under the workers' compensation laws of a state or federal government.

  The following legislation, which was not listed as workers' comp legislation, is noted for your information:
  SB 652-Controlled Dangerous Substance Testing for Job Applicants
  Preliminary Screenings authorizes employers who test job applicants for controlled dangerous substances to use a "preliminary screening procedure" unless the employer has entered into a collective bargaining agreement that prohibits such testing. The employer also may designate a medical laboratory licensed to perform job-related drug testing for the preliminary screening procedures. The bill specifies handling procedures, storage, and shipping of specimens and exempts an employer from medical laboratory permit requirements.

  SB 763-Self-insurance groups
  defines insolvent self-insurance group to mean a self-insurance group in which each individual member of the group is unable to meet the member's debts as they mature in the ordinary course of business as determined by the Maryland Insurance Commissioner. The bill provides that each member of a self-insurance group is jointly and severally liable for the workers' compensation obligations of the group and its members incurred during its membership period. Member obligations related to joint and several liabilities exist regardless of whether the member terminates group membership or becomes insolvent or bankrupt.

  HB 1278-Credit Against Payment of Permanent Partial Disability Awards After Appeal
  requires that if a workers' compensation award of permanent partial disability is reversed or modified by a court on appeal, the payment of any new compensation awarded must be subject to a credit for the amount of compensation previously awarded and paid.

Maryland Workers' Compensation Legislation: 2000

Spotlight on New IWIF Legislation
Several bills were recently passed that deal with the workers' compensation industry in Maryland and, more specifically, with IWIF. Maryland's legislators understand IWIF's significant contributions to our state's workers' compensation system and its economy. They also realize that IWIF is unique; in addition to fulfilling our public mandate by guaranteeing workers' compensation insurance for all businesses in Maryland, IWIF has become a major competitor within the private sector. As a result of this dual role, the General Assembly felt it prudent to enact legislation that will include IWIF in some of the same reviews that govern other insurers in the state. Following is a synopsis of this legislation.

Senate Bill (SB) 881 Injured Workers' Insurance Fund
Maryland Insurance Commissioner/Maryland Insurance Administration

• IWIF will be examined by the Maryland Insurance Commissioner to ensure solvency.
• The results of the examination will be reported to IWIF's Board.
• The Maryland Insurance Commissioner will not regulate IWIF.
• The Maryland Insurance Administration (MIA) cannot enforce any provision except for impaired entities, which deals with solvency issues.
• The MIA will not determine IWIF's rates.

  Guaranty Fund
  

• IWIF will become a member of the Property and Casualty Insurance Guaranty Corporation Fund after the first successful review by the Maryland Insurance Administration.

  Board of Directors
  

• IWIF's Board will be expanded from seven to nine members.
• Terms remain at five years; however, there is a two-term limit.

  State Treasurer
  

• The law repeals provisions making the State Treasurer custodian for IWIF.
  

  Open Meetings and Public Access
  

• IWIF is no longer subject to the Open Meetings Law.
• IWIF remains subject to the Public Information Act.

  Editor's note:
  The legislation pertaining to IWIF took effect October 1, 2000. The MIA review is the same audit undergone by private insurance carriers in Maryland, and it will further attest to IWIF's strong financial status. The Guaranty Fund exists to ensure that claims are paid should an insurance company fail financially. All private carriers are required to become members of the Guaranty Fund. In light of IWIF's dominant market share, legislators felt that IWIF should also become a member. The addition of two qualified and committed board members, appointed by the Governor, will serve to bolster our already strong leadership team. Exempting IWIF from the state's Open Meeting Laws will allow IWIF to conduct its business in a private forum, as do other insurance carriers. However, IWIF will still remain subject to the Public Information Act (PIA). Each of these legislative initiatives serves to further strengthen IWIF and to allow for continued improvement of our services.