W. Va. WCBM Passes Pair of Rules

May 20, 2004

The Workers’ Compensation Board of Managers has approved two “historic” rules to regulate how self-insured companies will conduct business in West Virginia.

Under Rule 18, the 127 active self-insured companies will begin to self-administer the claims of their injured workers beginning July 1. On that date, these companies – many among the largest employers in the state – will begin receiving claims applications from workers who are injured or acquire job-related diseases in the workplace. The companies will rule on the compensability of those claims and approve medical payments and wage replacement benefits for those workers.

“They will, essentially, step into the Commission’s shoes on July 1,” explained Executive Director Gregory Burton. “The Commission’s role will be to monitor those companies to assure they follow proper procedures and legal requirements, and their injured workers receive the benefits to which they are entitled.”

Under Rule 19, two separate risk pools will be established to pay the claims obligations of self-insured employers who go into default on their workers’ compensation premiums or who file for bankruptcy protection from their creditors.

A security pool will fund benefit pay orders on claims with dates of injury before July 1, 2004. A guarantee pool will fund benefit pay orders on claims with dates of injury on or after July 1, 2004.

“These pools will protect the self-insured community in the future from problems such as the Weirton Steel bankruptcy,” Burton said.

The Commission received written confirmation of the sale of Weirton Steel Corp. assets effective at 12:01 a.m. Monday. Weirton Steel’s liability for its injured workers was more than $70 million. A U.S. Bankruptcy Court judge ruled that obligation would not be passed on to Weirton Steel’s purchaser, ISG; therefore, remaining self-insured employers will be assessed to cover Weirton Steel’s debt.

The current annualized estimate of the amount of medical and wage replacement benefit payments for Weirton Steel is $7.5 million. This number is reportedly expected to decrease in subsequent years.

As part of the rule, all current self-insured employers must fully secure all liabilities incurred prior to July 1, 2004 by no later than July 1, 2006. The liabilities refer to the projected costs of medical and wage replacement benefits for workers who were injured or became ill with a work-related ailment prior to July 1.

Any employer with an existing security shortage of more than $1 million would have until July 1, 2006 to become fully collateralized.

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