The Georgia Senate Committee on Insurance and Labor is expected to discuss a bill Tuesday to allow employers whose workers' compensation providers are insolvent to buy into the state's insurance insolvency pool.
The measure, drafted by Rep. Carl Rogers (R-Gainesville), passed the full Georgia House last month. Rogers, an insurance agent, crafted the bill following last year's failure of Southeastern U.S. Inc., an Atlanta-based workers' compensation insurer.
The bill lets employers with less than $25 million in net assets buy into the pool's coverage by paying $5,000. Employers with more than $25 million in net assets would be required to pay $20,000. The insolvency pool is a backup fund that insurers pay into to cover existing claims if they fail.
But the insurance industry opposes the bill, saying it unfairly penalizes insurers who paid into the insolvency fund by forcing them to cover policies sold by those that didn't pay into it.
"It's a fairness issue. Rep. Rogers' bill is asking that those insurers pay for claims they did not have," said Robert R. Potter, an insurance lobbyist and attorney with Swift Currie in Atlanta.
"If the state wants to make a decision to provide state money or the federal government wants to step in and provide federal dollars for those individuals, they could do that. But for them to pass a bill that requires some entity to pay these claims retroactively, that does not seem fair."
Marvin Price, an attorney representing Kenny Whitey, a severely injured worker whose medical bills are $45,000 a month, said doing nothing places the burden on the workers and employers.
"These employers didn't know they were buying insurance that wasn't up to snuff," he said, noting that all insurers are licensed and regulated by the state. "This is just an emergency measure. It’s the only solution to keep people off the welfare rolls, off the unemployment rolls and to provide them the basic medical care to help them hopefully return to the workforce.”
When SEUS failed, some employers whose injured employees had active workers' comp claims became responsible for their medical bills.
The Georgia Legislature passed a law that required all insurers to begin contributing to the fund. But it didn't cover those insurers' claims that pre-dated Jan. 1, 2008, when the law took effect.
Eighty-eight workers in Georgia, including eight so severely injured that they'll need lifetime medical care, filed claims before that date.
The insolvency pool had $136.9 million in 2008, when the most recent audit was completed. About $77 million of the amount in the pool is earmarked for workers' comp-related insurance failures.
About the Author