Michigan lawmakers are considering a bill package that would provide $42.4 million in workers compensation benefits to “several hundred former employees” of failed automotive parts manufacturer Delphi Corp. who were left without benefits after the supplier emerged from Chapter 11 bankruptcy protection in 2009.
The Michigan House voted 110-0 in favor of H.B. 5489 on Tuesday, and the bill has been referred to the Michigan Senate Committee on Reforms, Restructuring and Reinventing, according to the legislature's website.
The legislation is part of a package of 13 bills that would “provide a means to provide workers' compensation benefits” to 352 former Delphi workers, according to an analysis posted on the Michigan legislature's website. Comp benefits for those workers “reportedly have not been available since 2009 due to the bankruptcy of” Troy, Michigan-based Delphi, the analysis says.
A federal bankruptcy judge “unexpectedly permitted (Delphi) in 2009 to emerge from bankruptcy without continuing to provide workers' compensation benefits to its injured workers,” according to testimony submitted to the Michigan House by Robert J. MacDonald, chairman of the Michigan Association for Justice's Workers' Compensation Committee. Delphi filed for Chapter 11 bankruptcy protection in 2005.
The legislature's analysis estimates that Michigan's potential liability for Delphi workers comp claims is about $42.4 million.
The bills would allow the Michigan Self-Insurers' Security Fund to authorize payments from the fund to disabled workers or their dependents if the worker is entitled to workers comp benefits for claims that arose from May 29, 1999 to October 7, 2009, the analysis reads. Self-insurers would see an increased assessment of 4%, compared with the current 3% assessment, to bolster the fund for employees of Delphi or Delphi Automotive Systems Corp.
Assessments are based on “total paid losses of all self-insurers for the preceding calendar year divided by the total paid losses of all carriers during the preceding calendar year,” according to Michigan's workers comp law.
The higher assessment would be effective Jan. 1, 2015 to Dec. 31, 2018, the analysis reads. The increase, along with current self-insurer fund reserves and a $4.15 million settlement paid by Delphi, would be expected to equal about $29.25 million to be tapped for former Delphi workers.
The analysis says that a “supplemental appropriation bill” is expected to be introduced in the Michigan Legislature to provide the remainder of funding for Delphi-related comp claims. Any excess assessment funds would be returned to the self-insurer fund members.
The Michigan Chamber of Commerce, which supports the bill package, said earlier this month that the legislation would help correct “pivotal and costly mistakes” that the state made in handling Delphi's bankruptcy proceedings.
“In this situation, rather than asking self-insured employers to bear the costs of the Delphi claims, the legislation seeks to strike a balance between the mistakes that were made and self-insured employers' legal obligation to pay (a) bankrupt company's claims,” the chamber's statement reads.
Delphi Automotive P.L.C., which is based in the United Kingdom, was formed in 2011 after an investor group bought assets and subsidiaries of the former Delphi Corp. in 2009, according to the current company's financial statements.