Minnesota bill would amend comp law for bankrupt self-insured employers

Minnesota lawmakers have proposed legislation that would amend provisions in the existing workers compensation law concerning instances where private self-insured employers are determined to be insolvent.

Senate Bill 3193, filed Thursday, deals with self-insured employers who are issued certificates of default and whose security deposits are called by the state’s workers comp commissioner after a failure to pay comp benefits in cases where the self-insured company files for voluntary or involuntary bankruptcy.

The bill would require self-insureds to notify the comp commissioner prior to, or immediately after, the filing of a bankruptcy petition under the United States Bankruptcy Code and when a court declares the self-insured to be bankrupt.

The measure requires the commissioner to call the security deposit in cases where the self-insureds fail to pay workers comp benefits after insolvency.

In cases where a bankrupt self-insured employer continues to pay timely workers comp benefits, the commissioner would still be able to call the security deposit if it is determined that there might be expected delays in paying out benefits as a result of the bankruptcy petition or declaration.

Under the bill, the self-insured employer would have 30 days to meet with the comp commissioner after the filing of the bankruptcy petition to discuss the matter, and a failure to do so could result in a default judgment against the self-insurer.