Alabama Administrative Code › Title 480 - ALABAMA DEPARTMENT OF LABOR › Chapter 480-5-3 - GROUP SELF-INSURANCE › Section 480-5-3-.09 - Departmental Intervention

Current through Register Vol. 42, No. 9, June 28, 2024
The Director may involve the trustees in a Fund's day to day
				management if he/she determines that a Fund is in violation of the Law, these
				Rules, or is potentially impaired and that the Administrator is unwilling or
				unable to correct the deficiencies. This rule contemplates the need for the
				Department to have guidelines under which it may intervene in the management of
				a Fund in order to ensure its viability or, in the event this is not
				achievable, provide for its orderly dissolution. Four levels of intervention
				are described, each with a triggering mechanism and a resolution process.
				Circumstances, in the discretion of the Director, may require acceleration of
				the process. Specifically, the Director may choose to initiate intervention at
				Phase II.
(a) Phase I - (Probation).
			 If the Director determines that any violation of these Rules, the Law, or
			 perceived financial impairment cannot be remedied in a timely manner through
			 normal discourse with the Administrator, the Director will call for a meeting
			 with the Fund's Trustees to informally discuss his concerns. All parties will
			 seek to reach consensus on the extent of any violations or financial
			 impairments and on remedial actions to be taken.
(b) Phase II - (Remediation). If the Director
			 determines that implementation of Phase I has not satisfied his concerns, or
			 that violations or impairments are so acute as to warrant immediate
			 documentation he may require the Trustees to submit a written remediation plan.
			 The written plan will be negotiated between the Director and the Trustees and
			 will include specific objectives with verifiable and measurable outcomes. The
			 implementation timeline for meeting the objectives of the written plan will be
			 mutually agreed upon and in the event of no agreement the Director will
			 establish time deadlines.
(c) Phase
			 III - (Supervision). If written objectives are not achieved in a timely manner,
			 the Director will appoint an employee of the Department to make and/or approve
			 all management and financial decisions of the Fund. The Director's appointee
			 will make all reasonable efforts to resolve all violations and impairments. The
			 principle goal will be ensuring the Fund's existence as a going concern and
			 returning the managerial decision making function to the Trustees. The Director
			 will notify each Fund Participant that the Fund providing its workers'
			 compensation coverage is under Departmental supervision. The notice will
			 contain a brief description of problems leading to this action and an outline
			 of the Department's plans to rehabilitate the Fund. A copy of this notice must
			 be provided to all the individuals or companies that market to prospective Fund
			 Participants. This list of marketing persons will be supplied to the Department
			 by the Fund at such time the Fund is placed in supervision. The Director will
			 determine within one year whether the Fund's rehabilitation is successful. The
			 Director may limit a Fund from writing any new business for a period of time
			 until the supervision is successfully completed. Any Fund which cannot be
			 successfully rehabilitated within one year will be dissolved unless a plan of
			 merger is approved by the Director.
(d) Phase IV - (Revocation). If the Director
			 determines that violation or impairments have not been remedied by operation of
			 this Rule, or that the Fund is insolvent, he may revoke the Fund's
			 self-insurance privilege. The Director shall give written notice of such
			 revocation to the Fund and its Service Company. The Fund shall have thirty (30)
			 days from the mailing of the notice to request a hearing on the revocation.
			 Failure to request a hearing within the prescribed time shall result in the
			 revocation becoming effective sixty (60) days from the mailing of the original
			 notice. In no event shall a revocation become effective prior to the date that
			 a hearing (if a hearing is requested) is scheduled. Such notice shall be served
			 personally or by certified or registered mail to the Fund Administrator and to
			 the Fund Trustees. In the event of the insolvency of a Fund, the Director will
			 declare the Fund insolvent and invoke joint and several liability and assess
			 Fund Participants by Fund year such amounts as are necessary to satisfy the
			 liabilities of the Fund. After all the liabilities are satisfied, the Director
			 will order the Trustees to return any unencumbered funds to each Participant in
			 the same proportion as each has been assessed.
(e) An administrative action taken by the
			 Department for violation of the Law or these Rules may be appealed by the
			 aggrieved party to the Circuit Court of Montgomery County, Alabama, within
			 thirty (30) days of the effective date of the administrative action.
Author:
Wilbon S. Spates, Chief, Workers'
				Compensation Division
Statutory Authority:
Code of Ala.
				  1975
, §
										25-2-2(6).