Opinion ID: 1344051
Heading Depth: 1
Heading Rank: 4

Heading: termination of an employer's right to self-insure

Text: The petitioners ask this Court to direct the Commissioner to establish a procedure by which a claimant can file an application or institute proceedings against a self-insurer to suspend or terminate an employer's self-insured status. W.Va.Code, 23-2-9 [1976] authorizes an employer to provide for the payment of benefits either by subscribing to the Workers' Compensation Fund or by electing to self-insure. The legislature vested in the Commissioner the authority and discretion to approve and supervise an employer's qualification as a self-insurer. In accordance with the legislative directive, the Commissioner has promulgated regulations governing self-insurers. It does not follow from the commissioner's discretionary role with regard to allowing an employer to become a self-insurer, however, that all of the Commissioner's subsequent dealings with self-insurers are also discretionary. In United States Steel Corporation v. Stokes, 138 W.Va. 506, 76 S.E.2d 474 (1953), a self-insurer sought a writ of prohibition to prevent the Commissioner from requiring that self-insurer to make payments for a claim which had been found compensable. This court held: The State Compensation Commissioner is vested by statute, [citation omitted], with authority to require payment by an employer carrying his own risk, of awarded and accrued compensation benefits. In so doing, he performs an administrative act.  syl. pt. 3, United States Steel Corporation v. Stokes, supra . (emphasis added). The significance of the term administrative act cannot easily be overstated. If the Commissioner were acting in an area in which she exercised discretion, it would be improper for this court or for individual claimants to second-guess her judgment. As the Stokes court recognized, however, that was not the case before it. In requiring payment by self-insurers of claims which were already approved, the Commissioner was simply carrying out the clear mandate of the statute involving no ascertainment of facts or exercise of discretion. Id. 76 S.E.2d at 478. Petitioners in the case before us allege that self-insurers abuse the system by refusing to comply with pay orders, refusing to pay medical bills, delaying the filing of accident reports, returning pay orders to the Commissioner because of typographical errors, and returning pay orders that are thought to be improper rather than filing protests. The fact of such abuses is not disputed, although the Commissioner questions the petitioners' assertions regarding the extent of such abuses. Frequency, however, is not a prerequisite for legal action. If petitioners can make out a claim that they have a legal right and are not being afforded a legal remedy, this court must provide them with one. We believe petitioners have made out such a case. If the Commissioner has a wholly administrative responsibility to require payment by self-insurers of approved claims, it follows that self-insurers have a reciprocal responsibility to comply with such requirements. The claimant has a legal right to all required payments without quibble and bureaucratic nit-picking, just as he would have if an employer subscribed to the fund and were not a self-insurer. The problem with the current system is that claimants have no available means by which to vindicate this right. They are the real parties in interest with regard to their disability claims, and it is reasonable to believe that they will be more vigilant in assuring that pay orders are met than the Commissioner who is already heavily burdened with administrative responsibilities. One possible solution would be to allow claimants to bring direct action requiring the self-insurer to meet its obligations. In fact, however, this solution would likely prove unavailing. First, the claimant would be faced with the problem of forcing a private entity to submit to mandamus rulings that are designed to control public bodies. Secondly, and more significantly, such a system would create no incentive for self-insurers to comply with initial pay orders. Their continued abuse of the system would allow them to delay making required payments until the claimant brought action against them. A preferable solution, therefore, is to allow claimants to bring action against self-insurers which would require the Commissioner to terminate an employer's status as a self-insurer if he failed to make required payments or alternatively, to pay a heavy fine to the claimant whenever such an abuse occurred. This system will deter self-insurers from abusing the process. The Commissioner has an administrative responsibility to require self-insurers to meet pay orders. Self-insurers have a reciprocal obligation to make required payments. Because claimants are most directly affected by the failure of those parties to meet their legal obligations, they are the most effective policemen of the system. Therefore, we order the Commissioner to establish a procedure by which claimants can bring action against self-insurers who fail to make required payments. A self-insurer who is found to have failed to make such required payments should either pay a sufficiently heavy fine to discourage such conduct in the future or forfeit his status as a self-insurer and become a member of the state-funded pool.