HB5228: WORK COMP-STATE LICENSURE

HB5228 Enrolled LRB104 20014 SPS 33465 b 1 AN ACT concerning employment. 2 Be it enacted by the People of the State of Illinois, 3 represented in the General Assembly: 4 Section 5. The Illinois Insurance Code is amended by 5 changing Section 416 as follows: 6 (215 ILCS 5/416) 7 Sec. 416. Illinois Workers' Compensation Commission 8 Operations Fund Surcharge. 9 (a) As of July 30, 2004 (the effective date of Public Act 10 93-840), every company licensed or authorized by the Illinois 11 Department of Insurance and insuring employers' liabilities 12 arising under the Workers' Compensation Act or the Workers' 13 Occupational Diseases Act shall remit to the Director a 14 surcharge based upon the annual direct written premium, as 15 reported under Section 136 of this Act, of the company in the 16 manner provided in this Section. Such proceeds shall be 17 deposited into the Illinois Workers' Compensation Commission 18 Operations Fund as established in the Workers' Compensation 19 Act. If a company survives or was formed by a merger, 20 consolidation, reorganization, or reincorporation, the direct 21 written premiums of all companies party to the merger, 22 consolidation, reorganization, or reincorporation shall, for 23 purposes of determining the amount of the fee imposed by this HB5228 Enrolled - 2 - LRB104 20014 SPS 33465 b 1 Section, be regarded as those of the surviving or new company. 2 (b) Beginning on July 30, 2004 (the effective date of 3 Public Act 93-840) and on July 1 of each year thereafter 4 through 2023, the Director shall charge an annual Illinois 5 Workers' Compensation Commission Operations Fund Surcharge 6 from every company subject to subsection (a) of this Section 7 equal to 1.01% of its direct written premium for insuring 8 employers' liabilities arising under the Workers' Compensation 9 Act or Workers' Occupational Diseases Act as reported in each 10 company's annual statement filed for the previous year as 11 required by Section 136. Within 15 days after June 5, 2024 (the 12 effective date of Public Act 103-590) and on July 1 of each 13 year thereafter, the Director shall charge an annual Illinois 14 Workers' Compensation Commission Operations Fund Surcharge 15 from every company subject to subsection (a) of this Section 16 equal to 1.092% of its direct written premium for insuring 17 employers' liabilities arising under the Workers' Compensation 18 Act or Workers' Occupational Diseases Act as reported in each 19 company's annual statement filed for the previous year as 20 required by Section 136. The Illinois Workers' Compensation 21 Commission Operations Fund Surcharge shall be collected by 22 companies subject to subsection (a) of this Section as a 23 separately stated surcharge on insured employers at the rate 24 of 1.092% of direct written premium for the surcharge due in 25 2024 and each year thereafter , plus an additional amount 26 determined under subsection (b-5) beginning in 2026 . The HB5228 Enrolled - 3 - LRB104 20014 SPS 33465 b 1 Illinois Workers' Compensation Commission Operations Fund 2 Surcharge shall not be collected by companies subject to 3 subsection (a) of this Section from any employer that 4 self-insures its liabilities arising under the Workers' 5 Compensation Act or Workers' Occupational Diseases Act, 6 provided that the employer has paid the Illinois Workers' 7 Compensation Commission Operations Fund Fee pursuant to 8 Section 4d of the Workers' Compensation Act. All sums 9 collected by the Department of Insurance under the provisions 10 of this Section shall be paid promptly after the receipt of the 11 same, accompanied by a detailed statement thereof, into the 12 Illinois Workers' Compensation Commission Operations Fund in 13 the State treasury. 14 (b-5) As used in this subsection: 15 "Annual funding target for the year" means $7,000,000 for 16 2026 and, for each year thereafter, the previous year's annual 17 funding target increased by 3.5%. 18 "Statewide underwriting gain for the previous year" means 19 the sum of the underwriting gains for all companies that had an 20 underwriting gain for their workers' compensation and excess 21 workers' compensation lines in this State, as reported in the 22 companies' annual statements filed for the previous year under 23 Section 136. 24 "Underwriting gain" means, if the difference is a positive 25 dollar amount, the difference between direct earned premiums 26 and the sum of the following expenses and fees: HB5228 Enrolled - 4 - LRB104 20014 SPS 33465 b 1 (A) direct losses incurred; 2 (B) direct defense and cost containment expense 3 incurred; 4 (C) commission and brokerage expenses; and 5 (D) taxes, licenses, and fees. 6 On or before July 1, 2026 or 15 days after the effective 7 date of this amendatory Act of the 104th General Assembly, 8 whichever is later, and on or before July 1 of each year 9 thereafter, in addition to the amount required by subsections 10 (a) and (b), the Director shall charge an amount to be included 11 in a company's obligation to pay the annual Illinois Workers' 12 Compensation Commission Operations Fund Surcharge under this 13 Section. The additional amount shall be collected from every 14 company subject to subsection (a) that had an underwriting 15 gain for its workers' compensation and excess workers' 16 compensation lines in this State, as reported in the company's 17 annual statement filed for the previous year under Section 18 136. All provisions of this Section for the administration and 19 enforcement of the portion of the annual Illinois Workers' 20 Compensation Commission Operations Fund Surcharge described in 21 subsection (b) shall apply to the additional amount described 22 in this subsection. 23 The additional amount included in each company's surcharge 24 for a given year shall be a percentage of the company's 25 underwriting gain for its workers' compensation and excess 26 workers' compensation lines in this State, as reported in the HB5228 Enrolled - 5 - LRB104 20014 SPS 33465 b 1 company's annual statement filed for the previous year under 2 Section 136. Each year's percentage shall be calculated as the 3 annual funding target for the year divided by the statewide 4 underwriting gain for the previous year multiplied by 100. 5 Before collecting the additional amount each year, the 6 Department shall publish a company bulletin demonstrating the 7 calculation of the percentage in accordance with this 8 subsection. The bulletin shall include or contain a hyperlink 9 to download the underlying data from the companies' annual 10 statements that the Department used to perform the 11 calculation. 12 The additional amount included in the surcharge shall be 13 deposited into the Illinois Workers' Compensation Commission 14 Operations Fund in accordance with the Workers' Compensation 15 Act. If a company survives or was formed by a merger, 16 consolidation, reorganization, or reincorporation, the 17 underwriting gain in this State for all companies that are 18 parties to the merger, consolidation, reorganization, or 19 reincorporation shall, for purposes of determining the 20 additional amount imposed by this subsection, be regarded as 21 those of the surviving or new company. 22 (c) In addition to the authority specifically granted 23 under Article XXV of this Code, the Director shall have such 24 authority to adopt rules or establish forms as may be 25 reasonably necessary for purposes of enforcing this Section. 26 The Director shall also have authority to defer, waive, or HB5228 Enrolled - 6 - LRB104 20014 SPS 33465 b 1 abate the surcharge or any penalties imposed by this Section 2 if in the Director's opinion the company's solvency and 3 ability to meet its insured obligations would be immediately 4 threatened by payment of the surcharge due. 5 (d) When a company fails to pay the full amount of any 6 annual Illinois Workers' Compensation Commission Operations 7 Fund Surcharge of $100 or more due under this Section, there 8 shall be added to the amount due as a penalty an amount equal 9 to 10% of the deficiency for each month or part of a month that 10 the deficiency remains unpaid. 11 (e) The Department of Insurance may enforce the collection 12 of any delinquent payment, penalty, or portion thereof by 13 legal action or in any other manner by which the collection of 14 debts due the State of Illinois may be enforced under the laws 15 of this State. 16 (f) Whenever it appears to the satisfaction of the 17 Director that a company has paid pursuant to this Act an 18 Illinois Workers' Compensation Commission Operations Fund 19 Surcharge in an amount in excess of the amount legally 20 collectable from the company, the Director shall issue a 21 credit memorandum for an amount equal to the amount of such 22 overpayment. A credit memorandum may be applied for the 2-year 23 period from the date of issuance, against the payment of any 24 amount due during that period under the surcharge imposed by 25 this Section or, subject to reasonable rule of the Department 26 of Insurance including requirement of notification, may be HB5228 Enrolled - 7 - LRB104 20014 SPS 33465 b 1 assigned to any other company subject to regulation under this 2 Act. Any application of credit memoranda after the period 3 provided for in this Section is void. 4 (g) Annually, the Governor may direct a transfer of up to 5 2% of all moneys collected under this Section to the Insurance 6 Financial Regulation Fund. 7 (Source: P.A. 103-590, eff. 6-5-24; 104-417, eff. 8-15-25.) 8 Section 10. The Workers' Compensation Act is amended by 9 changing Sections 4, 7, 8.7, and 12 as follows: 10 (820 ILCS 305/4) (from Ch. 48, par. 138.4) 11 (Text of Section from P.A. 101-40, 102-37, and 103-590) 12 Sec. 4. (a) Any employer, including but not limited to 13 general contractors and their subcontractors, who shall come 14 within the provisions of Section 3 of this Act, and any other 15 employer who shall elect to provide and pay the compensation 16 provided for in this Act shall: 17 (1) File with the Commission annually an application 18 for approval as a self-insurer which shall include a 19 current financial statement, and annually, thereafter, an 20 application for renewal of self-insurance, which shall 21 include a current financial statement. Said application 22 and financial statement shall be signed and sworn to by 23 the president or vice president and secretary or assistant 24 secretary of the employer if it be a corporation, or by all HB5228 Enrolled - 8 - LRB104 20014 SPS 33465 b 1 of the partners, if it be a copartnership, or by the owner 2 if it be neither a copartnership nor a corporation. All 3 initial applications and all applications for renewal of 4 self-insurance must be submitted at least 60 days prior to 5 the requested effective date of self-insurance. An 6 employer may elect to provide and pay compensation as 7 provided for in this Act as a member of a group workers' 8 compensation pool under Article V 3/4 of the Illinois 9 Insurance Code. If an employer becomes a member of a group 10 workers' compensation pool, the employer shall not be 11 relieved of any obligations imposed by this Act. 12 If the sworn application and financial statement of 13 any such employer does not satisfy the Commission of the 14 financial ability of the employer who has filed it, the 15 Commission shall require such employer to, 16 (2) Furnish security, indemnity or a bond guaranteeing 17 the payment by the employer of the compensation provided 18 for in this Act, provided that any such employer whose 19 application and financial statement shall not have 20 satisfied the commission of his or her financial ability 21 and who shall have secured his liability in part by excess 22 liability insurance shall be required to furnish to the 23 Commission security, indemnity or bond guaranteeing his or 24 her payment up to the effective limits of the excess 25 coverage, or 26 (3) Insure his entire liability to pay such HB5228 Enrolled - 9 - LRB104 20014 SPS 33465 b 1 compensation in some insurance carrier authorized, 2 licensed, or permitted to do such insurance business in 3 this State. Every policy of an insurance carrier, insuring 4 the payment of compensation under this Act shall cover all 5 the employees and the entire compensation liability of the 6 insured: Provided, however, that any employer may insure 7 his or her compensation liability with 2 or more insurance 8 carriers or may insure a part and qualify under subsection 9 1, 2, or 4 for the remainder of his or her liability to pay 10 such compensation, subject to the following two 11 provisions: 12 Firstly, the entire compensation liability of the 13 employer to employees working at or from one location 14 shall be insured in one such insurance carrier or 15 shall be self-insured, and 16 Secondly, the employer shall submit evidence 17 satisfactorily to the Commission that his or her 18 entire liability for the compensation provided for in 19 this Act will be secured. Any provisions in any 20 policy, or in any endorsement attached thereto, 21 attempting to limit or modify in any way, the 22 liability of the insurance carriers issuing the same 23 except as otherwise provided herein shall be wholly 24 void. 25 Nothing herein contained shall apply to policies of 26 excess liability carriage secured by employers who have HB5228 Enrolled - 10 - LRB104 20014 SPS 33465 b 1 been approved by the Commission as self-insurers, or 2 (4) Make some other provision, satisfactory to the 3 Commission, for the securing of the payment of 4 compensation provided for in this Act, and 5 (5) Upon becoming subject to this Act and thereafter 6 as often as the Commission may in writing demand, file 7 with the Commission in form prescribed by it evidence of 8 his or her compliance with the provision of this Section. 9 (a-1) Regardless of its state of domicile or its principal 10 place of business, an employer shall make payments to its 11 insurance carrier or group self-insurance fund, where 12 applicable, based upon the premium rates of the situs where 13 the work or project is located in Illinois if: 14 (A) the employer is engaged primarily in the building 15 and construction industry; and 16 (B) subdivision (a)(3) of this Section applies to the 17 employer or the employer is a member of a group 18 self-insurance plan as defined in subsection (1) of 19 Section 4a. 20 The Illinois Workers' Compensation Commission shall impose 21 a penalty upon an employer for violation of this subsection 22 (a-1) if: 23 (i) the employer is given an opportunity at a hearing 24 to present evidence of its compliance with this subsection 25 (a-1); and 26 (ii) after the hearing, the Commission finds that the HB5228 Enrolled - 11 - LRB104 20014 SPS 33465 b 1 employer failed to make payments upon the premium rates of 2 the situs where the work or project is located in 3 Illinois. 4 The penalty shall not exceed $1,000 for each day of work 5 for which the employer failed to make payments upon the 6 premium rates of the situs where the work or project is located 7 in Illinois, but the total penalty shall not exceed $50,000 8 for each project or each contract under which the work was 9 performed. 10 Any penalty under this subsection (a-1) must be imposed 11 not later than one year after the expiration of the applicable 12 limitation period specified in subsection (d) of Section 6 of 13 this Act. Penalties imposed under this subsection (a-1) shall 14 be deposited into the Illinois Workers' Compensation 15 Commission Operations Fund, a special fund that is created in 16 the State treasury. Subject to appropriation, moneys in the 17 Fund shall be used solely for the operations of the Illinois 18 Workers' Compensation Commission, the salaries and benefits of 19 the Self-Insurers Advisory Board employees, the operating 20 costs of the Self-Insurers Advisory Board, and by the 21 Department of Insurance for the purposes authorized in 22 subsection (c) of Section 25.5 of this Act. 23 (a-2) Every Employee Leasing Company (ELC), as defined in 24 Section 15 of the Employee Leasing Company Act, shall at a 25 minimum provide the following information to the Commission or 26 any entity designated by the Commission regarding each HB5228 Enrolled - 12 - LRB104 20014 SPS 33465 b 1 workers' compensation insurance policy issued to the ELC: 2 (1) Any client company of the ELC listed as an 3 additional named insured. 4 (2) Any informational schedule attached to the master 5 policy that identifies any individual client company's 6 name, FEIN, and job location. 7 (3) Any certificate of insurance coverage document 8 issued to a client company specifying its rights and 9 obligations under the master policy that establishes both 10 the identity and status of the client, as well as the dates 11 of inception and termination of coverage, if applicable. 12 (a-3) Any corporation, limited liability company, or 13 partnership engaged in activities requiring licensure by a 14 State agency, for which proof that it has insured its workers' 15 compensation liability is a requirement for licensure, that 16 fails to satisfy a requirement outlined in paragraph (1), (2), 17 (3), or (4) of subsection (a) shall be subject to civil 18 penalties under subsection (d) unless it shows by clear and 19 convincing evidence that it was not operating during the time 20 its license was active. 21 (b) The sworn application and financial statement, or 22 security, indemnity or bond, or amount of insurance, or other 23 provisions, filed, furnished, carried, or made by the 24 employer, as the case may be, shall be subject to the approval 25 of the Commission. 26 Deposits under escrow agreements shall be cash, negotiable HB5228 Enrolled - 13 - LRB104 20014 SPS 33465 b 1 United States government bonds or negotiable general 2 obligation bonds of the State of Illinois. Such cash or bonds 3 shall be deposited in escrow with any State or National Bank or 4 Trust Company having trust authority in the State of Illinois. 5 Upon the approval of the sworn application and financial 6 statement, security, indemnity or bond or amount of insurance, 7 filed, furnished or carried, as the case may be, the 8 Commission shall send to the employer written notice of its 9 approval thereof. The certificate of compliance by the 10 employer with the provisions of subparagraphs (2) and (3) of 11 paragraph (a) of this Section shall be delivered by the 12 insurance carrier to the Illinois Workers' Compensation 13 Commission within five days after the effective date of the 14 policy so certified. The insurance so certified shall cover 15 all compensation liability occurring during the time that the 16 insurance is in effect and no further certificate need be 17 filed in case such insurance is renewed, extended or otherwise 18 continued by such carrier. The insurance so certified shall 19 not be cancelled or in the event that such insurance is not 20 renewed, extended or otherwise continued, such insurance shall 21 not be terminated until at least 10 days after receipt by the 22 Illinois Workers' Compensation Commission of notice of the 23 cancellation or termination of said insurance; provided, 24 however, that if the employer has secured insurance from 25 another insurance carrier, or has otherwise secured the 26 payment of compensation in accordance with this Section, and HB5228 Enrolled - 14 - LRB104 20014 SPS 33465 b 1 such insurance or other security becomes effective prior to 2 the expiration of the 10 days, cancellation or termination 3 may, at the option of the insurance carrier indicated in such 4 notice, be effective as of the effective date of such other 5 insurance or security. 6 (c) Whenever the Commission shall find that any 7 corporation, company, association, aggregation of individuals, 8 reciprocal or interinsurers exchange, or other insurer 9 effecting workers' compensation insurance in this State shall 10 be insolvent, financially unsound, or unable to fully meet all 11 payments and liabilities assumed or to be assumed for 12 compensation insurance in this State, or shall practice a 13 policy of delay or unfairness toward employees in the 14 adjustment, settlement, or payment of benefits due such 15 employees, the Commission may after reasonable notice and 16 hearing order and direct that such corporation, company, 17 association, aggregation of individuals, reciprocal or 18 interinsurers exchange, or insurer, shall from and after a 19 date fixed in such order discontinue the writing of any such 20 workers' compensation insurance in this State. Subject to such 21 modification of the order as the Commission may later make on 22 review of the order, as herein provided, it shall thereupon be 23 unlawful for any such corporation, company, association, 24 aggregation of individuals, reciprocal or interinsurers 25 exchange, or insurer to effect any workers' compensation 26 insurance in this State. A copy of the order shall be served HB5228 Enrolled - 15 - LRB104 20014 SPS 33465 b 1 upon the Director of Insurance by registered mail. Whenever 2 the Commission finds that any service or adjustment company 3 used or employed by a self-insured employer or by an insurance 4 carrier to process, adjust, investigate, compromise or 5 otherwise handle claims under this Act, has practiced or is 6 practicing a policy of delay or unfairness toward employees in 7 the adjustment, settlement or payment of benefits due such 8 employees, the Commission may after reasonable notice and 9 hearing order and direct that such service or adjustment 10 company shall from and after a date fixed in such order be 11 prohibited from processing, adjusting, investigating, 12 compromising or otherwise handling claims under this Act. 13 Whenever the Commission finds that any self-insured 14 employer has practiced or is practicing delay or unfairness 15 toward employees in the adjustment, settlement or payment of 16 benefits due such employees, the Commission may, after 17 reasonable notice and hearing, order and direct that after a 18 date fixed in the order such self-insured employer shall be 19 disqualified to operate as a self-insurer and shall be 20 required to insure his entire liability to pay compensation in 21 some insurance carrier authorized, licensed and permitted to 22 do such insurance business in this State, as provided in 23 subparagraph 3 of paragraph (a) of this Section. 24 All orders made by the Commission under this Section shall 25 be subject to review by the courts, said review to be taken in 26 the same manner and within the same time as provided by Section HB5228 Enrolled - 16 - LRB104 20014 SPS 33465 b 1 19 of this Act for review of awards and decisions of the 2 Commission, upon the party seeking the review filing with the 3 clerk of the court to which said review is taken a bond in an 4 amount to be fixed and approved by the court to which the 5 review is taken, conditioned upon the payment of all 6 compensation awarded against the person taking said review 7 pending a decision thereof and further conditioned upon such 8 other obligations as the court may impose. Upon the review the 9 Circuit Court shall have power to review all questions of fact 10 as well as of law. The penalty hereinafter provided for in this 11 paragraph shall not attach and shall not begin to run until the 12 final determination of the order of the Commission. 13 (d) Whenever a Commissioner, with due process and after a 14 hearing, determines an employer has knowingly failed to 15 provide coverage as required by paragraph (a) of this Section, 16 the failure shall be deemed an immediate serious danger to 17 public health, safety, and welfare sufficient to justify 18 service by the Commission of a work-stop order on such 19 employer, requiring the cessation of all business operations 20 of such employer at the place of employment or job site. If a 21 business is declared to be extra hazardous, as defined in 22 Section 3, a Commissioner may issue an emergency work-stop 23 order on such an employer ex parte, prior to holding a hearing, 24 requiring the cessation of all business operations of such 25 employer at the place of employment or job site while awaiting 26 the ruling of the Commission. Whenever a Commissioner issues HB5228 Enrolled - 17 - LRB104 20014 SPS 33465 b 1 an emergency work-stop order, the Commission shall issue a 2 notice of emergency work-stop hearing to be posted at the 3 employer's places of employment and job sites. Any law 4 enforcement agency in the State shall, at the request of the 5 Commission, render any assistance necessary to carry out the 6 provisions of this Section, including, but not limited to, 7 preventing any employee of such employer from remaining at a 8 place of employment or job site after a work-stop order has 9 taken effect. Any work-stop order shall be lifted upon proof 10 of insurance as required by this Act. Any orders under this 11 Section are appealable under Section 19(f) to the Circuit 12 Court. 13 Any individual employer, corporate officer or director of 14 a corporate employer, partner of an employer partnership, or 15 member of an employer limited liability company who knowingly 16 fails to provide coverage as required by paragraph (a) of this 17 Section is guilty of a Class 4 felony. This provision shall not 18 apply to any corporate officer or director of any 19 publicly-owned corporation. Each day's violation constitutes a 20 separate offense. The State's Attorney of the county in which 21 the violation occurred, or the Attorney General, shall bring 22 such actions in the name of the People of the State of 23 Illinois, or may, in addition to other remedies provided in 24 this Section, bring an action for an injunction to restrain 25 the violation or to enjoin the operation of any such employer. 26 Any individual employer, corporate officer or director of HB5228 Enrolled - 18 - LRB104 20014 SPS 33465 b 1 a corporate employer, partner of an employer partnership, or 2 member of an employer limited liability company who 3 negligently fails to provide coverage as required by paragraph 4 (a) of this Section is guilty of a Class A misdemeanor. This 5 provision shall not apply to any corporate officer or director 6 of any publicly-owned corporation. Each day's violation 7 constitutes a separate offense. The State's Attorney of the 8 county in which the violation occurred, or the Attorney 9 General, shall bring such actions in the name of the People of 10 the State of Illinois. 11 The criminal penalties in this subsection (d) shall not 12 apply where there exists a good faith dispute as to the 13 existence of an employment relationship. Evidence of good 14 faith shall include, but not be limited to, compliance with 15 the definition of employee as used by the Internal Revenue 16 Service. 17 All investigative actions must be acted upon within 90 18 days of the issuance of the complaint. Employers who are 19 subject to and who knowingly fail to comply with this Section 20 shall not be entitled to the benefits of this Act during the 21 period of noncompliance, but shall be liable in an action 22 under any other applicable law of this State. In the action, 23 such employer shall not avail himself or herself of the 24 defenses of assumption of risk or negligence or that the 25 injury was due to a co-employee. In the action, proof of the 26 injury shall constitute prima facie evidence of negligence on HB5228 Enrolled - 19 - LRB104 20014 SPS 33465 b 1 the part of such employer and the burden shall be on such 2 employer to show freedom of negligence resulting in the 3 injury. The employer shall not join any other defendant in any 4 such civil action. Nothing in this amendatory Act of the 94th 5 General Assembly shall affect the employee's rights under 6 subdivision (a)3 of Section 1 of this Act. Any employer or 7 carrier who makes payments under subdivision (a)3 of Section 1 8 of this Act shall have a right of reimbursement from the 9 proceeds of any recovery under this Section. 10 An employee of an uninsured employer, or the employee's 11 dependents in case death ensued, may, instead of proceeding 12 against the employer in a civil action in court, file an 13 application for adjustment of claim with the Commission in 14 accordance with the provisions of this Act and the Commission 15 shall hear and determine the application for adjustment of 16 claim in the manner in which other claims are heard and 17 determined before the Commission. 18 All proceedings under this subsection (d) shall be 19 reported on an annual basis to the Workers' Compensation 20 Advisory Board. 21 An investigator with the Department of Insurance may issue 22 a citation to any employer that is not in compliance with its 23 obligation to have workers' compensation insurance under this 24 Act. The amount of the fine shall be based on the period of 25 time the employer was in non-compliance, but shall be no less 26 than $500, and shall not exceed $10,000. An employer that has HB5228 Enrolled - 20 - LRB104 20014 SPS 33465 b 1 been issued a citation shall pay the fine to the Department of 2 Insurance and provide to the Department of Insurance proof 3 that it obtained the required workers' compensation insurance 4 within 10 days after the citation was issued. This Section 5 does not affect any other obligations this Act imposes on 6 employers. 7 Upon a finding by the Commission, after reasonable notice 8 and hearing, of the knowing and willful failure or refusal of 9 an employer to comply with any of the provisions of paragraph 10 (a) of this Section, the failure or refusal of an employer, 11 service or adjustment company, or an insurance carrier to 12 comply with any order of the Illinois Workers' Compensation 13 Commission pursuant to paragraph (c) of this Section 14 disqualifying him or her to operate as a self insurer and 15 requiring him or her to insure his or her liability, or the 16 knowing and willful failure of an employer to comply with a 17 citation issued by an investigator with the Department of 18 Insurance, the Commission may assess a civil penalty of up to 19 $500 per day for each day of such failure or refusal after the 20 effective date of this amendatory Act of 1989. The minimum 21 penalty under this Section shall be the sum of $10,000. Each 22 day of such failure or refusal shall constitute a separate 23 offense. The Commission may assess the civil penalty 24 personally and individually against the corporate officers and 25 directors of a corporate employer, the partners of an employer 26 partnership, and the members of an employer limited liability HB5228 Enrolled - 21 - LRB104 20014 SPS 33465 b 1 company, after a finding of a knowing and willful refusal or 2 failure of each such named corporate officer, director, 3 partner, or member to comply with this Section. The liability 4 for the assessed penalty shall be against the named employer 5 first, and if the named employer fails or refuses to pay the 6 penalty to the Commission within 30 days after the final order 7 of the Commission, then the named corporate officers, 8 directors, partners, or members who have been found to have 9 knowingly and willfully refused or failed to comply with this 10 Section shall be liable for the unpaid penalty or any unpaid 11 portion of the penalty. Upon investigation by the Department 12 of Insurance, the Attorney General shall have the authority to 13 prosecute all proceedings to enforce the civil and 14 administrative provisions of this Section before the 15 Commission. The Commission and the Department of Insurance 16 shall promulgate procedural rules for enforcing this Section 17 relating to their respective duties prescribed herein. 18 If an employer is found to be in non-compliance with any 19 provisions of paragraph (a) of this Section more than once, 20 all minimum penalties will double. Therefore, upon the failure 21 or refusal of an employer, service or adjustment company, or 22 insurance carrier to comply with any order of the Commission 23 pursuant to paragraph (c) of this Section disqualifying him or 24 her to operate as a self-insurer and requiring him or her to 25 insure his or her liability, or the knowing and willful 26 failure of an employer to comply with a citation issued by an HB5228 Enrolled - 22 - LRB104 20014 SPS 33465 b 1 investigator with the Department of Insurance, the Commission 2 may assess a civil penalty of up to $1,000 per day for each day 3 of such failure or refusal after the effective date of this 4 amendatory Act of the 101st General Assembly. The minimum 5 penalty under this Section shall be the sum of $20,000. In 6 addition, employers with 2 or more violations of any 7 provisions of paragraph (a) of this Section may not 8 self-insure for one year or until all penalties are paid. 9 A Commission decision imposing penalties under this 10 Section may be judicially reviewed only as described in 11 Section 19(f). After expiration of the period for seeking 12 judicial review, the Commission's final decision imposing 13 penalties may be enforced in the same manner as a judgment 14 entered by a court of competent jurisdiction. The Commission's 15 final decision imposing penalties is a debt due and owing to 16 the State and can be enforced to the same extent as a judgment 17 entered by a circuit court. The Attorney General shall 18 represent the Commission and the Department of Insurance in 19 any action challenging the final decision in circuit court. If 20 the court affirms the Commission's decision, the court shall 21 enter judgment against the employer in the amount of the fines 22 assessed by the Commission. The Attorney General shall make 23 reasonable efforts to collect the amounts due under the 24 Commission's decision. 25 Any individual employer, corporate officer or director of 26 a corporate employer, partner of an employer partnership, or HB5228 Enrolled - 23 - LRB104 20014 SPS 33465 b 1 member of an employer limited liability company who, with the 2 intent to avoid payment of compensation under this Act to an 3 injured employee or the employee's dependents, knowingly 4 transfers, sells, encumbers, assigns, or in any manner 5 disposes of, conceals, secretes, or destroys any property 6 belonging to the employer, officer, director, partner, or 7 member is guilty of a Class 4 felony. 8 Penalties and fines collected pursuant to this paragraph 9 (d) shall be deposited upon receipt into a special fund which 10 shall be designated the Injured Workers' Benefit Fund, of 11 which the State Treasurer is ex-officio custodian, such 12 special fund to be held and disbursed in accordance with this 13 paragraph (d) for the purposes hereinafter stated in this 14 paragraph (d), upon the final order of the Commission. The 15 Injured Workers' Benefit Fund shall be deposited the same as 16 are State funds and any interest accruing thereon shall be 17 added thereto every 6 months. The Injured Workers' Benefit 18 Fund is subject to audit the same as State funds and accounts 19 and is protected by the general bond given by the State 20 Treasurer. The Injured Workers' Benefit Fund is considered 21 always appropriated for the purposes of disbursements as 22 provided in this paragraph, and shall be paid out and 23 disbursed as herein provided and shall not at any time be 24 appropriated or diverted to any other use or purpose. Moneys 25 in the Injured Workers' Benefit Fund shall be used only for 26 payment of workers' compensation benefits for injured HB5228 Enrolled - 24 - LRB104 20014 SPS 33465 b 1 employees when the employer has failed to provide coverage as 2 determined under this paragraph (d) and has failed to pay the 3 benefits due to the injured employee. The employer shall 4 reimburse the Injured Workers' Benefit Fund for any amounts 5 paid to an employee on account of the compensation awarded by 6 the Commission. The Attorney General shall make reasonable 7 efforts to obtain reimbursement for the Injured Workers' 8 Benefit Fund. 9 Any such amounts obtained shall be deposited by the 10 Commission into the Injured Workers' Benefit Fund. If an 11 injured employee or his or her personal representative 12 receives payment from the Injured Workers' Benefit Fund, the 13 State of Illinois has the same rights under paragraph (b) of 14 Section 5 that the employer who failed to pay the benefits due 15 to the injured employee would have had if the employer had paid 16 those benefits, and any moneys recovered by the State as a 17 result of the State's exercise of its rights under paragraph 18 (b) of Section 5 shall be deposited into the Injured Workers' 19 Benefit Fund. The custodian of the Injured Workers' Benefit 20 Fund shall be joined with the employer as a party respondent in 21 the application for adjustment of claim. After July 1, 2006, 22 the Commission shall make disbursements from the Fund once 23 each year to each eligible claimant. An eligible claimant is 24 an injured worker who has within the previous fiscal year 25 obtained a final award for benefits from the Commission 26 against the employer and the Injured Workers' Benefit Fund and HB5228 Enrolled - 25 - LRB104 20014 SPS 33465 b 1 has notified the Commission within 90 days of receipt of such 2 award. Within a reasonable time after the end of each fiscal 3 year, the Commission shall make a disbursement to each 4 eligible claimant. At the time of disbursement, if there are 5 insufficient moneys in the Fund to pay all claims, each 6 eligible claimant shall receive a pro-rata share, as 7 determined by the Commission, of the available moneys in the 8 Fund for that year. Payment from the Injured Workers' Benefit 9 Fund to an eligible claimant pursuant to this provision shall 10 discharge the obligations of the Injured Workers' Benefit Fund 11 regarding the award entered by the Commission. 12 (e) This Act shall not affect or disturb the continuance 13 of any existing insurance, mutual aid, benefit, or relief 14 association or department, whether maintained in whole or in 15 part by the employer or whether maintained by the employees, 16 the payment of benefits of such association or department 17 being guaranteed by the employer or by some person, firm or 18 corporation for him or her: Provided, the employer contributes 19 to such association or department an amount not less than the 20 full compensation herein provided, exclusive of the cost of 21 the maintenance of such association or department and without 22 any expense to the employee. This Act shall not prevent the 23 organization and maintaining under the insurance laws of this 24 State of any benefit or insurance company for the purpose of 25 insuring against the compensation provided for in this Act, 26 the expense of which is maintained by the employer. This Act HB5228 Enrolled - 26 - LRB104 20014 SPS 33465 b 1 shall not prevent the organization or maintaining under the 2 insurance laws of this State of any voluntary mutual aid, 3 benefit or relief association among employees for the payment 4 of additional accident or sick benefits. 5 (f) No existing insurance, mutual aid, benefit or relief 6 association or department shall, by reason of anything herein 7 contained, be authorized to discontinue its operation without 8 first discharging its obligations to any and all persons 9 carrying insurance in the same or entitled to relief or 10 benefits therein. 11 (g) Any contract, oral, written or implied, of employment 12 providing for relief benefit, or insurance or any other device 13 whereby the employee is required to pay any premium or 14 premiums for insurance against the compensation provided for 15 in this Act shall be null and void. Any employer withholding 16 from the wages of any employee any amount for the purpose of 17 paying any such premium shall be guilty of a Class B 18 misdemeanor. 19 In the event the employer does not pay the compensation 20 for which he or she is liable, then an insurance company, 21 association or insurer which may have insured such employer 22 against such liability shall become primarily liable to pay to 23 the employee, his or her personal representative or 24 beneficiary the compensation required by the provisions of 25 this Act to be paid by such employer. The insurance carrier may 26 be made a party to the proceedings in which the employer is a HB5228 Enrolled - 27 - LRB104 20014 SPS 33465 b 1 party and an award may be entered jointly against the employer 2 and the insurance carrier. 3 (h) It shall be unlawful for any employer, insurance 4 company or service or adjustment company to interfere with, 5 restrain or coerce an employee in any manner whatsoever in the 6 exercise of the rights or remedies granted to him or her by 7 this Act or to discriminate, attempt to discriminate, or 8 threaten to discriminate against an employee in any way 9 because of his or her exercise of the rights or remedies 10 granted to him or her by this Act. 11 It shall be unlawful for any employer, individually or 12 through any insurance company or service or adjustment 13 company, to discharge or to threaten to discharge, or to 14 refuse to rehire or recall to active service in a suitable 15 capacity an employee because of the exercise of his or her 16 rights or remedies granted to him or her by this Act. 17 (i) If an employer elects to obtain a life insurance 18 policy on his employees, he may also elect to apply such 19 benefits in satisfaction of all or a portion of the death 20 benefits payable under this Act, in which case, the employer's 21 compensation premium shall be reduced accordingly. 22 (j) Within 45 days of receipt of an initial application or 23 application to renew self-insurance privileges the 24 Self-Insurers Advisory Board shall review and submit for 25 approval by the Chairman of the Commission recommendations of 26 disposition of all initial applications to self-insure and all HB5228 Enrolled - 28 - LRB104 20014 SPS 33465 b 1 applications to renew self-insurance privileges filed by 2 private self-insurers pursuant to the provisions of this 3 Section and Section 4a-9 of this Act. Each private 4 self-insurer shall submit with its initial and renewal 5 applications the application fee required by Section 4a-4 of 6 this Act. 7 The Chairman of the Commission shall promptly act upon all 8 initial applications and applications for renewal in full 9 accordance with the recommendations of the Board or, should 10 the Chairman disagree with any recommendation of disposition 11 of the Self-Insurer's Advisory Board, he shall within 30 days 12 of receipt of such recommendation provide to the Board in 13 writing the reasons supporting his decision. The Chairman 14 shall also promptly notify the employer of his decision within 15 15 days of receipt of the recommendation of the Board. 16 If an employer is denied a renewal of self-insurance 17 privileges pursuant to application it shall retain said 18 privilege for 120 days after receipt of a notice of 19 cancellation of the privilege from the Chairman of the 20 Commission. 21 All orders made by the Chairman under this Section shall 22 be subject to review by the courts, such review to be taken in 23 the same manner and within the same time as provided by 24 subsection (f) of Section 19 of this Act for review of awards 25 and decisions of the Commission, upon the party seeking the 26 review filing with the clerk of the court to which such review HB5228 Enrolled - 29 - LRB104 20014 SPS 33465 b 1 is taken a bond in an amount to be fixed and approved by the 2 court to which the review is taken, conditioned upon the 3 payment of all compensation awarded against the person taking 4 such review pending a decision thereof and further conditioned 5 upon such other obligations as the court may impose. Upon the 6 review the Circuit Court shall have power to review all 7 questions of fact as well as of law. 8 (Source: P.A. 101-40, eff. 1-1-20; 102-37, eff. 7-1-21; 9 103-590, eff. 6-5-24..) 10 (Text of Section from P.A. 101-384, 102-37, and 103-590) 11 Sec. 4. (a) Any employer, including but not limited to 12 general contractors and their subcontractors, who shall come 13 within the provisions of Section 3 of this Act, and any other 14 employer who shall elect to provide and pay the compensation 15 provided for in this Act shall: 16 (1) File with the Commission annually an application 17 for approval as a self-insurer which shall include a 18 current financial statement, and annually, thereafter, an 19 application for renewal of self-insurance, which shall 20 include a current financial statement. Said application 21 and financial statement shall be signed and sworn to by 22 the president or vice president and secretary or assistant 23 secretary of the employer if it be a corporation, or by all 24 of the partners, if it be a copartnership, or by the owner 25 if it be neither a copartnership nor a corporation. All HB5228 Enrolled - 30 - LRB104 20014 SPS 33465 b 1 initial applications and all applications for renewal of 2 self-insurance must be submitted at least 60 days prior to 3 the requested effective date of self-insurance. An 4 employer may elect to provide and pay compensation as 5 provided for in this Act as a member of a group workers' 6 compensation pool under Article V 3/4 of the Illinois 7 Insurance Code. If an employer becomes a member of a group 8 workers' compensation pool, the employer shall not be 9 relieved of any obligations imposed by this Act. 10 If the sworn application and financial statement of 11 any such employer does not satisfy the Commission of the 12 financial ability of the employer who has filed it, the 13 Commission shall require such employer to, 14 (2) Furnish security, indemnity or a bond guaranteeing 15 the payment by the employer of the compensation provided 16 for in this Act, provided that any such employer whose 17 application and financial statement shall not have 18 satisfied the commission of his or her financial ability 19 and who shall have secured his liability in part by excess 20 liability insurance shall be required to furnish to the 21 Commission security, indemnity or bond guaranteeing his or 22 her payment up to the effective limits of the excess 23 coverage, or 24 (3) Insure his entire liability to pay such 25 compensation in some insurance carrier authorized, 26 licensed, or permitted to do such insurance business in HB5228 Enrolled - 31 - LRB104 20014 SPS 33465 b 1 this State. Every policy of an insurance carrier, insuring 2 the payment of compensation under this Act shall cover all 3 the employees and the entire compensation liability of the 4 insured: Provided, however, that any employer may insure 5 his or her compensation liability with 2 or more insurance 6 carriers or may insure a part and qualify under subsection 7 1, 2, or 4 for the remainder of his or her liability to pay 8 such compensation, subject to the following two 9 provisions: 10 Firstly, the entire compensation liability of the 11 employer to employees working at or from one location 12 shall be insured in one such insurance carrier or 13 shall be self-insured, and 14 Secondly, the employer shall submit evidence 15 satisfactorily to the Commission that his or her 16 entire liability for the compensation provided for in 17 this Act will be secured. Any provisions in any 18 policy, or in any endorsement attached thereto, 19 attempting to limit or modify in any way, the 20 liability of the insurance carriers issuing the same 21 except as otherwise provided herein shall be wholly 22 void. 23 Nothing herein contained shall apply to policies of 24 excess liability carriage secured by employers who have 25 been approved by the Commission as self-insurers, or 26 (4) Make some other provision, satisfactory to the HB5228 Enrolled - 32 - LRB104 20014 SPS 33465 b 1 Commission, for the securing of the payment of 2 compensation provided for in this Act, and 3 (5) Upon becoming subject to this Act and thereafter 4 as often as the Commission may in writing demand, file 5 with the Commission in form prescribed by it evidence of 6 his or her compliance with the provision of this Section. 7 (a-1) Regardless of its state of domicile or its principal 8 place of business, an employer shall make payments to its 9 insurance carrier or group self-insurance fund, where 10 applicable, based upon the premium rates of the situs where 11 the work or project is located in Illinois if: 12 (A) the employer is engaged primarily in the building 13 and construction industry; and 14 (B) subdivision (a)(3) of this Section applies to the 15 employer or the employer is a member of a group 16 self-insurance plan as defined in subsection (1) of 17 Section 4a. 18 The Illinois Workers' Compensation Commission shall impose 19 a penalty upon an employer for violation of this subsection 20 (a-1) if: 21 (i) the employer is given an opportunity at a hearing 22 to present evidence of its compliance with this subsection 23 (a-1); and 24 (ii) after the hearing, the Commission finds that the 25 employer failed to make payments upon the premium rates of 26 the situs where the work or project is located in HB5228 Enrolled - 33 - LRB104 20014 SPS 33465 b 1 Illinois. 2 The penalty shall not exceed $1,000 for each day of work 3 for which the employer failed to make payments upon the 4 premium rates of the situs where the work or project is located 5 in Illinois, but the total penalty shall not exceed $50,000 6 for each project or each contract under which the work was 7 performed. 8 Any penalty under this subsection (a-1) must be imposed 9 not later than one year after the expiration of the applicable 10 limitation period specified in subsection (d) of Section 6 of 11 this Act. Penalties imposed under this subsection (a-1) shall 12 be deposited into the Illinois Workers' Compensation 13 Commission Operations Fund, a special