Bill Summary – FastDemocracy

HB 99
                      Department of Legislative Services
                              Maryland General Assembly
                                    2020 Session
                           FISCAL AND POLICY NOTE
                                 Third Reader
House Bill 99                   (Delegate D.E. Davis)
Economic Matters                                                                    Finance
       Labor and Employment - Injured Workers' Insurance Fund - Revisions
This bill makes various changes to the administration and leadership of the Injured
Workers’ Insurance Fund (IWIF) and Chesapeake Employers’ Insurance Company
(Chesapeake).
                                    Fiscal Summary
State Effect: The bill does not materially affect State operations or finances.
Chesapeake Effect: No material impact. The bill largely codifies IWIF and Chesapeake’s
existing practices and otherwise makes administrative changes to the way IWIF and
Chesapeake are managed.
Local Effect: None.
Small Business Effect: None.
                                         Analysis
Bill Summary: The bill makes the following changes to the administration and leadership
of IWIF and Chesapeake:
      IWIF is required to be, instead of authorized to be, the third-party administrator for
       the State’s Self-Insured Workers’ Compensation Program for State Employees.
      IWIF is expressly authorized to use nonsupervisory employees of Chesapeake in its
       operations; Chesapeake must annually execute an agreement listing which
       employees are affected and that meets other specified requirements.
      The President of IWIF is no longer required to also be the President of Chesapeake.
      The requirement that IWIF’s board be the same as Chesapeake’s board is repealed.
       Instead, IWIF’s board must consist of (1) the State Treasurer (or designee) and
       (2) the two members appointed to Chesapeake’s board of directors by the Governor.
Current Law/Background:
Conversion of IWIF to the Chesapeake Employers’ Insurance Company
Chapter 570 of 2012 converted IWIF into a private, nonprofit, and nonstock workers’
compensation insurer as of October 1, 2013, specifically Chesapeake. Chesapeake may not
be considered to be a department, unit, agency, or instrumentality of the State for any
purpose. The functions, powers, duties, assets, real and personal property, accounts,
liabilities, contracts, and obligations of IWIF transferred to Chesapeake; however, some
staff remained IWIF employees, as discussed in the following section. Chesapeake is
required to serve as the workers’ compensation insurer of last resort in the State.
IWIF is authorized to be the third-party administrator for the State’s Self-Insured Workers’
Compensation Program for State Employees; currently Chesapeake and IWIF administer
the program together. A third-party administrator is necessary because the State is
self-insured, meaning that it pays claims and benefits directly instead of through an insurer.
IWIF and Chesapeake Employees
At the time of conversion, IWIF employees were able to choose to remain employees of
IWIF, and thus the State, or to become employees of Chesapeake. If an IWIF employee
chose to become an employee of Chesapeake, Chesapeake required the employee to make
the election in writing. Chesapeake provided the employee with information that fully
disclosed the terms of employment and stated that the employee’s election was voluntary
and irrevocable. An employee of Chesapeake may not again become an employee of IWIF.
As of October 1, 2013, IWIF is prohibited from hiring new employees. IWIF employees
may be assigned to perform functions of Chesapeake under a contract between Chesapeake
and IWIF. Chesapeake and IWIF must annually execute an agreement that, among other
things, lists the employees of IWIF who have been assigned to perform duties on behalf of
Chesapeake and identifies the employees who will be utilized by both Chesapeake and
IWIF.
HB 99/ Page 2
IWIF and Chesapeake Board of Directors and President
The board of directors for IWIF is the board of directors for Chesapeake. The board is
responsible for managing IWIF’s and Chesapeake’s business and affairs as a private,
nonprofit corporation in accordance with State law. The board consists of nine members:
two are appointed by the Governor and seven are appointed by Chesapeake’s
policyholders.
The board of directors must appoint a President of IWIF, who must be the President of
Chesapeake.
                              Additional Information
Prior Introductions: None.
Designated Cross File: SB 616 (Senator Klausmeier, et al.) - Finance.
Information Source(s): Chesapeake Employers’ Insurance Company; Maryland State
Treasurer's Office; Department of Budget and Management; Maryland Insurance
Administration; Department of Legislative Services
Fiscal Note History:    First Reader - February 28, 2020
mm/ljm                  Third Reader - March 16, 2020
Analysis by: Richard L. Duncan                      Direct Inquiries to:
                                                    (410) 946-5510
                                                    (301) 970-5510
HB 99/ Page 3
Statutes affected: 
Text - First - Labor and Employment - Injured Workers' Insurance Fund - Revisions: 10-101 Labor and Employment, 10-102 Labor and Employment, 10-105 Labor and Employment, 10-106 Labor and Employment
Text - Third - Labor and Employment - Injured Workers' Insurance Fund - Revisions: 10-101 Labor and Employment, 10-102 Labor and Employment, 10-105 Labor and Employment, 10-106 Labor and Employment