440.38 Security for compensation; insurance carriers and self-insurers.—
(1) Every employer shall secure the payment of compensation under this chapter:
(a) By insuring and keeping insured the payment of such compensation with any stock company or mutual company or association or exchange, authorized to do business in the state;
(b) By furnishing satisfactory proof to the Florida Self-Insurers Guaranty Association, Incorporated, created in s. 440.385, that it has the financial strength necessary to ensure timely payment of all current and future claims individually and on behalf of its subsidiary and affiliated companies with employees in this state and receiving an authorization from the department to pay such compensation directly. The association shall review the financial strength of applicants for membership, current members, and former members and make recommendations to the department regarding their qualifications to self-insure in accordance with this section and ss. 440.385 and 440.386. The department shall act in accordance with the recommendations unless it finds by clear and convincing evidence that the recommendations are erroneous.
1. As a condition of authorization under paragraph (a), the association may recommend that the department require an employer to deposit with the association a qualifying security deposit. The association shall recommend the type and amount of the qualifying security deposit and shall prescribe conditions for the qualifying security deposit, which shall include authorization for the association to call the qualifying security deposit in the case of default to pay compensation awards and related expenses of the association. As a condition to authorization to self-insure, the employer shall provide proof that the employer has provided for competent personnel with whom to deliver benefits and to provide a safe working environment. The employer shall also provide evidence that it carries reinsurance at levels that will ensure the financial strength and actuarial soundness of such employer in accordance with rules adopted by the department. The department may by rule require that, in the event of an individual self-insurer’s insolvency, such qualifying security deposits and reinsurance policies are payable to the association. Any employer securing compensation in accordance with the provisions of this paragraph shall be known as a self-insurer and shall be classed as a carrier of her or his own insurance. The employer shall, if requested, provide the association an actuarial report signed by a member of the American Academy of Actuaries providing an opinion of the appropriate present value of the reserves, using a 4-percent discount rate, for current and future compensation claims. If any member or former member of the association refuses to timely provide such a report, the association may obtain an order from a circuit court requiring the member to produce such a report and ordering any other relief that the court determines is appropriate. The association may recover all reasonable costs and attorney’s fees in such proceedings.
2. If the employer fails to maintain the foregoing requirements, the association shall recommend to the department that the department revoke the employer’s authority to self-insure, unless the employer provides to the association the certified opinion of an independent actuary who is a member of the American Academy of Actuaries as to the actuarial present value of the employer’s determined and estimated future compensation payments based on cash reserves, using a 4-percent discount rate, and a qualifying security deposit equal to 1.5 times the value so certified. The employer shall thereafter annually provide such a certified opinion until such time as the employer meets the requirements of subparagraph 1. The qualifying security deposit shall be adjusted at the time of each such annual report. Upon the failure of the employer to timely provide such opinion or to timely provide a security deposit in an amount equal to 1.5 times the value certified in the latest opinion, the association shall provide that information to the department along with a recommendation, and the department shall then revoke such employer’s authorization to self-insure. Failure to comply with this subparagraph constitutes an immediate serious danger to the public health, safety, or welfare sufficient to justify the summary suspension of the employer’s authorization to self-insure pursuant to s. 120.68.
3. Upon the suspension or revocation of the employer’s authorization to self-insure, the employer shall provide to the association the certified opinion of an independent actuary who is a member of the American Academy of Actuaries of the actuarial present value of the determined and estimated future compensation payments of the employer for claims incurred while the member exercised the privilege of self-insurance, using a discount rate of 4 percent. The employer shall provide such an opinion at 6-month intervals thereafter until such time as the latest opinion shows no remaining value of claims. With each such opinion, the employer shall deposit with the association a qualifying security deposit in an amount equal to the value certified by the actuary. The association has a cause of action against an employer, and against any successor of the employer, who fails to timely provide such opinion or who fails to timely maintain the required security deposit with the association. The association shall recover a judgment in the amount of the actuarial present value of the determined and estimated future compensation payments of the employer for claims incurred while the employer exercised the privilege of self-insurance, together with attorney’s fees. For purposes of this section, the successor of an employer means any person, business entity, or group of persons or business entities, which holds or acquires legal or beneficial title to the majority of the assets or the majority of the shares of the employer.
4. A qualifying security deposit shall consist, at the option of the employer, of:
a. Surety bonds, in a form and containing such terms as prescribed by the association, issued by a corporation surety authorized to transact surety business by the office, and whose policyholders’ and financial ratings, as reported in A.M. Best’s Insurance Reports, Property-Liability, are not less than “A” and “V”, respectively.
b. Irrevocable letters of credit in favor of the association issued by financial institutions located within this state, the deposits of which are insured through the Federal Deposit Insurance Corporation.
5. The qualifying security deposit shall be held by the association exclusively for the benefit of workers’ compensation claimants. The security shall not be subject to assignment, execution, attachment, or any legal process whatsoever, except as necessary to guarantee the payment of compensation under this chapter. No surety bond may be terminated, and no letter of credit may be allowed to expire, without 90 days’ prior written notice to the association and deposit by the self-insuring employer of some other qualifying security deposit of equal value within 10 business days after such notice. Failure to provide such written notice or failure to timely provide qualifying replacement security after such notice shall constitute grounds for the association to call or sue upon the surety bond or to exercise its rights under a letter of credit. Current self-insured employers must comply with this section on or before December 31, 2001, or upon the maturity of existing security deposits, whichever occurs later. The department may specify by rule the amount of the qualifying security deposit required prior to authorizing an employer to self-insure and the amount of net worth required for an employer to qualify for authorization to self-insure;
(c) By entering into a contract with a public utility under an approved utility-provided self-insurance program as set forth in s. 624.46225 in effect as of July 1, 1983. The department shall adopt rules to implement this paragraph;
(d) By entering into an interlocal agreement with other local governmental entities to create a local government pool pursuant to s. 624.4622; or
(e) By entering into a contract with an individual self-insurer under an approved individual self-insurer-provided self-insurance program as set forth in s. 624.46225. The department may adopt rules to administer this subsection.
(2)(a) The department shall adopt rules by which businesses may become qualified to provide underwriting claims-adjusting, loss control, and safety engineering services to self-insurers.
(b) The department shall adopt rules requiring self-insurers to file any reports necessary to fulfill the requirements of this chapter. Any self-insurer who fails to file any report as prescribed by the rules adopted by the department shall be subject to a civil penalty.
(3)(a) The license of any stock company or mutual company or association or exchange authorized to do insurance business in the state shall for good cause, upon recommendation of the department, be suspended or revoked by the office. No suspension or revocation shall affect the liability of any carrier already incurred.
(b) The department shall suspend or revoke any authorization to a self-insurer for failure to comply with this section or for good cause, as defined by rule of the department. No suspension or revocation shall affect the liability of any self-insurer already incurred.
(c) Violation of s. 440.381 by a self-insurance fund shall result in the imposition of a fine not to exceed $1,000 per audit if the self-insurance fund fails to act on said audits by correcting errors in employee classification or accepted applications for coverage where it knew employee classifications were incorrect. Such fines shall be levied by the department and deposited into the Workers’ Compensation Administration Trust Fund.
(4)(a) A carrier of insurance, including the parties to any mutual, reciprocal, or other association, may not write any compensation insurance under this chapter without a certificate of authority from the office. Such certificate of authority shall be given, upon application therefor, to any insurance or mutual or reciprocal insurance association upon the office’s being satisfied of the solvency of such corporation or association and its ability to perform all its undertakings. The office may revoke any certificate of authority so issued for violation of any provision of this chapter.
(b) A carrier of insurance, including the parties to any mutual, reciprocal, or other association, may not write any compensation insurance under this chapter unless such carrier has a claims adjuster, either in-house or under contract, situated within this state. Self-insurers whose compensation payments are administered through a third party and carriers of insurance shall maintain a claims adjuster within this state during any period for which there are any open claims against such self-insurer or carrier arising under the compensation insurance written by the self-insurer or carrier. Individual self-insurers whose compensation payments are administered by employees of the self-insurer shall not be required to have their claims adjuster situated within this state. Individual self-insurers shall not be required to have their claims adjusters situated within this state.
(5) All insurance carriers authorized to write workers’ compensation insurance in this state shall make available, at the written request of the employer, an insurance policy containing deductibles in the amount of $500, $1,000, $1,500, $2,000, and $2,500 per claim and a coinsurance provision per claim. Any amount of coinsurance shall bind the carrier to pay 80 percent, and the employer to pay 20 percent, of the benefits due to an employee for an injury compensable under this chapter of the amount of benefits above the deductible, up to the limit of $21,000. One hundred percent of the benefits above the amount of any deductible and coinsurance, as the case may be, due to an employee for one injury shall be paid solely by the carrier. Regardless of any coinsurance or deductible amount, the claim shall be paid by the applicable carrier, which shall then be reimbursed by the employer for any coinsurance or deductible amounts paid by the carrier. No insurance carrier shall be required to offer a deductible or coinsurance to any employer if, as a result of a credit investigation, the carrier determines that the employer is not sufficiently financially stable to be responsible for payment of such deductible or coinsurance amounts.
(6) The state and its boards, bureaus, departments, and agencies and all of its political subdivisions which employ labor, and the state universities, shall be deemed self-insurers under the terms of this chapter, unless they elect to procure and maintain insurance to secure the benefits of this chapter to their employees; and they are hereby authorized to pay the premiums for such insurance.
(7) Any employer who meets the requirements of subsection (1) through a policy of insurance issued outside of this state must at all times, with respect to all employees working in this state, maintain the required coverage under a Florida endorsement using Florida rates and rules pursuant to payroll reporting that accurately reflects the work performed in this state by such employees.
Cited 26 times | Published | Florida 4th District Court of Appeal
...fy such claim as a "covered claim" emanating from a form of direct insurance within the scope of the Florida Insurance Guaranty Association Act (Part II of Chapter 631, Florida Statutes). Appellant, Zinke-Smith, a self-insured employer as defined in Section 440.38(1)(b), F.S., brought this action against Florida Insurance Guaranty Association, Inc....
...Furthermore, the insolvency of a reinsurer could not be the basis of a "covered claim" on behalf of an insurer-reinsured since a claim against a reinsurer would necessarily involve "an amount due an insurer". The decisive issue here, then, is whether Zinke-Smith, having elected to become a "self-insurer" (as defined in Section 440.38, F.S.) was thereby an "insurer" within the meaning of Section 631.54(4), F.S., so that the policy of insurance with Home Owners was simply a form of reinsurance rather than merely one of excess liability....
...On the contrary, the allegations show it to be simply an employer liable for compensation to its employees under the provisions of the Workmen's Compensation law, [1] who had elected to secure the payment of such compensation in part by complying with Section 440.38(1)(b), F.S., and in part (where the compensation benefits exceeded certain amounts) by complying with Section 440.38(1)(a), F.S. Merely because an employer who secures compensation in accordance with Section 440.38(1)(b), F.S....
Cited 19 times | Published | Supreme Court of Florida | 158 Fla. 357, 1946 Fla. LEXIS 587
...Thereupon appeal was perfected to this Court. The appellant contends that the employee did not sustain injury by accident arising out of and in the course of his employment. *359 We may say here that if the injury Was compensable by the employer, the liability attaches to the carrier. Section 440.38 Fla. Statutes 1941 (same F.S.A.), inter alia, provides: “440.38....
Cited 12 times | Published | Florida 1st District Court of Appeal
...SMITH, Jr., Judge. This is a consolidated appeal from a summary final judgment, a non-final order denying leave to file a second amended complaint, and an order taxing costs. We affirm on all points. The appellant, International Patrol, is an employer required by § 440.38, Florida Statutes (1977), to maintain workers' compensation insurance....
Cited 10 times | Published | Florida 1st District Court of Appeal
...Both petitions alleged that the petitioners would be affected by the rules "in that the proposed rules will create an increased cost for non-refundable bond premiums and will have the potential impact of depriving the self-insurors and self-insuror funds of the right to operate as self-insurors pursuant to Florida Statutes, Section 440.38." The amended petition further alleged that one of the individual service companies had been authorized by one self-insurer, Cedars of Lebanon Hospital Corporation, to represent it in this proceeding and that one individual service com...
Cited 8 times | Published | Florida 1st District Court of Appeal | 1989 WL 104000
...n the rate base, the premium, or any rate filing. Section 440.34(3). We recognize that the definition of "carrier" in section 440.02(3) includes a self-insurer, and therefore any carrier provision may facially apply to self-insurers. As described by section 440.38(1)(b), a "self-insurer" is an employer who pays workers' compensation directly and is subject to depositing securities with the state in an amount sufficient to insure the prompt payment of that compensation. Such a self-insurer may also be required to carry reinsurance to insure its actuarial soundness. Further, under section 440.385, such a self-insurer may incur a cost in belonging to the Florida Self-Insurers Guaranty Association, Inc....
Cited 4 times | Published | Supreme Court of Florida
...y commissioner an application for a review thereof by the full commission in accordance with the provisions of this Subsection; provided, however, that an employer who has not secured the payment of compensation under this chapter in compliance with § 440.38 shall, as a condition of filing such application for a review by the full commission, file with his application for review a good and sufficient bond, as provided in § 59.13 of chapter 59, conditioned to pay the amount of the award, intere...
...es 1941, and F.S.A. To meet this situation the plaintiff alleged in each count of the declaration that at the time of the injury his employment came within the provisions of the Workmen's Compensation Law and that his employers failed to comply with Section 440.38 of that act....
Cited 3 times | Published | Florida 1st District Court of Appeal | 2004 WL 2921808
...h the Board of Employee Leasing Companies "evidence of workers' compensation coverage for all leased employees in this state." § 468.529(2), Fla. Stat. (2002). The issue to be resolved is whether CORE secured workers' compensation coverage for Orr. Section 440.38, Florida Statutes (2002), sets out a number of means by which an employer may secure workers' compensation coverage, including self-insurance if certain statutory requirements are satisfied....
...The parties appear to agree that CORE "self-funded" its workers' compensation claims. However, there is nothing in the record which conclusively demonstrates either that CORE was a self-insurer for workers' compensation purposes or that it had otherwise secured compensation in compliance with section 440.38. If CORE did secure compensation in compliance with section 440.38, Orr was the employee of a licensed employee leasing company (CORE) pursuant to section 468.529, and appellant would have workers' compensation immunity pursuant to section 440.11(2). If CORE was a self-insurer for purposes of section 440.38, Orr could still seek to recover unpaid workers' compensation benefits from the Florida Self-Insurers Guaranty Association pursuant to sections 440.385 and 440.386, Florida Statutes (2002). However, if CORE did not secure compensation in compliance with section 440.38, Orr was not the employee of a licensed employee leasing company but, rather, the borrowed employee of appellant by virtue of section 440.11(2)....
...ntitled to workers' compensation immunity. See § 440.11(1), Fla. Stat. (2002). We reverse the partial summary judgment and remand for further proceedings on the issue of whether CORE secured workers' compensation coverage for Orr in compliance with section 440.38....
Cited 2 times | Published | Supreme Court of Florida | 10 Fla. L. Weekly 157
...For the purposes of *906 chapter 440, Florida Statutes (1979), the state and its political subdivisions, in their capacity as employers, are treated no differently than private employers, except that they are deemed to be self-insurers unless they elect to obtain private insurance. See §§ 440.02(4) and 440.38(6), Fla....
...strative proceedings. Even when it is necessary to resort to such proceedings in order to obtain benefits, with exceptions that are not pertinent here, the benefits are not paid by the state unless a government body is the self-insured employer. See § 440.38(1)....
...(Doc' 2 at 1-2). Plaintiff contends that his claim “arises under” Florida Statutes § 440.06 and § 440.11(1). Florida Statute § 440.06 provides: Every employer who fails to secure the payment of compensation . .. by failing to meet the requirements of s. 440.38 may not, in any suit brought against him or her by an employee subject to this chapter to recover damages for injury or *1315 death, defend such a suit on the grounds that the injury was caused by the negligence of a fellow servant, that-th...
...•As to paragraph 7, Defendant contends that it secured coverage for compensation as required by the FWCL so the proscription on certain affirmative defenses contained in Florida Statutes § 440.06 and § 440.11(l)(a) is inapplicable. Florida Statute § 440.38 lists the permitted Ways an employer can secure the payment of compensation as required under the FWCL....
...utual company or association or exchange, authorized to do business in the state,’.’ or (2) “furnishing satisfactory proof.. .that it has the financial strength necessary to ensure timely payment of all current and future claims.” Fla. Stat. § 440.38 (l)(a)-(b)....
...compensation with any stock company or mutual company or
association or exchange, authorized to do business in the state;
(b) By furnishing satisfactory proof to the Florida Self-Insurers
Guaranty Association, Incorporated, created in s. 440.385, that it has
the financial strength necessary to ensure timely payment of all
current and future claims individually and on behalf of its subsidiary
and affiliated companies with employees in this state and receiving an
authorization from the department to pay such compensation directly.
...
§ 440.38, Fla....
...4th DCA 2012) (rejecting the notion that the term “secure payment of
compensation” imposes an “automatic duty to actually pay benefits,” but only
requires that payment be insured “with any stock company or mutual company or
association or exchange, authorized to do business in the state” (quoting § 440.38,
Fla. Stat. (2004))); see also Limerock Indus., Inc. v. Pridgeon, 743 So. 2d 176, 177
(Fla. 1st DCA 1999) (finding section 440.38’s requirement that the employer
“secure payment of compensation” was satisfied where the employer “secur[ed] a
policy of workers’ compensation insurance that covered the injured employee”)....
...r and must secure the payment for his employees for the compensation payable under the Act. The employer may discharge the responsibility of securing compensation either by obtaining appropriate insurance coverage or by becoming a self insurer (F.S. section 440.38, F.S.A.)....
...l orders are limited to those that ... determine... that, as a matter of law, a party is not entitled to workers' compensation immunity[.]" [2] See § 624.155, Fla. Stat. (2000). [3] The Act defines a "carrier" as any person or fund authorized under section 440.38, Florida Statutes (2000), to insure under the law, and includes a self-insurer and a commercial self-insurance fund, authorized under section 624.462, Florida Statutes (2000)....
...r Griffith’s application for review in view of his failure to file a bond as required by Sec. 440.25(4) (a), Florida Statutes 1955, F.S.A.: “ * * * an employer who has not secured the payment of compensation under this chapter in compliance with § 440.38 shall, as a condition of filing such application for a review by the full commission, file with his application for review a good and sufficient bond, as provided in § 59.13 of chapter 59, conditioned to pay the amount of the award, intere...
...Subpoenas will be issued on request of the parties or their counsel. g. Subpoenaed witnesses — failure to appear, sanctions. If any party or legally subpoenaed witness fails to appear at the time and place set for this hearing, sanctions under rule 4.150 may be imposed or punitive actions authorized under section 440.38, Florida Statutes, may be instigated....
Published | Florida 2nd District Court of Appeal | 2007 WL 703561
...court did not establish the Trust's entitlement to judgment. Therefore, we reverse the judgment and remand for further proceedings. This dispute concerns the premium due on an insurance policy securing payment of workers' compensation benefits. See § 440.38(1)(a), Fla....
...As of December 30, 1960, 84,719 employers complied with the requirements of coverage under the workmen’s compensation law by purchasing private insurance in one or more of the 212 insurance carriers licensed to write compensation insurance in Florida. Self insurers are governed by § 440.38(1) (b), Florida Statutes, F.S.A....
...In a workmen’s compensation proceeding, respondent Proudfoot, an employee, was awarded certain benefits for injuries resulting from an industrial accident. His employer, Fraternal Order of Eagles, had not secured the payment of compensation in compliance with Section 440.38, Florida Statutes, F.S.A....
...s unless in the meantime an application for review is filed with the full commission. The statute then reads in part: “ * * * provided, however, that an employer who has not secured the payment of compensation under this chapter in compliance with § 440.38 shall,, as a condition of filing such application for a review by the full commission, file with his application for review a good and sufficient bond, as provided in § 59.13 of chapter 59, conditioned to pay the amount of the award,, inte...
....”);
see also § 440.09(1), Fla. Stat. (requiring the employer to “pay
compensation or furnish benefits” as set out in chapter 440 “if the
employee suffers an accidental compensable injury . . . arising out
of work performed in the course and the scope of employment”);
§ 440.38(1), Fla....
This Florida statute resource is curated by Graham W. Syfert, Esq., a Jacksonville, Florida personal injury and workers' compensation attorney. Attorney Syfert regularly works with Chapter 440 in the context of workers' compensation claims and represents clients throughout Northeast Florida. For legal consultation, call 904-383-7448.
