§ 32–1540. Special fund.

(a) There is established in the Treasury of the District of Columbia a special fund for the purpose of making payments in accordance with the provisions of §§ 32-1507(c), 32-1507(e), 32-1508(6), and 32-1519(b). Such fund shall be administered by the Mayor.

(b) The Mayor shall be the custodian of the special fund, and all moneys and securities in such fund shall be held in trust by the Mayor and shall not be used for purposes other than those provided by this chapter. The Mayor may invest any portion of the fund which, in the opinion of the Mayor, is not needed for current requirements in bonds or notes of the United States or any federal land bank; provided, that such investments are made pursuant to the Financial Institutions Deposit and Investment Act of 1997.

(c) Neither the District of Columbia nor the Mayor shall be liable in respect of payments authorized under §§ 32-1507(c), 32-1507(e), 32-1508(6) and 32-1519(b) in any amount greater than the money or property deposited in or belonging to such fund.

(d) Payments into such fund shall be made as follows:

(1) Each employer shall pay $5,000 as compensation for the death of an employee of such employer resulting from injury where the Mayor determines that there is no person entitled under this chapter to compensation for such death;

(2) All amounts collected as fines and penalties under the provisions of this chapter shall be paid into such fund; and

(3) The total assessment amount shall be allocated between self-insured employers and insured employers based on paid losses for the fiscal year preceding the year in which the assessment is based. The method of assessing self-insured employers shall be based upon paid losses. The method of assessing insured employers shall be a surcharge based on premium as set forth in this subsection. The portion of the total aggregate assessment to be collected from self-insured employers shall be equal to that proportion of the total paid losses during the preceding fiscal year, which the total paid losses of all self-insured employers bore to the total paid losses made by all self-insured employers and insurers on behalf of all insured employers during the preceding fiscal year. The portion of the total aggregate assessment that shall be collected from insured employers shall be equal to that proportion of total paid losses during the preceding fiscal year, which the total paid losses made on behalf of all insured employers bore to the total paid losses made by all self-insured employers and insurers on behalf of all insured employers during the preceding fiscal year.

(4) Any employer which becomes self-insured shall be assessed as if it were insured for 24 months after conversion. The new self-insured employer shall be assessed on the basis of premium. The premium basis shall be equal to its premium for the policy period immediately preceding conversion to be self-insured, multiplied by the percentage change in the self-insured’s payroll. The payroll measurement period shall be the fiscal year immediately preceding conversion and the subsequent 2 fiscal years.

(5) On or after September 1, 1999, and annually thereafter, the Mayor shall notify insurers of the premium surcharge rate to be effective for policies written or renewed on and after October 1, 1999, and annually thereafter. The Mayor shall notify self-insured employers, at the same time, of the amount to be assessed against self-insured employers for the following fiscal year. The assessment against self-insurers and the surcharge rate applicable to policies of insured employers, together with amounts generated by paragraphs (1) and (2) of this subsection, shall be sufficient to generate revenue needed to satisfy obligations to the Special Fund. Should the Mayor subsequently determine that the assessments are insufficient to meet the Special Fund’s obligations during a fiscal year, the Mayor may assess self-insurers and insured employers to cover any anticipated deficiency, based upon the allocation method set forth in this subsection. Self-insured employers and insurers, on behalf of their policyholders, shall remit any emergency assessment within 30 calendar days of receipt of notice from the Mayor.

(6) Every workers’ compensation insurer shall collect, from each of its policyholders, an amount equal to the insured employers’ assessment through a surcharge based on premium. These assessments shall include any amounts paid by insurers on behalf of their policyholders to cover an emergency assessment by the Mayor during the previous fiscal year. Assessments when collected shall not constitute an element of loss for the purpose of establishing rates for workers’ compensation insurance but, for the purpose of collection, shall be treated as separate costs imposed upon insured employers. The total of the assessment imposed by this subsection shall be stated as a separate cost on an insured employer’s policy, or on a separate document submitted to the insured employer, and shall be identified as the “Workers’ Compensation Policyholder Surcharge.” Each assessment shall be shown as a percentage of the total workers’ compensation policyholder premium. The premium surcharge shall be excluded from the definition of premiums for all purposes, including computation of agents’ commissions or premium taxes.

(7) Insurers and self-insurers shall forward to the Special Fund all amounts collected pursuant to this section. These collections shall be for the administration of the Special Fund and shall not be part of the General Fund of the District of Columbia. Any balance remaining at the end of any fiscal year shall not revert to the General Fund and shall be used exclusively to offset any Special Fund assessment required in the next immediate fiscal year.

(e) The special fund shall be audited annually by the Department of Employment Services. The Director of the Department of Employment Services shall file an audited financial report with the Council by March 1st detailing the financial status of the fund as of the end of the preceding fiscal year, including the fund’s operation, cash flow, and changes in capital and surplus, using standard accounting principles.

(f) All civil penalties provided for in this chapter shall be collected by civil suit brought by the Mayor.

(July 1, 1980, D.C. Law 3-77, § 41, 27 DCR 2503; Mar. 18, 1998, D.C. Law 12-56, § 3, 44 DCR 6933; Apr. 16, 1999, D.C. Law 12-229, § 2(j), 46 DCR 891; Dec. 7, 2004, D.C. Law 15-205, § 1102(c), 51 DCR 8441.)

Prior Codifications

1981 Ed., § 36-340.

Section References

This section is referenced in § 32-1519, § 32-1535, § 32-1541, and § 32-1542.

Effect of Amendments

D.C. Law 15-205 rewrote subsec. (e) to read as follows: “(e) The accounts of the special fund shall be audited in the same manner as similar accounts of the District of Columbia.”

Emergency Legislation

For temporary amendment of section, see § 3 of the Financial Institutions Deposit and Investment Emergency Amendment Act of 1997 (D.C. Act 12-175, October 30, 1997, 44 DCR 6918).

For temporary amendment of section, see § 3 of the Financial Institutions Deposit and Investment Congressional Recess Emergency Amendment Act of 1998 (D.C. Act 12-281, February 25, 1998, 45 DCR 1707).

For temporary (90 day) amendment of section, see § 1102(c) of Fiscal Year 2005 Budget Support Emergency Act of 2004 (D.C. Act 15-486, August 2, 2004, 51 DCR 8236).

For temporary (90 day) worker’s compensation third-party administrator study provisions, see § 1112 of Fiscal Year 2005 Budget Support Emergency Act of 2004 (D.C. Act 15-486, August 2, 2004, 51 DCR 8236).

For temporary (90 day) amendment of section, see § 1102(c) of Fiscal Year 2005 Budget Support Congressional Review Emergency Act of 2004 (D.C. Act 15-594, October 26, 2004, 51 DCR 11725).

For temporary (90 day) worker’s compensation third-party administrator study provisions, see § 1112 of Fiscal Year 2005 Budget Support Congressional Review Emergency Act of 2004 (D.C. Act 15-594, October 26, 2004, 51 DCR 11725).

Short Title

Short title of subtitle K of title I of Law 15-205: Section 1111 of D.C. Law 15-205 provided that subtitle K of title I of the act may be cited as the Workers’ Compensation Third-Party Administrator Study Amendment Act of 2004.

References in Text

The “Financial Institutions Deposit and Investment Act of 1997,” referred to in (b), is D.C. Law 12-56.

Editor's Notes

Section 1112 of D.C. Law 15-205 provided: “By January 1, 2005, the Mayor shall provide the Council with an analysis of anticipated financial costs and savings if a third-party administrator would administer the special fund established by section 41 of the District of Columbia Workers’ Compensation Act of 1979, effective July 1, 1980 (D.C. Law 3-77; D.C. Official Code § 32-1540).”