Section 3701.5 Of Article 1. Insurance And Security From California Labor Code >> Division 4. >> Part 1. >> Chapter 4. >> Article 1.
3701.5
. (a) If the director determines that a private self-insured
employer has failed to pay workers' compensation as required by this
division, the security deposit shall be utilized to administer and
pay the employer's compensation obligations.
(b) If the director determines the security deposit has not been
immediately made available for the payment of compensation, the
director shall determine the method of payment and claims
administration as appropriate, which may include, but is not limited
to, payment by a surety that issued the bond, or payment by an issuer
of an irrevocable letter of credit, and administration by a surety
or by an adjusting agency, or through the Self-Insurers' Security
Fund, or any combination thereof. If the director arranges for
administration and payment by any person other than the Self-Insurers'
Security Fund after a default is declared, the fund shall have no
responsibility for claims administration or payment of the claims.
(c) If the director determines the payment of benefits and claims
administration shall be made through the Self-Insurers' Security
Fund, the fund shall commence payment of the private self-insured
employer's obligations for which it is liable under Section 3743
within 30 days of notification. Payments shall be made to claimants
whose entitlement to benefits can be ascertained by the fund, with or
without proceedings before the appeals board. Upon the assumption of
obligations by the fund pursuant to the director's determination,
the fund shall have a right to immediate possession of any posted
security and the custodian, surety, or issuer of any irrevocable
letter of credit shall turn over the security to the fund together
with the interest that has accrued since the date of the self-insured
employer's default or insolvency.
(d) The payment of benefits by the Self-Insurers' Security Fund
from security deposit proceeds shall release and discharge any
custodian of the security deposit, surety, any issuer of a letter of
credit, and the self-insured employer, from liability to fulfill
obligations to provide those same benefits as compensation, but does
not release any person from any liability to the fund for full
reimbursement. Payment by a surety constitutes a full release of the
surety's liability under the bond to the extent of that payment, and
entitles the surety to full reimbursement by the principal or his or
her estate. Full reimbursement includes necessary attorney fees and
other costs and expenses, without prior claim or proceedings on the
part of the injured employee or other beneficiaries. Any decision or
determination made, or any settlement approved, by the director or by
the appeals board under subdivision (f) shall conclusively be
presumed valid and binding as to any and all known claims arising out
of the underlying dispute, unless an appeal is made within the time
limit specified in Section 5950.
(e) The director shall advise the Self-Insurers' Security Fund
promptly after receipt of information indicating that a private
self-insured employer may be unable to meet its compensation
obligations. The director shall also advise the Self-Insurers'
Security Fund of all determinations and directives made or issued
pursuant to this section. All financial, actuarial, or claims
information received by the director from any self-insurer may be
shared by the director with the Self-Insurers' Security Fund.
(f) Disputes concerning the posting, renewal, termination,
exoneration, or return of all or any portion of the security deposit,
or any liability arising out of the posting or failure to post
security, or adequacy of the security or reasonableness of
administrative costs, including legal fees, and arising between or
among a surety, the issuer of an agreement of assumption and
guarantee of workers' compensation liabilities, the issuer of a
letter of credit, any custodian of the security deposit, a
self-insured employer, or the Self-Insurers' Security Fund shall be
resolved by the director. An appeal from the director's decision or
determination may be taken to the appropriate superior court by
petition for writ of mandate. Payment of claims from the security
deposit or by the Self-Insurers' Security Fund shall not be stayed
pending the resolution of the disputes unless and until the superior
court issues a determination staying a payment of claims decision or
determination of the director.