Chapter 342

2005 -- S 0699 SUBSTITUTE A AS AMENDED

Enacted 07/19/05

A N A C T

RELATING TO LABOR AND LABOR RELATIONS --

WORKERS' COMPENSATION -- BENEFITS

Introduced By: Senator Roger R. Badeau

Date Introduced: February 15, 2005

It is enacted by the General Assembly as follows:

SECTION 1. Sections 28-29-2, 28-29-17 and 28-29-19 of the General Laws in Chapter

28-29 entitled "Workers' Compensation - General Provisions" are hereby amended to read as

follows:

28-29-2. Definitions. -- In chapters 29 -- 38 of this title, unless the context otherwise

requires:

(1) "Department" means the department of labor and training.

(2) "Director" means the director of labor and training or his or her designee unless

specifically stated otherwise.

(3) (i) "Earnings capacity" means the weekly straight time earnings which an employee

could receive if the employee accepted an actual offer of suitable alternative employment.

Earnings capacity can also be established by the court based on evidence of ability to earn,

including, but not limited to, a determination of the degree of functional impairment and/or

disability, that an employee is capable of employment. The court may, in its discretion, take into

consideration the performance of the employee's duty to actively seek employment in scheduling

the implementation of the reduction. The employer need not identify particular employment

before the court can direct an earnings capacity adjustment. In the event that an employee returns

to light duty employment while partially disabled, an earnings capacity shall not be set based

upon actual wages earned until the employee has successfully worked at light duty for a period of

at least thirteen (13) weeks.

(ii) As used under the provisions of this title, "functional impairment" means an

anatomical or functional abnormality existing after the date of maximum medical improvement as

determined by a medically or scientifically demonstrable finding and based upon the most recent

edition of the American Medical Association's Guide to the Evaluation of Permanent Impairment

or comparable publications of the American Medical Association.

(iii) In the event that an employee returns to employment at an average weekly wage

equal to the employee's pre-injury earnings exclusive of overtime, the employee will be presumed

to have regained his/her earning capacity.

(4) "Employee" means any person who has entered into the employment of or works

under contract of service or apprenticeship with any employer, except that in the case of a city or

town other than the city of Providence it shall only mean that class or those classes of employees

as may be designated by a city, town, or regional school district in a manner provided in this

chapter to receive compensation under chapters 29 -- 38 of this title. Any person employed by the

state of Rhode Island, except for sworn employees of the Rhode Island State Police, who is

otherwise entitled to the benefits of chapter 19 of title 45 shall be subject to the provisions of

chapters 29 -- 38 of this title for all case management procedures and dispute resolution for all

benefits. It The term "employee" does not include any ~~partner,~~ individual who is a shareholder or

director in a corporation, general or limited partners in a general partnership, ~~or any partner in~~ a

registered limited liability partnership, a limited partnership, or partners in a registered limited

liability limited partnership, or any ~~nonmanager~~ individual who is a member in a limited liability

company. These exclusions do not apply to shareholders, directors and members who have

entered into the employment of or who work under a contract of service or apprenticeship within

a corporation or a limited liability company. The term "employee" also does not include a

~~member of a limited liability company,~~ sole proprietor, independent contractor, or a person whose

employment is of a casual nature, and who is employed other than for the purpose of the

employer's trade or business, or a person whose services are voluntary or who performs charitable

acts, nor shall it include the members of the regularly organized fire and police departments of

any town or city. Whenever a contractor has contracted with the state, a city, town, or regional

school district any person employed by that contractor in work under contract shall not be

deemed an employee of the state, city, town, or regional school district as the case may be. Any

person who on or after January 1, 1999, was an employee and became a corporate officer shall

remain an employee, for purposes of these chapters, unless and until coverage under this act is

waived pursuant to subsection 28-29-8(b) or section 28-29-17. Any person who is appointed a

corporate officer between January 1, 1999 and December 31, 2001, and was not previously an

employee of the corporation, will not be considered an employee, for purposes of these chapters,

unless that corporate officer has filed a notice pursuant to section 28-29-19(b). In the case of a

person whose services are voluntary or who performs charitable acts, any benefit received, in the

form of monetary remuneration or otherwise, shall be reportable to the appropriate taxation

authority but shall not be deemed to be wages earned under contract of hire for purposes of

qualifying for benefits under chapters 29 -- 38 of this title. Any reference to an employee who had

been injured shall, where the employee is dead, include a reference to his or her dependents as

defined in this section, or to his or her legal representatives, or, where he or she is a minor or

incompetent, to his or her conservator or guardian. A "seasonal occupation" means those

occupations in which work is performed on a seasonal basis of not more than sixteen (16) weeks.

(5) "Employer" includes any person, partnership, corporation, or voluntary association,

and the legal representative of a deceased employer; it includes the state, and the city of

Providence. It also includes each city, town, and regional school district in the state that votes or

accepts the provisions of chapters 29 -- 38 of this title in the manner provided in this chapter.

(6) "General or special employer":

(i) "General employer" includes but is not limited to temporary help companies and

employee leasing companies and means a person who for consideration and as the regular course

of its business supplies an employee with or without vehicle to another person.

(ii) "Special employer" means a person who contracts for services with a general

employer for the use of an employee, a vehicle, or both.

(iii) Whenever there is a general employer and special employer wherein the general

employer supplies to the special employer an employee and the general employer pays or is

obligated to pay the wages or salaries of the supplied employee, then, notwithstanding the fact

that direction and control is in the special employer and not the general employer, the general

employer, if it is subject to the provisions of the Workers' Compensation Act or has accepted that

Act, shall be deemed to be the employer as set forth in subdivision (5) of this section and both the

general and special employer shall be the employer for purposes of sections 28-29-17 and 28-29-

18.

(iv) Effective January 1, 2003, whenever a general employer enters into a contract or

arrangement with a special employer to supply an employee or employees for work, the special

employer shall require an insurer generated insurance coverage certification, on a form prescribed

by the department, demonstrating Rhode Island workers' compensation and employer's liability

coverage ~~written documentation~~ evidencing that the general employer carries workers'

compensation insurance with that insurer with no indebtedness for its employees for the term of

the contract or arrangement. In the event that the special employer fails to obtain and maintain at

policy renewal and thereafter this insurer generated insurance coverage certification

demonstrating Rhode Island workers' compensation and employer's liability coverage ~~the written~~

~~documentation~~ from the general employer, the special employer is deemed to be the employer

pursuant to the provisions of this section. Upon the cancellation or failure to renew, the insurer

having written the workers' compensation and employer's liability policy shall notify the

certificate holders and the department of the cancellation or failure to renew and upon notice, the

certificate holders shall be deemed to be the employer for the term of the contact or arrangement

unless or until a new certification is obtained.

(7) (i) "Injury" means and refers to personal injury to an employee arising out of and in

the course of his or her employment, connected and referable to the employment.

(ii) An injury to an employee while voluntarily participating in a private, group, or

employer-sponsored carpool, vanpool, commuter bus service, or other rideshare program, having

as its sole purpose the mass transportation of employees to and from work shall not be deemed to

have arisen out of and in the course of employment. Nothing in the foregoing provision shall be

held to deny benefits under chapters 29 -- 38 and chapter 47 of this title to employees such as

drivers, mechanics, and others who receive remuneration for their participation in the rideshare

program. Provided, that the foregoing provision shall not bar the right of an employee to recover

against an employer and/or driver for tortious misconduct.

(8) "Maximum medical improvement" means a point in time when any medically

determinable physical or mental impairment as a result of injury has become stable and when no

further treatment is reasonably expected to materially improve the condition. Neither the need for

future medical maintenance nor the possibility of improvement or deterioration resulting from the

passage of time and not from the ordinary course of the disabling condition, nor the continuation

of a pre-existing condition precludes a finding of maximum medical improvement. A finding of

maximum medical improvement by the workers' compensation court may be reviewed only

where it is established that an employee's condition has substantially deteriorated or improved.

(9) "Physician" means medical doctor, surgeon, dentist, licensed psychologist,

chiropractor, osteopath, podiatrist, or optometrist, as the case may be.

(10) "Suitable alternative employment" means employment or an actual offer of

employment which the employee is physically able to perform and will not exacerbate the

employee's health condition and which bears a reasonable relationship to the employee's

qualifications, background, education, and training. The employee's age alone shall not be

considered in determining the suitableness of the alternative employment.

(11) "Independent contractor" means a person who has filed a notice of designation as

independent contractor with the director pursuant to section 28-29-17.1 or as otherwise found by

the workers' compensation court.

28-29-17. Waiver of common law rights -- Notice of claim of common law right. --

An eEmployees or corporate officers of an employer, or managers, managing members or

members of a limited liability company subject to or who ~~has~~ have elected to become subject to

the provisions of chapters 29 -- 38 of this title as provided in section 28-29-8 shall be held to have

waived his or her right of action at common law to recover damages for personal injuries if he or

she has not given his or her employer at the time of the contract of hire or appointment notice in

writing that he or she claims that right and within ten (10) days after that has filed a copy of the

notice with the director, or, if the contract of hire or appointment was made before the employer

became subject to or elected to become subject to the provisions of those chapters, if the

employee, or corporate officer, or manager, managing member or member of a limited liability

company ~~shall not~~ must have given ~~the~~ notice and filed it with the director within ten (10) days

after the filing by the employer who is subject to or who has elected to become subject to the

provisions of those chapters of the written statement as provided. That waiver shall continue in

force for the term of one year, and after that, without further act on his or her part, for successive

terms of one year each, unless the employee, or corporate officer, or manager, managing member

or member of a limited liability company, at least sixty (60) days prior to the expiration of the

first or any succeeding year files with the director a notice in writing to the effect that he or she

desires to claim his or her right of action at common law and within ten (10) days thereafter gives

notice of this to his or her employer.

28-29-19. Waiver of claim of common law rights. -- (a) Any employee, or corporate

officer, or manager, managing member or member of a limited liability company, or the parent or

guardian of any minor employee, who has given notice to the employer that he or she claimed his

or her right of action at common law may waive that claim by filing a notice in writing with the

director and the employer or his or her agent which shall take effect five (5) days after the filing

with the director.

(b) Any person who is appointed a corporate officer between January 1, 1999 and

December 31, 2001 and was not previously an employee of the corporation may elect to become

subject to chapters 29 -- 38 of this title upon filing a notice in writing with the director which

notice takes effect five (5) days after the filing of his or her notice.

SECTION 2. Section 28-33-17.3 of the General Laws in Chapter 28-33 entitled

"Workers' Compensation - Benefits" is hereby amended to read as follows:

28-33-17.3. Fraud and abuse. -- (a) (1) The workers' compensation court is authorized

and directed to impose sanctions and penalties necessary to maintain the integrity of and to

maintain the high standards of professional conduct in the workers' compensation system. All

pleadings related to proceedings under chapters 29 -- 38 of this title shall be considered an

attestation by counsel that valid grounds exist for the position taken and that the pleading is not

interposed for delay.

(2) If any judge determines that any proceedings have been brought, prosecuted, or

defended by an employer, insurer, or their counsel without reasonable grounds, then:

(i) The whole cost of the proceedings shall be assessed upon the employer, insurer, or

counsel, whoever is responsible; and

(ii) If a subsequent order requires that additional compensation be paid, a penalty of

double the amount of retroactive benefits ordered shall be paid to the employee and the penalty

shall not be included in any formula utilized to establish premium rates for workers'

compensation insurance.

(3) If any judge determines that any proceedings have been brought or defended by an

employee or his or her counsel without reasonable grounds, the whole cost of the proceedings

shall be assessed against the employee or counsel, whoever is responsible.

(4) The court shall determine whether an action or defense is frivolous or conduct giving

rise to the action or defense was unreasonable. Where the amount at issue is less than the actual

attorneys' fees of the parties combined, the court shall exercise particular vigilance. Nothing in

this subsection, however, is intended to discourage prompt payment in full of all amounts

required to be paid.

(5) The appropriate body with professional disciplinary authority over the attorney shall

be notified of the action.

(b) (1) It is unlawful to do any of the following:

(i) Make or cause to be made any knowingly false or fraudulent material statement or

material representation for the purpose of obtaining or denying any compensation;

(ii) Present or cause to be presented any knowingly false or fraudulent written or oral

material statement in support of, or in opposition to, any claim for compensation or petition

regarding the continuation, termination, or modification of benefits;

(iii) Knowingly assist, aid and abet, solicit, or conspire with any person who engages in

an unlawful act under this section;

(iv) Make or cause to be made any knowingly false or fraudulent statements with regard

to entitlement to benefits with the intent to discourage an injured worker from claiming benefits

or pursuing a claim;

(v) Willfully misrepresent or fail to disclose any material fact in order to obtain workers'

compensation insurance at less than the proper rate for the insurance including, but not limited to,

intentionally misleading or failing to disclose information to an insurer regarding the appropriate

rate classification of an employee;

(vi) Willfully fail to provide a lower rate adjustment favorable to an employer as

required by an approved experience rating plan or regulations promulgated by the insurance

commissioners;

(vii) Willfully fail to report or provide false or misleading information regarding

ownership changes as required by an approved experience rating plan or regulations promulgated

by the insurance commissioner; or

(viii) Knowingly assist, aid and abet, solicit or conspire to coerce an employee to

willfully misrepresent an employee's status as a shareholder, director or officer ~~president, one~~

~~vice president, secretary and/or treasurer~~ of a corporation, or as a member or manager of a limited

liability company, or as a partner, in a general or ~~partnership~~, limited partnership, registered

limited liability partnership or a registered limited liability limited partnership, or as an

independent contractor for the purpose of avoiding the inclusion of that or other employees in a

workers' compensation insurance application, renewal or both.

(2) For the purposes of this section, "Statement" includes, but is not limited to, any

endorsement of a benefit check, application for insurance coverage, oral or written statement,

proof of injury, bill for services, diagnosis, prescription, hospital or provider records, x-rays, test

results, or other documentation offered as proof of, or in the absence of, a loss, injury, or expense.

(3) If it is determined that any person concealed or knowingly failed to disclose that

which is required by law to be revealed, knowingly gave or used perjured testimony or false

evidence, knowingly made a false statement of fact, participated in the creation or presentation of

evidence which he or she knows to be false, or otherwise engaged in conduct in violation of

subdivision (1) of this subsection, that person shall be subject in criminal proceedings to a fine

and/or penalty not exceeding fifty thousand dollars ($50,000), or double the value of the fraud,

whichever is greater, or by imprisonment up to five (5) years in state prison or both.

(4) There shall be a general amnesty until July 1, 1992 for any person receiving

compensation under chapters 29 -- 38 of this title, to the extent compensation has been voluntarily

reduced or relinquished by the employee prior to that date.

attorney general, to be sent to all workers who are presently receiving benefits and those for

whom first reports of injury are filed in the future which shall give the employee notice that the

endorsement of a benefit check sent pursuant to section 28-35-39 is the employee's affirmation

that he or she is qualified to receive benefits under the Workers' Compensation Act. The insurers

and self-insured employers are directed to send the form to all workers receiving benefits.

(d) Any employer, or in any case where the employer is a corporation, the president, vice

president, secretary, ~~and~~ treasurer, and other officers of the corporation, or in any case where the

employer is a limited liability company, the managers, and the managing members or in any case

where the employer is a general partnership, or a registered limited liability partnership, or in the

case where the employer is a limited ~~liability~~ partnership or a registered limited liability limited

partnership, the partners, that is are found to have violated this section or section 28-36-15, shall

be guilty of a felony for failure to secure and maintain compensation, and upon conviction, shall

be subject to imprisonment of up to two (2) years, a fine not exceeding ten thousand dollars

($10,000), or both. In any case where the employer is a corporation, the president, vice president,

secretary, ~~and~~ treasurer, and other officers of the corporation, shall be severally liable for the fine

or subject to imprisonment, or both. In any case where the employer is a limited liability

company, the managers and managing members shall be severally liable for the fine or subject to

imprisonment, or both. In any case where the employer is a partnership~~, or a general partnership,~~

or a registered limited liability partnership, the partners shall be severally liable for the fine or

subject to imprisonment, or both. In any case where the employer is a limited partnership or a

registered limited liability limited partnership, the general partners shall be severally liable for the

fine or subject to imprisonment, or both.

SECTION 3. Section 28-36-15 of the General Laws in Chapter 28-36 entitled "Workers'

Compensation - Insurance" is hereby amended to read as follows:

28-36-15. Penalty for failure to secure compensation -- Personal liability of

corporate officers. -- (a) Any employer required to secure the payment of compensation under

chapters 29 -- 38 of this title who knowingly fails to secure that compensation shall be guilty of a

felony and shall be subject to imprisonment for up to two (2) years. In addition to the foregoing,

the employer shall be subject to a civil penalty punished by a fine of not less than five hundred

dollars ($500) and not more than one thousand dollars ($1,000) for each day of noncompliance

with the requirements of this title. The director shall institute any and all reasonable measures to

comprehensively monitor, investigate, and otherwise discover all employer noncompliance with

this section and shall establish rules and regulations governing these measures. Each day shall

constitute a separate and distinct offense for calculation of the penalty. Where that employer is a

corporation ~~or a limited liability company or general or limited partnership,~~ the president, vice

president, secretary, ~~and~~ treasurer, and other officers of the corporation, ~~or member or manager of~~

~~a limited liability company or general or limited partner in a registered limited liability~~

~~partnership~~ shall be ~~also~~ severally liable for the fine, penalty or imprisonment as provided in this

section for the failure of that corporation to secure the payment of compensation. The president,

vice president, secretary, ~~and~~ treasurer, and other officers of the corporation ~~or member or~~

~~manager or general or limited partner~~ shall also be severally personally liable, jointly with the

corporation ~~or company or partnership,~~ for any compensation or other benefit which may accrue

under those chapters in respect to any injury which may occur to any employee of that

corporation while it fails to secure the payment of compensation as required by those chapters.

~~All criminal actions for any violation of this section shall be prosecuted by the attorney general.~~

~~The attorney general shall prosecute actions to enforce the payment of penalties and fines at the~~

~~request of the director. The workers' compensation court shall have jurisdiction over all civil~~

~~actions filed pursuant to this section.~~

~~(b) (1) As soon as practicable after the director receives notice of noncompliance under~~

~~this section, the director shall determine whether cause exists for the imposition of a civil penalty.~~

~~Unless the director determines that the noncompliance was unintentional or the result of a clerical~~

~~error and subject to the administrative proceedings under subsection (c) of this section, the~~

~~director shall commence an action in the workers' compensation court to assess a civil penalty~~

~~against the employer as set forth in subsection (a) of this section and shall refer the matter to the~~

~~attorney general for prosecution of criminal charges.~~

~~(2) The director shall bring a civil action in the workers' compensation court to collect all~~

~~payments and penalties ordered and not paid. All civil actions for any violations of this chapter or~~

~~of any of the rules or regulations promulgated by the director, or for the collection of payments in~~

~~accordance with section 28-37-13, 28-33-17.3(a)(2) or 28-33-17.3(a)(3) or civil penalties under~~

~~this chapter, shall be prosecuted by any qualified member of the Rhode Island bar whom the~~

~~director may designate, in the name of the director, and the director is exempt from giving surety~~

~~for costs in any proceedings.~~

~~(c) In the case of unintentional noncompliance or noncompliance resulting from clerical~~

~~error where the uninsured period is less than one year from the date of discovery and there were~~

~~no employees injured during the uninsured period and the employer has not been subject to any~~

~~other findings of noncompliance with these chapters, the director shall assess an administrative~~

~~penalty of not less than the estimated annual workers' compensation insurance premium for that~~

~~employer and not more than triple that amount. Any party has the right to appeal the orders of the~~

~~director. Such appeal shall be to the workers' compensation court in the first instance and~~

~~thereafter from the workers' compensation court to the Rhode Island supreme court in accordance~~

~~with section 28-35-30.~~

~~(d) The director shall collect all payments under this chapter under the rules and~~

~~regulations that may be set forth by the director. All fines collected pursuant to this section shall~~

~~be deposited to a restricted receipt account to be administered by the director of the department of~~

~~labor and training in his or her sole discretion to carry out chapters 29 -- 38 of this title.~~

~~(e) (1) In that the operation of a commercial enterprise without the required workers'~~

~~compensation insurance is a crime and creates a clear and present danger of irreparable harm to~~

~~employees who are injured while the employer is uninsured, the director shall suspend the~~

~~operation of the business immediately and until workers' compensation and employers' liability~~

~~insurance is secured consistent with these chapters. The director shall lift the suspension upon~~

~~receipt of satisfactory proof of insurance and evidence sufficient to satisfy the director that the~~

~~employer is in full compliance with these chapters. Any party has the right to appeal the~~

~~suspension to the workers' compensation court where the matter shall proceed pursuant to the~~

~~workers' compensation court rules of procedure.~~

~~(2) In the event that the employer shall fail to comply with the director's order of~~

~~suspension, the director may apply immediately to the workers' compensation court for an order~~

~~directing the employer to comply with the director's prior orders.~~

~~(3) Actions filed with the workers' compensation court pursuant to this section shall not~~

~~be subject to a pretrial conference in accordance with section 28-35-20 but shall be assigned~~

~~consistent with the workers' compensation court rules of procedure.~~

~~(f) Interest shall accrue on unpaid penalties during the pendency of any appeal at the rate~~

~~per annum provided in section 9-21-10.~~

(b) Where the employer is a limited liability company, the managers and managing

members who knowingly fail to secure the payment of compensation under chapters 29--38 of

this title shall be guilty of a felony and shall be subject to imprisonment for up to two (2) years.

The managers and managing members shall also be severally liable for the fine, penalty or

imprisonment as provided in this section for the failure of that company to secure the payment of

compensation. The managers and managing members shall be severally personally liable, jointly

with the company, for any compensation or other benefit which may accrue under those chapters

in respect to any injury which may occur to any employee of that company while it fails to secure

the payment of compensation as required by those chapters.

partners who knowingly fail to secure the payment of compensation under chapters 29--38 of this

title shall be guilty of a felony and shall be subject to imprisonment for up to two (2) years. The

partners shall also be severally liable for the fine, penalty, or imprisonment as provided in this

section for the failure of that partnership to secure the payment of compensation. The partners

shall be severally personally liable, jointly with the partnership, for any compensation or other

benefit which may accrue under those chapters in respect to any injury which may occur to any

employee of that partnership while it fails to secure the payment as required by those chapters.

(d) Where the employer is a limited partnership or a registered limited liability limited

partnership, the general partners who knowingly fail to secure the payment of compensation

under chapters 29--38 of this title shall be guilty of a felony and shall be subject to imprisonment

for up to two (2) years. The general partners shall also be severally liable for the fine, penalty or

imprisonment as provided in this section for the failure of that limited partnership to secure the

payment of compensation. The general partners shall be severally personally liable, jointly with

the limited partnership, for any compensation or other benefit which may accrue under those

chapters in respect to any injury which may occur to any employee of that partnership while it

fails to secure the payment of compensation as required by those chapters.

(e) All criminal actions for any violation of this section shall be prosecuted by the

attorney general. The attorney general shall prosecute actions to enforce the payment of penalties

and fines at the request of the director. The workers' compensation court shall have jurisdiction

over all civil actions filed pursuant to this section.

~~(b)~~(f) (1) As soon as practicable after the director receives notice of noncompliance under

this section, the director shall determine whether cause exists for the imposition of a civil penalty.

Unless the director determines that the noncompliance was unintentional or the result of a clerical

error and subject to the administrative proceedings under subsection ~~(c)~~(g) of this section, the

director shall commence an action in the workers' compensation court to assess a civil penalty

against the employer as set forth in subsection (a) of this section and shall refer the matter to the

attorney general for prosecution of criminal charges.

(2) The director shall bring a civil action in the workers' compensation court to collect all

payments and penalties ordered and not paid. All civil actions for any violations of this chapter or

of any of the rules or regulations promulgated by the director, or for the collection of payments in

accordance with section 28-37-13, 28-33-17.3(a)(2) or 28-33-17.3(a)(3) or civil penalties under

this chapter, shall be prosecuted by any qualified member of the Rhode Island bar whom the

director may designate, in the name of the director, and the director is exempt from giving surety

for costs in any proceedings.

~~(c)~~(g) In the case of unintentional noncompliance or noncompliance resulting from

clerical error where the uninsured period is less than one year from the date of discovery and

there were no employees injured during the uninsured period and the employer has not been

subject to any other findings of noncompliance with these chapters, the director shall assess an

administrative penalty of not less than the estimated annual workers' compensation insurance

premium for that employer and not more than triple that amount. Any party has the right to appeal

the orders of the director. Such appeal shall be to the workers' compensation court in the first

instance and thereafter from the workers' compensation court to the Rhode Island supreme court

in accordance with section 28-35-30.

~~(d)~~(h) The director shall collect all payments under this chapter under the rules and

regulations that may be set forth by the director. All fines collected pursuant to this section shall

be deposited to a restricted receipt account to be administered by the director of the department of

labor and training in his or her sole discretion to carry out chapters 29 -- 38 of this title.

~~(e)~~(i) (1) In that the operation of a commercial enterprise without the required workers'

compensation insurance is a crime and creates a clear and present danger of irreparable harm to

employees who are injured while the employer is uninsured, the director shall suspend the

operation of the business immediately and until workers' compensation and employers' liability

insurance is secured consistent with these chapters. The director shall lift the suspension upon

receipt of satisfactory proof of insurance and evidence sufficient to satisfy the director that the

employer is in full compliance with these chapters. Any party has the right to appeal the

suspension to the workers' compensation court where the matter shall proceed pursuant to the

workers' compensation court rules of procedure.

(2) In the event that the employer shall fail to comply with the director's order of

suspension, the director may apply immediately to the workers' compensation court for an order

directing the employer to comply with the director's prior orders.

(3) Actions filed with the workers' compensation court pursuant to this section shall not

be subject to a pretrial conference in accordance with section 28-35-20 but shall be assigned

consistent with the workers' compensation court rules of procedure.

~~(f)~~ (4) Interest shall accrue on unpaid penalties during the pendency of any appeal at the

rate per annum provided in section 9-21-10.

These provisions shall take effect upon passage except section 28-29-2 (6) (iv) which

shall take effect on January 1, 2006.

28-33-18.3. Continuation of benefits -- Partial incapacity. -- (a) (1) For all injuries

occurring on or after September 1, 1990, in those cases where the employee has received a notice

of intention to terminate partial incapacity benefits pursuant to section 28-33-18, the employee or

his or her duly authorized representative may file with the workers' compensation court a petition

for continuation of benefits on forms prescribed by the workers' compensation court. In any

proceeding before the workers' compensation court on a petition for continuation of partial

incapacity benefits, where the employee demonstrates by a fair preponderance of the evidence

that his or her partial incapacity poses a material hindrance to obtaining employment suitable to

his or her limitation, partial incapacity benefits shall continue. For injuries on and after July 1,

~~2003~~ 2005, "material hindrance" is defined to include only compensable injuries causing a greater

than sixty-five percent (65%) degree of functional impairment and/or disability. Any period of

time for which the employee has received benefits for total incapacity shall not be included in the

calculation of the three hundred and twelve (312) week period.

(2) The provisions of this subsection apply to all injuries from Sept. 1, 1990, to July 1,

~~2003~~ 2005.

(b) (1) Where any employee's incapacity is partial and has extended for more than three

hundred and twelve (312) weeks and the employee has proved an entitlement to continued

benefits under subsection (a) of this section, payments made to these incapacitated employees

shall be increased annually on the tenth (10th) day of May thereafter so long as the employee

remains incapacitated. The increase shall be by an amount equal to the total percentage increase

in the annual consumer price index, United States city average for urban wage earners and

clerical workers, as formulated and computed by the bureau of labor statistics of the United States

Department of Labor for the period of March 1 to February 28 each year.

(2) "Index" as used in this section refers to the consumer price index, United States city

average for urban wage earners and clerical workers, as that index was formulated and computed

by the Bureau of Labor Statistics of the United States Department of Labor.

(3) The annual increase shall be based upon the percentage increase, if any, in the

consumer price index for the month of a given year, over the index for February, the previous

year. Thereafter, increases shall be made on May 10 annually, based upon the percentage

increase, if any, in the consumer price index for the period of March 1 to February 28.

(4) The computations in this section shall be made by the director of labor and training

and promulgated to insurers and employers making payments required by this section. Increases

shall be paid by insurers and employers without further order of the court. If payment payable

under this section is not mailed within fourteen (14) days after the employer or insurer has been

notified by publication in a newspaper of general circulation in the state it becomes due, there

shall be added to the unpaid payment an amount equal to twenty percent (20%) of it, to be paid at

the same time as but in addition to the payment.

(5) This section applies only to payment of weekly indemnity benefits to employees as

described in subdivision (1) of this subsection, and does not apply to specific compensation

payments for loss of use or disfigurement or payment of dependency benefits or any other

benefits payable under the Workers' Compensation Act.

employee is receiving benefits pursuant to this section.

SECTION 4. Section 28-37-13 of the General Laws in Chapter 28-37 entitled "Workers'

Compensation Administrative Fund" is hereby amended to read as follows:

28-37-13. Payments into fund by insurers and employers. -- (a) For the privilege of

writing or renewing workers' compensation insurance or employer's liability insurance in this

state, every mutual association or stock company so authorized, to be referred to as "insurers",

and for the privilege of being authorized, to make payments of workers' compensation directly to

its employees, and every employer so authorized, to be referred to as "certified employers", shall

annually make the following payments to the workers' compensation administrative fund:

(1) In the case of an insurer, an amount measured by ~~four and one-quarter percent~~

~~(4.25%), or such other~~ the percentage of return as certified by the director pursuant to subsection

employer's liability insurance written or renewed by it during the preceding calendar year on risks

within this state, but not less than ~~fifty~~ one hundred dollars ~~($50.00)~~($100); and

(2) In the case of a certified employer, an amount measured by ~~four and one-quarter~~

~~percent (4.25%), or any other~~ the percentage of return as certified by the director pursuant to

subsection (c) of this section of the premium which the employer would have had to pay to obtain

workers' compensation insurance or employer's liability insurance for the preceding calendar

year, but not less than ~~fifty~~ one hundred dollars ~~($50.00)~~($100), which amount shall be

determined by the director.

(b) Every certified employer and every insurer shall also pay into the workers'

compensation administrative fund the sum of seven thousand five hundred dollars ($7,500) for

every case of injury causing death in which there is no person entitled to compensation.

~~except for the period ending June 30, 2000, when such determination shall be made on or before~~

~~November 15 by experience or by other means~~, after taking into account projected expenditures

for the current fiscal year and for the next fiscal year, what percentage of return, referred to as the

"assessment", is needed to provide sufficient funds, in conjunction with appropriations from the

general fund, if any, to fulfill the purposes enumerated in section 28-37-1(b) and shall certify this

assessment to the governor and the general assembly. This assessment may be separately

determined for insurers and for certified employers. The payments, due within sixty (60) days of

notice each year pursuant to sections 28-37-15 and 28-37-16, shall be made based upon the

certified assessment. ~~If the certified assessment in any given year is less than the certified~~

~~assessment for the prior year, the percentage of reduction shall be applied to reduce pro rata~~

~~employer payments and in accordance with this, the director shall require the insurance carriers as~~

~~described in subdivision (a)(1) of this section to reduce their premiums by a like percentage of~~

~~premiums paid. If an insured subsequently cancels his or her policy or otherwise allows his or her~~

~~policy to terminate, or the insured's policy is terminated, the insurance company shall make a pro~~

~~rata cash refund not later than sixty (60) days after the reduction has been determined. The~~

~~insurance company shall immediately certify to the director that the premium reductions have~~

~~been made.~~

(d) (1) In recognition of the continued utilization of the workers' compensation system

by insurers who have discontinued writing workers' compensation policies in the state, if any

~~insurance~~ insurer company, deemed by the director of the department of business regulation to

have been licensed on January 1, 1991 to write workers' compensation policies, discontinues the

issuance of workers' compensation policies, ~~this company~~ such insurer shall be and remain

obligated to pay the workers' compensation administrative fund assessment for a period of six (6)

years ~~after that~~ subsequent to its discontinuation of the issuance of such polices.

(2) In calculating the amount due by these insurance companies on the due date, as

defined in subsection (c) of this section, of the year after which it discontinues writing policies in

this state (the base year) the director of labor and training will calculate an amount equal to the

assessment in effect on the last date the insurer issued workers' compensation policies multiplied

by the gross premiums received for workers' compensation insurance or employers' liability

insurance written or renewed by it during the base year on risks within this state, but not less than

~~fifty~~ one hundred dollars ~~($50.00)~~($100) each year.

(3) The basis for the calculation of the assessment in each succeeding year shall be a

reduction of the base year assessment by increments of sixteen and two-thirds percent (16 2/3%)

per each succeeding year.

(e) All penalties collected for any violation under chapters 29 -- 38 of this title shall be

paid into this fund.

(f) Any employer, insurer, self-insurer, or group self-insurer who has not paid

assessments or who is not current with payment of assessments into this fund shall not be

permitted to place a claim against the fund. Reimbursement to any employer, insurer, self-insurer,

or group self-insurer who is not current with payment of assessments into this fund shall be

suspended immediately as of the first date of arrearage.

(g) To be eligible to use any of the services funded by the workers' compensation

administrative fund an employer, insurer, self-insurer, or group self-insurer shall pay a fee of one

thousand dollars ($1,000) per claim, per month into the fund until the arrearage is paid in full in

addition to any other interests or penalties.

SECTION 5. Section 42-16.1-12 of the General Laws in Chapter 42-16.1 entitled

"Department of Labor and Training" is hereby amended to read as follows:

42-16.1-12. ~~Fraud prevention unit -- Appointment -- Duties -- Qualifications --~~

~~Annual report. --~~ Fraud prevention unit -- Appointment -- Duties – Qualifications. -- (a)

The director of the department of labor and training shall maintain within the workers'

compensation unit of the department of labor and training, a workers' compensation fraud

prevention unit whose members shall be in the unclassified service and whose responsibility it

shall be to formulate an integrated state plan to reduce and prevent fraud arising out of claims

made pursuant to the workers' compensation laws of this state and to conduct investigations as

authorized by the director. The plan shall include a fraud prevention telephone hotline. ~~The~~

~~workers' compensation fraud prevention unit shall submit an annual report to the director, the~~

~~attorney general, the chief judge of the workers' compensation court and the general assembly~~

~~fiscal advisory staff, on or before February 15 of each year, describing its activities and setting~~

~~forth its findings, conclusions, and recommendations.~~

(b) To carry out the purposes of this section, the director, is authorized to employ any

persons that may be required, including an assistant attorney general position within the

department of attorney general to assist the unit in any hearing, investigation, action or

proceeding taken or done in carrying out the purposes of this section. The director is further

authorized and directed to employ any investigative or other services that he or she deems

reasonable and prudent to accomplish these purposes.

established in section 28-37-1, and any other funds or balances that the director deems

appropriate.

SECTION 6. Section 28-33-17 of the General Laws in Chapter 28-33 entitled "Workers'

Compensation - Benefits" is hereby amended to read as follows:

28-33-17. Weekly compensation for total incapacity -- Permanent total disability --

Dependents' allowances. -- (a) (1) While the incapacity for work resulting from the injury is

total, the employer shall pay the injured employee a weekly compensation equal to seventy-five

percent (75%) of his or her average weekly spendable base wages, earnings, or salary, as

computed pursuant to the provisions of section 28-33-20. The amount may not exceed more than

sixty percent (60%) of the state average weekly wage of individuals in covered employment

under the provisions of the Rhode Island Employment Security Act as computed and established

by the Rhode Island department of labor and training, annually, on or before May 31 of each year,

under the provisions of section 28-44-6(a). Effective September 1, 1974, the maximum rate for

weekly compensation for total disability shall not exceed sixty-six and two-thirds percent (66

2/3%) of the state average weekly wage as computed and established under the provisions of

section 28-44-6(a). Effective September 1, 1975, the maximum rate for weekly compensation for

total disability shall not exceed one hundred percent (100%) of the state average weekly wage as

computed and established under the provisions of section 28-44-6(a). Effective September 1,

2000, the maximum rate for weekly compensation for total disability shall not exceed one

hundred ten percent (110%) of the state average weekly wage as computed and established under

the provisions of section 28-44-6(a). If the maximum weekly benefit rate is not an exact multiple

of one dollar ($1.00), then the rate shall be raised to the next higher multiple of one dollar

($1.00).

(2) The average weekly wage computed and established under section 28-44-6(a) is

applicable to injured employees whose injury occurred on or after September 1, 2000, and shall

be applicable for the full period during which compensation is payable.

(3) (i) "Spendable earnings" means the employee's gross average weekly wages,

earnings, or salary, including any gratuities reported as income, reduced by an amount determined

to reflect amounts which would be withheld from the wages, earnings, or salary under federal and

state income tax laws, and under the Federal Insurance Contributions Act (FICA), 26 U.S.C.

section 3101 et seq., relating to social security and Medicare taxes. In all cases, it is to be

assumed that the amount withheld would be determined on the basis of expected liability of the

employee for tax for the taxable year in which the payments are made without regard to any

itemized deductions but taking into account the maximum number of personal exemptions

allowable.

(ii) Each year, the director shall publish tables of the average weekly wage and seventy-

five percent (75%) of spendable earnings that are to be in effect on May 10. These tables shall be

conclusive for the purposes of converting an average weekly wage into seventy-five percent

(75%) of spendable earnings. In calculating spendable earnings the director shall have discretion

to exempt funds assigned to third parties by order of the family court pursuant to section 8-10-3

and funds designated for payment of liens pursuant to section 28-33-27 upon submission of

supporting evidence.

(b) (1) In the following cases, it shall for the purpose of this section be that the injury

resulted in permanent total disability:

(i) The total and irrecoverable loss of sight in both eyes or the reduction to one-tenth (1

1/0) or less of normal vision with glasses;

(ii) The loss of both feet at or above the ankle;

(iii) The loss of both hands at or above the wrist;

(iv) The loss of one hand and one foot;

(v) An injury to the spine resulting in permanent and complete paralysis of the legs or

arms; and

(vi) An injury to the skull resulting in incurable imbecility or insanity.

(2) In all other cases, total disability shall be determined only if, as a result of the injury,

the employee is physically unable to earn any wages in any employment; provided, that in cases

where manifest injustice would otherwise result, total disability shall be determined when an

employee proves, taking into account the employee's age, education, background, abilities, and

training, that he or she is unable on account of his or her compensable injury to perform his or her

regular job and is unable to perform any alternative employment. The court may deny total

disability under this subsection without requiring the employer to identify particular alternative

employment.

him or her or in fact so dependent, the sum of fifteen dollars ($15.00) shall be added to the

weekly compensation payable for total incapacity for each person wholly dependent on the

employee, except that the sum of forty dollars ($40.00) shall be added for those receiving benefits

under section 28-33-12, but in no case shall the aggregate of those amounts exceed eighty percent

(80%) of the average weekly wage of the employee, except that there shall be no limit for those

receiving benefits under section 28-33-12.

(2) The dependency allowance shall be in addition to the compensation benefits for total

disability otherwise payable under the provisions of this section. The dependency allowance shall

be increased if the number of persons dependent upon the employee increases during the time that

weekly compensation benefits are being received.

(3) For the purposes of this section the following persons shall be conclusively presumed

to be wholly dependent for support upon an employee:

(i) A wife upon a husband with whom she is living at the time of his injury, but only

while she is not working for wages during her spouse's total disability.

(ii) A husband upon a wife with whom he is living at the time of her injury, but only

while he is not working for wages during his spouse's total disability.

(iii) Children under the age of eighteen (18) years, or over that age but physically or

mentally incapacitated from earning, if living with the employee, or, if the employee is bound or

ordered by law, decree, or order of court, or by any other lawful requirement, to support the

children, although living apart from them. Provided, that the payment of dependency benefits to a

dependent child over the age of eighteen (18) years shall continue as long as that child is

satisfactorily enrolled as a full-time student in an educational institution or an educational facility

duly accredited or approved by the appropriate state educational authorities at the time of

enrollment. Those payments shall not be continued beyond the age of twenty-three (23) years.

"Children," within the meaning of this paragraph, also includes any children of the injured

employee conceived but not born at the time of the employee's injury, and the compensation

provided for in this section shall be payable on account of any such children from the date of their

birth.

(d) "Dependents," as provided in this section, does not include the spouse of the injured

employee except as provided in paragraphs (c)(3)(i) and (ii) of this section. In all other cases

questions of dependency shall be determined in accordance with the facts as the facts may be at

the time of the injury.

(e) The court or any of its judges may in its or his or her discretion order the insurer or

self-insurer to make payment of the nine dollars ($9.00) or fifteen dollars ($15.00) for those

receiving benefits under section 28-33-12 directly to the dependent.

(f) (1) Where any employee's incapacity is total and has extended beyond fifty-two (52)

weeks, regardless of the date of injury, payments made to all totally incapacitated employees shall

be increased as of May 10, 1991, and annually on the tenth of May after that as long as the

employee remains totally incapacitated. The increase shall be by an amount equal to the total

percentage increase in annual consumer price index, United States city average for urban wage

earners and clerical workers, as formulated and computed by the bureau of labor statistics of the

United States Department of Labor for the period of March 1 to February 28 each year.

(2) If the employee is subsequently found to be only partially incapacitated, the weekly

compensation benefit paid to the employee shall be equal to the payment in effect prior to his or

her most recent cost of living adjustment.

(3) "Index" as used in this section refers to the consumer price index, United States city

average for urban wage earners, clerical workers, as that index is formulated and computed by the

Bureau of Labor Statistics of the United States Department of Labor.

(4) The May 10, 1991 increase shall be based upon the total percentage increase, if any,

in the annual consumer price index for the period of March 1, 1990 to February 28, 1991.

Thereafter, increases shall be made on May 10 annually, based upon the percentage increase, if

any, in the index for the period March 1 to February 28.

(5) The computations in this section shall be made by the director of labor and training

and promulgated to insurers and employers making payments required by this section. Increases

shall be paid by insurers and employers without further order of the court. If payment payable

under this section is not paid within fourteen (14) days after the employer or insurer has been

notified or it becomes due, whichever is later, there shall be added to the unpaid payment an

amount equal to twenty percent (20%) of that amount, which shall be paid at the same time as,

but in addition to the payment.

(6) This section applies only to payment of weekly indemnity benefits to employees as

described in subdivision (1) of this subsection, and does not apply to specific compensation

payments for loss of use or disfigurement or payment of dependency benefits or any other

benefits payable under the Workers' Compensation Act.

(7) Notwithstanding any other provision of the general law or public laws to the contrary,

any employee of the state of Rhode Island who is receiving workers' compensation benefits for

total incapacity, as a result of a brain injury due to a violent assault, shall be entitled to receive the

health insurance benefit he or she was entitled to at the time of the injury for the duration of the

total incapacity or until said employee and his or her spouse are both eligible for Medicare.

SECTION 7. This act shall take effect upon passage with the exception of subsection 28-

29-2 (6) (iv) which shall take effect on January 1, 2006.

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LC02275/SUB A

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