N.J. Admin. Code § 11:15-1.3

Current through Register Vol. 56, No. 21, November 4, 2024

Section 11:15-1.3 - Qualifications for initial approval and continued authority to act as a group

(a) A proposed group shall file its application with the Commissioner for his or her approval on a form prescribed by him or her and accompanied by a nonrefundable processing fee in the amount of $ 1,000. The application shall include the group's name, location of its principal office, date of organization, name and address of each of its trustees and its administrator or general manager, and service organizations, the name and address of each member hospital, and such other information as the Commissioner may reasonably require, together with the following:

1. Proof of compliance with the provisions of subsection (b) below;

2. A copy of the articles of association, if any;

3. A copy of agreements with the administrator and with any service organizations maintained by the group for the prevention of injuries, underwriting, and claims administration services;

4. A copy of the group's operating rules, including, but not limited to, by-laws, if any;

5. A copy of the indemnity and trust agreement between the group and each member of the group;

6. The address in New Jersey where the books and records of the group will be maintained at all times and the designation and appointment of a person in New Jersey upon whom service of process for the group might be made;

7. A pro forma financial statement, on a form acceptable to the Commissioner, providing him satisfactory proof of its financial ability to pay such compensation for the members of the group;

8. A statement from an actuary that the proposed group plan of operation is actuarially sound;

9. A listing of the estimated annual contributions to be paid by each member of the group;

10. Proof of payment to the group by each member of not less than 25% of that member's first year estimated annual contributions.

(b) To obtain and to maintain its certificate of approval, a group shall comply with the following requirements, as well as any other requirements established by law or regulation:

1. A combined net worth of all members of the group of at least $ 1,000,000;

2. To provide assurance that such benefits as are payable by the group will continue to be paid and that the group will meet its statutory obligations, security in a form and amount prescribed by the Commissioner shall be posted by either a surety bond, security deposit, letter of credit, or financial security endorsement, or any combination thereof. If a surety bond is used to meet the security requirement, it shall be issued by a corporate surety company authorized to transact business in this State. If a security deposit is used to meet the security requirement, securities shall be limited to bonds or other evidences of indebtedness issued, assumed, or guaranteed by the United States of America, or by an agency or instrumentality thereof; certificates of deposit in a Federally insured bank; shares or savings deposits in a Federally insured savings and loan association or credit union, or any bond or security issued by a State of the United States of America and backed by the full faith and credit of the State. If a letter of credit is used, it shall be issued by a banking institution authorized to transact business in New Jersey and in a form acceptable to the Commissioner. A financial security endorsement, issued as part of an acceptable excess insurance contract, may be used to meet all or part of the security requirement. The bond, security deposit, letter of credit, or financial security endorsement shall be:

i. For the benefit of the State solely to pay claims and associated expenses; and

ii. Payable upon the failure of the group to pay workers' compensation benefits it is legally obligated to pay. The Commissioner may establish requirements for the amount of security based on differences among groups in their size, years in existence, and other relevant factors; however, the Commissioner may not require an amount lower than $ 100,000 for any group during its first year of operation and may subsequently increase such amount as he or she deems necessary;

3. Confirmation of the availability of specific and aggregate excess insurance in a form, in an amount, and by an insurance company acceptable to the Commissioner. The Commissioner may establish minimum requirements for the amount of specific and aggregate excess insurance based on differences among groups in their size, years in existence, and other relevant factors and may permit a group to meet this requirement by placing in a designated depository securities of the type referred to in (b)2 above;

4. Estimated annual standard contributions of at least $ 250,000 during the group's first year of operation. Thereafter, the annual standard contributions shall be at least $ 500,000;

5. An indemnity and trust agreement, in a form satisfactory to the Commissioner, jointly and severally binding the group and each member thereof to meet the workers' compensation obligations of each member, and establishing a trust for the benefit of persons qualifying to receive workers' compensation awards or payments from employers participating in the group;

6. A fidelity bond for the administrator in a form and amount prescribed by the Commissioner;

7. A listing of any underwriting, claim, loss prevention, or other service organization used by the group.

(c) A group shall notify the Commissioner of any change in the information required to be filed under subsection (a) above or in the manner of its compliance with subsection (b) above no later than 30 days after such change.

N.J. Admin. Code § 11:15-1.3

Amended by R.2005 d.112, effective 4/4/2005.
See: 36 New Jersey Register 4625(a), 37 New Jersey Register 1075(a).
In (a), inserted "or her" following "his" and 'him" in the first sentence of the introductory paragraph; in (b), substituted "institution" for "association" in the fourth sentence of the introductory paragraph of 2 and inserted "or she" preceding "deems necessary" in 2ii, and substituted "(b)2 above" for "paragraph 2 of this subsection" in 3.