Section 408.43m. Servicing self-insured employers or groups; application; requirements; noncompliance.

Rule 13m. (1) An individual, partnership, limited liability company, or corporation that desires to engage in the business of providing 1 or  more services for an individual self-insurer or a self-insurers' group shall apply to the bureau before entering into a contract with the individual or group self-insurer and shall satisfy the bureau that it has adequate facilities and competent staff with   Michigan   workers'

compensation adjusting  experience within the state to service a self-insured program in a manner that fulfills the employers' obligations under the act and the rules of the bureau. Workers' compensation claims of Michigan individual or group self-insured employers shall be handled within the state of Michigan by its staff, except that the director, at his or her discretion, may permit an approved service company to handle the claims of a Michigan individual self-insurer outside of this state upon specific written request by the individual self-insurer and the service company. The request for permission shall set forth documentation sufficient to the agency that claims will be handled pursuant to Michigan law, administrative rules, and agency policy. The director will respond to the request in writing, giving the reasons for denial,  or   if approved, the conditions of approval. The approval may be withdrawn by the director at any time based upon the failure of the service company and/or employer to comply with the conditions of the approval. Service may include claims adjusting, loss control services, underwriting, and the capacity to provide required reporting. Any individual, partnership, limited liability company, or corporation  that   provides  claims  adjusting or loss control services  to  an  approved  self-insured  employer,  where  the  self- insured employer has designated within its own organization an individual to be responsible to the bureau for its claims program or loss control services, or both, shall not be considered a service company for purposes of this rule.

(2)   An applicant shall apply to the bureau for approval to act as a servicing company for self-insured employers or group funds on a form prescribed by the bureau. The application shall contain answers to  all questions.   An applicant shall give the answers under oath. The bureau shall approve the application prior to the service company entering into a contract with an approved self- insurer. Approval to act as a service company for self-insurers is granted for a period of 1 year and is subject to renewal annually.

(3)       If a service company  seeks   approval  to  service   claims  for self-insurers, then it shall  submit  proof  that  it   has,  within  its organization at least 1 person who has the knowledge and Michigan workers' compensation adjusting experience necessary to handle claims involving the act. The service company shall attach a resume covering the principal person's background to the application of the service company. The principal individuals adjusting workers'  compensation   claims  shall   hold a current workers' disability compensation adjuster's license under chapter 12 of 1956 PA 218, MCL §500.1201.

(4)    If a service company seeks approval to provide underwriting service to self- insurers, then it shall submit proof that it has, within its organization or under contract on a full-time basis, at least 1 person who has the knowledge and experience necessary to provide underwriting services for workers' compensation excess liability insurance coverage. The service company shall attach a resume detailing the principal person's background to the application of the service company.

(5)    If a service company seeks approval to furnish loss control services to self- insurers, then it shall submit proof that it has, within its organization or under contract on a full-time basis, at least 1 person who has the knowledge and background necessary to adequately provide loss control and health services.

(6)   A service company shall maintain adequate staff in the state. The service company shall authorize staff to act for the service company on all matters covered by the act and the rules of the bureau.

(7)   A service company shall attach to the application a copy of its standard service agreement that it will enter  into   with  self-insured employers or group funds. The service company shall certify, in writing, that the service agreement is in compliance with the act and these rules. The service company shall certify, and include  a provision in its standard service contract which states, that the contract provides for the handling of all claims with dates of injury or disease within the  contract  until conclusion of the claims, unless the service company is relieved by the bureau, in writing, of the responsibility for handling claims. If the service contract calls for additional fees for any reason, then the service company shall clearly define  the additional fees in the contract. For a service company to be relieved of the responsibility of handling claims to conclusion, the client, the previous service company, and the new service company shall sign a claims transfer agreement. The claims transfer agreement shall be completed on a form prescribed by the bureau and shall include a written request made by the previous service company to be relieved  of its claims handling responsibilities to the bureau.  A   requesting  company  is relieved of its claims handling responsibility only after receiving a written response from the bureau approving a request. The service company  shall certify that it will report to  the specific excess insurance carrier or aggregate excess insurance carrier, or both,  and put the specific excess insurance carrier or aggregate excess insurance carrier, or both, on notice of all claims as required by the self-insurers' or group self-insurers' insurance policies. The standard service contract filed with the bureau for approval and renewal of the service company authority shall include language specifically stating that the service company is responsible for reporting to the excess insurance carrier. The bureau may waive the reporting requirement upon written request to the bureau. Any dispute involving late reporting of excess liability insurance claims and  potential penalties shall be reported to the bureau immediately.

(8)   A service company shall certify, and provide for  in  all   service contracts, that all documents generated or prepared by the service company for the group or the individual self-insurer or any materials relating to an individual or group self-insurer held by a service company are the property of the individual or group self-insurer and shall be surrendered to the individual or group self-insurer within  10  days  of termination of the service contract, subject to written request by the individual or group self-insurer.

(9)    Failure to comply with the provisions of the act constitutes good cause for withdrawal of the approval to act as a service company for self-insurers. The bureau shall give 30 days' notice of withdrawal. The bureau shall give the notice by certified or registered mail, upon all interested parties.

History: 1980 AACS; 1984 AACS; 1996 AACS; 1998-2000 AACS; 2007 AACS.