In Missouri , all employers with five or more employees must insure themselves for workers’ compensation liability.  Most employers do so by purchasing a workers’ compensation insurance policy. However, the law also allows large employers to self-insure their workers’ compensation liability.  In other words, qualifying employers may choose to pay their workers’ compensation liabilities themselves rather than through the purchase of insurance.  Several large employers in this state choose to self-insure.   At first glance, this might be concerning to an injured employee of one of these major companies.  What if their company goes out of business and they have no insurance to pay their workers’ compensation benefits?  This article is intended to alleviate some of those concerns.

There are many requirements an employer must meet before they are allowed to self-insure their workers’ compensation liability in Missouri. 

First of all, before an employer can self-insure, they must prove to the Division of Worker’s Compensation that they have the financial ability to do so.  The must present balance sheets and income statements for the four years prior to their application.  They also must report the amount of workers’ compensation benefits paid to date and the amount of money that they have reserved for pending claims.  They must also report their current experience modification factor (a technical insurance calculation).  They must give a description of how they are going to administer the workers’ compensation obligations of their company.   If the employer is going to use a claims service company to assist them, the claims service company must be licensed through the Missouri Department of Insurance.  They also must provide a Certificate of Good Standing for their corporation, a chart of the organizational structure of the company, and any other information the Division may feel is necessary.  The Division then determines whether to approve or deny the application of self-insurance.

If the Division approves the application, the employer must provide security in the minimum amount of $200,000.  This can be accomplished through a bond, a letter of credit, or by depositing money in escrow.  The employer must also provide confirmation that they hold excess or aggregate insurance.

If approved, a self-insured employer must make an annual report to the Division of all outstanding death and injury claims, and the security filed must be at least ½ of those outstanding obligations. The Division has the right to require additional security.    The Division can terminate an employer’s self insurance privileges if it is determined that the employer will be unable to meet its workers’ compensation obligations. 

Section 287.280 RSMo. allows the Division, after hearing, to revoke the right of an employer to self-insure if the Division finds that the employer is  “willfully and intentionally violating the provisions of (this chapter) with intent to defraud their employees of their right to compensation.”   If the self-insured employer fails to comply with Section 287.280, an injured employee may elect to bring an action against such employer to recover for damages for personal injury or death, and the employer is not allowed to argue the comparative fault of the employee or the fault of a co-employee, or that the employee had assumed the risk of injury. 

If a self-insured employer defaults on making  a payment that should be made to an employee under the workers’ compensation law, that employee can make an application to the Division and if the employee proves that the employer is indeed in default of any payment obligation, the Division will then require the employer to provide security for the payment of compensation. If the employer still refuses, then all compensation due the employee gets commuted and becomes immediately payable. 

Section 287.860 RSMo. sets up “The Missouri Private Sector Individual Self-Insurers Guaranty Corporation.”  All individual self-insurers must be a member of the organization.  If the employer cannot pay their obligations or goes bankrupt, the Guaranty Corporation steps in to cover the obligations of the employer. However, an employee of a bankrupt employer must file a claim with the bankruptcy court and get any payments from the bankruptcy action before the Guaranty Corporation has to make any payments.  If you think that your self-insured employer might be filing for bankruptcy, it is vital that you contact an attorney immediately.

In summary, there are many safeguards in place to protect employees from the poor claims practices or the insolvency of their self-insured employer.  If you are having problems with your self-insured employer in providing you with your legal workers’ compensation rights, you should call an attorney immediately. We are happy to help here at Bollwerk & Associates.  

Jill S. Bollwerk
Helping St. Louis area residents with personal injury, workers' compensation & insurance appeals/disputes.