March 21, 2018

OR DCBS Acts to Decertify Oregon Employers Trust

Salem, OR – The Department of Consumer and Business Services (DCBS) has taken preliminary steps to decertify the Oregon Employers Trust, Inc., the state’s largest private group of employers that self-insure for workers’ compensation.

As part of an annual evaluation of the group’s finances, the department required the trust to increase its security deposit from $3.2 million to $3.95 million. The security deposit helps ensure the trust can meet its obligations to pay benefits to workers facing job-related injuries or illnesses.

So far, the group has failed to provide the increased amount. Unless it can do so by Aug. 7, the department will revoke the group’s certificate to operate, effective Aug. 8, 2013. Among other things, that means employer members will immediately need to find other workers’ compensation insurance.

The department notified the trust’s administrator, Empire Pacific Risk Management, Inc., in late May of the need to increase the security deposit based on the group’s estimated claims liabilities through June 2012 and its membership growth.

“The trust is required to post an adequate security deposit to show it has the financial ability to promptly pay all the workers’ compensation benefits owed employees,” Workers’ Compensation Division Administrator John Shilts said.

Instead of purchasing a workers’ compensation policy from an insurance company, self-insured employers handle workers’ claims for benefits themselves. The Oregon Employers Trust formed in 2009 and grew quickly during challenging economic times as an alternative to buying coverage through insurance companies.

Even if the trust is decertified, all workers’ compensation benefits will be paid. If the existing security deposit and other assets are insufficient, the group’s members would be assessed since they are jointly and severally liable under the law. If some of the trust’s employers go out of business, the other members remain fully liable, in essence assuming that liability.

In the meantime, self-insured employers pay into a state fund that can pay workers’ claims benefits between the time a group ceases to exist and when its security deposit can be accessed.

Payments for workers’ compensation claims can continue long into the future if there is a fatality, permanent disability, occupational disease, or other long-term medical expenses.

DCBS sent letters Friday to employer members, notifying them of the potential decertification and alerting them that if the trust is decertified, businesses that lack coverage effective Aug. 8 would be violating Oregon law.

“We know trust members will have a lot of questions and we have staff available by phone and email to help them understand their options,” Shilts said.

Source: OR DCBS

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