In this subtitle the following words have the meanings indicated. “Administrator” means a person engaged by a workers’ compensation self-insurance group to carry out the policies established by the self-insurance group and to provide management of the self-insurance group. “Insolvent self-insurance group” means a self-insurance group in which each individual member of the group is unable to meet the member’s debts as they mature in the ordinary course of business, as determined by the Commissioner. “Self-insurance agreement” means the partnership arrangement between the members of a self-insurance group that defines the rights, obligations, and liabilities of the members of the self-insurance group. “Self-insurance group” means two or more employers organized in accordance with this subtitle. “Self-insurance group” does not include a governmental self-insurance group organized under § 9-404 of the Labor and Employment Article.

An employer may satisfy the requirements of § 9-402 of the Labor and Employment Article by participating in a self-insurance group that meets the requirements of this subtitle.

In this section, “service company” means a person that provides services that are not provided by the administrator, including: claims adjustment; safety engineering; compilation of statistics and the preparation of premium, loss, and tax reports; preparation of other required self-insurance reports; development of members’ assessments and fees; and administration of a claim fund. The Commissioner shall adopt regulations to carry out this subtitle. The regulations shall include: classifications of businesses and industries, based on the type of activity conducted by the business or industry, within which employers may join together in self-insurance groups; for each classification: a minimum level of contribution of at least $250,000 in premiums collected from or pledged by members of a self-insurance group to a fund from which workers’ compensation claims will be paid; a minimum level of excess insurance coverage that must be obtained by each self-insurance group; a requirement that the minimum levels of excess insurance adopted under this subtitle may be satisfied by placing, in a depository that the Commissioner designates, securities in a form and amount that the Commissioner requires; and a surety bond of at least $100,000 that must be obtained by each self-insurance group; conditions under which contributions by members of a self-insurance group may be rebated or temporarily suspended; for each administrator or service company, a bond that the Commissioner may require in addition to any other required bond; and a requirement that the governance of the group be under the control of its members.

Before a self-insurance group may operate, the self-insurance group must obtain the approval of the Commissioner, including approval of its self-insurance agreement. Each self-insurance group must have combined net assets of at least $1,000,000. A self-insurance group shall pay all workers’ compensation benefits for which each member incurs liability during its period of membership. Each member of a self-insurance group is jointly and severally liable for the workers’ compensation obligations of the group and its members that are incurred during its period of membership. A member who elects to terminate its membership in or is canceled by a group remains jointly and severally liable for workers’ compensation obligations of the group and its members which were incurred during the canceled or terminated member’s period of membership. The insolvency or bankruptcy of a member does not relieve the self-insurance group or any other member of liability for the payment of workers’ compensation benefits incurred during the insolvent or bankrupt member’s period of membership.

A self-insurance group is not liable for payments to the Property and Casualty Insurance Guaranty Corporation. There is a Self-Insurers’ Guaranty Fund. The Uninsured Employers’ Fund established under § 10-304 of the Labor and Employment Article shall administer the Self-Insurers’ Guaranty Fund. Each self-insurance group shall pay an assessment into the Self-Insurers’ Guaranty Fund at the same level assessed against other workers’ compensation insurers by the Property and Casualty Insurance Guaranty Corporation under Title 9, Subtitle 3 of this article. The Self-Insurers’ Guaranty Fund shall pay any outstanding obligations of a self-insurance group that becomes insolvent. If the Self-Insurers’ Guaranty Fund becomes insolvent, any outstanding obligations of an insolvent self-insurance group are a joint and several liability of each member of the self-insurance group.

The Commissioner may not grant the request of a self-insurance group to terminate its self-insurance agreement unless the self-insurance group has insured or reinsured all incurred workers’ compensation obligations with an authorized insurer under an agreement filed with and approved in writing by the Commissioner. Subject to the approval of the Commissioner, a self-insurance group may merge with another self-insurance group engaged in the same or similar type of business only if the resulting self-insurance group assumes all the obligations of the merging self-insurance groups. The Commissioner shall hold a hearing on the merger at the request of any party including a member of either self-insurance group. For purposes of this section, obligations include known claims and associated expenses and claims incurred but not reported and associated expenses.

The Commissioner may: require actuarial studies and audits to determine the financial solvency of each self-insurance group as often as the Commissioner desires; assess each self-insurance group an annual amount of not more than $500 to be used for the actuarial studies and audits; and require an annual report that may include payroll audit reports, summary loss reports, and quarterly financial statements.

After notice and opportunity for a hearing, the Commissioner may impose a monetary penalty on a person or self–insurance group that the Commissioner finds to be in violation of this subtitle or a regulation adopted under this subtitle. A monetary penalty imposed under this subsection may not exceed $1,000 for each violation or $10,000 in the aggregate. A person or self–insurance group that is assessed a monetary penalty under this subsection shall pay the penalty to the Commissioner for the use of the State. After written notice and opportunity for a hearing, the Commissioner may issue an order that requires a person or self–insurance group to cease and desist from engaging in an act or practice that the Commissioner finds to be in violation of this subtitle or a regulation adopted under this subtitle. If the Commissioner finds, after notice and opportunity for a hearing, that a person or self–insurance group has violated an order issued under this subsection, the Commissioner may: impose a monetary penalty of not more than $10,000 for each violation of the order or $100,000 in the aggregate; and suspend or revoke the authority of the self–insurance group to operate. Notwithstanding any other provision of this subtitle, after notice and opportunity for a hearing, the Commissioner may suspend or revoke the authority of a self–insurance group to operate if the Commissioner determines that the self–insurance group: is insolvent; failed to pay the special fund contribution or regulatory fee imposed on the self–insurance group; failed to comply within the time set with a provision of this subtitle, a regulation adopted under this subtitle, or a lawful order of the Commissioner; obtained its authority to operate by fraud, including making a material misrepresentation in the application for authority to operate as a self–insurance group; misappropriated, converted, illegally withheld, or refused to pay on proper demand money that has been entrusted to the self–insurance group or its administrator in its fiduciary capacity and that belongs to a member of the self–insurance group, an employee of a member, or a person entitled to payment; or for any other reason, must have its authority to operate suspended or revoked to protect the members or insureds of a self–insurance group or the public.