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23-907. Liability of employer failing to secure compensation; defenses; presumption; right of employee to compensation under chapter; information exchange; civil penalties; settlement of disputed claim

A. Employers who are subject to and who fail to comply with section 23-961 or 23-962 shall not be entitled to the benefits of this chapter during the period of noncompliance, but shall be liable in an action under any other applicable law of the state. In such action the defendant shall not avail himself of the defenses of assumption of risk or contributory negligence. In all such actions proof of the injury shall constitute prima facie evidence of negligence on the part of the employer and the burden shall be upon the employer to show freedom from negligence resulting in the injury.

B. An employee of such an employer, or the employee's dependents in case death ensued, in lieu of proceeding against the employer by civil action in court, may file an application with the commission for compensation in accordance with this chapter, and the commission shall hear and determine the application for compensation in the manner other claims are heard and determined before the commission.  Except for a protest of compensability, an employer who protests or petitions the commission for relief of actions or determinations made by the special fund established by section 23-1065 shall be in compliance with section 23-961 or 23-962.  The employer's protest or petition shall include proof that the employer is complying with section 23-961 or 23-962.  The proof shall be either a copy of the declaration page of the workers' compensation insurance policy under section 23-961, subsection A, paragraph 1 or a notice to the commission that the employer is in good standing with the commission under section 23-961, subsection A, paragraph 2.  The compensation so determined shall be paid from the special fund to the person entitled as provided in this section.

C. The special fund may begin the payment of medical or compensation benefits on a claim which involves an employer who has failed to secure compensation as required by section 23-961 and which is processed under subsection B of this section, pending finality of a notice, a determination, an order or a finding and award on a claim, condition or other matter accepted by the special fund.  After payment begins, the payment shall not be interrupted if there is a protest, petition for hearing, request for review or appeal to a higher court by an employer unless, before a notice, determination or order is final, the special fund issues a notice, determination or order that rescinds or amends its prior action or terminates the payment of medical or compensation benefits.  Any overpayment of medical or compensation benefits that occurs shall be credited or adjusted against any future liability on the same claim.  Any overpayment of medical or compensation benefits to a claimant for a claim, condition or matter that is finally determined to be noncompensable shall be borne by the special fund.

D. The commission may spend monies from the special fund that relate to a claim under this section and shall include as part of an employer's liability under this section those expenditures for the employment or contracting of medical, rehabilitation or labor market consultants, experts or examiners that are necessary for processing and determining benefits and assisting in determining the liability of the special fund on a claim.

E. The employer shall be notified of the employer's liability to the special fund periodically and this notice shall include a ten per cent penalty of the amount expended by the special fund or a penalty of one thousand dollars, whichever is greater, plus interest on the amount expended and the penalty pursuant to section 44-1201.  The payments made from the special fund pursuant to the award plus the penalty shall act as a judgment against the employer. The commission shall file the award in the office of the clerk of the superior court in any county in the state and such award shall be entered in the civil order book and judgment docket and when so filed and entered shall be a lien for eight years from the date of the award upon the property of the employer located in the county. Execution may issue thereon within eight years in the same manner and with like effect as if the award were a judgment of the superior court. The commission may recover reasonable attorney fees incurred pursuant to this section. Any civil penalties and interest assessed pursuant to this section shall be deposited, pursuant to sections 35-146 and 35-147, in the state general fund and any payments and attorney fees shall be deposited in the special fund account.

F. An employer with one or more employees who is required to comply with this chapter but who fails to obtain coverage through an insurance carrier or as a self-insurer shall be subject to an action by the commission to apply to the court for an injunction which shall cause the employer to cease the operation of business until such employer complies with the provisions of law pertaining thereto.

G. The commission and other state and local governmental agencies may exchange information concerning employers who fail to comply with section 23-961 or 23-962 with other federal, state or local governmental agencies. This exchange of information shall be made only for the purpose of the valid administrative needs of the programs administered by the commission or other agencies and shall not be made for the purpose of criminal prosecution of an employer.

H. The commission may assess a civil penalty of one thousand dollars on an uninsured employer if the commission makes an award for a noncompensable claim against the employer and finds that:

1. At the time of the accident for which the claim was made the employer was subject to this chapter.

2. The employer was not insured pursuant to this chapter.

I. The commission may issue an order assessing a civil penalty of not to exceed one thousand dollars on an employer who is subject to this chapter and who is not insured pursuant to this chapter. The order is final against the employer unless the employer requests a hearing before the commission within fifteen working days after a copy of the order is mailed to the employer. The employer's request for hearing shall specify the facts and grounds that are the basis of the employer's objection to the order issued under this subsection.  Following the hearing the commission may affirm, reverse or modify its order and shall serve a copy of its decision by first class mail on the employer. An employer aggrieved by this decision may seek judicial review pursuant to title 12, chapter 7, article 6.

J. If the commission has assessed a civil penalty under this section against an employer within the previous five years for failure to secure workers' compensation as required under this chapter, the commission may assess an additional civil penalty against the employer that:

1. Does not exceed five thousand dollars for the second failure to secure the payment of compensation.

2. Does not exceed ten thousand dollars for a third or subsequent failure to secure the payment of compensation.  As an aggravating factor only, the commission may consider the economic benefit that the employer received by failing to comply with this chapter.

K. In determining the amount of the final penalty under subsection H, I or J of this section, the commission may consider any relevant factor to waive or reduce the penalty, including:

1. The history of the employer's noncompliance with section 23-961 or 23-962.

2. The history of no insurance claims filed against the employer.

3. Whether the failure to secure workers' compensation coverage was inadvertent.  For the purposes of this paragraph, "inadvertent" includes a lapse in coverage of not more than thirty days if there is a change of insurance carrier, a change of ownership or a change in the form of the business.

4. Whether the failure to secure workers' compensation coverage was because the employer was a victim of fraud, misrepresentation or gross negligence by an insurance agent or broker or by a person whom a reasonable person would believe is an insurance agent or broker.

L. Civil penalties assessed pursuant to subsections H, I and J of this section are payable to the state general fund and shall act as a judgment in the same manner as prescribed in subsection E of this section. Recovery of attorney fees and accrual of interest are the same as prescribed in subsection E of this section.

M. The commission may compromise or otherwise settle a disputed claim with an employee of an employer who is subject to and who fails to comply with section 23-961 or 23-962 by filing a notice of compromise and settlement or notice of stipulation with the presiding administrative law judge. The notice shall be served on the employer at the last known mailing address as shown on the records of the commission. The employer shall keep the commission informed of its current mailing address once the employer has been notified by the commission of the filing of a claim against the employer. If the employer does not request a hearing protesting the terms of the agreement or stipulation within ten working days of the service of the notice, the commission and the employee may execute the agreement or stipulation without the consent of the employer, subject to the approval of the presiding administrative law judge. Any payments made to the employee pursuant to this subsection shall be paid from the special fund and are subject to reimbursement and collection from the employer in the same manner as other payments made pursuant to this chapter.