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Substitute House Bill No. 5476

PUBLIC ACT NO. 96-65

AN ACT ALLOWING CIVIL ACTIONS AGAINST EMPLOYERS WHO FAIL TO CARRY WORKERS' COMPENSATION INSURANCE.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Subsections (a) and (b) of section 31-284 of the general statutes are repealed and the following is substituted in lieu thereof:

(a) An employer WHO COMPLIES WITH THE REQUIREMENTS OF SUBSECTION (b) OF THIS SECTION shall not be liable [to] FOR any action for damages on account of personal injury sustained by an employee arising out of and in the course of his employment or on account of death resulting from personal injury so sustained, but an employer shall secure compensation for his employees as provided under this chapter, except that compensation shall not be paid when the personal injury has been caused by the willful and serious misconduct of the injured employee or by his intoxication. All rights and claims between AN employer WHO COMPLIES WITH THE REQUIREMENTS OF SUBSECTION (b) OF THIS SECTION and employees, or any representatives or dependents of such employees, arising out of personal injury or death sustained in the course of employment are abolished other than rights and claims given by this chapter, provided nothing in this section shall prohibit any employee from securing, by agreement with his employer, additional compensation from his employer for the injury or from enforcing any agreement for additional compensation.

(b) Each employer who does not furnish to the chairman of the Workers' Compensation Commission satisfactory proof of his solvency and financial ability to pay directly to injured employees or other beneficiaries compensation provided by this chapter shall insure his full liability under this chapter, other than his liability for assessments pursuant to sections 31-345 and 31-354, AS AMENDED, in one of the following ways: (1) By filing with the Insurance Commissioner in form acceptable to him security guaranteeing the performance of the obligations of this chapter by the employer; or (2) by insuring his full liability under this part, exclusive of any liability resulting from the terms of section 31-284b, in any stock or mutual companies or associations that are or may be authorized to take such risks in this state; or (3) by any combination of the methods provided in subdivisions (1) and (2) of this subsection as he may choose, subject to the approval of the Insurance Commissioner. [If the employer willfully fails to conform to any provision of this subsection, he shall be fined not more than one thousand dollars for each failure.] IF THE EMPLOYER FAILS TO COMPLY WITH THE REQUIREMENTS OF THIS SUBSECTION, AN EMPLOYEE MAY BRING AN ACTION AGAINST SUCH EMPLOYER FOR DAMAGES ON ACCOUNT OF PERSONAL INJURY SUSTAINED BY SUCH EMPLOYEE ARISING OUT OF AND IN THE COURSE OF HIS EMPLOYMENT OR ON ACCOUNT OF DEATH RESULTING FROM PERSONAL INJURY SO SUSTAINED, EXCEPT THAT THERE SHALL BE NO LIABILITY UNDER THIS SECTION TO AN INDIVIDUAL ON THE PART OF THE EMPLOYER IF SUCH INDIVIDUAL HELD HIMSELF OUT TO THE EMPLOYER AS AN INDEPENDENT CONTRACTOR AND THE EMPLOYER, IN GOOD FAITH, RELIED ON THAT REPRESENTATION AS WELL AS OTHER INDICIA OF SUCH STATUS AND CLASSIFIED SUCH INDIVIDUAL AS AN INDEPENDENT CONTRACTOR. In case of an alleged noncompliance with the provisions of this subsection, a certificate of noncompliance under oath, by the chairman of the Workers' Compensation Commission, shall constitute prima facie evidence of noncompliance.

Sec. 2. Subsection (a) of section 31-293 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) When any injury for which compensation is payable under the provisions of this chapter has been sustained under circumstances creating in a [third] person other than [the employer] AN EMPLOYER WHO HAS COMPLIED WITH THE REQUIREMENTS OF SUBSECTION (b) OF SECTION 31-284, AS AMENDED BY SECTION 1 OF THIS ACT, a legal liability to pay damages for the injury, the injured employee may claim compensation under the provisions of this chapter, but the payment or award of compensation shall not affect the claim or right of action of the injured employee against [the third] SUCH person, but the injured employee may proceed at law against [the third] SUCH person to recover damages for the injury; and any employer OR THE CUSTODIAN OF THE SECOND INJURY FUND, having paid, or having become obligated to pay, compensation under the provisions of this chapter may bring an action against [the third] SUCH person to recover any amount that he has paid or has become obligated to pay as compensation to the injured employee. If [either] the employee, [or] the employer OR THE CUSTODIAN OF THE SECOND INJURY FUND brings an action against [the third] SUCH person, he shall immediately notify the [other] OTHERS, in writing, by personal presentation or by registered or certified mail, of the action and of the name of the court to which the writ is returnable, and the [other] OTHERS may join as [a party] PARTIES plaintiff in the action within thirty days after such notification, and, if the [other fails] OTHERS FAIL to join as [a party plaintiff, his] PARTIES PLAINTIFF, THEIR right of action against [the third] SUCH person shall abate. In any case in which an employee brings an action against a [third] party OTHER THAN AN EMPLOYER WHO FAILED TO COMPLY WITH THE REQUIREMENTS OF SUBSECTION (b) OF SECTION 31-284, AS AMENDED BY SECTION 1 OF THIS ACT, in accordance with the provisions of this section, and the employer is a party defendant in the action, the employer may join as a party plaintiff in the action. The bringing of any action against an employer shall not constitute notice to the employer within the meaning of this section. If the employer and the employee join as parties plaintiff in the action and any damages are recovered, the damages shall be so apportioned that the claim of the employer, as defined in this section, shall take precedence over that of the injured employee in the proceeds of the recovery, after the deduction of reasonable and necessary expenditures, including attorneys' fees, incurred by the employee in effecting the recovery. The rendition of a judgment in favor of the employee or the employer against the [third] party shall not terminate the employer's obligation to make further compensation which the commissioner thereafter deems payable to the injured employee. If the damages, after deducting the employee's expenses as provided in this subsection, are more than sufficient to reimburse the employer, damages shall be assessed in his favor in a sum sufficient to reimburse him for his claim, and the excess shall be assessed in favor of the injured employee. No compromise with the [third] person by either the employer or the employee shall be binding upon or affect the rights of the other, unless assented to by him. For the purposes of this section, the claim of the employer shall consist of (1) the amount of any compensation which he has paid on account of the injury which is the subject of the suit and (2) an amount equal to the present worth of any probable future payments which he has by award become obligated to pay on account of the injury. The word "compensation", as used in this section, shall be construed to include incapacity payments to an injured employee, payments to the dependents of a deceased employee, sums paid out for surgical, medical and hospital services to an injured employee, the burial fee provided by subdivision (1) of subsection (a) of section 31-306, payments made under the provisions of sections 31-312 and 31-313, and payments made under the provisions of section 31-284b in the case of an action brought under this section by the employer or an action brought under this section by the employee in which the employee has alleged and been awarded such payments as damages. Each employee who brings an action against a [third-party] PARTY in accordance with the provisions of this subsection shall include in his complaint (A) the amount of any compensation paid by the employer OR THE SECOND INJURY FUND on account of the injury which is the subject of the suit and (B) the amount equal to the present worth of any probable future payments which the employer OR THE SECOND INJURY FUND has, by award, become obligated to pay on account of the injury. Notwithstanding the provisions of this subsection, when any injury for which compensation is payable under the provisions of this chapter has been sustained under circumstances creating in a [third] person other than [the] AN employer WHO HAS COMPLIED WITH THE REQUIREMENTS OF SUBSECTION (b) OF SECTION 31-284, AS AMENDED BY SECTION 1 OF THIS ACT, a legal liability to pay damages for the injury and the injured employee has received compensation for the injury from [his] SUCH employer, [or] its workers' compensation insurance carrier OR THE SECOND INJURY FUND pursuant to the provisions of this chapter, the employer, [or] insurance carrier OR SECOND INJURY FUND shall have a lien upon any judgment received by the employee against the [third] party or any settlement received by the employee from the [third] party, provided the employer, [or] insurance carrier OR SECOND INJURY FUND shall give written notice of the lien to the [third] party prior to such judgment or settlement.

Approved May 8, 1996. Effective October 1, 1996.

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