Section 7. (1) Within fourteen days of an insurer's receipt of an employer's first report of injury, or an initial written claim for weekly benefits on a form prescribed by the department, whichever is received first, the insurer shall either commence payment of weekly benefits under this chapter or shall notify the division of administration, the employer, and, by certified mail, the employee, of its refusal to commence payment of weekly benefits. The notice shall specify the grounds and factual basis for the refusal to commence payment of said benefits and shall state that if no claim has yet been filed, benefits will not be secured for the alleged injury unless a claim is filed with the department and insurer within any time limits provided under this chapter. Any grounds and basis for noncompensability specified by the insurer shall, unless based upon newly discovered evidence, be the sole basis of the insurer's defense on the issue of compensability in any subsequent proceeding. An insurer's inability to defend on any issue shall not relieve an employee of the burden of proving each element of any case.

(2) If an insurer fails to commence such payment or to make such notification within fourteen days, it shall pay to the employee a penalty in an amount equal to two hundred dollars. Where compensation is later ordered and interest is due the employee under section fifty, such penalty shall be considered compensation for the purpose of computing interest. If the insurer fails to commence such payment or to make such notification of denial within sixty days it shall pay an additional penalty to the department of two thousand dollars into the special fund created pursuant to section sixty-five; provided, however, that such additional penalty shall be ten thousand dollars if said payment is not commenced and said notification is not made within ninety days. Penalties under this section may be waived if an administrative judge finds that the failure to comply with the requirements herein set forth was due to events beyond the control of the insurer or its agents. No additional penalties shall be levied for continuing violations under this section, but the insurer shall be allowed no defenses against any initial claim for weekly benefits until any penalty owed under this section has been paid. No amount paid as a penalty under this section shall be included in any formula utilized to establish premium rates for workers' compensation insurance. An insurer's inability to defend on any issue shall not relieve an employee of the burden of proving each element of any case.

(3) No individual shall receive or continue to receive benefits under this chapter if such individual has an outstanding default or arrest warrant against him. In order to determine if an individual has an outstanding default or arrest warrant against him, the department shall transmit to the department of criminal justice information services a list of applicants and beneficiaries along with sufficient identifying information about such applicants and beneficiaries on at least a quarterly basis. The department of criminal justice information services shall send to the department a list of any applicants or beneficiaries who have a default or arrest warrant outstanding. Evidence of the outstanding default or arrest warrant appearing in the warrant management system established by section 23A of chapter 276 shall be sufficient grounds for such action by the department. The department shall notify the person against whom there is a default or arrest warrant outstanding that such person's benefits shall be denied or suspended unless such person furnishes proof within 30 days that such warrant has been recalled or that there is no such warrant outstanding for such person. Notice of potential denial or suspension shall be deemed sufficient if the notice is mailed to the most recent address furnished to the department. If proof that such warrant has been recalled or that there is no such warrant outstanding is furnished within 30 days, and if the applicant would otherwise be entitled to benefits, such benefits shall be provided from the time that they would have been provided had there not been a denial or suspension of benefits. If no such proof is furnished within 30 days, such person shall be notified that such benefits are denied or suspended subject to the opportunity for a hearing. After such notice to such person has been delivered or mailed by the department, such person may request a hearing within 90 days with respect to the existence of an outstanding warrant. If a hearing is requested within ten days from the time the notice that benefits are being denied or suspended is mailed or delivered, benefits shall not be suspended until a finding following the hearing. If a hearing is requested, the law enforcement agency responsible for the warrant shall be notified of the time, place, date of hearing and the subject of the warrant. An affidavit from the law enforcement agency responsible for the warrant or from the colonel of the state police may be introduced as prima facie evidence of the existence of a warrant without the need for members of that law enforcement agency to attend any hearings held under this section. The department shall issue a finding within 45 days of conducting the hearing as to whether there is a warrant. If there is a warrant outstanding, the benefits shall not be issued or shall be suspended. A person whose benefits have been denied or suspended due to an outstanding warrant may petition for reinstatement of such benefits at any time if such person can furnish sufficient proof as determined by the department that such warrant has been recalled. Such benefits will be provided from the time the warrant was recalled. The department shall promulgate regulations to implement this section.