(2) In addition to, and not in lieu of, any civil penalties assessed pursuant to ORS 656.735, all costs to the Workers’ Benefit Fund incurred under subsection (1) of this section shall be a liability of the noncomplying employer. Such costs include compensation, disputed claim settlements pursuant to ORS 656.289 and claim disposition agreements pursuant to ORS 656.236, whether or not the noncomplying employer agrees and executes such documents, reasonable administrative costs and claims processing costs provided by contract, attorney fees related to compensability issues and any attorney fees awarded to the claimant, but do not include assessments for reserves in the Workers’ Benefit Fund. The director shall recover such costs from the employer. The director periodically shall pay the assigned claims agent from the Workers’ Benefit Fund for any costs the assigned claims agent incurs under this section in accordance with the terms of the contract. When the director prevails in any action brought pursuant to this subsection, the director is entitled to recover from the noncomplying employer court costs and attorney fees incurred by the director.

(3) Periodically, or upon the request of a noncomplying employer in a particular claim, the director shall audit the files of the State Accident Insurance Fund Corporation and any assigned claims agents to validate the amount reimbursed pursuant to subsection (2) of this section. The conditions for granting or denying of reimbursement shall be specified in the contract with the assigned claims agent. The contract at least shall provide for denial of reimbursement if, upon such audit, any of the following are found to apply:

(a) Compensation has been paid as a result of untimely, inaccurate, or improper claims processing;

(b) Compensation has been paid negligently for treatment of any condition unrelated to the compensable condition;

(c) The compensability of an accepted claim is questionable and the rationale for acceptance has not been reasonably documented in accordance with generally accepted claims management procedures;

(d) The separate payments of compensation have not been documented in accordance with generally accepted accounting procedures; or

(e) The payments were made pursuant to a disposition agreement as provided by ORS 656.236 without the prior approval of the director.

(4) The State Accident Insurance Fund Corporation and any assigned claims agent may request review under ORS 656.704 of any disapproval of reimbursement made by the director under this section.

(5) Claims of injured workers of noncomplying employers may be assigned and reassigned by the director for claims processing regardless of the date of the worker’s injury.

(6) In selecting an assigned claims agent, the director must consider the assigned claims agent’s ability to deliver timely and appropriate benefits to injured workers, the ability to control both claims cost and administrative cost and such other factors as the director considers appropriate.

(7) If no qualified entity agrees to be an assigned claims agent, the director may require one or more of the three highest premium producing insurers to be assigned claims agents. Notwithstanding any other provision of law, the director’s selection of assigned claims agents shall be made at the sole discretion of the director. Such selections shall not be subject to review by any court or other administrative body.

(8) Any assigned claims agent, except the State Accident Insurance Fund Corporation, may employ legal counsel of its choice for representation under this section.

(9) As used in this section, "assigned claims agent" means an insurer, casualty adjuster or a third party administrator with whom the director contracts to manage claims of injured workers of noncomplying employers. [Amended by 1959 c.448 §9; 1965 c.285 §15; 1967 c.341 §5; 1971 c.72 §1; 1973 c.447 §2; 1979 c.839 §2; 1981 c.854 §8; 1983 c.816 §2; 1987 c.234 §2; 1987 c.250 §3; 1991 c.679 §1; 1995 c.332 §7; 1995 c.641 §17; 1999 c.1020 §1; 2003 c.14 §399; 2003 c.170 §1; 2005 c.26 §1]

Note: Section 9, chapter 332, Oregon Laws 1995, provides:

Sec. 9. The amendments to ORS 656.054 by section 7 of this 1995 Act do not remove the authority of the Director of the Department of Consumer and Business Services to audit files of the State Accident Insurance Fund Corporation for claims against noncomplying employers assigned to the State Accident Insurance Fund Corporation prior to the effective date of this 1995 Act [June 7, 1995]. [1995 c.332 §9]