§ 28-36-1. Insurance or filing of bond required. (a) Every employer subject to or who has elected to become subject to chapters 29 - 38 of this title as provided in § 28-29-8 shall secure in one of the following ways the compensation for which he or she is or may become liable under those chapters:

(1) By insuring and keeping insured against liability to pay the compensation in any stock or mutual company, or association, authorized and qualified to do business in this state and to take those risks in this state;

(2)(i) By furnishing to the director of labor and training satisfactory proof of his or her financial ability to pay directly to injured employees or their dependents the compensation, and by furnishing security, indemnity, or a bond in kind and in amount satisfactory to the director. The bond shall run to the director for the benefit of the employees and their dependents and with the indemnity or security shall be deposited with him or her;

(ii) Should the self-insured employer be unable to pay claims then the director shall call on the security, indemnity or bond in kind. If these funds are deposited in a state account the account shall be an interest bearing account and all accrued interest shall only be for the benefit of employees and dependents of the self-insured employer.

(3)(i) By a combination of subdivisions (1) and (2) of this subsection, the employer may self-insure for a sum certain by furnishing security, indemnity or a bond in kind and amount equal to the sum certain, together with insurance for loss in excess of the sum certain.

(ii) The provisions of subdivisions (2) and (3) of this subsection shall apply upon compliance with the reasonable criteria and rules and regulations as established by the director to qualify and safeguard the underlying amounts of self-insurance; or

(4) By becoming a member of an authorized group self-insurance fund pursuant to chapter 47 of this title.

(b)(1) All employers who apply for approval to self insure for all or part of their liability, pursuant to subdivisions (a)(2) and (a)(3) of this section, shall pay an application fee based upon the number of employees located at the employer's place(s) of business in Rhode Island. The fees for new applications are set in accordance with the following schedule:

(2) There is established a restricted receipt account within the department of labor and training into which shall be deposited the application fees set forth in subdivision (1) of this subsection and the revenue derived from the assessment set forth in subdivision (3) of this subsection. This account shall be used solely for the payment of the expenses of the department of labor and training in performing its duties under §§ 28-36-1 and 28-36-2. If an employer receives approval to self-insure from the director for all or part of its liability pursuant to subdivision (a)(2) or (a)(3) of this section, the application fee paid by that employer shall be applied as a credit to reduce the amount of the assessment apportioned to that employer pursuant to subdivision (3) of this subsection.

(3) The director of labor and training and the department of administration, annually, as soon as practicable prior to the start of the fiscal year, in each succeeding year, shall ascertain the total amount of expenses, including in addition to the direct costs of personal services, (i) the cost of maintenance and operation, (ii) the cost of retirement contributions made and workers' compensation premiums to be paid by the state for or on account of personnel, (iii) rentals for space to be occupied in state owned or state leased buildings, and (iv) all other direct or indirect costs to be incurred by the department of labor in the next fiscal year in carrying out its responsibilities under §§ 28-36-1 and 28-36-2. Those expenses shall be assessed against all employers who self-insure for all or part of their liability under chapters 29 - 38 of this title. The basis of apportionment of the assessment against each employer shall be that proportion of those expenses that the penal sum of the surety bond, indemnity, or security of each employer at the close of the preceding fiscal year bears to the total of the penal sum of all bonds, indemnity, or security for all employers.

(4)(i) In addition to current classified positions in the department of labor and training self-insurance unit, consisting of administrator, hearing officer, supervising trainer, and senior clerk stenographer, there shall be funded as unclassified positions:

(A) Two (2) administrative aide positions; and

(B) Two (2) financial evaluator analysts.

(ii) This staff's and/or any consultant's studies on feasibility and/or audits, as assessed by the administrator according to the rules of the department at the expense of any self-insured or proposed self-insured entity, shall be reported to the director of the department in the course of the department operations on the administration of the self-insurance unit. All funds are from the restricted receipt account of the department as collected by the self-insurance unit pursuant to subdivisions (1) - (3) of this subsection.

History of Section. (P.L. 1912, ch. 831, art. 5, § 1; P.L. 1915, ch. 1268, § 1; G.L. 1923, ch. 92, art. 5, § 1; P.L. 1936, ch. 2290, § 15; G.L. 1938, ch. 300, art. 5, § 1; P.L. 1941, ch. 1063, § 1; P.L. 1954, ch. 3297, § 1; G.L. 1956, § 28-36-1; P.L. 1981, ch. 238, § 1; P.L. 1982, ch. 32, art. 1, § 12; P.L. 1985, ch. 365, § 9; P.L. 1986, ch. 507, § 10; P.L. 1991, ch. 206, § 6; P.L. 1993, ch. 271, § 1; P.L. 1999, ch. 216, § 7; P.L. 1999, ch. 384, § 7; P.L. 2000, ch. 491, § 6.)