SB 0111 - Fiscal Note

Fiscal Note - SB 0111 - Changes interest calculations for workers' compensation payments

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO. 441-01

BILL NO. SB 111

SUBJECT: Workers' Compensation: Interest Calculations

TYPE: Original

DATE: January 14, 1999

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FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 2000	FY 2001	FY 2002
None	$0	$0	$0
Total Estimated Net Effect on All State Funds	$0	$0	$0

ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED	FY 2000	FY 2001	FY 2002
None	$0	$0	$0
Total Estimated Net Effect on All Federal Funds	$0	$0	$0

ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED	FY 2000	FY 2001	FY 2002
Local Government	$0	$0	$0

Numbers within parentheses: ( ) indicate costs or losses

This fiscal note contains 3 pages.

FISCAL ANALYSIS

ASSUMPTION

Officials from the Secretary of State's Office, Attorney General's Office and the Department of Insurance assume this proposal would not fiscally impact their agencies.

Officials from the Department of Transportation (MoDOT) assume this proposal would have some fiscal impact but are unable to determine an amount. Currently, MoDOT processes all their own workers' compensation claims. They assume that by changing the interest calculations on uncontested late payments the department will experience some fiscal impact. Many times the first workers' compensation payment is delayed because of the lack of necessary information.

Oversight assumes MoDOT will adjust their processing procedures to guarantee timely payment of workers' compensation payments and therefore assumes a zero fiscal impact.

The Department of Labor and Industrial Relations (DOL) assume this proposal would not fiscally impact their agency because DOL merely sets the interest rates to be applied to late workers' compensation payments and does not collect any monies resulting from late payments. The weekly benefit payments for workers' compensation claims are paid by the employer, or the insurance companies handling the claims, directly to the employee. In the event of a late payment to the injured party, the employer or insurance company is assessed an interest rate that must be applied the payment due the employee. Therefore, the employers or insurance companies that process workers' compensation claims would experience an increase in costs in the event that they do not distribute the benefit payments in a timely manner.

FISCAL IMPACT - State Government	FY 2000	FY 2001	FY 2002
	(10 Mo.)
	$0	$0	$0
FISCAL IMPACT - Local Government	FY 2000	FY 2001	FY 2002
	(10 Mo.)
	$0	$0	$0
FISCAL IMPACT - Small Business
Small businesses would be expected to be fiscally impacted to the extent that they would incur additional interest penalties in the event of a late payment.

DESCRIPTION

This proposal would change interest calculations for worker's compensation payments under subsection 3 of Section 287.160, RSMo. Uncontested late payments accrue interest at 10% per annum from the date when due upon being ten days late. Contested payments must be made within ten days after an award of compensation or accrue interest. Current law allows 30 days

until a payment is late, and provides for interest after the 30 day period.

The act provides for annual review of the interest rate on late payments based on an economic price index.

This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space.

SOURCES OF INFORMATION

Department of Labor and Industrial Relations

Secretary of State

Department of Insurance

Attorney General's Office

Department of Transportation

Jeanne Jarrett, CPA

Director

January 14, 1999