Terms Used In Louisiana Constitution Art. 12 Sec. 8.1

  • Appropriation: The provision of funds, through an annual appropriations act or a permanent law, for federal agencies to make payments out of the Treasury for specified purposes. The formal federal spending process consists of two sequential steps: authorization
  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
  • Ex officio: Literally, by virtue of one's office.
  • Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.

Section 8.1.(A)  Authorization.  (1)  Notwithstanding any other provision of this constitution to the contrary, and subject to the conditions contained in this Section, the legislature by law may create a private, nonprofit corporation to provide workers’ compensation insurance and to deliver related services as provided by law.

(2)  Once the full faith and credit of the state for the payment of the corporation’s legal obligations is extinguished, and the corporation provides security, as required by law, to hold the state harmless from all claims arising from any legal obligation of the corporation to which the full faith and credit of the state is applicable, including all costs associated therewith:

(a)  This private corporation may not be dissolved or otherwise terminated by the repeal of the statutes enabling its creation or by the passage of other legislation providing for its dissolution or termination.

(b)  Exclusive power to dissolve or otherwise terminate the corporation shall rest solely with the commissioner of insurance or the corporation’s policyholders.  Such dissolution or termination shall be in accordance with law.

(c)  The corporation shall not be sold or converted to a domestic stock insurer, nor shall ownership or control be transferred.

(d)  The corporation shall not be subject to any legislation directed exclusively at the corporation which impairs the corporation’s ability to provide a competitive market for workers’ compensation insurance to Louisiana employers.

(e)  Upon the failure of the corporation to maintain security as required herein and as certified by the commissioner of insurance, the provisions of Subsubparagraphs (a), (b), (c), and  (d) shall be null.

(B)(1)  Loan, Pledge, or Donation by State.  Notwithstanding any other provision of this constitution to the contrary, the funds, credit, property, or things of value of the state may be loaned, pledged, or donated to or for the corporation under terms, conditions, or procedures to be provided by law with specific applicability to the corporation.  However, any cash or negotiable instrument advanced to the corporation by the state shall be a loan and may not be donated by the state.

(2)  Full Faith and Credit.  The corporation may rely on the full faith and credit of the state of Louisiana for the payment of legal obligations, for a period of five years or until such time as the United States Department of Labor approves United States Longshore and Harbor Worker’s Compensation Act coverage by the corporation without such security, whichever occurs later.

(C)  Board of Directors.

(1)  The board of directors for a corporation established pursuant to the authorization contained in Paragraph A of this Section shall consist of twelve members as follows:

(a)  One person from a list of three names submitted by the Louisiana American Federation of Labor and Congress of Industrial Organizations, or by a successor organization representative of organized labor to be designated by the legislature in the event that the Louisiana American Federation of Labor and Congress of Industrial Organizations ceases to exist.

(b)  One person from a list of three names submitted by the Louisiana Association of Business and Industry, or by a successor organization representative of organized business to be designated by the legislature in the event that the Louisiana Association of Business and Industry ceases to exist.

(c)  Four persons, all residents of Louisiana, each of whom represents a for-profit business, provided that at least one of these persons represents a business with ten or fewer employees, one of these persons represents a business with at least eleven but not more than fifty employees, one of these persons represents a business with over fifty employees, and one of these persons represents a business with over one hundred employees.

(d)  A member of the Senate who has management experience in a for-profit business, who shall be a nonvoting ex officio member.

(e)  A member of the House of Representatives who has management experience in a for-profit business, who shall be a nonvoting ex officio member.

(f)  One person, from a list of three submitted by the board of directors of the Louisiana Workers’ Compensation Corporation, who is an agent licensed by the Department of Insurance to sell workers’ compensation insurance in Louisiana and who possesses executive level experience in the field of workers’ compensation insurance.

(g)  Two persons, each from a list of three submitted by the board of directors of Louisiana Workers’ Compensation Corporation, who are residents of the state of Louisiana and who shall represent the interest of the citizens of the state at large.

(h)  Repealed by Acts 2003, No. 1294, §2, approved Oct. 4, 2003, eff. Nov. 6, 2003.

(i)  The insurance commissioner or his designee, who shall be a nonvoting ex officio member.

(2)  The governor shall appoint the charter members to the board, except that the president of the Senate shall appoint the Senate member and the speaker of the House shall appoint the House of Representatives member.

(3)  The legislature shall provide by law for staggered terms of board members.  Those who hold policies issued by the corporation will elect the successors to the four charter members representing for-profit businesses.  The president of the Senate shall appoint the successors to the charter Senate member and the speaker of the House of Representatives shall appoint the successors to the charter House of Representatives member.  The governor shall continue to appoint all other members as initially provided.

(4)  All gubernatorial appointees shall be confirmed by the Senate in conformity with the procedures of Article IV, Section 5(H) of this constitution.

(D)  Corporation Property Separate.  The corporation shall not be a state agency.  The property and assets of the corporation shall not be state property, shall not be subject to appropriation by the legislature, shall not be deposited in the state treasury, and shall consist of all premiums collected from underwriting worker’s compensation risks, all reserves to pay future claims and all interest earned upon any monies invested by the corporation, any properties or securities acquired through the use of monies belonging to the corporation, all earnings of such property or securities, and all other monies received by the corporation from any other source.

(E)  Solvency.  The corporation shall adopt actuarially sound rates and underwriting policies that insure the corporation’s solvency.

(F)  Guaranty Fund.  The corporation shall be exempt from participation in and shall not join or contribute financially to or be entitled to the protection of any plan, pool, association, or guaranty fund or insolvency fund authorized or required pursuant to the Insurance Code.  However, upon the extinguishment of the full faith and credit guarantee of the state, the corporation shall no longer be exempt from participation in, contribution to, and protection under the insurance guaranty association fund created and operating under La. Rev. Stat. 22:1375 et seq., of the Insurance Code.  The corporation’s participation in, contribution to, and protection under the insurance guaranty association fund shall be on a prospective basis only.  This prospective participation, contribution, and protection shall only apply to claims arising from injuries occurring after the extinguishment of the full faith and credit guarantee.

Added by Acts 1991, No. 1073, §1, approved Oct. 19, 1991, eff. Nov. 21, 1991; Amended by Acts 1999, No. 1404, §1, approved Nov. 20, 1999, eff. Dec. 27, 1999; Acts 1999, No. 1405, §1, approved Nov. 20, 1999, eff. Dec. 27, 1999; Acts 2003, No. 1294, §§1, 2, approved Oct. 4, 2003, eff. Nov. 6, 2003.