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California’s UEF Program. Shirley H James, Manager, California Uninsured Employers Benefit Trust Fund Anthony Mischel and Fred Lonsdale, Office of Director of Industrial Relations, Legal. California UEF. Created by Legislature, 1972.

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California s uef program l.jpg

California’s UEF Program

Shirley H James, Manager, California Uninsured Employers Benefit Trust Fund

Anthony Mischel and Fred Lonsdale, Office of Director of Industrial Relations, Legal

California UEF

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California UEF

  • Created by Legislature, 1972.

  • The Mission of the Uninsured Employers Benefit Trust Fund:

    • Provide timely benefits to eligible injured workers; and

    • To make it prohibitively expensive for illegally uninsured employers to do business.

California UEF

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Hallmarks of California UEF

  • Sources of Funding

  • UEF Derivatively Only Liable If Award Against Employer Not Paid

  • Employer Personally Liable to Injured Worker (IW)

  • Collection Rights By UEF

  • Enforcement Of Obligation To Be Insured

California UEF

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UEF Funding

  • Employer assessments (surcharges) provides funding for payment of benefits

    • UEF expected to contribute $ 5 million of that money

      • From collection on prior cases.

      • Penalties assessed against uninsured employers by Labor Commissioner.

California UEF

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UEF Has Derivative Liability

  • The Fund’s Liability for Benefits to IWs of Illegally Uninsured Employers Only After Award Issued Against Employer That Goes Unpaid

  • No Direct Liability Possible From UEF to IW

    • Liability is through the employer (2 preconditions)

      • Award against employer

      • Unpaid

    • UEF is not the guarantor

  • Lack of Direct Liability Has Consequences For UEF’s Procedures

California UEF

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Uninsured Employer Personally Liable

  • Case In Chief Is Between IW and Employer

    • IW’s goal is enforceable, civil judgment against employer

    • If an award of benefits is enforceable, the injured worker demands payment from the uninsured employer. Should the employer fail to pay, UEF must pay the award

      • Result is initial requirement to

        • Name the employer correctly, and

        • Serve the employer

California UEF

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Due Process Considerations

  • Why Due Process Matters

    • WCAB considered judicial body

    • Employer’s personal liability adjudged

    • Property may be seized by UEF

  • When Is Due Process Preserved

    • If not in IW’s case, uncollectible judgment

    • Seems to be unique to California UEF.

California UEF

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Lien Rights

  • Liens and Penalties For Discretionary Payments

    • Advance on collectible awards

    • Extra penalty from employer to UEF for advances being necessary

  • Prejudgment Lien Rights

    • Real property liens

    • Due process considerations

California UEF

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UEF Procedures –2-

California UEF

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Collection Rights

  • Can Collect All Moneys Paid

    • Including penalties UEF does not pay

  • Persons Liable With Employer

    • Partners/Community property

    • Joint venturers

    • Some shareholders of corporate employers

    • Limited Liability Company Members

California UEF

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Bankruptcy Issues

  • About Ten Percent Of Employers File Bankruptcy

    • Mostly Chapter 7 Discharges

  • Two Issues For Proceedings

    • IW’s case proceeding

    • UEF’s ability to collect

  • Dischargability

    • In Re Camilli (9th Cir.) – AZ

    • George (9th Cir.) – CA

  • Collection History

California UEF

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Other Enforcement Actions Possible

  • Referrals of Currently Uninsured Employers To Labor Commissioner

    • Stop orders & penalties

    • Current procedures

    • Additional penalties after workers’ compensation award

  • Criminal Sanctions

California UEF

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UEF Procedures –3-

California UEF

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How UEF Operates

California UEF

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With Many Thanks

  • Staff of Uninsured Employers Benefit Trust Fund

  • Office of The Director – Legal Unit

California UEF