In 2014, the state's workers' compensation system was facing a crisis that was due to drastically impact self-insured employers. The problem occurred largely because of key errors made by the State in 2009 in the Delphi bankruptcy proceedings, which left approximately 300 workers' compensation claimants without benefits.
These claims presented a $30 to $46 million liability to the employer-funded account, the Self-Insured Security Fund (SISF), which makes payments to injured workers from bankrupt companies. Without a solution, this issue could have threatened the sustainability of Michigan's self-insurance system.
Legislation signed into law in July of 2014, and supported by the Michigan Chamber, authorizes the use of $29 million in general funds and existing SISF assessment revenues, while also authorizing a 0.5% increase in SISF assessments for 5 years -- but only if initial funding sources are insufficient. Hence, the total potential liability to self-insured employers is $5 million. This is in stark contrast to the State’s proposal, which would have cost self-insured employers over $30 million.
Where We Stand:
Finding a solution to this issue was a priority for the Michigan Chamber but, given the mistakes made by the State, we strongly opposed an initial plan asking self-insured employers to bear all of the costs of these claims. The Michigan Chamber instead pushed for a solution to strike a balance between the mistakes that were made and self-insured employers’ legal obligation to pay bankrupt company’s claims. These bills are a positive development for Michigan employers who choose to self-insure.