Section R20-5-711. Joint and Several Liability of Members

A.      The  joint  and  several  liability   provision  described  under

A.R.S. § 23-961.01(E) shall include the following meaning:

1.        Liability of members. Each member is liable for its own workers’ compensation claims or losses incurred during the member’s period of membership in the pool to the extent that the pool does not pay the claims or losses. A member’s liability for its own claims or losses continues for the life of the claims and continues notwithstanding the pool’s inability to process or pay the member’s claims or losses. Failure of the pool to comply with the provi- sions of the Arizona Workers’ Compensation Act relating to payment and processing of claims shall result in the assignment of the claims to the State Compensation Fund under A.R.S. § 23-966 and shall not relieve a member of liability for its own losses or claims. In the event that claims are assigned to the State Compensation Fund under A.R.S. § 23-966, the Industrial Commission shall have a right of reimbursement against the member for the amount paid by the State Compensation Fund for the member’s own claims and losses, including costs, neces- sary expenses and reasonable attorney’s fees, to the extent that such claims and losses are not covered by the pool’s bonds or assets.

2.        Liability of a pool. The pool shall pay all claims for which each member incurs liability during each mem- ber’s period of membership. The pool shall defend, in the name of and on behalf of any member, any action or other proceeding which may arise or be instituted against a member as a result of injury or death covered by the Ari- zona Workers’ Compensation Act and accompanying rules. The pool shall pay all legal costs and all expenses incurred for investigation, negotiation or defense related to such action or proceeding. The pool shall also pay all judgments or awards, and all interest due and accruing after a judgment.

B.       The joint and several liability clause required under A.R.S. § 23-961.01 to be included in each agreement or contract to establish a pool shall include the language in subsection (A)(1) and (2).

C.      The joint and several liability clause required under A.R.S. § 23-961.01(E) applies to any agreement used to form a pool on a cooperative or contract basis, through a joint formation of a nonprofit corporation, or by the execution of a trust agreement.

D.      A pool shall ensure that all members read and agree, in writ- ing, to the joint and several clause required under A.R.S. § 23-

961.01 and described in subsection (A).

E.       Failure to comply with the requirements of A.R.S. § 23- 961.01(E) and this Section is cause for revocation of authority to self-insure.

Historical Note

Adopted effective September 9, 1998 (Supp. 98-3).