The continuing saga of “good faith” for self-insured cities

The bill creating a vague “good faith” standard for cities that self-insure for workers’ compensation is continuing its journey through the Senate. AWC continues to oppose this costly bill and has continued to work on amendments to address some of the concerns of self-insured cities.

SB 1521 passed out of the Senate Labor & Commerce Committee unamended on March 23 with a 5-4 party-line vote. The bill creates an undefined duty of “good faith” for self-insured employers and their third-party administrators towards workers in self-insured workers’ compensation programs, with significant penalties for violating this new and unclear standard of good faith. It also allows L&I to write rules outlining those duties and requires L&I to investigate and order resolution of claims. AWC supported amendments in committee to improve the bill, but they were rejected.

AWC continues to oppose the bill because of the unclear “good faith” standard that it imposes, as well as the short timelines for addressing complaints and the enforcement and penalties mechanisms in the bill. We will continue our attempts to mitigate the negative aspects of this proposal. Late last week, AWC was made aware of possible amendments to narrow the bill to firefighters and other first responders (since they have been the most vocal about the bill), limit the application of the “good faith” standard to willful violations, address our concerns about high penalties and enforcement, and instead remove self-insurance certification from municipal self-insured employer with three or more “good faith” violations over a 10-year period. AWC will continue to keep you updated on any further developments.

HB 1521 is currently waiting to be scheduled for a floor vote in the Senate. If it were to pass out of the Senate with no further amendments, it would go to the Governor’s desk for signature.