Provides relative to experience modifiers and subrogation in workers' compensation cases

House Bill 605 enacts a new section of Louisiana's workers' compensation statute, specifically R.S. 23:1105, which modifies how insurers calculate an employer's experience modifier when a third party is liable for the accident. The statute provides that when an insurer has a right to recover compensation and medical benefits paid from a third party and pursues that recovery through the existing subrogation provisions in R.S. 23:1101 et seq., the insurer must delay factoring the accident into the employer's experience modifier calculation until either the parties reach a settlement agreement or a final judgment is rendered. Once a resolution occurs, the insurer may then recalculate the experience modifier retroactively to the date of the accident based on the actual allocation of fault and the amount of reimbursement ultimately recovered from the third party.

The practical effect of this legislation benefits employers and insureds by deferring potential premium increases. Without this law, an employer's experience modifier could be negatively affected by an accident immediately, even if the employer bears no fault and the insurer later recovers full or partial compensation from the responsible third party. Under the new statute, the employer's premium rate adjustments occur only after the subrogation claim is resolved, allowing the experience modifier to reflect the true allocation of fault and actual recovery. Additionally, any increase in premiums resulting from an adjusted experience modifier must be spread over two calendar years unless the employer and insurer agree to different terms, easing the financial burden of rate adjustments.

This legislation operates within Louisiana's existing workers' compensation insurance framework, which includes subrogation rights allowing insurers to pursue third parties for recovery of benefits paid. The experience modifier itself is a rating mechanism used in workers' compensation insurance to adjust an employer's insurance premium based on the employer's loss history relative to other employers in the same classification. By creating this new section, the statute interacts with the broader subrogation scheme in R.S. 23:1101 et seq. while establishing a timing mechanism that aligns experience modifier calculations with the actual resolution of third-party liability claims. The amortization requirement in section B operates as a consumer protection measure within the insurance rating system, ensuring that employers do not face sudden, substantial premium increases when experience modifiers are adjusted following settlement or judgment.