What Happens with a Failure to Insure in Maryland?

Compliance Corner

Catonsville, MD (WorkersCompensation.com) -- Like many states, Maryland has rules in place for when an employer fails to secure compensation for all covered employees. As detailed on Simply Research, those rules are as follows.

Order to Show Cause

If an employer doesn't secure compensation for all covered employees, the state's Workers' Compensation Commission will:

(1) Issue an order directing the employer to attend a hearing to show cause as to why the employer should not be required to secure compensation for all covered employees, found in violation of state law, and assessed a penalty.

(2) Set a hearing as soon as practicable.

After the Hearing

If, following the hearing, the commission finds that the employer failed to secure compensation for all covered employees of the employer, the commission will:

(1) Order the employer to: 1) secure and maintain insurance for all covered employees and 2) submit proof of insurance coverage.

(2) Order the employer to pay a penalty of $25,000 to the Uninsured Employers' Fund.

Employer's Failure to Comply with an Order

If an employer doesn't comply with an order to insure with an authorized insurer with 30 days after the commission issues the order, the commission must set another hearing as soon as practicable.

After this hearing, the commission may order the employer to pay a penalty of $25,000 to the Uninsured Employers' Fund.

Failure to Pay a Penalty

An employer's failure to pay a penalty constitutes a default in payment of compensation and judgment shall be entered as in a case of default in payment of compensation.

A penalty is a lien against the assets of the employer that is liable for the penalty, and that lien is subordinate to claims for unpaid wages and prior recorded liens.

The Uninsured Employers' Fund may bring a civil action to collect a penalty ordered or any assessment ordered.

Officer Liability

If the uninsured employer is a corporation the assets of which are not sufficient to satisfy any penalty ordered, any officer of the corporation who has responsibility for the general management of the corporation in Maryland is jointly and severally liable for the penalty if the corporate officer knowingly failed to secure compensation for employer's covered employees.

If the uninsured employer is a limited liability company the assets of which are not sufficient to satisfy any penalty order, any member of the LLC who has responsibility for the general management of the LLC in Maryland is jointly and severally liable for the penalty if a member of the LLC who has general management responsibility knowingly failed to secure compensation for the covered employees.

Workers' Comp 101: According to Black's Law Dictionary, "joint and several liability" is liability that may be apportioned either among two or more parties or to only one or a few select members of the group, at the adversary's discretion.

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