GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1993

S	4 

SENATE BILL 906
Manufacturing and Labor Committee Substitute Adopted 5/10/93
Third Edition Engrossed 5/11/93
Select Committee on Senate Bill 906 Committee Substitute Adopted 7/8/93

Short Title:  Workers' Comp. Reform.	(Public)
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Sponsors:
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Referred to:  Appropriations.
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April 19, 1993

A BILL TO BE ENTITLED
AN ACT TO MAKE VARIOUS SUBSTANTIVE AMENDMENTS TO THE WORKERS' COMPENSATION ACT AND TO MAKE RELATED CHANGES.
Whereas, the North Carolina Workers' Compensation Act was adopted in 1929 to delicately balance the interests of employers and injured employees, relieving employees of the burden of proving fault for workplace injuries while providing medical care as long as needed and wage support during a healing period; and
Whereas, the North Carolina workers' compensation system worked well for the next 50 years providing fair, prompt benefits for injured employees at an affordable cost to employers; and
Whereas, beginning in the 1980s, court decisions and legislative enactments expanded the Workers' Compensation Act beyond its original intent; and
Whereas, there has been a sharp increase in the number of permanent disability claims that cannot be justified by a corresponding increase in the severity of injuries and has led to expensive, time-consuming litigation over such issues as the degree of permanent disability and the expiration of temporary disability; and
Whereas, medical costs to employers pursuant to our workers' compensation system have increased at almost twice the national average for medical costs in general; and
Whereas, these pressures on the workers' compensation system have caused double digit increases in the cost of workers' compensation for North Carolina's employers for several consecutive years, the most recent and largest insurance rate increase being implemented by the North Carolina Rate Bureau over the objections of the Commissioner of Insurance, resulting in an average aggregate increase of almost 150% in the last five years; and
Whereas, workers' compensation cost North Carolina's employers twice as much as it did a mere three years ago, up from $500,000,000 in 1990 to $1,000,000,000 in 1993; and
Whereas, an increasing and unacceptable number of North Carolina employers, particularly small businesses, are unable to obtain workers' compensation coverage through normal, voluntary insurance markets, resulting in those employers having to attempt to self-fund their liability or to obtain insurance through the assigned risk plan and to pay a significant rate surcharge for their coverage; and
Whereas, the cost of coverage under the Workers' Compensation Act in North Carolina is rapidly becoming a substantial detriment to the ability of our State to attract new employers and for our State's employers to expand their employment, even forcing some employers to close or move to another state; and
Whereas, the time has come for the General Assembly to restore the Workers' Compensation Act so that it provides the balance and stability it enjoyed for more than 50 years; Now, therefore,
The General Assembly of North Carolina enacts:
Section 1.  G.S. 97-2(6) reads as rewritten:
"(6)	Injury. – 'Injury and personal injury' mean only injury by accident arising out of and in the course of the employment, and shall not include a disease in any form, except where it results naturally and unavoidably from the accident.  With respect to back injuries, however, where injury to the back arises out of and in the course of the employment and is the direct result of a specific traumatic incident of the work assigned, 'injury by accident' shall be  construed to include any disabling physical injury to the back arising out of and causally related to such incident.  Injury shall include breakage or damage to eyeglasses, hearing aids, dentures, or other prosthetic devices which function as part of the body; provided, however, that eyeglasses and hearing aids will not be replaced, repaired, or otherwise compensated for unless injury to them is incidental to a compensable injury.  Injury or disease means only a work-related injury or disease that is the predominant cause of the disability and includes a consequence of a compensable injury when the compensable injury is the predominant cause of the consequential condition.  Injury means an injury that combines with a preexisting disease or condition to cause or prolong disability or a need for treatment to the extent the injury is and remains the predominant cause of the disability or need for the treatment.  Injury does not include a worsened condition if the predominant cause of the worsened condition is an injury not occurring within the course and scope of employment.  Injury, personal injury, or disease does not mean mental injury that is unaccompanied by physical injury."
Sec. 2.  G.S. 97-2(9) is repealed.
Sec. 3.  G.S. 97-2(19) reads as rewritten:
"(19)	Medical Compensation. –'Medical compensation' means medical, surgical, hospital, nursing, and rehabilitative services, and medicines, sick travel, and other treatment, including medical and surgical supplies, and any original artificial members as may reasonably be necessary at the end of the healing period."
Sec. 4.  G.S. 97-2 is amended by adding the following new subdivisions:
"(20)	Medically Stationary. – 'Medically stationary' means further recovery from or lasting improvement to an injury can no longer be reasonably anticipated after a certain date based upon reasonable medical probability as determined by an authorized health care provider.  A finding of medically stationary is not precluded even though future medical maintenance may be required that will not significantly improve the condition or there exists a possibility of improvement or deterioration resulting from the passage of time.
(21)	Objective Findings. – 'Objective findings' means diagnostic evidence that is substantiated by clinical findings, including, but not limited to, diagnostic evidence regarding range of motion, atrophy, muscle strength, and muscle spasm.
(22)	Impairment. – 'Impairment' means an anatomical or functional abnormality existing after the date the employee becomes medically stationary as determined by a medically or scientifically demonstrable finding and based upon the third edition or the most recent subsequent edition of the American Medical Association's Guide to the Evaluation of Permanent Impairment or comparable publications of the American Medical Association.
(23)	Partial Disability. – 'Partial disability' means a condition whereby an employee, due to an injury, suffers a physical impairment.
(24)	Temporary Total Disability. – 'Temporary total disability' means the inability of the employee, due to an injury, to perform his duties prior to the injury becoming medically stationary.
(25)	Permanent Total Disability. – 'Permanent total disability' means that the employee is unable to earn wages in the same or other employment within North Carolina or nearby surrounding areas as a result of an injury.  Permanent total disability includes the loss of both hands, both arms, both feet, both legs, both eyes, or of any two thereof, absent conclusive proof to the contrary.
(26)	Attending Physician. – 'Attending physician' means a doctor or physician who is primarily responsible for the treatment pursuant to this Article of an employee with an injury and who is:
a.	A physician licensed to practice medicine or surgery in this State, Tennessee, Georgia, Virginia, or South Carolina;
b.	A chiropractor licensed to practice chiropractic in this State, Tennessee, Georgia, Virginia, or South Carolina.
(27)	Palliative Care. – 'Palliative care' means care rendered to temporarily reduce or moderate the intensity of an otherwise medically stationary condition, as distinguished from care that is rendered to diagnose, heal, permanently alleviate, or eliminate an undesirable medical condition."
Sec. 5.  Chapter 97 of the General Statutes is amended by adding a new section to read:
"§ 97-9.1.  Burden of proof.
The employee has the burden of proving that an injury arose out of and in the course and scope of employment and the burden of proving that the injury is established by medical evidence supported by objective findings."
Sec. 6.  G.S. 97-10.1 reads as rewritten:
"§ 97-10.1.  Other rights and remedies against employer excluded.
 (a)	Except as provided in subsection (b) of this section, if the employee and the employer are subject to and have complied with the provisions of this Article, then the rights and remedies herein granted to the employee and the employee's dependents, next of kin, or personal representative shall exclude all other rights and remedies of the employee, and the employee's dependents, next of kin, or personal representative as against the employer at common law or otherwise on account of or arising out of such injury or death.
(b)	The only exception to the exclusive remedy provided in subsection (a) of this section is for an injury that results from an intentional tort by the employer.  For the purposes of this Article, an intentional tort occurs only when an employer intentionally engages in misconduct knowing it is substantially certain to cause serious injury or death to employees and an employee is injured or killed by that misconduct.
(c)	Subject to subsection (d) of this section, this Article shall not prohibit any person from filing a claim as provided in this Article and simultaneously commencing a civil action seeking to recover damages from an employer for the injury or death.
(d)	If any benefits payable under the provisions of G.S. 97-29(b), 97-30, or 97-31 are accepted by an employee or an employee's dependents, next of kin, or personal representative, then the employee and employee's dependents, next of kin, or other personal representative shall forfeit any other rights or remedies against the employer, including, but not limited to, any statutory and common-law claims against the employer, whether derivative or independent, relating in any way to the injury or death.  Further, if an employee or an employee's dependents, next of kin, or personal representative files a civil action seeking to recover for such injury or death from an employer and fails to accept benefits payable under the provisions of this Article before the time when the jury is impaneled or evidence is first presented at the trial of the civil action, whichever occurs first, then the employee and employee's dependents, next of kin, or personal representative have elected to proceed outside this Article and shall forfeit any other rights and remedies against the employer including all rights and remedies available under this Article, related to the injury or death.  However, the provisions set forth in this subsection shall not affect compensation and benefits previously accepted by an employee that were paid pursuant to the provisions of G.S. 97-25 and G.S. 97-59, and any sums accepted by an employee or an employee's dependents, next of kin, or personal representative shall be offset against any amount for which the employer subsequently may be found liable for the injury, disease, or death in the civil action.  Accordingly, evidence of payments made by an employer pursuant to G.S. 97-25 and G.S. 97-59 shall be admissible in the trial of any civil action, but shall be limited only to interpretations of this Article and benefits actually accepted by an employee.
(e)	For purposes of this Article, the personal liability of an employee whose actions proximately cause the injury or death to another employee shall be determined according to the same standards of conduct as provided in subsection (b) of this section as applied to the employer when the employee's actions arise out of and in the course and scope of the employment."
Sec. 7.  G.S. 97-12 reads as rewritten:
"§ 97-12.  Use of intoxicant or controlled substance; willful neglect; willful disobedience of statutory duty, safety regulation or rule.
No compensation shall be payable if the injury or death to the employee was proximately caused by:
(1)	The employee's intoxication, provided the intoxicant was not supplied by the employer or the employer's agent while acting in a supervisory capacity to the employee; or
(2)	The employee's being under the influence of any controlled substance listed in the North Carolina Controlled Substances Act, G.S. 90-86, et seq., where such controlled substance was not by prescription by a practitioner, and provided the controlled substance was not supplied by the employer or the employer's agent while acting in a supervisory capacity to the employee; or
(3)	The employee's willful intention to injure or kill himself or another.  When the injury or death is caused by the willful failure of the employer to comply with any statutory requirement or any lawful order of the Commission, compensation shall be increased ten percent (10%). When the injury or death is caused by the willful failure of the employee to use a safety appliance or perform a statutory duty or by the willful breach of any reasonable rule or regulation adopted by the employer and brought to the knowledge of the employee prior to the injury compensation shall be reduced ten percent (10%).
The burden of proof shall be upon the party claiming an exemption or forfeiture under this section."
Sec. 8.  G.S. 97-17 reads as rewritten:
"§ 97-17.  Settlements allowed in accordance with Article.
(a)	This Article shall not be construed so as to prevent settlements made by and between the employee and employer so long as the amount of compensation and the time and manner of payment are in accordance with the provisions of this Article. If it shall be made to appear to the satisfaction of the Commission that there has been error due to fraud, misrepresentation, undue influence or mutual mistake, the Industrial Commission may set aside a settlement agreement.  Any settlement shall constitute a final determination of liability for the injury and shall be binding on all parties.
(b)	Within 180 days from the date of the first payment of compensation, the employer may serve upon the employee an offer of settlement, which shall be filed by the employer with the Commission.  If within 30 days after the service of the offer of settlement, the employee serves written notice that the offer is accepted, the employer shall file with the Commission a Notice of Intent to Settle, together with the agreed terms of settlement.  The Commission may approve or reject the settlement, and unless the settlement is approved or rejected within 60 days following submission of the Notice of Intent to Settle, the settlement shall be deemed approved.
(c)	An offer of settlement not accepted within 30 days after its service shall be deemed withdrawn.  The failure or refusal of the employee to timely accept the offer does not preclude a subsequent settlement.
(d)	Evidence of an offer of settlement shall not be admissable in a subsequent proceeding on the issue of compensability."
Sec. 9.  G.S. 97-18 reads as rewritten:
"§ 97-18.  Prompt payment of compensation required; installments; notice to Commission; penalties.
(a)	Compensation under this Article shall be paid periodically, promptly and directly to the person entitled thereto unless otherwise specifically provided.
(b)	The first installment of compensation payable by the employer shall become due on the fourteenth day after the employer has written or actual knowledge of the injury or death, on which date all compensation then due shall be paid, or the employer shall notify the Commission and advise the employee in writing of its refusal to pay and advise the employee of the employee's right to request a hearing pursuant to G.S. 97-83. Compensation shall be paid in installments weekly except where the Commission determines that payment in installments should be made monthly or at some other period.
(b1)	In any claim for compensation in which the employer is uncertain whether the claim is compensable under this Article, or is uncertain of the extent of its liability under this Article, the employer may initiate compensation payments without prejudice and without admitting liability.  Such payments may continue until such time as the employer decides to contest the claim or 180 days from the due date of the first payment of compensation, whichever shall first occur.  The initiation of payment by the employer does not affect the right of the employer to continue to investigate or deny the compensability of the injury during this period.  If, during this 180-day period during which compensation has been paid, the employer decides to contest the claim, the employer shall suspend payment of benefits and shall promptly notify the employee on a form prescribed by the Commission, stating the grounds upon which the employee's right to compensation or the extent of liability is contested.  The employer shall furnish a copy to the Commission.  If the employer does not contest the compensability of the injury in 180 days or less from the due date of the first payment of compensation, the employer waives the right to contest compensability.  However, an employer may contest the claim after the 180-day period when the employer can show that evidence was discovered after that period that could not have been reasonably discovered earlier.
(c)	The first installment of compensation payable under the terms of an award by the Commission, or under the terms of a judgment of the court upon an appeal from such an award, shall become due 14 days from the date of such an award or from the date of such a judgment of the court, on which date all compensation then due shall be paid. Thereafter compensation shall be paid in installments weekly, except where the Commission determines that payment in installments shall be made monthly or in some other manner. A payment becomes due within the meaning of this subsection the day following expiration of time for appeal of an award or judgment or after notice waiving right of appeal by all parties has been received by the Commission, whichever is sooner. Except that if the applicable time for appeal is longer than 14 days, then payment must be made within five days after it becomes due as herein defined.
(d)	The employer's grounds for contesting the employee's claim as specified in the notice under subsection (b1) of this section are the only bases for the employer's defense on the issue of compensability in a subsequent proceeding, unless the defense is based on newly discovered evidence that could not reasonably have been discovered earlier.
(e)	If any installment of compensation is not paid within 30 days after it becomes due, there shall be added to such unpaid installment an amount equal to ten per centum (10%) thereof, which shall be paid at the same time as, but in addition to, such installment, unless such nonpayment is excused by the Commission after a showing by the employer that owing to conditions over which he had no control such installment could not be paid within the period prescribed for the payment.
(f)	Within 16 days after final payment of compensation has been made, the employer shall send to the Commission a notice, in accordance with a form prescribed by the Commission, stating that such final payment has been made, the total amount of compensation paid, the name of the employee and of any other person to whom compensation has been paid, the date of the injury or death, and the date to which compensation has been paid. If the employer fails to so notify the Commission within such time, the Commission shall assess against such employer a civil penalty in the amount of twenty-five dollars ($25.00).
(g)	If any bill for services rendered under G.S. 97-25 by any provider of health care is not paid within 60 days after it has been approved by the Commission and returned to the responsible party, there shall be added to such unpaid bill an amount equal to ten per centum (10%) thereof, which shall be paid at the same time as, but in addition to, such medical bill, unless such late payment is excused by the Commission."
Sec. 10.  Chapter 97 of the General Statutes is amended by adding a new section to read:
"§ 97-18.1.  Termination or modification of compensation benefits.
(a)	If the employer seeks to terminate or modify temporary total disability benefits because the employee has returned to work or because the employer has reason to believe the employee has become medically stationary or has recovered sufficiently to return to work, the employer shall notify the employee in writing of the employer's intent to terminate or modify benefits.  This notice shall inform the employee of the employee's right to administrative review of the matter.  The employer may suspend compensation 14 days following its notice to the employee. The employee, within 30 days of being notified, may request an administrative review with the Commission disputing the employer's decision to suspend compensation.
(b)	After the request for administrative review is filed, the Commission shall promptly conduct a review of documentation submitted by the employer, together with any information submitted by the employee. The Commission shall issue a decision within 14 days following the employee's request for administrative review.
(c)	Where the medical condition of the employee is in dispute, the Commission shall consider all medical evidence and shall make its determination based on the greater weight of the information submitted.  Where, however, either party has requested an examination by an independent medical examiner pursuant to G.S. 97-27, that examiner's opinion of the employee's recovery and ability to return to work is conclusive absent clear, cogent, and convincing proof to the contrary.
(d)	Following an administrative decision by the Commission pursuant to subsection (b) of this section, either party may file a request for a hearing pursuant to G.S. 97-83.  The employer shall not be required to continue payment of compensation following the Commission's determination upholding the employer's decision.  If neither party requests a hearing within seven days of the administrative decision, that decision shall constitute a final determination."
Sec. 11.  G.S. 97-25 reads as rewritten:
"§ 97-25.  Medical treatment and supplies.
(a)	Subject to subsection (e) of this section, G.S. 97-25.1, 97-25.2, and 97-25.3, medical compensation shall be provided by the employer.  The obligation of an employer to provide medical compensation is limited by and subject to the provisions regarding the modification of an award for change of condition as set forth in G.S. 97-47.
(b)	In all cases of injury or disease, the employer or insurer has the right to select the attending physician.  Upon written request to the insurer or to the employer's authorized representative if the employer is self-insured, the employee may procure written permission to have the employee's own physician attend the employee.  If such permission is neither granted nor refused within 20 days, the employer or insurance carrier shall be deemed to have waived any objection.  Objection shall be in writing and shall be deposited in the mail or hand-delivered to the employee within 20 days.  Any unauthorized medical expense is not the responsibility of the employer.
(c)	The refusal of the employee to accept any medical, hospital, surgical or other treatment or rehabilitative procedure when ordered by the Industrial Commission shall bar said employee from further compensation until such refusal ceases, and no compensation shall at any time be paid for the period of suspension unless in the opinion of the Industrial Commission the circumstances justified the refusal, in which case, the Industrial Commission may order a change in the medical or hospital service.
(d)	The employee, upon reasonable grounds, may petition the Industrial Commission for a change of physicians to be provided by the employer.  The employee shall give notice to the employer or insurer of this request for a change of physicians to afford the employer the opportunity to fulfill its obligations under this section.  The employer shall not be obligated to pay for the services obtained when notice was not given in accordance with this subsection.
(e)	When the attending physician is a chiropractor, compensation for chiropractic treatment shall be provided by the employer for a period of 90 days from the initial treatment or for 30 office visits, whichever occurs first.  A request for additional chiropractic treatment shall be submitted to the insurer at least 10 working days prior to delivery of the services and shall include documentation of the need for the services requested.  When chiropractic treatment is expected to extend beyond 90 days from the date of the initial treatment, the request for additional services shall include a treatment plan, including a time schedule of measurable objectives, a projected termination date of treatment, and an estimated total cost of service.  The Commission shall adopt rules governing the response to a request for additional chiropractic services and the review of a decision thereon."
Sec. 12.  Chapter 97 of the General Statutes is amended by adding the following new sections:
"§ 97-25.1.  Palliative care.
(a)	After the employee has become medically stationary, palliative care is not compensable, except when:
(1)	Provided to an employee who has been determined to have permanent total disability;
(2)	Necessary to monitor administration of prescription medication required to maintain the employee in a medically stationary condition; or
(3)	Necessary to monitor the status of a prosthetic device.
If the employee's attending physician determines that palliative care that would otherwise not be compensable under this section is appropriate to enable the employee to continue current employment, the attending physician shall request approval from the insurer or self-insured employer for such treatment.  The request for palliative services shall include a treatment plan, including a time schedule of measurable objectives, a projected termination date of treatment, and an estimated total cost of services.  If approval for palliative care is not granted, the attending physician may request approval from the Commission for such treatment.  The Commission shall appoint an independent medical examiner pursuant to G.S. 97-27 to review the request for treatment.
(b)	The employer shall not be required to pay for palliative care that is not authorized pursuant to this section.
"§ 97-25.2.  Managed care organizations.
As used in this section, 'managed care organization' means a preferred provider organization, plan, or arrangement, an exclusive provider panel, or a health maintenance organization regulated under Chapter 58 of the General Statutes.  An employer or carrier may satisfy the requirements of G.S. 97-25 by contracting with a managed care organization.  Notwithstanding any other provision of this Article, if an employer or carrier contracts with a managed care organization for medical services that are compensable under this Article, those employees who are covered by the contract with the managed care organization shall receive medical services in the manner prescribed by the contract or in accordance with the managed care organization's plan of operation; provided that the plan of operation has been approved by the Commissioner of Insurance and further provided that the contract complies with rules adopted by the Commission governing such managed care organizations.  Immediate emergency medical services provided by a health care provider who is not a member of the managed care organization or a party to the contract are compensable under this Article.  An employee must exhaust any dispute resolution procedure of a managed care organization before that employee may seek review by the Commission on any issue related to the managed care organization or the choice of a physician.  Once application to the Commission has been made, the employee shall be entitled to an examination by a duly qualified physician or surgeon in the same manner as provided by G.S. 97-27.
If the employer or insurer elects to provide medical care through a managed care program pursuant to this section, the employee shall select the attending physician from those physicians who are members of the managed care program, and may subsequently change attending physicians once within the group of physicians who are members of the managed care program without approval from the employer or insurer.  Additional changes in attending physician or any change to a physician not a member of the employer's or insurer's managed care program shall only be made pursuant to the procedures set forth in this section.
"§ 97-25.3.  Preauthorization.
(a)	An employee shall notify the insurer within five working days before hospital in-patient confinement or surgery, except in case of an emergency, in accordance with procedures prescribed by the Commission.  When hospitalization or surgery is recommended, the insurer shall make a hospital confinement and surgery review and shall have reasonable opportunity to obtain an independent medical exam.  A copy of the review shall be provided to the employee, attending physician, and hospital in writing.  Hospital and physician charges incurred without preauthorization shall be reduced by fifty percent (50%) provided that notice has been given to the hospital and physician of the requirement of preauthorization.  The employee shall not be liable for payment of the balance. A hospital and physician that refuse to treat an employee for other than an emergency medical condition because preauthorization has not been obtained shall be immune from liability in any civil action.
(b)	No health care provider may refer the employee to a diagnostic facility, pain program, work-hardening program, therapy center, or other facility without authorization from the insurer pursuant to this section except in cases of immediate medical emergency.
(c)	The Commission shall adopt rules specifying additional types of medical care requiring express preauthorization by the insurer.  The Commission shall adopt rules establishing a procedure for expedited resolution of any dispute over the denial of preauthorization by the insurer.
(d)	When a health care provider of medical services or treatment makes referrals for medical services or treatment compensable under this Article to a health care provider or entity in which the health care provider making the referral has an investment interest, the referring provider shall, at the time of the referral, disclose that investment interest to the employee, the Commission, the employer, and the employer's insurer.  The referring provider also shall file an annual disclosure statement with the Commission as provided by rules adopted by the Commission.
(e)	Except in cases of medical emergency, the insurer shall not be liable for medical costs related to hospital in-patient confinement or surgery, chiropractic care, or physical or occupational therapy unless:
(1)	The insurer or employer waives the right to request a second opinion from a physician approved by the insurer or the Commission no later than 14 days after the date of notification that any of these medical treatments is recommended; or
(2)	The employee obtains a second opinion from a physician approved by the insurer or the Commission, and the second physician concurs with the attending physician's recommendation.
(f)	The insurer or Commission may require an employee to submit to medical examinations to resolve any question about the appropriateness of medical treatment received or recommended.  The Commission shall require a physical examination only after the insurer has attempted and failed to receive the permission of the employee.
(g)	The insurer shall pay for any physical examination required under subsections (e) and (f) of this section.
(h)	An employee who, without good cause, fails or refuses to appear at the time scheduled for a physical examination under subsections (e) or (f) of this section shall have the employee's rights suspended as provided in G.S. 97-27(a).
(i)	A health care provider shall not pursue a private claim against an employee for all or part of the costs of medical treatment provided to the employee by the provider unless the claim is finally adjudicated not to be compensable under this Article or unless the employee fails to comply with this section."
Sec. 13.  G.S. 97-26 reads as rewritten:
"§ 97-26.  Fees allowed for medical treatment; malpractice of physician.
(a)	The Commission shall adopt a schedule of maximum fees for all services, procedures, and tasks.  This schedule shall govern reimbursement of maximum fees to all health care providers under G.S. 97-25 and shall be in accordance with the following:
     	(1)	The Teachers' and State Employees' Comprehensive Major Medical Plan shall provide to the Commission no later than December 1st of each year the average of all allowable charges of providers under the Teachers' and State Employees' Comprehensive Major Medical Plan for each CPT ('Current Procedural Terminology') or standard code.  This subdivision does not apply to providers covered under subdivisions (2) or (3) of this subsection.
(2)	Each hospital shall provide to the Commission no later than December 1st of each year its schedule of charges under the Teachers' and State Employees' Comprehensive Major Medical Plan.
(3)	Each institutional provider, other than a hospital, shall provide to the Commission, upon request of the Commission, no later than December 1st of each year, its schedule of charges under the Teachers' and State Employees' Comprehensive Major Medical Plan.
(4)	The maximum fee for a specified treatment, procedure, service, or task shall equal:
a.	For a provider under subdivision (1) of this subsection, the average fee reported pursuant to subdivision (1) of this subsection for the CPT or standard code;
b.	For a provider under subdivision (2) of this subsection, the fee charged by the provider under its schedule of charges with the Teachers' and State Employees' Comprehensive Major Medical Plan;
c.	For a provider under subdivision (3) of this subsection, the fee determined by the Commission after review of the information submitted pursuant to subdivision (3).
(5)	The codes established by the Commission shall be in accordance with the codes contained in the American Medical Association's Physicians' Current Procedural Terminology (CPT), as modified, or in standard codes and definitions produced by other recognized professional associations for which CPT codes do not exist.  The use of modifier codes shall be strictly limited, the additional fee allowed for each modification shall be provided in the fee schedule, and documentation indicating the need for such modifiers shall be required.  Services, procedures, and tasks shall be billed using the most inclusive codes available; and differing elements of a service, procedure, or task shall not be billed individually when a single code is available describing the complete service, procedure, or task.
(6)	Each surgical procedure shall provide for appropriate subsequent care, including examinations, changes of dressings, and similar services associated with postsurgery recovery, but the cost of such care shall not be billed during the recovery period.
(b)	Unless the employer or insurer and a health care provider agree to a lesser fee, the fees charged for treatment and care under this Article shall be the provider's usual and customary fee for the treatment or service, or the fee for that treatment or service under the Commission's schedule, whichever is less.
(c)	Health care providers shall submit charges to the employer within 30 days of treatment or within 30 days after the end of the month during which multiple treatments were provided.  If the employer disputes a part of a provider's bill, it shall pay the uncontested portion of the bill and shall resolve disputes regarding the balance of medical charges in accordance with this section.  Health care providers shall not charge for diagnostic tests previously conducted by other providers, unless the provider has reasonable grounds to believe a change in patient condition has occurred or the quality of the prior test is doubted.  The Commission shall adopt rules establishing reasonable requirements for reports and records to be made available to other health care providers to prevent unnecessary duplication of tests and examinations.
(d)	The Commission shall promulgate rules governing treatment. Such rules shall define appropriate clinical indications and methods of treatment, must be consistent with appropriate standards of care and levels of quality, and shall take into account resources available to physicians practicing in various geographic areas of the State.  In developing the rules, the Commission must consider and may adopt or modify treatment guidelines in accordance with practice guidelines and parameters developed by the North Carolina Board of Medical Examiners, North Carolina Medical Society, and the American Medical Association. Neither the employer, its insurer, nor the employee shall be responsible for reimbursing a health care provider for treatment of the injured employee that exceeds in frequency treatment plans adopted by the Commission.
(e)	The employer shall not be liable in damages for malpractice by a physician or surgeon furnished by him pursuant to the provisions of this section, but the consequences of any such malpractice shall be deemed part of the injury resulting from the accident, and shall be compensated for as such.
(f)	Unless the hospital agrees to a lesser fee, the Commission's schedule of maximum fees shall govern reimbursement to all hospitals for services, treatment, and care under this Article."
Sec. 14.  G.S. 97-27 reads as rewritten:
"§ 97-27.  Medical examination; facts not privileged; refusal to be examined suspends compensation; autopsy.
(a)	After an injury, and so long as he claims compensation, the employee, if so requested by his employer or ordered by the Industrial Commission, shall, subject to the provisions of subsection (b) and subsection (c) of this section, submit himself to examination, at reasonable times and places, by a duly qualified physician or surgeon designated and paid by the employer or the Industrial Commission.  The employee shall have the right to have present at such examination any duly qualified physician or surgeon provided and paid by him.  Notwithstanding the provisions of G.S. 8-53, no fact communicated to or otherwise learned by any physician or surgeon or hospital or hospital employee who may have attended or examined the employee, or who may have been present at any examination, shall be privileged in any workers' compensation case with respect to a claim pending for hearing before the Industrial Commission.  If the employee refuses to submit himself to or in any way obstructs such examination requested by and provided for by the employer, his right to compensation and his right to take or prosecute any proceedings under this Article shall be suspended until such refusal or objection ceases, and no compensation shall at any time be payable for the period of obstruction, unless in the opinion of the Industrial Commission the circumstances justify the refusal or obstruction.  The employer, or the Industrial Commission, shall have the right in any case of death to require an autopsy at the expense of the party requesting the same.
(b)	In those cases arising under this Article in which there is a dispute as to the extent, nature, or cause of disability or death, or a dispute as to whether the employee is medically stationary, the attending physician who has provided the primary care shall make a determination on medical issues as provided in this section.  If either party disputes the attending physician's findings, the parties may select an independent medical examiner by mutual agreement.  If the parties are unable to mutually agree on the selection of an independent medical examiner, the Commission shall assign a panel of three independent medical examiners.
(c)	When the injured employee becomes medically stationary, the attending physician shall determine a medical impairment rating based on the most recent edition of the American Medical Association Guide to the Evaluation of Permanent Impairment.  For purposes of determining levels of medical impairment, the physician shall not render a medical impairment rating based on chronic pain unless there is an anatomic or physiologic correlation to the pain.  Anatomic or physiologic correlation shall be based on objective findings.  If either party disputes the attending physician's findings of medical impairment, the parties may select an independent medical examiner by mutual agreement.  If the parties are unable to mutually agree on the selection of an independent medical examiner, the Commission shall assign a panel of three independent medical examiners.
(d)	When a panel of independent medical examiners has been assigned to a case under subsection (b) or subsection (c) of this section, the parties shall be notified immediately.  The employee shall select one independent medical examiner from the panel within five days after notification.  The employer may, no later than three days after notification of the employee's selection, reject the employee's selection of the independent medical examiner, in which case the employee's first choice of an independent medical examiner is removed from the panel, and the employee shall select one of the two remaining independent medical examiners.  The findings of the independent medical examiner under subsection (b) or subsection (c) of this section shall be final, absent a showing of clear, cogent, and convincing evidence to the contrary.  No hearing to contest the findings of the independent medical examiner shall be conducted until the findings of the independent medical examiner have been filed with the Commission.
(e)	No fact communicated to or otherwise learned by any physician or surgeon who may have attended or examined the employee, or who may have been present at any examination, shall be privileged, either in hearings provided for by this Article or any action at law.
(f)	The Commission shall certify independent medical examiners to assist the Commission.  The Commission shall, in certifying, recertifying, or decertifying an independent medical examiner, consider the qualifications, training, impartiality, and commitment of the health care provider to providing quality medical care at a reasonable cost.  The Commission shall require, at a minimum, that independent medical examiners:
(1)	Have specialized workers' compensation training or experience with the procedures of North Carolina Workers' Compensation Act;
(2)	Be licensed to practice medicine or surgery in this State, Tennessee, Georgia, Virginia, or South Carolina; and
(3)	Be board certified."
Sec. 15.  G.S. 97-29 reads as rewritten:
"§ 97-29.  Compensation rates for total disability.
(a)	Except as hereinafter otherwise provided, where the employee sustains a temporary total disability, the employer shall pay or cause to be paid, as hereinafter provided, to the injured employee during the continuance of disability a weekly compensation equal to sixty-six and two-thirds percent (66 2/3%) of his average weekly wages, but not more than the amount established annually to be effective October 1 as provided herein, nor less than thirty dollars ($30.00) per week.
Notwithstanding any other provision of this section, temporary total disability benefits shall continue until any one of the following first occurs:
(1)	The employee becomes medically stationary;
(2)	The employee returns to regular or modified employment;
(3)	The attending physician gives the employee a written release to return to regular employment; or
(4)	The attending physician gives the employee a written release to return to modified employment, this employment is offered to the employee in writing, and the employee fails to begin the employment.
If the employee returns to work pursuant to the provisions of this subsection, the employer shall continue to provide medical compensation.  In no case shall the period covered by such compensation be greater than 300 weeks from the date of injury.  In no case may the period covered by the compensation provided by this subsection and G.S. 97-30 exceed an aggregate total of 300 weeks.
(b)	Where the injured employee sustains a permanent total disability, the employer shall pay, or cause to be paid to the injured employee during the permanent total disability, a weekly compensation equal to sixty-six and two-thirds percent (66 2/3%) of the employee's average weekly wages, but not more than the amount established annually, to be effective October 1 as provided herein, nor less than thirty dollars ($30.00) per week.
In cases of permanent total disability, compensation, including medical compensation, shall be paid for by the employer during the lifetime of the injured employee.  If death results from the injury then the employer shall pay compensation in accordance with the provisions of G.S. 97-38.
(c)	The weekly compensation payment for members of the North Carolina national guard and the North Carolina State guard shall be the maximum amount established annually in accordance with the last paragraph of this section per week as fixed herein.  The weekly compensation payment for deputy sheriffs, or those acting in the capacity of deputy sheriffs, who serve upon a fee basis, shall be thirty dollars ($30.00) a week as fixed herein.
An officer or member of the State Highway Patrol shall not be awarded any weekly compensation under the provisions of this section for the first two years of any incapacity resulting from an injury by accident arising out of and in the course of the performance by him of his official duties if, during such incapacity, he continues to be an officer or member of the State Highway Patrol, but he shall be awarded any other benefits to which he may be entitled under the provisions of this Article.
(d)	Notwithstanding any other provision of this Article, on July 1 of each year, a maximum weekly benefit amount shall be computed.  The amount of this maximum weekly benefit shall be derived by obtaining the average weekly insured wage in accordance with G.S. 96-8(22), by multiplying such average weekly insured wage by 1.10, and by rounding such figure to its nearest multiple of two dollars ($2.00), and this said maximum weekly benefit shall be applicable to all injuries and claims arising on and after January 1 following such computation.  Such maximum weekly benefit shall apply to all provisions of this Chapter and shall be adjusted July 1 and effective January 1 of each year as herein provided.
(e)	In addition to the provisions of subsection (a) of this section, temporary total disability benefits may be terminated for an employee of an employer with 25 or more employees upon the written release under subdivisions (a)(3) and (a)(4) of this section, completed by the attending physician on a form prescribed by the Commission.  Temporary total benefits terminate and permanent partial disability benefits, if any, begin upon certification on the release form by the physician that the employee is able to return to work at a job actually available to the employee.  The physician may consult with vocational experts.  The certification must specify the requirements of the job.
A dispute over the attending physician's certification or refusal to certify pursuant to this subsection shall be resolved by an independent medical examination pursuant to G.S. 97-27.  Such determination shall be binding on the parties pending a hearing pursuant to G.S. 97-84.  Notwithstanding the provisions of G.S. 97-18.1(a), the employer may terminate temporary total disability benefits seven days following receipt by the employee of notification that the physician has determined the employee can perform the specified job.   Any nonpayment of benefits later determined to be due shall be subject to the ten percent (10%) penalty provisions of G.S. 97-18(e).  If the employee proves incapable of sustained performance in the specified job, temporary total disability benefits shall immediately resume if the employee is otherwise entitled to the benefits.
(f)	If an employer with 25 or more employees fails to offer an employee who sustains a compensable injury in its employment a job paying at least eighty percent (80%) of the employee's former wages within 60 days from the time the employee has been determined to be medically stationary, and another employer shall hire the employee within one year from the time the employee has become medically stationary, and the subsequent employment is full-time employment in which the employee is performing all the essential duties of the employment and there is a reasonable certainty that the subsequent employer will continue the employment of the employee at the same or greater wages into the indefinite future, then the employer shall reimburse the subsequent employer fifty percent (50%) of the employee's new gross wages actually paid to the employee, not to exceed fifty percent (50%) of the uncommuted equivalent of 52 weeks of the employee's workers' compensation rate.  Such amounts payable to the subsequent employer shall be in addition to any compensation due the employee pursuant to G.S. 97-30 or G.S. 97-31.  The subsequent employer shall have standing before the Commission to seek an award of said reimbursement.  Any carrier or any group that self-insures the liabilities of its members under this Article may contract for reimbursement by the employer for payments made pursuant to this subsection to the subsequent employer.
(g)	Subsections (e) and (f) of this section apply to an employer with whom the employee was injured if the employer had 25 or more employees at the time of injury."
Sec. 16.  G.S. 97-30 reads as rewritten:
"§ 97-30.  Partial disability.
Except as otherwise provided in G.S. 97-31 where the disability for work resulting from the injury is partial, the employer shall pay or cause to be paid, as hereinafter provided, to the injured employee during such disability, a weekly compensation equal to sixty-six and two-thirds percent (66 2/3%) of the difference between his average weekly wages before the injury and the average weekly wages which he is able to earn thereafter, but not more than the amount established annually to be effective October 1 as provided in G.S. 97-29 a week, and in no case shall the period covered by such compensation be greater than 300 weeks from the date of injury. In case the partial disability begins after a period of total disability, the latter period shall be deducted from the maximum period herein allowed for partial disability. An officer or member of the State Highway Patrol shall not be awarded any weekly compensation under the provisions of this section for the first two years of any incapacity resulting from an injury by accident arising out of and in the course of the performance by him of his official duties if, during such incapacity, he continues to be an officer or member of the State Highway Patrol, but he shall be awarded any other benefits to which he may be entitled under the provisions of this Article."
Sec. 17.  Chapter 97 of the General Statutes is amended by adding a new section to read:
"§ 97-32.1.  Trial return to work.
Notwithstanding the provisions of G.S. 97-32, an employee may attempt a single trial return to work for a period not to exceed nine months.  During any such trial return to work, the employee shall be paid compensation only for any temporary partial disability which may be owed pursuant to G.S. 97-30.  If the trial return to work is unsuccessful and the employee has not become medically stationary, the employee shall resume receiving temporary total disability benefits pursuant to G.S. 97-29(a).  If the trial return to work is unsuccessful or the employee becomes medically stationary during the trial work period, any permanent impairment shall be determined when the trial period terminates."
Sec. 18.  G.S. 97-40.1(a) reads as rewritten:
"(a)	There is hereby created a fund to be known as the "Second Injury Fund,"to be held and disbursed by the Industrial Commission as hereinafter provided.
For the purpose of providing money for said fund the Industrial Commission may assess against the employer or its insurance carrier the payment of not to exceed two hundred fifty dollars ($250.00) for the loss, or loss of use, of each minor member in every case of a permanent partial disability where there is such loss, and shall assess not to exceed seven hundred fifty dollars ($750.00) for fifty percent (50%) or more loss or loss of use of each major member, defined as back, foot, leg, hand, arm, eye, or hearing.
In addition to the assessments hereinabove provided for, the Commission shall also deposit in said fund all moneys received by it for the Second Injury Fund under the provisions of G.S. 97-40."
Sec. 19.  G.S. 97-42 reads as rewritten:
"§ 97-42.  Deduction of payments.
(a)	Any payments made by the employer to the injured employee during the period of his disability, or to his dependents, which by the terms of this Article were not due and payable when made, may, subject to the approval of the Industrial Commission be deducted from the amount to be paid as compensation. Provided, that in the case of disability such deductions shall be made by shortening the period during which compensation must be paid, and not by reducing the amount of the weekly payment.
	(b)	If the injury is reported pursuant to G.S. 97-92, the employer, with the consent of the employee, may continue the injured employee on its payroll at the employee's preinjury wages, including deductions for taxes, and the value of payments made to or for the employee and his or her dependents, including the cost of health insurance, shall be offset against compensation due for that pay period.  With the consent of the employee, the value of such payments by the employer exceeding compensation due for such pay periods shall be offset against benefits subsequently due pursuant to G.S. 97-30 or G.S. 97-31 by such method as the parties agree or the Commission directs."
Sec. 20.  G.S. 97-47 reads as rewritten:
"§ 97-47.  Change of condition; modification of award.
Subject to G.S. 97-18.1, upon its own motion or upon the application of any party in interest on the grounds of a change in condition, the Industrial Commission may review any award, and on such review may make an award  ending, diminishing, or increasing the medical compensation or compensation previously awarded, subject to the maximum or minimum provided in this Article, and shall immediately send to the parties a copy of the award.  No such review shall be made after two years from the date of the last payment of medical compensation or compensation pursuant to an award under this Article, except that in cases in which only medical or other treatment bills are paid, no such review shall be made after 12 months from the date of the last payment of bills for medical or other treatment, paid pursuant to this Article.  Medical compensation or compensation that has been paid pursuant to the provisions of this Article prior to review shall not be affected by review or modification of an award under this section.  Payment of medical compensation for palliative care under G.S. 97-25.1 shall not toll the time allowed for reviewing an award based upon a change of condition."
Sec. 21.  G.S. 97-54 reads as rewritten:
"§ 97-54. 'Disablement' defined.
The term 'disablement' as used in this Article as applied to cases of asbestosis and silicosis means the event of becoming actually incapacitated because of asbestosis or silicosis to earn, in the same or any other employment, the wages which the employee was receiving at the time of his last injurious exposure to asbestosis or silicosis."
Sec. 22.  G.S. 97-55 is repealed.
Sec. 23.  G.S. 97-79 reads as rewritten:
"§ 97-79.  Offices and supplies; deputies with power to subpoena witnesses and to take testimony; meetings; hearings.
(a)	The Commission shall be provided with adequate offices in which the records shall be kept and its official business transacted during regular business hours; it shall also be provided with necessary office furniture, stationery, and other supplies.
(b)	The Commission may appoint deputies who shall have the same power to issue subpoenas, administer oaths, conduct hearings, hold persons, firms or corporations in contempt as provided in Chapter 5A of the General Statutes, take evidence, and enter orders, opinions, and awards based thereon as is possessed by the members of the Commission, and such deputy or deputies shall be subject to the State Personnel System.  Deputies shall be attorneys licensed to practice in this State and shall have a minimum of three years' experience as attorneys.
(c)	The Commission or any member thereof may hold sessions at any place within the State as may be deemed necessary by the Commission.
(d)	Hearings before the Commission shall be open to the public and shall be stenographically reported, and the Commission is authorized to contract for the reporting of such hearings. The Commission shall by regulation provide for the preparation of a record of the hearings and other proceedings.
(e)	The North Carolina Industrial Commission, or any member thereof, or any deputy is authorized by appropriate order, to make additional parties plaintiff or defendant in any proceeding pending before the North Carolina Industrial Commission when it is made to appear that such new party is either a necessary party or a proper party to a final determination of the proceeding.
(f)	The Commission shall create an ombudsman program to assist unrepresented claimants, employers, and other parties, to enable them to protect their rights under this Article. In addition to other duties assigned by the Commission, the ombudsman shall meet with, or otherwise provide information to, injured employees, investigate complaints, and communicate with employers' insurance carriers and physicians at the request of the claimant.  Assistance provided under this subsection shall not include representing the claimant in a compensation hearing."
Sec. 24.  G.S. 97-82 is repealed.
Sec. 25.  G.S. 97-80(a) reads as rewritten:
"(a)	The Commission may make rules, not inconsistent with this Article, for carrying out the provisions of this Article. Processes and procedure under this Article shall be as summary and simple as reasonably may be.  The Commission or any member thereof, or any person deputized by it, shall have the power, for the purpose of this Article, to tax costs against the parties, and to subpoena witnesses, administer or cause to have administered oaths, hold persons, firms or corporations in contempt as provided in Chapter 5A of the General Statutes, and to examine or cause to be examined such parts of the books and records of the parties to a proceeding as relate to questions in dispute.  The Commission may order parties to participate in mediation, under rules substantially similar to those approved by the Supreme Court for use in the superior court division, and to apportion the costs among the parties.  Any party to a proceeding under this Article may, upon application to the Commission, which application shall set forth the materiality of the evidence to be given, cause the depositions of witnesses residing within or without the State to be taken, the costs to be taxed as other costs by Commission. Such depositions shall be taken after giving the notice and in the manner prescribed by law for depositions in action at law, except that they shall be directed to the Commission, the commissioner, or the deputy commissioner before whom the proceedings may be pending."
Sec. 26.  G.S. 143-296 reads as rewritten:
"§ 143-296.  Powers of Industrial Commission; deputies.
The members of the Industrial Commission, or a deputy thereof, shall have power to issue subpoenas, administer oaths, conduct hearings, take evidence, enter orders, opinions, and awards based thereon, and punish for contempt.  The Industrial Commission is authorized to appoint deputies and clerical assistants to carry out the purpose and intent of this Article, and such deputy or deputies are hereby vested with the same power and authority to hear and determine tort claims against State departments, institutions, and agencies as is by this Article vested in the members of the Industrial Commission.  Such deputy or deputies shall also have and are hereby vested with the same power and authority to hear and determine cases arising under the Workers' Compensation Act when assigned to do so by the Industrial Commission.  The Commission may order parties to participate in mediation, under rules substantially similar to those approved by the Supreme Court for use in the superior court division, and to apportion the costs among the parties."
Sec. 27.  G.S. 97-83 reads as rewritten:
"§ 97-83.  Commission is to make award after hearing.
If the employer and the injured employee or his dependents fail to reach an agreement in regard to benefits under this Article within 14 days after the employer has knowledge of the injury or death, or upon the arising of a dispute under this Article, either party may make application to the Industrial Commission for a hearing in regard to the matters at issue, and for a ruling thereon. The county commissioners of each of the counties shall provide a suitable place for the Industrial Commission to conduct hearings in the county seat of such county so long as the provision of such a suitable place does not interfere with the normal use of county facilities.
Immediately after such application has been received the Commission shall set the date of a hearing, which shall he held as soon as practicable, shall notify the parties at issue of the time and place of such hearing. The hearing or hearings shall be held in the city or county where the injury occurred, unless otherwise authorized by the Industrial Commission."
Sec. 28.  G.S. 97-84 reads as rewritten:
"§ 97-84.  Determination of disputes by deputy.
The deputy shall hear the parties at issue and their representatives and witnesses, and shall determine the dispute in a summary manner.  The award, together with a statement of the findings of fact, rulings of law, and other matters pertinent to the questions at issue shall be filed with the record of the proceedings, within 180 days of the close of the hearing record unless time is extended for good cause by the Commission, and a copy of the award shall immediately be sent to the parties in dispute.  The decision of the deputy shall be based on the greater weight of credible evidence as contained in the record."
Sec. 29.  Reserved.
Sec. 30.  G.S. 97-87 reads as rewritten:
"§ 97-87.  Filing awards; judgment in accordance therewith; discharge or restoration of lien.
Any party in interest may file in the superior court of the county in which the injury occurred an order or decision of the Commission, or of an award of the Commission unappealed from or of an award of the Commission affirmed upon appeal, whereupon said court shall render judgment in accordance therewith, and notify the parties. Such judgment shall have the same effect, and all proceedings in relation thereto shall thereafter be the same, as though said judgment had been rendered in a suit duly heard and determined by said court: Provided, if the judgment debtor shall file a certificate duly issued by the Industrial Commission showing compliance with G.S. 97-83 with the clerk of the superior court in the county or counties where such judgment is docketed, then such clerk shall make upon the judgment roll an entry showing the filing of such certificate which shall operate as a discharge of the lien of the said judgment, and no execution shall be issued thereon; provided, further, that if at any time there is default in the payment of any installment due under the award set forth in said judgment the court may, upon application for cause and after 10 days' notice to judgment debtor, order the lien of such judgment restored, and execution may be immediately issued thereon for past due installments and for future installments as they may become due."
Sec. 31.  Chapter 97 of the General Statutes is amended by adding the following two new sections to read:
"§ 97-88.2.  Penalty for misrepresentation.
(a)	Any person who willfully makes any false or misleading statement or representation for the purpose of obtaining or denying any benefit or payment, or assisting another to obtain or deny any benefit or payment under this Article, shall be guilty of a Class I felony and, upon conviction, shall be punished by a fine not to exceed ten thousand dollars ($10,000), imprisonment not to exceed five years, or both.  The court may order restitution.
(b)	The Commission shall refer all cases of suspected fraud and all violations related to workers' compensation claims, by or against insurers or self-funded employers, to the Department of Insurance to:
(1)	Perform investigations and refer possible criminal violations to the appropriate prosecutorial authorities;
(2)	Conduct administrative violation proceedings; and
(3)	Assess and collect penalties and restitution.
(c)	The Commission shall not be liable in a civil action for any action made in good faith under this section, including the identification and referral of a person for investigation and prosecution for an alleged administrative violation or criminal offense.  Any person, including, but not limited to, an attorney, an employee, an employer, an insurer, and an employee of an insurer, who in good faith comes forward with information under this section, shall not be liable in a civil action.
(d)	The Commission shall report annually to the General Assembly on the number and disposition of investigations involving claimants, employers, insurance company officials, officials of third-party administrators, insurance agents, attorneys, medical providers, and vocational rehabilitation providers.
"§ 97-88.3.  Penalty for health care providers.
(a)	In addition to any liability under G.S. 97-88.2, any health care provider who willfully or intentionally undertakes the following acts is subject to an administrative penalty, assessed by the Commission, not to exceed ten thousand dollars ($10,000):
(1)	Submitting charges for health care that was not furnished;
(2)	Fraudulently administering, providing, and attempting to collect for inappropriate or unnecessary treatment or services;
(3)	Failing to disclose an interest as required by this Article.
(b)	In addition to any liability under G.S. 97-88.2, any health care provider who willfully or intentionally undertakes the following acts is subject to an administrative penalty, assessed by the Commission, not to exceed one thousand dollars ($1,000):
(1)	Failing or refusing to timely file required reports or records;
(2)	Making unnecessary referrals;
(3)	Knowingly violating this Article or rules promulgated hereunder, including treatment guidelines, with intention to deceive or to gain improper advantage of a patient, employee, insurer, or the Commission.
(c)	A health care provider who knowingly charges or otherwise holds an employee financially responsible for the cost of any services provided for a compensable injury under this Article is guilty of a misdemeanor.
(d)	Any person, including, but not limited to, an employer, an insurer, and an employee of an insurer, who in good faith comes forward with information under this section, shall not be liable in a civil action.
(e)	Information relating to possible violations under this section shall be reported to the Commission which shall refer the same to the appropriate licensing or regulatory board or authority for the health care provider involved.
(f)	A hospital that relies on a written order of a physician in performing health care services shall not be subject to an administrative penalty in violation of this section."
Sec. 32.  Reserved.
Sec. 33.  G.S. 97-90 reads as rewritten:
"§ 97-90.  Legal and medical fees to be approved by Commission; misdemeanor to receive fees unapproved by Commission, or to solicit employment in adjusting claims; agreement for fee or compensation.
(a)	Fees for attorneys and physicians and charges of hospitals for medical compensation under this Article shall be subject to the approval of the Commission; but no physician or hospital or other medical facilities shall be entitled to collect fees from an employer or insurance carrier until he has made the reports required by the Industrial Commission in connection with the case.  Unless otherwise provided by the rules, schedules, or orders of the Commission, a request for a specific prior approval to charge shall be submitted to the Commission for each such fee or charge.
(b)	Any person (i) who receives any fee, other consideration, or any gratuity on account of services so rendered, unless such consideration or gratuity is approved by the Commission or such court, or (ii) who makes it a business to solicit employment for a lawyer or for himself in respect of any claim or award for compensation, shall be guilty of a misdemeanor, and upon conviction thereof shall, for each offense, be punished by a fine of not more than five hundred dollars ($500.00) or by imprisonment not to exceed one year, or by both such fine and imprisonment.
(c)	
The Industrial Commission in determining an allowance of attorneys' fees shall examine the record to determine the services rendered.  Neither the employer nor its carrier shall be liable for any part of the fee to be paid to the claimant's attorney.  The fees shall be allowed only on the amount of compensation disputed.  The factors to be considered by the Industrial Commission in determining an allowance of attorneys' fees shall include, but not necessarily be limited to: the nature, scope, and quality of the attorneys' services; the level of skill and competence required of the attorney in rendering the services; the results achieved; the experience and skill level of the attorney; and the contingent nature of the case.  In the order making the allowance of attorneys' fees, the Industrial Commission shall set forth findings sufficient to support the amount approved.
The Commission may reduce the attorneys' fees to an amount commensurate with the services performed, or may deny or reduce an attorneys' fees upon proof of solicitation of employment in violation of the Rules of Professional Conduct of the North Carolina State Bar.
(c1)	No attorneys' fees in any case involving benefits under this Article shall be paid until the fee is approved by the Industrial Commission.  Any contract for the payment of attorneys' fees other than as provided in this section is void. The motion for approval of an attorney fee allowance shall be submitted within 30 days following a final determination of the last appealable order of the Industrial Commission.
(d)	Provided, that nothing contained in this section shall prevent the collection of such reasonable fees of physicians and charges for hospitalization as may be recovered in an action, or embraced in settlement of a claim, against a third-party tort-feasor as described in G.S. 97-10.
(e)	The fees provided for in subsection (a) of this section shall be approved by the Commission no later than June 1 of the year in which the Commission exercises its authority under subsection (a) of this section, but shall not become effective until July 1 following such approval.
(f)	For purposes of this section, 'compensation disputed' means compensation, as defined in G.S. 97-2(11), obtained as a result of the claimant's attorneys' legal services rendered in connection with the claim for benefits, to the extent that the amount of benefits secured is in excess of any offer of settlement filed pursuant to G.S. 97-17, if that offer of settlement was filed prior to the attorneys' involvement in the claim for benefits."
Sec. 34.  G.S. 97-91 reads as rewritten:
"§ 97-91.  Commission to determine all questions.
All questions arising under this Article shall be determined by the Commission, except as otherwise herein provided."
Sec. 35.  G.S. 97-98 reads as rewritten:
"§ 97-98.  Policy must contain agreement promptly to pay benefits; continuance of obligation of insurer in event of default.
No policy of insurance against liability arising under this Article shall be issued unless it contains the agreement of the insurer that it will promptly pay to the person entitled to same all benefits conferred by this Article, and all installments of the compensation that may be awarded, and that the obligation shall not be affected by any default of the insured after the injury or by any default in giving notice required by the policy or otherwise. The agreement shall be construed to be a direct promise by the insurer to the person entitled to compensation enforceable in the name of the person."
Sec. 36.  G.S. 58-36-1(5) reads as rewritten:
"(5)	a.	It is the duty of every insurer that writes workers' compensation insurance in this State and is a member of the Bureau, as defined in this section and G.S. 58-36-5 to insure and accept any workers' compensation insurance risk that has been certified to be 'difficult to place' by any fire and casualty insurance agent who is licensed in this State.  When any such risk is called to the attention of the Bureau by receipt of an application with an estimated or deposit premium payment and it appears that the risk is in good faith entitled to such coverage, the Bureau will bind coverage for 30 days and will designate a member who must issue a standard workers' compensation policy of insurance that contains the usual and customary provisions found in those policies.  Coverage will be bound at 12:01 A.M. on the first day following the postmark time and date on the envelope in which the application is mailed including the estimated annual or deposit premium, or the expiration of existing coverage, whichever is later.  If there should be no postmark, coverage will be effective 12:01 A.M. on the date of receipt by the Bureau unless a later date is requested.  Those applications hand delivered to the Bureau will be effective as of 12:01 A.M. of the date following receipt by the Bureau unless a later date is requested.  The designated carrier may request of the Bureau certification of the State Department of Labor that the insured is complying with the laws, rules, and regulations of that Department.  The certification must be finished within 30 days by the State Department of Labor unless extension of time is granted by agreement between the Bureau and the State Department of Labor.  The Bureau will make and adopt such rules as are necessary to carry this section into effect, subject to final approval of the Commissioner.  As a prerequisite to the transaction of workers' compensation insurance in this State, every member of the Bureau that writes such insurance must file with the Bureau written authority permitting the Bureau to act in its behalf, as provided in this section, and an agreement to accept risks that are assigned to the member by the Bureau, as provided in this section.
b.	Upon notice of cancellation or the decision to decline to write or renew a policy of workers' compensation insurance for an employer, the carrier or its agents shall supply the employer with a form, supplied by the Bureau, by which the employer may request the Bureau to list the employer and pertinent information about it among a compendium of such information on employers refused voluntary coverage, which shall be made available by the Bureau to all insurers and self-insureds' administrators doing business in this State.  It shall be stored and indexed to allow access to information by industry, primary classifications of employees, geography, experience modification, and in any other manner the Bureau determines is commercially useful to facilitate voluntary coverage of listed employers.
c.	Failure or refusal by any assigned employer risk to make full disclosure to the Bureau, servicing carrier, or insurer writing a policy of information regarding the employer's true ownership, change of ownership, operations, or payroll, or any other failure to disclose fully any records pertaining to workers' compensation insurance shall be sufficient grounds for the Bureau to authorize the termination of the policy of that employer."
Sec. 37.  G.S. 97-93 reads as rewritten:
"§ 97-93.  Employers required to carry insurance or prove financial ability to pay for benefits; employers required to post notice; self-insured employers regulated by Commissioner of Insurance.
(a)	Every employer subject to the provisions of this Article relative to the payment of compensation shall either:
(1)	Insure and keep insured his liability under this Article in any authorized corporation, association, organization, or in any mutual insurance association formed by a group of employers so authorized; or
(2)	Furnish to the Commissioner of Insurance satisfactory proof of the employer's financial ability, either alone or through membership in a group comprising two or more employers who agree to pool their liabilities under this Article, to directly pay the compensation in the amount and manner and when due as provided for in this Article.
(a1)	Every employer who is in compliance with the provisions of subsection (a) of this section shall post in a conspicuous place in places of employment a notice stating that employment by this employer is subject to the North Carolina Workers' Compensation Act and stating whether the employer has a policy of insurance against liability or qualifies as a self-insured employer.  In the event the employer allows its insurance to lapse or ceases to qualify as a self-insured employer, the employer shall, within five working days of this occurrence, remove any notices indicating otherwise.
(b)	In the case of subdivision (a)(2) of this section, the Commissioner of Insurance may require the deposit of an acceptable security, indemnity, or bond to secure the payment of compensation liabilities as they are incurred. Any individual employer or group of employers who furnish proof of financial ability under subdivision (a)(2) of this section shall be governed in all respects by this Article and by such rules as may be promulgated by the Commissioner of Insurance.
(c)	Payment of dividends to the members of any group of employers who agree to pool their liabilities under subdivision (a)(2) of this section shall not be contingent upon the maintenance or continuance of membership in such pools."
Sec. 37.1.  G.S. 97-94 is amended by adding a new subsection to read:
"( d)	Any person who, with the ability and authority to bring an employer in compliance with G.S. 97-93, wilfully and intentionally refuses and neglects to bring the employer in compliance so, shall be guilty of a misdemeanor, punishable by a fine of not less than one thousand dollars ($1,000).  The Commission may also assess a civil penalty against a person in an amount up to one hundred percent (100%) of the amount of any compensation due the employer's employees injured during the time the employer failed to comply with G.S. 97-93, provided that the person had the ability and authority to bring the employer in compliance with G.S. 97-93 and wilfully and intentionally refused or neglected to do so.  The Commission may suspend collection or remit all or part of the civil penalty on condition that the employer pays the compensation due and complies with G.S. 97-93."
Sec. 38.  The North Carolina Rate Bureau and its member companies are directed to cooperate fully with the Commissioner of Insurance in conducting a thorough and complete study of the methods and costs of assigning "difficult to place" workers' compensation insurance risks under G.S. 58-36-1(5).  Such study shall be completed and the Commissioner shall report on the same to the Joint Legislative Commission on Governmental Operations by March 1, 1994, for consideration of any needed legislation in the 1994 Regular Session of the 1993 General Assembly.  The report of the Commissioner, and the study preceding the same, shall examine such things as, but not be limited to, the criteria used for assigning a workers' compensation risk, the qualifications of and the compensation paid to insurers which service risks assigned under that statute, safety and loss prevention services provided to risks so assigned, the acquisition expenses paid by the Rate Bureau and its member insurers to insurance agents placing risks through such assignments, and the equities of both member insurers and self-funded employers sharing in any possible losses sustained by that assigned risk plan.  The study and report of the Commissioner may, in his discretion, also address the procedures and methodology for insurance rate making under Article 36 of Chapter 58 of the General Statutes.
Sec. 39.  There is appropriated from the General Fund to the Industrial Commission the sum of one hundred thousand dollars ($100,000) for the 1993-94 fiscal year and the sum of one hundred thousand dollars ($100,000) for the 1994-95 fiscal year to establish an ombudsman program.
Sec. 40.  There is appropriated from the General Fund to the Department of Insurance the sum of one hundred thousand dollars ($100,000) for the 1993-94 fiscal year and the sum of one hundred thousand dollars ($100,000) for the 1994-95 fiscal year for the investigation of suspected workers' compensation fraud and violation of workers' compensation claims.
Sec. 41.  The provisions of G.S. 97-79(f), as enacted by Section 23 of this act, shall not become effective unless and until the General Assembly appropriates funds for its implementation.  Section 38 of this act is effective upon ratification.  Section 13 of this act becomes effective October 1, 1993.  Sections 39 and 40 of this act become effective July 1, 1993.  The remaining sections of this act become effective January 1, 1994, and apply to claims arising on or after that date.