SECTION 5.6406. Indemnity Agreement

The indemnity agreement required by Labor Code §407A.051(c)(14) and §407A.056 must be executed by all employers in the group and shall contain the following provisions:

(1) THIS IS A LEGAL DOCUMENT THAT BINDS THE SIGNATORIES TO SPECIFIC DUTIES AND RESPONSIBILITIES REGARDING GROUP FINANCIAL ARRANGEMENTS FOR COVERING WORKERS' COMPENSATION INJURIES AND OCCUPATIONAL DISEASE AND EMPLOYERS LIABILITY INSURANCE COVERAGE IN THE STATE OF TEXAS.

(2) JOINT AND SEVERAL LIABILITY: THIS PARAGRAPH REQUIRES THE EMPLOYER TO JOIN IN PAYING WORKERS' COMPENSATION LOSSES OF THE GROUP IN THE EVENT THE GROUP'S ASSETS ARE NOT SUFFICIENT TO COVER THE LIABILITIES. The Employer will be jointly and severally obligated with each other member of the group to meet the workers' compensation and employer's liability insurance coverage obligations of the group and to make any and all payments to the group, which may be necessary to meet the group's obligations under applicable Texas law and regulations and also in accordance with the group's Bylaws; including agreeing that if the assets of the group are at any time insufficient to enable the group to discharge the group's legal liabilities and other obligations and maintain the reserves required of it under applicable Texas statutes and regulations, and the group is unable to otherwise make up the deficiency in accordance with Texas laws, regulations, and the group's Bylaws, then the Employer will be jointly and severally liable to pay an assessment by the group in an amount necessary to make up the deficiency.

(3) The Employer remains jointly and severally liable even if the Employer is cancelled by the group or elects to terminate membership in the group. The Employer will remain jointly and severally liable for the workers' compensation and employer's liability insurance coverage obligations for the group and its members that were incurred during the Employer's period of membership.

(4) The insolvency or bankruptcy of the Employer will not relieve the group, the Employer, or any member from liability for the payment of any benefits incurred during the insolvency or bankrupt member's period of membership.

(5) The Employer is not buying a policy of insurance. The employer is entering into an agreement which is evidence that the employer is a subscriber to the Texas workers' compensation system.

(6) Because the sums required to fulfill workers' compensation and employer's liability insurance coverage obligation of the group cannot be known precisely in advance, the premium and other assessments, reserve requirements, and other financial requirements for the group's operation will initially be established by estimates.

Source Note: The provisions of this §5.6406 adopted to be effective August 31, 2004, 29 TexReg 8353