(1) A compensable injury to a subject worker while in the employ of a noncomplying employer is compensable to the same extent as if the employer had complied with this chapter. The Director of the Department of Consumer and Business Services shall refer the claim for such an injury to an assigned claims agent within 60 days of the date the director has notice of the claim. At the time of referral of the claim, the director shall notify the employer in writing regarding the referral of the claim and the employer’s right to object to the claim. A claim for compensation made by such a worker shall be processed by the assigned claims agent in the same manner as a claim made by a worker employed by a carrier-insured employer, except that the time within which the first installment of compensation is to be paid, pursuant to ORS § 656.262 (4), shall not begin to run until the director has referred the claim to the assigned claims agent. At any time within which the claim may be accepted or denied as provided in ORS § 656.262, the employer may request a hearing to object to the claim. If an order becomes final holding the claim to be compensable, the employer is liable for all costs imposed by this chapter, including reasonable attorney fees to be paid to the worker’s attorney for services rendered in connection with the employer’s objection to the claim.

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(2) In addition to, and not in lieu of, any civil penalties assessed pursuant to ORS § 656.735, all costs to the Workers’ Benefit Fund incurred under subsection (1) of this section shall be a liability of the noncomplying employer. Such costs include compensation, disputed claim settlements pursuant to ORS § 656.289 and claim disposition agreements pursuant to ORS § 656.236, whether or not the noncomplying employer agrees and executes such documents, reasonable administrative costs and claims processing costs provided by contract, attorney fees related to compensability issues and any attorney fees awarded to the claimant, but do not include assessments for reserves in the Workers’ Benefit Fund. The director shall recover such costs from the employer. The director periodically shall pay the assigned claims agent from the Workers’ Benefit Fund for any costs the assigned claims agent incurs under this section in accordance with the terms of the contract. When the director prevails in any action brought pursuant to this subsection, the director is entitled to recover from the noncomplying employer court costs and attorney fees incurred by the director.

(3) Periodically, or upon the request of a noncomplying employer in a particular claim, the director shall audit the files of the State Accident Insurance Fund Corporation and any assigned claims agents to validate the amount reimbursed pursuant to subsection (2) of this section. The conditions for granting or denying of reimbursement shall be specified in the contract with the assigned claims agent. The contract at least shall provide for denial of reimbursement if, upon such audit, any of the following are found to apply:

(a) Compensation has been paid as a result of untimely, inaccurate, or improper claims processing;

(b) Compensation has been paid negligently for treatment of any condition unrelated to the compensable condition;

(c) The compensability of an accepted claim is questionable and the rationale for acceptance has not been reasonably documented in accordance with generally accepted claims management procedures;

(d) The separate payments of compensation have not been documented in accordance with generally accepted accounting procedures; or

(e) The payments were made pursuant to a disposition agreement as provided by ORS § 656.236 without the prior approval of the director.

(4) The State Accident Insurance Fund Corporation and any assigned claims agent may request review under ORS § 656.704 of any disapproval of reimbursement made by the director under this section.

(5) Claims of injured workers of noncomplying employers may be assigned and reassigned by the director for claims processing regardless of the date of the worker’s injury.

(6) In selecting an assigned claims agent, the director must consider the assigned claims agent’s ability to deliver timely and appropriate benefits to injured workers, the ability to control both claims cost and administrative cost and such other factors as the director considers appropriate.

(7) If no qualified entity agrees to be an assigned claims agent, the director may require one or more of the three highest premium producing insurers to be assigned claims agents. Notwithstanding any other provision of law, the director’s selection of assigned claims agents shall be made at the sole discretion of the director. Such selections shall not be subject to review by any court or other administrative body.

(8) Any assigned claims agent, except the State Accident Insurance Fund Corporation, may employ legal counsel of its choice for representation under this section.

(9) As used in this section, ‘assigned claims agent’ means an insurer, casualty adjuster or a third party administrator with whom the director contracts to manage claims of injured workers of noncomplying employers. [Amended by 1959 c.448 § 9; 1965 c.285 § 15; 1967 c.341 § 5; 1971 c.72 § 1; 1973 c.447 § 2; 1979 c.839 § 2; 1981 c.854 § 8; 1983 c.816 § 2; 1987 c.234 § 2; 1987 c.250 § 3; 1991 c.679 § 1; 1995 c.332 § 7; 1995 c.641 § 17; 1999 c.1020 § 1; 2003 c.14 § 399; 2003 c.170 § 1; 2005 c.26 § 1]