39-71-532. Penalties and remedies for underinsuring. (1) (a) The department may require that an underinsured employer pay to the department a penalty of up to double the premium that the employer would have paid if the employer had properly classified the employee or $200, whichever is greater. In determining the amount for the calculation of the penalty under this subsection (a), the department shall make an assessment on how much premium would have been paid on the employer's payroll for the past 3 years for periods within the 3 years when the employer was underinsured. The department shall determine the amount of the penalty based upon the gravity of the violation and the clarity of the relevant classification codes. The determination by the department is subject to the provisions in 39-71-204.
     (b) The penalty provided in subsection (1)(a) may be assessed against the employer for each employee not properly classified.
     (c) The fund must receive from an underinsured employer an amount equal to all benefits paid or to be paid from the fund to an injured employee of the underinsured employer. However, the underinsured employer's liability under this subsection (c) may not exceed $50,000.
     (2) When the department discovers an underinsured employer, it may order the employer to cease operations until the employer's employees are properly classified and the correct premium rates are being paid to the insurer.
     (3) An employer who does not comply with the department's order to cease operations is guilty of a misdemeanor. Each day of violation is a separate offense. The county attorney may bring a criminal action under this subsection in the county in which the violation occurs. Prosecution under this subsection does not bar the department from enforcing its order by a civil action.
     (4) The department may institute and maintain in the name of the state, through the attorney general or the county attorney, an action for an injunction order or other civil remedy in district court to enforce its order to cease operations.
     (5) This section does not limit a private insurer's civil remedies to collect premiums owed by the employer for paying insufficient premiums due to misclassification of employees.

     History: En. Sec. 2, Ch. 467, L. 1993; amd. Sec. 46, Ch. 18, L. 1995.