New TPA Law Governing Workers Compensation in Washington State

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Washington has recently adopted legislation (Substitute House Bill 2409 that established Revised Code of Washington 51.14.179) that will impose new licensing and other regulatory requirements on workers compensation Third Party Administrators (“TPAs”) that contract with one or more self-insured employers to handle their claims.  Specifically, effective July 1, 2021, all TPAs administering workers compensation business for self-insured employers must be licensed by the Washington State Department of Labor and Industries (“Washington DLI”). Per the Washington DLI, such self-insured employers have used TPAs for a long time in Washington, but this is the first time there will be a requirement to obtain a TPA license.

To become eligible for a TPA license with the Washington DLI, a business entity must:

  • Be licensed to conduct business in Washington by holding a business license from the Washington Department of Revenue.
  • Demonstrate to the Washington DLI’s satisfaction that it can meet the requirement for handling claims under Washington’s laws.
  • Comply with the reporting requirements for TPAs under Washington law.
  • Provide a list of the self-insured employers in Washington for which the TPA is under contract to handle claims.
  • Provide a list of the TPA’s certified claims administrators. Claims administrators are the individuals managing the claims for the self-insured employers.
    • Historically in Washington, only one claims administrator at each location was required to be certified by the Washington DLI. Effective July 1, 2021, all claims administrators will need to be certified or in the process of becoming certified.
    • The process to become certified as a claims administrator is outlined in the Washington Administrative Code and includes having a certain amount of experience in the administration or oversight of workers compensation claims or completion of a training program or curriculum and also includes taking a certification test with the Washington DLI.

The Washington DLI is finalizing the TPA license application materials and expects to distribute them soon.  According to the Washington DLI, if a TPA does not obtain a TPA license by July 1, 2021, it will not be authorized to manage workers compensation claims for self-insured employers in the state of Washington.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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