AIK COMP MEMBERS ASSESSED $97 M

Frankfort, Ky.-based AIK COMP. has announced it plans to assess former members in Kentucky more than $97 million in an attempt to cover its debts. AIK intends to recover the money in retroactive premiums in an attempt to keep injured workers’ claims fulfilled.

AIK is a self-insured workers’ compensation fund. It was established in 1979 as Associated Industries of Kentucky Selective Self-Insurance Fund. Member employers received reduced workers’ compensation rates. Members understood at the time they could later be retroactively charged for any shortalls.

On April 7, Franklin Circuit Court Judge William Graham signed an order enabling AIK COMP rehabilitator Martin J. Koetters to continue his efforts on behalf of the financially troubled self-insured group workers’ compensation fund.

Members of the fund were assessed for a shortfall of $58.5 million in November 2004. (The actual deficit is now estimated to be at least $100 million.) Approximately 1,800 of the fund’s more than 3,700 members paid at least the first installment of the assessment, resulting in the collection of $12.2 million in cash.

Some AIK COMP members, however, challenged the assessment in court, stalling the rehabilitation and leading to an order by Judge Graham on Jan. 27 for a 40-day mediation period between the rehabilitator and a group of opposing counsel. The April 7 order, in effect, ended the mediation process.

Under the order, Koetters is authorized to collect at least 20 percent of the total due from each member who has not previously paid. Assessments under $500 will be collected in full.