Section 50-6-1007 - Defaults(a) The commissioner shall promptly notify the association in writing that a member self-insurer has failed to timely pay workers' compensation liabilities when due. The notification must be issued to the member self-insurer and the association. Upon receipt of such notice by the commissioner, the association shall promptly take possession of all physical and electronic claims files of the member self-insurer. This subsection (a) does not require the commissioner or the association to proactively investigate a possible failure by a member self-insurer to pay workers' compensation liabilities.(b) The association is not liable for the administration of any claims, nor the payment of any rosses or allocated or unallocated loss adjustment expenses, including costs of claims administration and legal fees, related to an employer who defaulted prior to the effective date of this part, nor penalties assessed for an act or omission on the part of a person other than the association.(c) The association shall commence payment of the self-insured employer's claim obligations for which it is liable within thirty (30) days of notification. Payments must be made to claimants whose entitlement to benefits can be ascertained by the association. Notwithstanding this subsection (c), the association is not liable for the payment or reimbursement of the allocated or unallocated loss adjustment expenses, including costs of claims administered and legal fees incurred by the member self-insurer prior to the association assuming administration of the claims. Upon the assumption of obligations by the association, the association has a right to immediate possession of any posted security and the custodian, surety, or issuer of any irrevocable letter of credit must turn over the security to the association, together with the interest that has accrued since the date of the employer's default or insolvency.(d) The payment of benefits by the association from security deposit proceeds releases and discharges any custodian of the security deposit or surety, issuer of a letter of credit, and the employer from liability to fulfill obligations to provide those same benefits as compensation but does not release a person from any liability to the association for full reimbursement. Payment by a surety constitutes a full release of the surety's liability under the bond to the extent of that payment and entitles the surety to full reimbursement by the principal or the principal's estate. Full reimbursement includes necessary attorney fees and other costs and expenses, without prior claim or proceedings on the part of the injured employee or other beneficiaries.(e) The association must be a party in interest in all proceedings involving compensation claims against an insolvent self-insurer whose compensation obligations have been paid or assumed by the association. The association has the same rights and defenses as the insolvent employer, including the right to: (1) Appear, defend, and appeal claims; and(2) Receive notice of, investigate, adjust, handle, compromise, settle, deny, and pay claims.(f) The commissioner shall promptly advise the association after receipt of information indicating that an employer may be unable to meet its workers' compensation obligations.Added by 2024 Tenn. Acts, ch. 666,s 1, eff. 4/9/2024.