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HB 5191

AN ACT RELATING TO STATE AFFAIRS AND GOVERNMENT -- STATE EMBLEMS

2025 Regular Session Introduced by Jackie Baginski and 9 co-sponsors

HB 5191 creates a state Uninsured Employer’s Security Fund to pay and recover benefits for workers injured by uninsured employers, with enforcement and penalties for noncompliance.

02/06/2025 Committee recommended measure be held for further study
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Bill Summary · HB 5191

Summary — HB 5191 (Worker's compensation: uninsured employer's security fund)

Bill: HB 5191 — Introduced March 14, 2025; electronically reproduced October 30, 2025
Sponsor: Rep. Denise Mentzer (with multiple cosponsors)
Subject: Amend Worker’s Disability Compensation Act of 1969 (1969 PA 317) — amends MCL 418.501 and adds new sec. 536

Purpose / Intent

HB 5191 creates and establishes the governance, funding, and claims procedures for an Uninsured Employer’s Security Fund (UESF) within the state treasury to provide benefits to workers injured while employed by uninsured employers and to allow the state to pursue recovery from those employers. The bill clarifies trustees’ powers and procedures for administering claims, investments, penalties and reimbursement recoveries.

Key provisions

  • Creates an Uninsured Employer’s Security Fund (UESF) in the state treasury (new sec. 536); the fund succeeds any assets of the former uninsured employer’s account in the prior workplace health and safety fund.
  • Legislative appropriation required: the legislature must appropriate sufficient funds to administer the UESF; trustees may not implement the section until appropriation is made (sec. 536(2)).
  • State treasurer responsibilities:
    • Deposit money and other assets received into the UESF.
    • Invest money in the fund consistent with state treasury surplus fund investment law (MCL 21.141–21.147).
    • Credit interest and earnings to the fund quarterly; fund balances do not lapse to the general fund (sec. 536(3), (6)).
  • Uses of fund (appropriation required): pay benefits to injured employees (or dependents) when the employer is uninsured at time of compensable injury (subject to subsections noted), and pay trustees’ defense/administration expenses (sec. 536(4)).
  • Claims procedure:
    • Claimants submit applications to the director on prescribed forms; the director notifies the employer and trustees upon receipt (sec. 536(7)).
    • Trustees must make reasonable written attempts to notify the alleged uninsured employer of the claim and liability (sec. 536(8)).
  • Employer response and waiver:
    • Uninsured employers must pay or otherwise respond to claims; failure to do so results in waiver of rights under the Act (sec. 536(9)).
    • If waived, trustees step into the rights/obligations of employer/carrier (including redemption of claims) and may require employer records and information (sec. 536(10)).
    • Failure to provide requested information can result in civil fines up to $10,000 per offense; fines are deposited into the fund (sec. 536(10)).
  • Recovery and penalties:
    • Trustees may seek reimbursement from an uninsured employer (or successors) for amounts paid by the fund equal to either:
    • 3× the benefits paid to an employee or dependents (including administration costs), or
    • 3× actual and reasonable expenses incurred processing a claim (sec. 536(13)).
    • Trustees may initiate civil actions by referral to the Attorney General (sec. 536(14)).
    • Redemption by trustees terminates the fund’s liability but does not bar the employee from also pursuing the uninsured employer (sec. 536(11)).
  • Offsets: the fund is entitled to offsets for employee recoveries under other sections (e.g., sec. 641(2) or 827) — limits and interactions are addressed in the bill (truncated text indicates offsets are permitted) (sec. 536(16)).
  • Limitations: Trustees are not authorized to expend fund money for enforcement/regulatory purposes unless specifically authorized (sec. 536(5)).

Who is affected

  • Injured employees or their dependents who sustain compensable work injuries when their employer is uninsured (primary beneficiaries).
  • Uninsured employers — face potential civil liability, tripled reimbursement obligations, requirement to provide records, and fines up to $10,000 per offense for noncompliance.
  • Trustees of the fund, the state treasurer (investment and receipt duties), the director (claims intake), the Attorney General and county prosecutors (enforcement/recovery litigation).
  • Potential indirect effects on employers/insurers and the state budget (administration, appropriation needs, potential litigation costs/recoveries).

Procedural / timeline notes

  • The bill amends MCL 418.501 and adds new section 536; benefits payable only for compensable injuries occurring on or after the effective date of the amendatory act adding sec. 536.
  • Trustees may not operationalize the fund until the legislature appropriates sufficient administrative funds.
  • Legislative actions recorded: filed March 14, 2025; referred to committees (Pensions, Investments & Financial Services; Committee on Economic Competitiveness); electronically reproduced Oct 30, 2025.

Potential impacts / considerations

  • Establishes a mechanism to pay injured workers when employers lack insurance, improving benefit access.
  • Provides strong financial incentives and enforcement tools to recover costs from uninsured employers (including 3× recovery and civil fines).
  • Implementation depends on legislative appropriation; potential net fiscal effect will depend on fund balances, recoveries, administrative costs, and litigation activity.

Compiled from official sources — confirm details with the bill’s official record.

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