(a) The division of workers' compensation shall, by rule promulgated pursuant to the Uniform Administrative Procedures Act, compiled in title 4, chapter 5, establish and collect penalties for the following:

(1) Failure of a covered employer to provide workers' compensation coverage or qualify as a self-insurer;

(2) Late filing of accident reports;

(3) Bad faith denial of claims;

(4) Late filing of notice of denial of claim;

(5) Late filing of notice of change in benefit payments;

(6) Late filing with the department of notice of filing of lawsuits by employees or employee representatives; and

(7) Late filing of judgments by insurance companies or by employers, if self-insured.

(b) All penalties collected by the department from an employer for failure to provide workers' compensation coverage or failure to qualify as a self-insurer shall be paid into and become a part of the uninsured employers fund. All other penalties collected by the department shall be paid into and become a part of the second injury fund.

(c) The commissioner, commissioner's designee, or an agency member appointed by the commissioner, may assess the penalties authorized by this chapter, upon providing notice and an opportunity for a hearing to an employer, an employee, an insurer, or a self-insured pool or trust. If a hearing is requested, the commissioner, commissioner's designee, or an agency member appointed by the commissioner shall have the authority to hear the matter as a contested case, and the authority to hear the administrative appeal of an agency decision, relating to the assessment of the penalties authorized by this chapter. When a hearing or review of an agency decision is requested, the requesting party shall have the burden of proving, by a preponderance of the evidence, that the penalized party was either not subject to this chapter, or that the penalties assessed pursuant to this chapter should not have been assessed.