Download Zipped Introduced WP 8.0 HB0266.ZIP 26,977 Bytes
[Status][Bill Documents][Fiscal Note][Bills Directory]

H.B. 266

             1     

WORKERS' COMPENSATION COVERAGE

             2     
AMENDMENTS

             3     
1999 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Sponsor: Gerry A. Adair

             6      AN ACT RELATING TO LABOR; AMENDING WORKERS' COMPENSATION COVERAGE
             7      REQUIREMENTS; AMENDING PROVISIONS RELATED TO EMPLOYERS WHO ARE
             8      SELF-INSURED FOR PURPOSES OF WORKERS' COMPENSATION; AND MAKING
             9      TECHNICAL CORRECTIONS.
             10      This act affects sections of Utah Code Annotated 1953 as follows:
             11      AMENDS:
             12          31A-15-103, as last amended by Chapter 375, Laws of Utah 1997
             13          34A-2-103 (Effective 07/01/99), as last amended by Chapter 277, Laws of Utah 1998
             14          34A-2-103 (Superseded 07/01/99), as last amended by Chapter 277, Laws of Utah 1998
             15          34A-2-201, as renumbered and amended by Chapter 375, Laws of Utah 1997
             16          34A-2-401, as renumbered and amended by Chapter 375, Laws of Utah 1997
             17      ENACTS:
             18          34A-2-201.5, Utah Code Annotated 1953
             19      Be it enacted by the Legislature of the state of Utah:
             20          Section 1. Section 31A-15-103 is amended to read:
             21           31A-15-103. Surplus lines insurance -- Unauthorized insurers.
             22          (1) Notwithstanding Section 31A-15-102 , a foreign insurer that has not obtained a
             23      certificate of authority to do business in this state under Section 31A-14-202 may negotiate for and
             24      make insurance contracts with persons in this state and on risks located in this state, subject to the
             25      limitations and requirements of this section.
             26          (2) For contracts made under this section, the insurer may, in this state, inspect the risks
             27      to be insured, collect premiums and adjust losses, and do all other acts reasonably incidental to the


             28      contract, through employees or through independent contractors.
             29          (3) (a) Subsections (1) and (2) do not permit any person to solicit business in this state on
             30      behalf of an insurer that has no certificate of authority.
             31          (b) Any insurance placed with a nonadmitted insurer shall be placed with a surplus lines
             32      broker licensed under Chapter 23.
             33          (c) The commissioner may by rule prescribe how a surplus lines broker may:
             34          (i) pay or permit the payment, commission, or other remuneration on insurance placed by
             35      [him] the surplus lines broker under authority of [his] the surplus lines broker's license to one
             36      holding a license to act as an insurance agent[,]; and [how he may]
             37          (ii) advertise the availability of [his] the surplus lines broker's services in procuring, on
             38      behalf of persons seeking insurance, contracts with nonadmitted insurers.
             39          (4) For contracts made under this section, nonadmitted insurers are subject to Sections
             40      31A-23-302 and 31A-26-303 and the rules adopted under those sections.
             41          (5) A nonadmitted insurer may not issue workers' compensation insurance coverage to
             42      employers located in this state, except for stop loss coverages issued to employers securing
             43      workers' compensation under Subsection 34A-2-201 [(1)(c)](3).
             44          (6) (a) The commissioner may by rule prohibit making contracts under Subsection (1) for
             45      a specified class of insurance if authorized insurers provide an established market for the class in
             46      this state that is adequate and reasonably competitive.
             47          (b) The commissioner may by rule place restrictions and limitations on and create special
             48      procedures for making contracts under Subsection (1) for a specified class of insurance if there
             49      have been abuses of placements in the class or if the policyholders in the class, because of limited
             50      financial resources, business experience, or knowledge, cannot protect their own interests
             51      adequately.
             52          (c) The commissioner may prohibit an individual insurer from making any contract under
             53      Subsection (1) and all insurance agents and brokers from dealing with the insurer if:
             54          (i) the insurer has willfully violated this section, Section 31A-4-102 , 31A-23-302 , or
             55      31A-26-303 , or any rule adopted under any of these sections;
             56          (ii) the insurer has failed to pay the fees and taxes specified under Section 31A-3-301 ; or
             57          (iii) the commissioner has reason to believe that the insurer is in an unsound condition or
             58      is operated in a fraudulent, dishonest, or incompetent manner or in violation of the law of its


             59      domicile.
             60          (d) The commissioner may issue lists of unauthorized foreign insurers whose solidity [he]
             61      the commissioner doubts, or whose practices [he] the commissioner considers objectionable. The
             62      commissioner shall issue lists of unauthorized foreign insurers [he] the commissioner considers
             63      to be reliable and solid. The commissioner may also issue other relevant evaluations of
             64      unauthorized insurers. No action lies against the commissioner or any employee of the department
             65      for any written or oral communication made in, or in connection with the issuance of, these lists
             66      or evaluations. A foreign unauthorized insurer shall be listed on the commissioner's "reliable" list
             67      only if the unauthorized insurer:
             68          (i) has delivered a request to the commissioner to be on the list;
             69          (ii) has established satisfactory evidence of good reputation and financial integrity;
             70          (iii) has delivered to the commissioner a copy of its current annual statement certified by
             71      the insurer and continues each subsequent year to file its annual statements with the commissioner
             72      within 60 days of its filing with the insurance regulatory authority where it is domiciled; and
             73          (iv) (A) is in substantial compliance with the solvency standards in Chapter 17, Part [6]
             74      VI, Risk-Based Capital, or maintains capital and surplus of at least $5,000,000, whichever is
             75      greater, and maintains in the United States an irrevocable trust fund in either a national bank or a
             76      member of the Federal Reserve System, or maintains a deposit meeting the statutory deposit
             77      requirements for insurers in the state where it is made, which trust fund or deposit:
             78          (I) shall be in an amount not less than $1,500,000 for the protection of all of the insurer's
             79      policyholders in the United States;
             80          (II) may consist of cash, securities, or investments of substantially the same character and
             81      quality as those which are "qualified assets" under Section 31A-17-201 ; and
             82          (III) may include as part of the trust arrangement a letter of credit that qualifies as
             83      acceptable security under Subsection 31A-17-404 (3)(c)(iii); or
             84          (B) in the case of any "Lloyd's" or other similar incorporated or unincorporated group of
             85      alien individual insurers, maintains a trust fund that:
             86          (I) shall be in an amount not less than $50,000,000 as security to its full amount for all
             87      policyholders and creditors in the United States of each member of the group;
             88          (II) may consist of cash, securities, or investments of substantially the same character and
             89      quality as those which are "qualified assets" under Section 31A-17-201 ; and


             90          (III) may include as part of this trust arrangement a letter of credit that qualifies as
             91      acceptable security under Subsection 31A-17-404 (3)(c)(iii).
             92          (7) A surplus lines broker may not, either knowingly or without reasonable investigation
             93      of the financial condition and general reputation of the insurer, place insurance under this section
             94      with financially unsound insurers or with insurers engaging in unfair practices, or with otherwise
             95      substandard insurers, unless the broker gives the applicant notice in writing of the known
             96      deficiencies of the insurer or the limitations on his investigation, and explains the need to place
             97      the business with that insurer. A copy of this notice shall be kept in the office of the broker for at
             98      least five years. To be financially sound, an insurer shall satisfy standards that are comparable to
             99      those applied under the laws of this state to authorized insurers. Insurers on the "doubtful or
             100      objectionable" list under Subsection (6)(d) and insurers not on the commissioner's "reliable" list
             101      under Subsection (6)(d) are presumed substandard.
             102          (8) A policy issued under this section shall include a description of the subject of the
             103      insurance and indicate the coverage, conditions, and term of the insurance, the premium charged
             104      and premium taxes to be collected from the policyholder, and the name and address of the
             105      policyholder and insurer. If the direct risk is assumed by more than one insurer, the policy shall
             106      state the names and addresses of all insurers and the portion of the entire direct risk each has
             107      assumed. All policies issued under the authority of this section shall have attached or affixed to
             108      the policy the following statement: "The insurer issuing this policy does not hold a certificate of
             109      authority to do business in this state and thus is not fully subject to regulation by the Utah
             110      insurance commissioner. This policy receives no protection from any of the guaranty associations
             111      created under Title 31A, Chapter 28."
             112          (9) Upon placing a new or renewal coverage under this section, the broker shall promptly
             113      deliver to the policyholder or his agent evidence of the insurance consisting either of the policy as
             114      issued by the insurer or, if the policy is not then available, a certificate, cover note, or other
             115      confirmation of insurance complying with Subsection (8).
             116          (10) If [he] the commissioner finds it necessary to protect the interests of insureds and the
             117      public in this state, the commissioner may by rule subject policies issued under this section to as
             118      much of the regulation provided by this title as is required for comparable policies written by
             119      authorized foreign insurers.
             120          (11) (a) Each surplus lines transaction in this state shall be examined to determine whether


             121      it complies with:
             122          (i) the surplus lines tax levied under Chapter 3;
             123          (ii) the solicitation limitations of Subsection (3);
             124          (iii) the requirement of Subsection (3) that placement be through a surplus lines broker;
             125          (iv) placement limitations imposed under Subsections (6)(a), (b), and (c); and
             126          (v) the policy form requirements of Subsections (8) and (10).
             127          (b) The examination described in Subsection (11)(a) shall take place as soon as practicable
             128      after the transaction. The surplus lines broker shall submit to the examiner information necessary
             129      to conduct the examination within a period specified by rule.
             130          (c) The examination described in Subsection (11)(a) may be conducted by the
             131      commissioner or by an advisory organization created under Section 31A-15-111 and authorized
             132      by the commissioner to conduct these examinations. The commissioner is not required to
             133      authorize any additional advisory organizations to conduct examinations under this subsection.
             134      The commissioner's authorization of one or more advisory organizations to act as examiners under
             135      this subsection shall be by rule. In addition, the authorization shall be evidenced by a contract, on
             136      a form provided by the commissioner, between the authorized advisory organization and the
             137      department.
             138          (d) The person conducting the examination described in Subsection (11)(a) shall collect
             139      a stamping fee of an amount not to exceed 1% of the policy premium payable in connection with
             140      the transaction. Stamping fees collected by the commissioner shall be deposited in the General
             141      Fund. The commissioner shall establish this fee by rule. Stamping fees collected by an advisory
             142      organization are the property of the advisory organization to be used in paying the expenses of the
             143      advisory organization. Liability for paying the stamping fee is as required under Subsection
             144      31A-3-303 (1) for taxes imposed under Section 31A-3-301 . The commissioner shall adopt a rule
             145      dealing with the payment of stamping fees. If stamping fees are not paid when due, the
             146      commissioner or advisory organization may impose a penalty of 25% of the fee due, plus 1-1/2%
             147      per month from the time of default until full payment of the fee. Fees relative to policies covering
             148      risks located partially in this state shall be allocated in the same manner as under Subsection
             149      31A-3-303 (4).
             150          (e) The commissioner, representatives of the department, advisory organizations,
             151      representatives and members of advisory organizations, authorized insurers, and surplus lines


             152      insurers are not liable for damages on account of statements, comments, or recommendations made
             153      in good faith in connection with their duties under this subsection or under Section 31A-15-111 .
             154          (f) Examinations conducted under this subsection and the documents and materials related
             155      to the examinations are confidential.
             156          Section 2. Section 34A-2-103 (Effective 07/01/99) is amended to read:
             157           34A-2-103 (Effective 07/01/99). Employers enumerated and defined -- Regularly
             158      employed -- Statutory employers.
             159          (1) (a) The state, and each county, city, town, and school district in the state are considered
             160      employers under this chapter and Chapter 3, Utah Occupational Disease Act.
             161          (b) For the purposes of the exclusive remedy in this chapter and Chapter 3, Utah
             162      Occupational Disease Act prescribed in Sections 34A-2-105 and 34A-3-102 , the state is considered
             163      to be a single employer and includes any office, department, agency, authority, commission, board,
             164      institution, hospital, college, university, or other instrumentality of the state.
             165          (2) Except as provided in Subsection (4), each person, including each public utility and
             166      each independent contractor, who regularly employs one or more workers or operatives in the same
             167      business, or in or about the same establishment, under any contract of hire, express or implied, oral
             168      or written, is considered an employer under this chapter and Chapter 3, Utah Occupational Disease
             169      Act. As used in this Subsection (2):
             170          (a) "Independent contractor" means any person engaged in the performance of any work
             171      for another who, while so engaged, is:
             172          (i) independent of the employer in all that pertains to the execution of the work;
             173          (ii) not subject to the routine rule or control of the employer;
             174          (iii) engaged only in the performance of a definite job or piece of work; and
             175          (iv) subordinate to the employer only in effecting a result in accordance with the
             176      employer's design.
             177          (b) "Regularly" includes all employments in the usual course of the trade, business,
             178      profession, or occupation of the employer, whether continuous throughout the year or for only a
             179      portion of the year.
             180          (3) (a) The client company in an employee leasing arrangement under Title 58, Chapter
             181      59, Employee Leasing Company Licensing Act, is considered the employer of leased employees
             182      and shall secure workers' compensation benefits for them by complying with Subsection


             183      34A-2-201 (1)[(a)] or [(b)] (2) and commission rules.
             184          (b) Insurance carriers may underwrite workers' compensation secured in accordance with
             185      Subsection (3)(a) showing the leasing company as the named insured and each client company as
             186      an additional insured by means of individual endorsements.
             187          (c) Endorsements shall be filed with the division as directed by commission rule.
             188          (d) The division shall promptly inform the Division of Occupation and Professional
             189      Licensing within the Department of Commerce if the division has reason to believe that an
             190      employee leasing company is not in compliance with Subsection 34A-2-201 (1)[(a)] or [(b)] (2) and
             191      commission rules.
             192          (4) A domestic employer who does not employ one employee or more than one employee
             193      at least 40 hours per week is not considered an employer under this chapter and Chapter 3, Utah
             194      Occupational Disease Act.
             195          (5) (a) As used in this Subsection (5):
             196          (i) (A) "agricultural employer" means a person who employs agricultural labor as defined
             197      in Subsections 35A-4-206 (1) and (2) and does not include employment as provided in Subsection
             198      35A-4-206 (3); and
             199          (B) notwithstanding Subsection (5)(a)(i)(A), only for purposes of determining who is a
             200      member of the employer's immediate family under Subsection (5)(a)(ii), if the agricultural
             201      employer is a corporation, partnership, or other business entity, "agricultural employer" means an
             202      officer, director, or partner of the business entity;
             203          (ii) "employer's immediate family" means:
             204          (A) an agricultural employer's:
             205          (I) spouse;
             206          (II) grandparent;
             207          (III) parent;
             208          (IV) sibling;
             209          (V) child;
             210          (VI) grandchild;
             211          (VII) nephew; or
             212          (VIII) niece;
             213          (B) a spouse of any person provided in Subsection (4)(a)(ii)(A)(II) through (VIII); or


             214          (C) an individual who is similar to those listed in Subsections (4)(a)(ii)(A) or (B) as
             215      defined by rules of the commission; and
             216          (iii) "non-immediate family" means a person who is not a member of the employer's
             217      immediate family.
             218          (b) For purposes of this chapter and Chapter 3, Utah Occupational Disease Act, an
             219      agricultural employer is not considered an employer of a member of the employer's immediate
             220      family.
             221          (c) For purposes of this chapter and Chapter 3, Utah Occupational Disease Act, an
             222      agricultural employer is not considered an employer of a non-immediate family employee if:
             223          (i) for the previous calendar year the agricultural employer's total annual payroll for all
             224      non-immediate family employees was less than $8,000; or
             225          (ii) (A) for the previous calendar year the agricultural employer's total annual payroll for
             226      all non-immediate family employees was equal to or greater than $8,000 but less than $50,000; and
             227          (B) the agricultural employer maintains insurance that covers job-related injuries of the
             228      employer's nonimmediate family employees in at least the following amounts:
             229          (I) $300,000 liability insurance, as defined in Section 31A-1-301 ; and
             230          (II) $5,000 for medical, hospital, and surgical benefits as described in Subsection
             231      31A-1-301 (50)(a)(ii).
             232          (d) For purposes of this chapter and Chapter 3, Utah Occupational Disease Act, an
             233      agricultural employer is considered an employer of a non-immediate family employee if:
             234          (i) for the previous calendar year the agricultural employer's total annual payroll for all
             235      non-immediate family employees is equal to or greater than $50,000; or
             236          (ii) (A) for the previous year the agricultural employer's total payroll for non-immediate
             237      family employees was equal to or exceeds $8,000 but is less than $50,000; and
             238          (B) the agricultural employer fails to maintain the insurance required under Subsection
             239      (5)(c)(ii).
             240          (6) An employer of agricultural laborers or domestic servants who is not considered an
             241      employer under this chapter and Chapter 3, Utah Occupational Disease Act, may come under this
             242      chapter and Chapter 3, Utah Occupational Disease Act, by complying with:
             243          (a) this chapter and Chapter 3, Utah Occupational Disease Act; and
             244          (b) the rules of the commission.


             245          (7) (a) If any person who is an employer procures any work to be done wholly or in part
             246      for the employer by a contractor over whose work the employer retains supervision or control, and
             247      this work is a part or process in the trade or business of the employer, the contractor, all persons
             248      employed by the contractor, all subcontractors under the contractor, and all persons employed by
             249      any of these subcontractors, are considered employees of the original employer for the purposes
             250      of this chapter and Chapter 3, Utah Occupational Disease Act.
             251          (b) Any person who is engaged in constructing, improving, repairing, or remodelling a
             252      residence that the person owns or is in the process of acquiring as the person's personal residence
             253      may not be considered an employee or employer solely by operation of Subsection (7)(a).
             254          (c) A partner in a partnership or an owner of a sole proprietorship may not be considered
             255      an employee under Subsection (7)(a) if the employer who procures work to be done by the
             256      partnership or sole proprietorship obtains and relies on either:
             257          (i) a valid certification of the partnership's or sole proprietorship's compliance with Section
             258      34A-2-201 indicating that the partnership or sole proprietorship secured the payment of workers'
             259      compensation benefits pursuant to Section 34A-2-201 ; or
             260          (ii) if a partnership or sole proprietorship with no employees other than a partner of the
             261      partnership or owner of the sole proprietorship, a workers' compensation policy issued by an
             262      insurer pursuant to Subsection 31A-21-104 (8) stating that:
             263          (A) the partnership or sole proprietorship is customarily engaged in an independently
             264      established trade, occupation, profession, or business; and
             265          (B) the partner or owner personally waives the partner's or owner's entitlement to the
             266      benefits of this chapter and Chapter 3, Utah Occupational Disease Act, in the operation of the
             267      partnership or sole proprietorship.
             268          (d) A director or officer of a corporation may not be considered an employee under
             269      Subsection (7)(a) if the director or officer is excluded from coverage under Subsection
             270      34A-2-104 (4).
             271          (e) A contractor or subcontractor is not an employee of the employer under Subsection
             272      (7)(a), if the employer who procures work to be done by the contractor or subcontractor obtains
             273      and relies on either:
             274          (i) a valid certification of the contractor's or subcontractor's compliance with Section
             275      34A-2-201 ; or


             276          (ii) if a partnership, corporation, or sole proprietorship with no employees other than a
             277      partner of the partnership, officer of the corporation, or owner of the sole proprietorship, a workers'
             278      compensation policy issued by an insurer pursuant to Subsection 31A-21-104 (8) stating that:
             279          (A) the partnership, corporation, or sole proprietorship is customarily engaged in an
             280      independently established trade, occupation, profession, or business; and
             281          (B) the partner, corporate officer, or owner personally waives the partner's, corporate
             282      officer's, or owner's entitlement to the benefits of this chapter and Chapter 3, Utah Occupational
             283      Disease Act, in the operation of the partnership's, corporation's, or sole proprietorship's enterprise
             284      under a contract of hire for services.
             285          Section 3. Section 34A-2-103 (Superseded 07/01/99) is amended to read:
             286           34A-2-103 (Superseded 07/01/99). Employers enumerated and defined -- Regularly
             287      employed -- Statutory employers.
             288          (1) (a) The state, and each county, city, town, and school district in the state are considered
             289      employers under this chapter and Chapter 3, Utah Occupational Disease Act.
             290          (b) For the purposes of the exclusive remedy in this chapter and Chapter 3, Utah
             291      Occupational Disease Act prescribed in Sections 34A-2-105 and 34A-3-102 , the state is considered
             292      to be a single employer and includes any office, department, agency, authority, commission, board,
             293      institution, hospital, college, university, or other instrumentality of the state.
             294          (2) Except as provided in Subsection (4), each person, including each public utility and
             295      each independent contractor, who regularly employs one or more workers or operatives in the same
             296      business, or in or about the same establishment, under any contract of hire, express or implied, oral
             297      or written, is considered an employer under this chapter and Chapter 3, Utah Occupational Disease
             298      Act. As used in Subsection (2):
             299          (a) "Regularly" includes all employments in the usual course of the trade, business,
             300      profession, or occupation of the employer, whether continuous throughout the year or for only a
             301      portion of the year.
             302          (b) "Independent contractor" means any person engaged in the performance of any work
             303      for another who, while so engaged, is independent of the employer in all that pertains to the
             304      execution of the work, is not subject to the routine rule or control of the employer, is engaged only
             305      in the performance of a definite job or piece of work, and is subordinate to the employer only in
             306      effecting a result in accordance with the employer's design.


             307          (3) (a) The client company in an employee leasing arrangement under Title 58, Chapter
             308      59, Employee Leasing Company Licensing Act, is considered the employer of leased employees
             309      and shall secure workers' compensation benefits for them by complying with Subsection
             310      34A-2-201 (1)[(a)] or [(b)] (2) and commission rules.
             311          (b) Insurance carriers may underwrite workers' compensation secured in accordance with
             312      Subsection (3)(a) showing the leasing company as the named insured and each client company as
             313      an additional insured by means of individual endorsements.
             314          (c) Endorsements shall be filed with the division as directed by commission rule.
             315          (d) The division shall promptly inform the Division of Occupation and Professional
             316      Licensing within the Department of Commerce if the division has reason to believe that an
             317      employee leasing company is not in compliance with Subsection 34A-2-201 (1)[(a)] or [(b)] (2) and
             318      commission rules.
             319          (4) (a) An agricultural employer is not considered an employer under this chapter and
             320      Chapter 3, Utah Occupational Disease Act, if:
             321          (i) (A) the employer's employees are all members of the employer's immediate family; and
             322          (B) the employer has a proprietary interest in the farm where they work; or
             323          (ii) the employer employed five or fewer persons other than immediate family members
             324      for 40 hours or more per week per employee for 13 consecutive weeks during any part of the
             325      preceding 12 months.
             326          (b) A domestic employer who does not employ one employee or more than one employee
             327      at least 40 hours per week is not considered an employer under this chapter and Chapter 3, Utah
             328      Occupational Disease Act.
             329          (5) An employer of agricultural laborers or domestic servants who is not considered an
             330      employer under this chapter and Chapter 3, Utah Occupational Disease Act, may come under this
             331      chapter and Chapter 3, Utah Occupational Disease Act, by complying with this chapter and
             332      Chapter 3, Utah Occupational Disease Act, and the rules of the commission.
             333          (6) (a) If any person who is an employer procures any work to be done wholly or in part
             334      for the employer by a contractor over whose work the employer retains supervision or control, and
             335      this work is a part or process in the trade or business of the employer, the contractor, all persons
             336      employed by the contractor, all subcontractors under the contractor, and all persons employed by
             337      any of these subcontractors, are considered employees of the original employer for the purposes


             338      of this chapter and Chapter 3, Utah Occupational Disease Act.
             339          (b) Any person who is engaged in constructing, improving, repairing, or remodelling a
             340      residence that the person owns or is in the process of acquiring as the person's personal residence
             341      may not be considered an employee or employer solely by operation of Subsection (6)(a).
             342          (c) A partner in a partnership or an owner of a sole proprietorship may not be considered
             343      an employee under Subsection (6)(a) if the employer who procures work to be done by the
             344      partnership or sole proprietorship obtains and relies on either:
             345          (i) a valid certification of the partnership's or sole proprietorship's compliance with Section
             346      34A-2-201 indicating that the partnership or sole proprietorship secured the payment of workers'
             347      compensation benefits pursuant to Section 34A-2-201 ; or
             348          (ii) if a partnership or sole proprietorship with no employees other than a partner of the
             349      partnership or owner of the sole proprietorship, a workers' compensation policy issued by an
             350      insurer pursuant to Subsection 31A-21-104 (8) stating that:
             351          (A) the partnership or sole proprietorship is customarily engaged in an independently
             352      established trade, occupation, profession, or business; and
             353          (B) the partner or owner personally waives the partner's or owner's entitlement to the
             354      benefits of this chapter and Chapter 3, Utah Occupational Disease Act, in the operation of the
             355      partnership or sole proprietorship.
             356          (d) A director or officer of a corporation may not be considered an employee under
             357      Subsection (6)(a) if the director or officer is excluded from coverage under Subsection
             358      34A-2-104 (4).
             359          (e) A contractor or subcontractor is not an employee of the employer under Subsection
             360      (6)(a), if the employer who procures work to be done by the contractor or subcontractor obtains
             361      and relies on either:
             362          (i) a valid certification of the contractor's or subcontractor's compliance with Section
             363      34A-2-201 ; or
             364          (ii) if a partnership, corporation, or sole proprietorship with no employees other than a
             365      partner of the partnership, officer of the corporation, or owner of the sole proprietorship, a workers'
             366      compensation policy issued by an insurer pursuant to Subsection 31A-21-104 (8) stating that:
             367          (A) the partnership, corporation, or sole proprietorship is customarily engaged in an
             368      independently established trade, occupation, profession, or business; and


             369          (B) the partner, corporate officer, or owner personally waives the partner's, corporate
             370      officer's, or owner's entitlement to the benefits of this chapter and Chapter 3, Utah Occupational
             371      Disease Act, in the operation of the partnership's, corporation's, or sole proprietorship's enterprise
             372      under a contract of hire for services.
             373          Section 4. Section 34A-2-201 is amended to read:
             374           34A-2-201. Employers to secure workers' compensation benefits for employees --
             375      Methods -- Self-insured status.
             376          [(1) Employers, including counties, cities, towns, and school districts,] An employer shall
             377      secure the payment of workers' compensation benefits for [their] its employees by:
             378          [(a) by] (1) insuring, and keeping insured, the payment of this compensation with the
             379      Workers' Compensation Fund of Utah[, which payments shall commence within 30 days after any
             380      final award by the commission];
             381          [(b) by] (2) insuring, and keeping insured, the payment of this compensation with any
             382      stock corporation or mutual association authorized to transact the business of workers'
             383      compensation insurance in this state[, which payments shall commence within 30 days after any
             384      final award by the commission]; or
             385          [(c) by furnishing annually to the division satisfactory proof of financial ability to]
             386          (3) obtaining approval from the division in accordance with Section 34A-2-201.5 to pay
             387      direct compensation as a self-insured employer in the amount, in the manner, and when due as
             388      provided for in this chapter or Chapter 3, Utah Occupational Disease Act[, which payments shall
             389      commence within 30 days after any final award by the commission].
             390          [(2) (a) If an employer secures payment of workers' compensation benefits under
             391      Subsection (1)(c), the division may:]
             392          [(i) require the deposit of acceptable security, indemnity, or bond to secure the payment
             393      of compensation liabilities as they are incurred; and]
             394          [(ii) at any time change or modify the requirement to deposit acceptable security,
             395      indemnity, or bond, if in its judgment this action is necessary or desirable to secure or assure a
             396      strict compliance with all the provisions of law relating to the payment of compensation and the
             397      furnishing of medical, nurse, and hospital services, medicines, and burial expenses to injured
             398      employees and to the dependents of killed employees.]
             399          [(b) (i) The division may in proper cases revoke any employer's privilege as a self-insurer.]


             400          [(ii) The revocation under Subsection (2)(b) (i) becomes a final order of the commission
             401      effective 30 days from the date the division revokes the privilege, unless within the 30 days the
             402      employer files an application for hearing in accordance with Part 8, Adjudication.]
             403          Section 5. Section 34A-2-201.5 is enacted to read:
             404          34A-2-201.5. Self-insured employer -- Acceptable security -- Procedures.
             405          (1) As used in this section:
             406          (a) "Acceptable security" means one or more of the following:
             407          (i) cash;
             408          (ii) a surety bond issued:
             409          (A) by a person acceptable to the division; and
             410          (B) in a form approved by the division;
             411          (iii) an irrevocable letter of credit issued:
             412          (A) by a depository institution acceptable to the division; and
             413          (B) in a form approved by the division;
             414          (iv) a United States Treasury Bill;
             415          (v) a deposit in a depository institution that:
             416          (A) has an office located in Utah; and
             417          (B) is insured by the Federal Deposit Insurance Corporation; or
             418          (vi) a certificate of deposit in a depository institution that:
             419          (A) has an office located in Utah; and
             420          (B) is insured by the Federal Deposit Insurance Corporation.
             421          (b) "Compensation" is as defined in Section 34A-2-102 .
             422          (c) "Depository institution" is as defined in Section 7-1-103 .
             423          (d) "Self-insured employer" means an employer that is authorized by the division to pay
             424      direct workers' compensation benefits under Subsection (2).
             425          (2) (a) An employer may directly pay compensation in the amount, in the manner, and
             426      when due as provided for in this chapter and Chapter 3, Utah Occupational Disease Act, as a
             427      self-insured employer if the employer is approved by the division as a self-insured employer in
             428      accordance with this section.
             429          (b) If an employer's application to directly pay compensation as a self-insured employer
             430      is approved by the division, the application of the employer is acceptance by the employer of the


             431      conditions, liabilities, and responsibilities imposed by this chapter and Chapter 3, Utah
             432      Occupational Disease Act, including the liability imposed pursuant to Subsection 34A-2-704 (14).
             433          (c) The division's denial under this Subsection (2) of an employer's application to directly
             434      pay compensation as a self-insured employer becomes a final order of the commission 30 calendar
             435      days from the date of the denial unless with that 30-days the employer files an application for a
             436      hearing in accordance with Part 8, Adjudication.
             437          (3) To qualify as a self-insured employer, the employer shall:
             438          (a) submit a written application requesting to directly pay compensation as a self-insured
             439      employer;
             440          (b) annually provide the division proof of the employer's ability to directly pay
             441      compensation in the amount, manner, and time provided by this chapter and Chapter 3, Utah
             442      Occupational Disease Act; and
             443          (c) if requested by the division, deposit acceptable security in the amounts determined by
             444      the division to be sufficient to secure the employer's liabilities under this chapter and Chapter 3,
             445      Utah Occupational Disease Act.
             446          (4) (a) Acceptable security deposited by a self-insured employer in accordance with
             447      Subsection (3)(c) shall be:
             448          (i) deposited on behalf of the division by the employer with the state treasurer; and
             449          (ii) withdrawn only upon written order of the division.
             450          (b) The self-insured employer has no right, title, interest in, or control over acceptable
             451      security that is deposited in accordance with this section.
             452          (c) If the division determines that the amount of acceptable security deposited in
             453      accordance with this section is in excess of that needed to secure payment of the self-insured
             454      employer's liability under this chapter and Chapter 3, Utah Occupational Disease Act, the division
             455      shall return the amount that is determined to be excess to the self-insured employer.
             456          (5) (a) The division may at any time require a self-insured employer to:
             457          (i) increase or decrease the amount of acceptable security required to be deposited under
             458      Subsection (3)(c); or
             459          (ii) modify the type of acceptable security to be deposited under Subsection (3)(c).
             460          (b) (i) If the division requires a self-insured employer to take an action described in
             461      Subsection (5)(a), a perfected security interest is created in favor of the division in the assets of the


             462      self-insured employer to the extent necessary to pay any amount owed by the self-insured employer
             463      under this chapter and Chapter 3, Utah Occupational Disease Act, that cannot be paid by
             464      acceptable security deposited in accordance with this section.
             465          (ii) The perfected security interest created in Subsection (5)(b)(i) ends when the
             466      self-insured employer complies with the division's request under Subsection (5)(a) to the
             467      satisfaction of the division.
             468          (6) (a) If an employer is approved under Subsection (2) to directly pay compensation as
             469      a self-insured employer, the division may revoke its approval.
             470          (b) The division's revocation of its approval under Subsection (6)(a) becomes a final order
             471      of the commission 30 calendar days from the date of the revocation unless with that 30-days the
             472      employer files an application for a hearing in accordance with Part 8, Adjudication.
             473          (7) If the division finds that a self-insured employer has failed to pay compensation it was
             474      liable to pay under this chapter or Chapter 3, Utah Occupational Disease Act, the division may use
             475      the acceptable security deposited and any interest earned on the acceptable security to pay:
             476          (a) the self-insured employer's liability under this chapter and Chapter 3, Utah
             477      Occupational Disease Act; and
             478          (b) any costs, including legal fees, associated with the administration of the compensation
             479      incurred by:
             480          (i) the division;
             481          (ii) a surety;
             482          (iii) an adjusting agency; or
             483          (iv) the Uninsured Employers' Fund.
             484          (8) (a) If the division determines that the acceptable security deposited under Subsection
             485      (3)(c) should be available for payment of the self-insured employer's liabilities under Subsection
             486      (7), the division shall:
             487          (i) determine the method of claims administration, which may include administration by:
             488          (A) a surety;
             489          (B) an adjusting agency;
             490          (C) the Uninsured Employers' Fund; or
             491          (D) any combination of Subsections (8)(a)(i)(A) through (C); and
             492          (ii) audit the self-insured employer's liabilities under this chapter and Chapter 3, Utah


             493      Occupational Disease Act.
             494          (b) The following shall cooperate in the division's audit under Subsection (8)(a)(ii) and
             495      provide any relevant information in its possession:
             496          (i) the self-insured employer;
             497          (ii) any excess insurer;
             498          (iii) any adjusting agency;
             499          (iv) a surety; and
             500          (v) an employee of a self-insured employer if the employee makes a claim for
             501      compensation under this chapter or Chapter 3, Utah Occupational Disease Act.
             502          (9) (a) Payment by a surety is a full release of the surety's liability under the bond to the
             503      extent of that payment, and entitles the surety to full reimbursement by the principal or the
             504      principal's estate including reimbursement of:
             505          (i) necessary attorney's fees; and
             506          (ii) other costs and expenses.
             507          (b) A payment, settlement, or administration of benefits made in good faith pursuant to
             508      this section by a surety, an adjusting agency, the Uninsured Employers' Fund, or this division is
             509      valid and binding as between:
             510          (i) (A) the surety;
             511          (B) adjusting agency;
             512          (C) the Uninsured Employers' Fund; or
             513          (D) the division; and
             514          (ii) the self-insured employer.
             515          (10) (a) The division shall resolve any dispute concerning:
             516          (i) the depositing, renewal, termination, exoneration, or return of all or any portion of
             517      acceptable security deposited under this section;
             518          (ii) any liability arising out of the depositing or failure to deposit acceptable security;
             519          (iii) the adequacy of the acceptable security; or
             520          (iv) the reasonableness of administrative costs under Subsection (7)(b), including legal
             521      fees.
             522          (b) The division's decision under Subsection (10)(a) becomes a final order of the
             523      commission 30 calendar days of the date of the decision, unless with that 30-days the employer


             524      files an application for hearing in accordance with Part 8, Adjudication.
             525          Section 6. Section 34A-2-401 is amended to read:
             526           34A-2-401. Compensation for industrial accidents to be paid.
             527          (1) [Each] An employee described in Section 34A-2-104 who is injured and the
             528      dependents of each such employee who is killed, by accident arising out of and in the course of the
             529      employee's employment, wherever such injury occurred, if the accident was not purposely
             530      self-inflicted, shall be paid:
             531          (a) compensation for loss sustained on account of the injury or death[, and such];
             532          (b) the amount provided in this chapter for:
             533          (i) medical, nurse, and hospital services [and];
             534          (ii) medicines[,]; and[,]
             535          (iii) in case of death, [such] the amount of funeral expenses[,] as provided in this chapter.
             536          (2) The responsibility for compensation and payment of medical, nursing, and hospital
             537      services and medicines, and funeral expenses provided under this chapter [shall be]:
             538          (a) on the employer and [its] the employer's insurance carrier; and
             539          (b) not on the employee.
             540          (3) Payment of benefits provided by this chapter or Chapter 3, Utah Occupational Disease
             541      Act, shall commence within 30 calendar days after any final award by the commission.




Legislative Review Note
    as of 1-25-99 10:18 AM


A limited legal review of this legislation raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel


[Bill Documents][Bills Directory]