H.B. 13 Enrolled

1

WORKERS' COMPENSATION FUND - BOARD
2 AMENDMENTS
3 2007 GENERAL SESSION
4 STATE OF UTAH
5 Chief Sponsor: David Clark
6 Senate Sponsor: Curtis S. Bramble
7
8 LONG TITLE
9 General Description:
10 This bill modifies provisions related to the Workers' Compensation Fund to address
11 issues related to its board of directors.
12 Highlighted Provisions:
13 This bill:
14 . modifies how terms of directors on the board are staggered; and
15 . changes how directors are paid from per diem and expenses approved by the
16 Division of Finance to compensation and reasonable expenses approved by the
17 board and subject to a cap on compensation.
18 Monies Appropriated in this Bill:
19 None
20 Other Special Clauses:
21 None
22 Utah Code Sections Affected:
23 AMENDS:
24 31A-33-106, as last amended by Chapter 275, Laws of Utah 2006
25 31A-33-107, as last amended by Chapter 130, Laws of Utah 1999
26
27 Be it enacted by the Legislature of the state of Utah:
28 Section 1. Section 31A-33-106 is amended to read:
29 31A-33-106. Board of directors -- Status of the fund in relationship to the state.

30 (1) There is created a board of directors of the Workers' Compensation Fund.
31 (2) The board shall consist of seven directors.
32 (3) Subject to Subsection (8), one director:
33 (a) (i) shall be the executive director of the Department of Administrative Services or
34 the executive director's designee; and
35 (ii) acts as the representative of the state as a policyholder of the Workers'
36 Compensation Fund; or
37 (b) is a public director appointed in accordance with Subsection (8)(b).
38 (4) One director shall be the chief executive officer of the fund.
39 (5) (a) In accordance with a plan that meets the requirements of this section , the
40 governor, with the consent of the Senate, shall appoint five public directors as follows:
41 (i) three directors who are owners, officers, or employees of policyholders other than
42 the state, each of whom is an owner, officer, or employee of a policyholder that has been
43 insured by the Workers' Compensation Fund for at least one year before the appointment of the
44 director representing the policyholder; and
45 (ii) two directors from the public in general.
46 (b) The plan described in Subsection (5)(a) shall comply with Section 31A-5-409 to the
47 extent that Section 31A-5-409 does not conflict with this section.
48 (6) No two directors may represent or be employed by the same policyholder.
49 (7) At least four directors appointed by the governor shall have had previous
50 experience in:
51 (a) the actuarial profession;
52 (b) accounting;
53 (c) investments;
54 (d) risk management;
55 (e) occupational safety;
56 (f) casualty insurance; or
57 (g) the legal profession.

58 (8) (a) Any director who represents a policyholder that fails to maintain workers'
59 compensation insurance through the Workers' Compensation Fund shall immediately resign
60 from the board, including the executive director of the Department of Administrative Services
61 or the executive director's designee if the state is no longer insured by the Workers'
62 Compensation Fund pursuant to Section 34A-2-203 .
63 (b) (i) If the state is no longer insured by the Workers' Compensation Fund pursuant to
64 Section 34A-2-203 , the governor with the consent of the Senate, shall appoint a public director
65 to replace the executive director of the Department of Administrative Services or the executive
66 director's designee.
67 (ii) The public director appointed under this Subsection (8)(b) shall:
68 (A) be an owner, officer, or employee of a policyholder that has been insured by the
69 Workers' Compensation Fund for at least one year before the appointment of the director
70 representing the policyholder;
71 (B) have previous experience described in Subsection (7); or
72 (C) be the director of the Governor's Office of Economic Development.
73 (c) Once the executive director of the Department of Administrative Services or the
74 executive director's designee is not a member of the board under Subsection (3), the state shall
75 have a member on the board to represent the state as a policyholder only if the member is
76 appointed in accordance with Subsection (5) or (8)(b).
77 (9) A person may not be a director if that person:
78 (a) has any interest as a stockholder, employee, attorney, or contractor of a competing
79 insurance carrier providing workers' compensation insurance in Utah;
80 (b) fails to meet or comply with the conflict of interest policies established by the
81 board; or
82 (c) is not bondable.
83 (10) After notice and a hearing, the governor may remove any director for cause which
84 includes:
85 (a) neglect of duty; or

86 (b) malfeasance.
87 (11) (a) Except as required by Subsection (11)(b), the term of office of the directors
88 appointed by the governor shall be four years, beginning July 1 of the year of appointment.
89 (b) Notwithstanding the requirements of Subsection (11)(a), the governor shall, at the
90 time of appointment or reappointment, adjust the length of terms to ensure that [the terms of
91 directors are staggered so that approximately half of the board is appointed every two years] no
92 more than two terms expire in a calendar year.
93 (12) Each director shall hold office until the director's successor is appointed and
94 qualified.
95 (13) When a vacancy occurs in the membership of the board for any reason, the
96 replacement shall be appointed for the unexpired term.
97 (14) The board shall annually elect a chair and other officers as needed from its
98 membership.
99 (15) (a) The board shall meet at least quarterly at a time and place designated by the
100 chair.
101 (b) The chair:
102 (i) may call board meetings more frequently than quarterly; and
103 (ii) shall call additional board meetings if requested to do so by a majority of the board.
104 (16) Four directors are a quorum for the purpose of transacting all business of the
105 board.
106 (17) Each decision of the board requires the affirmative vote of at least four directors
107 for approval.
108 (18) (a) (i) [Directors shall receive no compensation or benefits for their services, but
109 may receive per diem and] A director may receive compensation and be reimbursed for
110 reasonable expenses incurred in the performance of the director's official duties [at the rates
111 established by the Division of Finance under Sections 63A-3-106 and 63A-3-107 .]:
112 (A) as determined by the board of directors; and
113 (B) if the aggregate of compensation paid to all directors of the Workers'

114 Compensation Fund in a calendar year is less than or equal to the amount described in
115 Subsection (18)(a)(ii).
116 (ii) (A) For the period beginning May 1, 2007 and ending December 31, 2007, the
117 amount described in Subsection (18)(a)(i)(B) is $75,000 except that any compensation paid to a
118 director of the Workers' Compensation Fund on or after January 1, 2007 but on or before April
119 30, 2007 shall be included in determining whether the aggregate amount described in
120 Subsection (18)(a)(i)(B) is exceeded.
121 (B) For calendar years beginning on or after January 1, 2008, the amount described in
122 Subsection (18)(a)(i)(B) is the sum of the amount under this Subsection (18)(a) for the previous
123 year and an amount equal to the greater of:
124 (I) an amount calculated by multiplying the amount under this Subsection (18)(a) for
125 the previous year by the actual percent change during the previous calendar year in the
126 consumer price index; and
127 (II) 0.
128 (C) For purposes of this Subsection (18), the consumer price index shall be calculated
129 as provided in Sections 1(f)(4) and 1(f)(5), Internal Revenue Code.
130 (b) Directors may decline to receive [per diem] compensation and expenses for their
131 service.
132 (c) The [fund] Worker's Compensation Fund shall pay [the per diem allowance]
133 compensation to and reimburse reasonable expenses of directors as permitted by this section:
134 (i) from the Injury Fund; and
135 (ii) upon vouchers drawn in the same manner as the Workers' Compensation Fund pays
136 its normal operating expenses.
137 (d) The following shall serve on the board without [a per diem allowance] payment of
138 compensation, but may be reimbursed for reasonable expenses in accordance with Subsection
139 (18)(a):
140 (i) the executive director of the Department of Administrative Services, or the
141 executive director's designee;

142 (ii) the chief executive officer of the Workers' Compensation Fund; and
143 (iii) the director of the Governor's Office of Economic Development if appointed under
144 Subsection (8).
145 (e) The Workers' Compensation Fund shall annually report to the commissioner
146 compensation and expenses paid to the directors on the board.
147 (19) The requirement that the governor, with the consent of the Senate, appoint the
148 directors of the Workers' Compensation Fund specified in Subsection (5) or (8), does not:
149 (a) remove from the board of directors the managerial, financial, or operational control
150 of the Workers' Compensation Fund;
151 (b) give to the state or the governor managerial, financial, or operational control of the
152 Workers' Compensation Fund;
153 (c) consistent with Section 31A-33-105 , cause the state to be liable for any:
154 (i) obligation of the Workers' Compensation Fund; or
155 (ii) expense, liability, or debt described in Section 31A-33-105 ;
156 (d) alter the legal status of the Workers' Compensation Fund as:
157 (i) a nonprofit, self-supporting, quasi-public corporation; and
158 (ii) an insurer:
159 (A) regulated under this title;
160 (B) that is structured to operate in perpetuity; and
161 (C) domiciled in the state; or
162 (e) alter the requirement that the Workers' Compensation Fund provide workers'
163 compensation:
164 (i) for the purposes set forth in Section 31A-33-102 ;
165 (ii) consistent with Section 34A-2-201 ; and
166 (iii) as provided in Section 31A-22-1001 .
167 Section 2. Section 31A-33-107 is amended to read:
168 31A-33-107. Duties of board -- Creation of subsidiaries -- Entering into joint
169 enterprises.

170 (1) The board shall:
171 (a) appoint a chief executive officer to administer the Workers' Compensation Fund;
172 (b) receive and act upon financial, management, and actuarial reports covering the
173 operations of the Workers' Compensation Fund;
174 (c) ensure that the Workers' Compensation Fund is administered according to law;
175 (d) examine and approve an annual operating budget for the Workers' Compensation
176 Fund;
177 (e) serve as investment trustees and fiduciaries of the Injury Fund;
178 (f) receive and act upon recommendations of the chief executive officer;
179 (g) develop broad policy for the long-term operation of the Workers' Compensation
180 Fund, consistent with its mission and fiduciary responsibility;
181 (h) subject to Chapter 19a, Part 4, Workers' Compensation Rates, approve any rating
182 plans that would modify a policyholder's premium;
183 (i) subject to Chapter 19a, Part 4, Workers' Compensation Rates, approve the amount
184 of deviation, if any, from standard insurance rates;
185 (j) approve the amount of the dividends, if any, to be returned to policyholders;
186 (k) adopt a procurement policy consistent with the provisions of Title 63, Chapter 56,
187 Utah Procurement Code;
188 (l) develop and publish an annual report to policyholders, the governor, the Legislature,
189 and interested parties that describes the financial condition of the Injury Fund, including a
190 statement of expenses and income and what measures were taken or will be necessary to keep
191 the Injury Fund actuarially sound;
192 (m) establish a fiscal year;
193 (n) determine and establish an actuarially sound price for insurance offered by the
194 fund;
195 (o) establish conflict of interest requirements that govern the board, officers, and
196 employees; [and]
197 (p) establish compensation and reasonable expenses to be paid to directors on the board

198 subject to the requirements of Section 31A-33-106 , so that the board may not approve
199 compensation that exceeds the amount described in Subsection 31A-33-106 (18)(a)(i)(B); and
200 [(p)] (q) perform all other acts necessary for the policymaking and oversight of the
201 Workers' Compensation Fund.
202 (2) Subject to board review and its responsibilities under Subsection (1)(e), the board
203 may delegate authority to make daily investment decisions.
204 (3) The fund may form or acquire a subsidiary or enter into a joint enterprise:
205 (a) only if that action is approved by the board; and
206 (b) subject to the limitations in Section 31A-33-103.5 .