19-1-206.   Contracting powers of department -- Health insurance coverage.
     (1) For purposes of this section:
     (a) "Employee" means an "employee," "worker," or "operative" as defined in Section 34A-2-104 who:
     (i) works at least 30 hours per calendar week; and
     (ii) meets employer eligibility waiting requirements for health care insurance which may not exceed 90 days from the date of hire.
     (b) "Health benefit plan" has the same meaning as provided in Section 31A-1-301.
     (c) "Qualified health insurance coverage" means a health benefit plan that at the time the contract is entered into or renewed:
     (i) (A) provides coverage that is actuarially equivalent to the current benefit plan determined by the Children's Health Insurance Program under Section 26-40-106; and
     (B) under which the employer pays at least 50% of the premium for the employee and the dependents of the employee;
     (ii) (A) is a federally qualified high deductible health plan that has:
     (I) the lowest deductible permitted for a federally qualified high deductible health plan; and
     (II) an out of pocket maximum that does not exceed three times the amount of the annual deductible; and
     (B) under which the employer pays 75% of the premium for the employee and the dependents of the employee; or
     (iii) (A) provides coverage that is actuarially equivalent to 75% of the benefit plan determined under Subsection (1)(c)(i); and
     (B) under which the employer pays at least 75% of the premium of the employee and the dependents of the employee.
     (d) "Subcontractor" has the same meaning provided for in Section 63A-5-208.
     (2) Except as provided in Subsection (3), this section applies to all contracts entered into by or delegated to the department or a division or board of the department on or after July 1, 2009, if:
     (a) the contract is for design or construction; and
     (b) (i) the prime contract is in the amount of $1,500,000 or greater; or
     (ii) a subcontract is in the amount of $750,000 or greater.
     (3) This section does not apply to contracts entered into by the department or a division or board of the department if:
     (a) the application of this section jeopardizes the receipt of federal funds;
     (b) the contract or agreement is between:
     (i) the department or a division or board of the department; and
     (ii) (A) another agency of the state;
     (B) the federal government;
     (C) another state;
     (D) an interstate agency;
     (E) a political subdivision of this state; or
     (F) a political subdivision of another state;
     (c) the executive director determines that applying the requirements of this section to a particular contract interferes with the effective response to an immediate health and safety threat

from the environment; or
     (d) the contract is:
     (i) a sole source contract; or
     (ii) an emergency procurement.
     (4) (a) This section does not apply to a change order as defined in Section 63G-6-102, or a modification to a contract, when the contract does not meet the initial threshold required by Subsection (2).
     (b) A person who intentionally uses change orders or contract modifications to circumvent the requirements of Subsection (2) is guilty of an infraction.
     (5) (a) A contractor subject to Subsection (2) shall demonstrate to the executive director that the contractor has and will maintain an offer of qualified health insurance coverage for the contractor's employees and the employees' dependents during the duration of the contract.
     (b) If a subcontractor of the contractor is subject to Subsection (2), the contractor shall demonstrate to the executive director that the subcontractor has and will maintain an offer of qualified health insurance coverage for the subcontractor's employees and the employees' dependents during the duration of the contract.
     (c) (i) (A) A contractor who fails to comply with Subsection (5)(a) during the duration of the contract is subject to penalties in accordance with administrative rules adopted by the department under Subsection (6).
     (B) A contractor is not subject to penalties for the failure of a subcontractor to meet the requirements of Subsection (5)(b).
     (ii) (A) A subcontractor who fails to meet the requirements of Subsection (5)(b) during the duration of the contract is subject to penalties in accordance with administrative rules adopted by the department under Subsection (6).
     (B) A subcontractor is not subject to penalties for the failure of a contractor to meet the requirements of Subsection (5)(a).
     (6) The department shall adopt administrative rules:
     (a) in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act;
     (b) in coordination with:
     (i) a public transit district in accordance with Section 17B-2a-818.5;
     (ii) the Department of Natural Resources in accordance with Section 79-2-404;
     (iii) the State Building Board in accordance with Section 63A-5-205;
     (iv) the State Capitol Preservation Board in accordance with Section 63C-9-403;
     (v) the Department of Transportation in accordance with Section 72-6-107.5; and
     (vi) the Legislature's Administrative Rules Review Committee; and
     (c) which establish:
     (i) the requirements and procedures a contractor must follow to demonstrate to the public transit district compliance with this section which shall include:
     (A) that a contractor will not have to demonstrate compliance with Subsection (5)(a) or (b) more than twice in any 12-month period; and
     (B) that the actuarially equivalent determination required in Subsection (1) is met by the contractor if the contractor provides the department or division with a written statement of actuarial equivalency from either the Utah Insurance Department or an actuary selected by the contractor or the contractor's insurer; and
     (ii) the penalties that may be imposed if a contractor or subcontractor intentionally

violates the provisions of this section, which may include:
     (A) a three-month suspension of the contractor or subcontractor from entering into future contracts with the state upon the first violation;
     (B) a six-month suspension of the contractor or subcontractor from entering into future contracts with the state upon the second violation;
     (C) an action for debarment of the contractor or subcontractor in accordance with Section 63G-6-804 upon the third or subsequent violation; and
     (D) notwithstanding Section 19-1-303, monetary penalties which may not exceed 50% of the amount necessary to purchase qualified health insurance coverage for an employee and the dependents of an employee of the contractor or subcontractor who was not offered qualified health insurance coverage during the duration of the contract.
     (7) (a) In addition to the penalties imposed under Subsection (6)(c), a contractor or subcontractor who violates the provisions of this section shall be liable to the employee for health care costs not covered by insurance.
     (b) An employee has a private right of action only against the employee's employer to enforce the provisions of this Subsection (7).
     (8) Any penalties imposed and collected under this section shall be deposited into the Medicaid Restricted Account created in Section 26-18-402.
     (9) The failure of a contractor or subcontractor to provide health insurance as required by this section:
     (a) may not be the basis for a protest or other action from a prospective bidder, offeror, or contractor under Section 63G-6-801 or any other provision in Title 63G, Chapter 6, Part 8, Legal and Contractual Remedies; and
     (b) may not be used by the procurement entity or a prospective bidder, offeror, or contractor as a basis for any action or suit that would suspend, disrupt, or terminate the design or construction.

Enacted by Chapter 13, 2009 General Session
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Last revised: Thursday, May 28, 2009