H.B. 175 Enrolled

WORKERS' COMPENSATION FUND OF UTAH
1997 GENERAL SESSION
STATE OF UTAH
Sponsor: Jeff Alexander
AN ACT RELATING TO INSURANCE; AMENDING RESTRICTIONS ON NAME USED BY
THE WORKERS' COMPENSATION FUND OF UTAH; ADDRESSING POWERS OF
FUND; AMENDING DUTIES OF THE BOARD OF DIRECTORS; ELIMINATING
REQUIREMENT OF ANNUAL FINANCIAL AUDIT BY STATE AUDITOR;
CREATING THE BLUE RIBBON COMMISSION ON THE WORKERS'
COMPENSATION FUND OF UTAH; PROVIDING FOR MEMBERSHIP OF
COMMISSION; DELINEATING RESPONSIBILITIES AND PROCEDURES OF
COMMISSION; PROVIDING A REPORTING DATE FOR COMMISSION; MAKING
TECHNICAL CORRECTIONS; PROVIDING AN EFFECTIVE DATE; AND
PROVIDING A REPEAL DATE.
This act affects sections of Utah Code Annotated 1953 as follows:
AMENDS:
31A-33-103 (Effective 07/01/97), as renumbered and amended by Chapter 240, Laws of
Utah 1996
31A-33-107 (Effective 07/01/97), as renumbered and amended by Chapter 240, Laws of
Utah 1996
31A-33-110 (Effective 07/01/97), as renumbered and amended by Chapter 240, Laws of
Utah 1996
35A-1-404, as enacted by Chapter 240, Laws of Utah 1996
67-3-9, as enacted by Chapter 323, Laws of Utah 1990
ENACTS:
31A-33-103.5, Utah Code Annotated 1953
This act enacts uncodified material.
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 31A-33-103 (Effective 07/01/97) is amended to read:

31A-33-103 (Effective 07/01/97). Legal nature of Workers' Compensation Fund.
(1) The Workers' Compensation Fund is:
(a) a nonprofit, self-supporting, quasi-public corporation; and
(b) a legal entity, [which] that may sue and be sued in its own name.
(2) All of the business and affairs of the corporation shall be conducted in the name of the
Workers' Compensation Fund of Utah or if conducted through a subsidiary, such other corporate
names that comply with state law.
Section 2. Section 31A-33-103.5 is enacted to read:
31A-33-103.5. Powers of Fund -- Limitations.
(1) The fund may form or acquire subsidiaries in accordance with Section 31A-33-107
except as limited by Subsections (2) and (3).
(2) (a) Subject to applicable insurance rules and statutes, the Workers' Compensation Fund
of Utah, or its subsidiaries, may offer only workers' compensation insurance products and services
in Utah and other states until the Legislature enacts legislation addressing the recommendations of
a legislatively authorized study of the fund's authority, if any, to offer insurance products or services
other than workers' compensation insurance products or services either directly, through a
subsidiary, or through a joint venture.
(b) A subsidiary of the Workers' Compensation Fund of Utah may offer workers'
compensation insurance coverage only in a state other than Utah.
(3) There is a moratorium until July 1, 2000, on the Workers' Compensation Fund of Utah's
authority, if any, to offer health insurance services including medical, surgical, hospital, and other
ancillary medical expenses, by any means including directly, through a subsidiary, or through a joint
venture.
Section 3. Section 31A-33-107 (Effective 07/01/97) is amended to read:
31A-33-107 (Effective 07/01/97). Duties of board -- Creation of subsidiaries.
(1) The board shall:
(a) appoint a chief executive officer to administer the Workers' Compensation Fund;
(b) receive and act upon financial, management, and actuarial reports covering the operations

- 2 -

of the Workers' Compensation Fund;
(c) ensure that the Workers' Compensation Fund is administered according to law;
(d) examine and approve an annual operating budget for the Workers' Compensation Fund;
(e) serve as investment trustees and fiduciaries of the Injury Fund;
(f) receive and act upon recommendations of the chief executive officer;
(g) develop broad policy for the long-term operation of the Workers' Compensation Fund,
consistent with its mission and fiduciary responsibility;
(h) subject to Sections 31A-19-401 through 31A-19-420, approve any rating plans that
would modify a policyholder's premium;
(i) subject to Sections 31A-19-401 through 31A-19-420, approve the amount of deviation,
if any, from standard insurance rates;
(j) approve the amount of the dividends, if any, to be returned to policyholders;
(k) adopt a procurement policy consistent with the provisions of Title 63, Chapter 56, Utah
Procurement Code;
(l) develop and publish an annual report to policyholders, the governor, the Legislature, and
interested parties that describes the financial condition of the Injury Fund, including a statement of
expenses and income and what measures were taken or will be necessary to keep the Injury Fund
actuarially sound;
(m) establish a fiscal year;
(n) determine and establish an actuarially sound price for insurance offered by the fund;
(o) establish conflict of interest requirements that govern the board, officers, and employees;
and
(p) perform all other acts necessary for the policymaking and oversight of the Workers'
Compensation Fund.
(2) Subject to board review and its responsibilities under Subsection (1)(e), the board may
delegate authority to make daily investment decisions.
(3) The fund may form or acquire a subsidiary under Section 31A-33-103.5 only if that
action is approved by the board.

- 3 -

Section 4. Section 31A-33-110 (Effective 07/01/97) is amended to read:
31A-33-110 (Effective 07/01/97). Audits and examinations required.
(1) (a) The [state auditor shall audit the] Workers' Compensation Fund shall annually obtain
an audit:
(i) conducted in accordance with:
(A) generally accepted auditing standards; and
(B) government auditing standards; and
(ii) by a national firm of certified public accountants.
(b) The fund shall provide the audit performed under Subsection (1)(a) to the state auditor
within 30 days of its completion.
(2) (a) The insurance commissioner shall examine the Injury Fund according to the purposes
and procedures provided in Sections 31A-2-203 through 31A-2-205 at least once every five years.
(b) The chief executive officer shall pay the necessary expense of this examination from the
Injury Fund.
Section 5. Section 35A-1-404 is amended to read:
35A-1-404. Implementation of consolidation.
(1) (a) The administration, adjudication, management, authority, statutes, rules, staffing, or
operations of the Industrial Commission may not change substantively as a result of the passage of
this act until:
(i) after July 1, 1997; and
(ii) the restructuring of the Industrial Commission is studied by a work group consisting of
an equal number of employer representatives and employee representatives that are voting members
and selected as follows:
(A) eight employer and eight employee representatives selected by the governor; and
(B) a ninth employer representative who has antidiscrimination experience selected by the
eight employer representatives selected under Subsection (1)(a)(ii)(A); and
(C) a ninth employee representative who has antidiscrimination experience selected by the
eight employee representatives selected under Subsection (1)(a)(ii)(A).

- 4 -

(b) The acting executive director shall:
(i) be a nonvoting ex officio member of the working group described in Subsection (1)(a);
(ii) chair the working group described in Subsection (1)(a); and
(iii) ensure staffing and support for the work group described in Subsection (1)(a).
(c) The following individuals may participate as nonvoting members of the work group
when the work group studies the restructuring of the Industrial Commission with regard to their
respective areas:
(i) the nonvoting members of the Workers' Compensation Advisory Council;
(ii) the public members of the Employment Security Advisory Council;
(iii) the members of the Utah Antidiscrimination Committee; and
(iv) the members of the Utah Occupational Safety and Health Advisory Council.
(d) The work group created under Subsection (1)(a) may invite the commissioners of the
Industrial Commission to participate in the activities of the work group in an advisory capacity.
(e) The working group described in Subsection (1)(a) shall study:
(i) all aspects and issues of the Industrial Commission and may consider and recommend
that the responsibilities of the Industrial Commission be, in part or wholly:
(A) assigned to the department;
(B) consolidated or integrated into different departments of the state; or
(C) remain separate from the department or any other department of the state; and
(ii) (A) whether or not the costs of worker's compensation can more effectively be managed
by combining the benefits required by Chapters 3 and 3a with disability and health insurance, as
defined in Section 31A-1-301, in a program of 24-hour insurance coverage, to be offered through:
(I) integrated management of separate, but jointly administered workers' compensation and
disability or health plans; or
(II) other means set forth in Title 31A, Insurance Code;
(B) the impact of a program described in Subsection (1)(e)(ii)(A) on:
(I) insured employers and workers;
(II) the exclusive remedy protections outlined in Sections 35A-3-105 and 35A-3a-102;

- 5 -

(III) competition among private and public insurers;
(IV) the regulatory functions of the Department of Workforce Services and the Department
of Insurance;
(V) the actuarial soundness of the Workers' Compensation Fund of Utah; and
(VI) liability of the state; and
(C) any issue related to the offering of 24-hour insurance coverage programs by workers'
compensation carriers, including the Workers' Compensation Fund of Utah's authority, if any, to
offer 24-hour insurance programs.
(f) The work group described in Subsection (1)(a) shall make final recommendations to the
Legislature including proposed legislation by October 15, 1996, concerning the study items listed
in Subsection (1)(e)(i).
(g) The work group described in Subsection (1)(a) shall make final recommendations to the
legislative work group created under Subsection (4)[(b)] by no later than August 1, 1996, concerning
the study items listed in Subsection (1)(e)(ii).
(2) (a) The lieutenant governor jointly with the insurance commissioner shall create a work
group with representation from the private insurance industry and the Workers' Compensation Fund
of Utah.
(b) The lieutenant governor and the insurance commissioner shall serve as cochairs of the
work group created under Subsection (2)(a).
(c) The work group created under Subsection (2)(a), shall study:
(i) whether or not the costs of workers' compensation can more effectively be managed by
combining the benefits required by Chapters 3 and 3a with disability and health insurance, as defined
in Section 31A-1-301, in a program of 24-hour insurance coverage, to be offered through:
(A) integrated management of separate, but jointly administered workers' compensation and
disability or health plans; or
(B) other means set forth in Title 31A, Insurance Code;
(ii) the impact of a program described in Subsection (2)(c)(i) on:
(A) insured employers and workers;

- 6 -

(B) the exclusive remedy protections outlined in Sections 35A-3-105 and 35A-3a-102;
(C) competition among private and public insurers;
(D) the regulatory functions of the Department of Workforce Services and the Department
of Insurance;
(E) the actuarial soundness of the Workers' Compensation Fund of Utah; and
(F) liability of the state; and
(iii) any issue related to the offering of 24-hour insurance coverage programs by workers'
compensation carriers, including the Workers' Compensation Fund of Utah's authority, if any, to
offer 24-hour insurance programs.
(d) The work group created under Subsection (2)(a) shall make final recommendations to
the legislative workgroup created under Subsection (4)[(b)] by no later than August 1, 1996.
(e) The Department of Insurance shall provide staff support for the work group created under
Subsection (2)(a).
(3) (a) To avoid commingling of revenues from different sources, financial barriers existing
at the time of passage of this act shall be maintained between revenues from employer premiums for
workers' compensation, unemployment compensation, other dedicated credit funds and the revenue
used for social or other department programs normally funded from the General Fund or federal
monies, grants, or loans.
(b) Funds collected for specific programs under this title shall:
(i) only be used for the purposes for which the funds were collected; and
(ii) be expended according to processes that can be verified by audit.
[(4) (a) There is a moratorium until July 1, 1998, on the Workers' Compensation Fund of
Utah's authority, if any, to offer disability or health insurance, as defined in Section 31A-1-301, by
any means including directly or through a subsidiary.]
[(b) (i)] (4) (a) There is created a legislative work group to study the issues listed in
Subsection (4)[(b)(v)] (e) composed of the following:
[(A)] (i) three members of the Senate, appointed by the president of the Senate; and
[(B)] (ii) five members of the House of Representatives, appointed by the speaker of the

- 7 -

House of Representatives[;].
[(ii)] (b) The president of the Senate shall designate a member of the Senate appointed to
the work group under Subsection (4)[(b)(i)] (a) as the Senate chair of the work group, and the
speaker of the House of Representatives shall designate a member of the House of Representatives
appointed to the work group under Subsection (4)[(b)(i)] (a) as the House chair of the work group.
[(iii)] (c) The work group shall comply with the rules applicable to legislative interim
committees.
[(iv)] (d) The work group may meet eight times.
[(v)] (e) The work group shall review and make recommendations on the following issues
to the Business, Labor, and Economic Development Interim Committee by no later than the October
interim of the interim committee:
[(A)] (i) whether or not the costs of workers' compensation can more effectively be managed
by combining the benefits required by Chapters 3 and 3a with disability and health insurance, as
defined in Section 31A-1-301, in a program of 24-hour insurance coverage, to be offered through:
[(I)] (A) integrated management of separate, but jointly administered workers' compensation
and disability or health plans; or
[(II)] (B) other means set forth in Title 31A, Insurance Code;
[(B)] (ii) the impact of a program described in Subsection (4)[(b)(v)(A)] (e)(i) on:
[(I)] (A) insured employers and workers;
[(II)] (B) the exclusive remedy protections outlined in Sections 35A-3-105 and 35A-3a-102;
[(III)] (C) competition among private and public insurers;
[(IV)] (D) the regulatory functions of the Department of Workforce Services and the
Department of Insurance;
[(V)] (E) the actuarial soundness of the Workers' Compensation Fund of Utah; and
[(VI)] (F) liability of the state;
[(C)] (iii) any issue related to the offering of 24-hour insurance coverage programs by
workers' compensation carriers, including the Workers' Compensation Fund of Utah's authority,
if any, to offer 24-hour insurance programs; and

- 8 -

[(D)] (iv) the nature, status, and scope of the Workers' Compensation Fund of Utah.
[(vi)] (f) Salaries and expenses of work group members shall be paid in accordance with
Section 36-2-2.
[(vii)] (g) The Office of Legislative Research and General Counsel shall provide staff
support to the work group.
[(viii)] (h) It is the intent of the Legislature to act on the recommendations of the study under
this Subsection (4)[(b)] during the 1997 Annual General Session.
[(ix)] (i) This Subsection (4)[(b)] providing for the study of 24-hour insurance coverage is
repealed December 31, 1996.
(5) (a) The acting executive director, with the concurrence of the Utah Association of
Counties Executive Board, shall establish a work group with broad representation from the Utah
Association of Counties, clients, providers, persons having oversight, and other persons interested
in the workforce development functions of the department including boards and councils associated
with programs administered prior to the consolidation. The work group shall develop
recommendations for:
(i) selecting the regional councils on workforce services;
(ii) enabling local governments within a consortium of counties that express interest in
writing to the acting executive director, to have greater autonomy in administering Division of
Employment Development services that are provided by regional workforce services areas;
(iii) enabling regional councils on workforce services to develop policies for administering
and delivering programs provided in regional workforce services areas in a manner as to be
responsible to consortiums of counties;
(iv) providing funding for staff that is responsible to counties and other resources to enable
meaningful local involvement in the operations of the Division of Employment Development;
(v) a mechanism by which regional consortiums of counties shall contract for needed
services from counties, educational institutions, businesses, labor unions, or any other public or
private providers;
(vi) a process to ensure that the regional councils on workforce services that represent local

- 9 -

government and private interests, the State Council on Workforce Services, and the executive
director will work in partnership to determine how to implement federal block grants, if any,
administered through the Division of Employment Development;
(vii) a process by which funds will be allocated to regional workforce services areas for
administration and delivery of services according to regional and local priorities;
(viii) use of the Job Training Partnership Act, Turning Point, SPEID, and other case
management models for job descriptions and responsibilities in the department; and
(ix) process whereby specific county needs for priorities of training emphasis can be met
within the consortium of counties through the regional council on workforce services; and
(x) processes to ensure equity and full participation by all counties in a consortium of
counties.
(b) The recommendations made under Subsection (5)(a) shall ensure the concepts of:
(i) employment assistance centers;
(ii) unified case management;
(iii) statewide consistency in:
(A) information systems;
(B) administrative criteria;
(C) legal restrictions; and
(D) personnel management and equitable personnel benefit systems;
(iv) Turning Point clients and services will continue to be offered in educational settings,
when possible; and
(v) state and federal law requirements for or restrictions on the operation of the department.
(c) The acting executive director and the Utah Association of Counties through its executive
board or their designees shall jointly suggest legislation for presentation during the 1997 Annual
General Session based on the recommendations made by the work group under Subsection (5)(a).
If no joint agreement is reached, separate reports may be presented.
Section 6. Section 67-3-9 is amended to read:
67-3-9. Audit of independent agencies.

- 10 -

(1) As used in this section:
(a) "Auditor" means the state auditor.
(b) "Compliance audit" means an audit of an independent agency's compliance with relevant
statutes, rules, policies, and regulations that govern that independent agency.
(c) (i) "Governing board" means the board, committee, council or other body, however
designated, with responsibility for making policy and overseeing the operations of the independent
agency.
(ii) "Governing board" does not mean the manager, president, or other individual responsible
for daily management of the independent agency.
(d) "Independent agency" means [the Workers' Compensation Fund,]:
(i) the Utah Technology Finance Corporation[,];
(ii) the Utah Housing Finance Agency[,]; and
(iii) the Retirement Board and Office.
(2) The auditor shall:
(a) conduct an annual financial and compliance audit of each independent agency; and
(b) issue an audit report detailing [his] the auditor's findings and recommendations to:
(i) the governing board of each independent agency; and
(ii) the Office of the Legislative Fiscal Analyst for submission to the relevant legislative
appropriations subcommittee.
Section 7. Blue Ribbon Workers' Compensation Commission -- Creation --
Membership -- Quorum -- Compensation -- Staff.
(1) The commissioner of insurance shall examine the Workers' Compensation Fund of Utah
in accordance with Section 31A-2-203 and this act. The commissioner of insurance shall designate
as the examiner in charge the Blue Ribbon Commission on the Workers' Compensation Fund of Utah
that shall exist until November 30, 1997. The commission shall consist of the following 15
members:
(a) two members of the Senate appointed by the president of the Senate, no more than one
of whom may be from the same political party;

- 11 -

(b) three members of the House of Representatives appointed by the speaker of the House
of Representatives, no more than two of whom may be from the same political party; and
(c) the following members jointly appointed by the president of the Senate and the speaker
of the House of Representatives:
(i) the commissioner of insurance;
(ii) the chair of the Industrial Commission or as of July 1, 1997, the labor commissioner;
(iii) a representative of the Workers' Compensation Fund of Utah;
(iv) three representatives of the insurance industry, one of whom shall be a health
underwriter;
(v) two representatives of employers; and
(vi) two representatives of employees.
(2) The commissioner of insurance shall serve as the chair of the commission.
(3) A majority of the members of the commission constitutes a quorum. The action of a
majority of a quorum constitutes the action of the commission.
(4) (a) The members of the commission who are legislators shall receive no compensation
or expenses for their services on the commission.
(b) Members of the commission who are state employees shall receive no compensation or
expenses for their service on the commission except for compensation and expenses provided by the
agency by which they are employed.
(c) Members of the commission who are not legislators or state employees shall receive no
compensation or expenses for their service on the commission.
(5) The Insurance Department shall provide staff support to the commission.
Section 8. Duties -- Interim report.
(1) Notwithstanding Subsection 31A-2-204(1), the scope of the examination is limited to
reviewing and making recommendations on the following issues:
(a) privatization of the Workers' Compensation Fund of Utah;
(b) how to serve the residual market;
(c) the granting of new insurance authority to the Workers' Compensation Fund of Utah for

- 12 -

competitive reasons; and
(d) any related issue.
(2) If the commission considers a recommendation for the privatization or any similar
change to the structure or operations of the Workers' Compensation Fund of Utah, the commission,
and not the Workers' Compensation Fund, shall provide an independent financial analysis to
determine:
(a) the nature and amount of monetary claims by the state, policy holders, or others to the
surplus and assets of the Workers' Compensation Fund of Utah; and
(b) whether any officer or director of the Workers' Compensation Fund of Utah has a claim
for any compensation, either monetary or through an ownership interest, as a result of or in the
process of any privatization or similar changes to the structure or operations of the Workers'
Compensation Fund of Utah.
(3) A final report, including any proposed legislation shall be presented to the Business,
Labor, and Economic Development Interim Committee by the interim committee's 1997 November
meeting.
(4) The examination required under this act is not subject to Subsection 31A-2-204(1) or
Subsections 31A-2-204(6) through (10).
Section 9. Funding.
(1) Pursuant to Section 31A-2-205, the reasonable costs of the commission's examination
shall be reimbursed by the Workers' Compensation Fund of Utah to the Insurance Department.
(2) The Workers' Compensation Fund of Utah may offset the examination expenses paid
pursuant to the section against premium taxes under Subsection 59-9-102(2).
Section 10. Effective date.
Sections 31A-33-103, 31A-33-103.5, 31A-33-107, 31A-33-110, 35A-1-404, and 67-3-9 take
effect July 1, 1997. Sections 7 through 11, uncodified material, take effect May 5, 1997.
Section 11. Repeal date.
Sections 7 through 9 are repealed November 30, 1997.

- 13 -