H.B. 175

1

WORKERS' COMPENSATION FUND OF UTAH
2 1997 GENERAL SESSION
3 STATE OF UTAH
4 Sponsor: Jeff Alexander
5 AN ACT RELATING TO INSURANCE; AMENDING RESTRICTIONS ON NAME USED BY
6 THE WORKERS' COMPENSATION FUND OF UTAH; ADDRESSING POWERS OF
7 FUND; AMENDING DUTIES OF THE BOARD OF DIRECTORS; ELIMINATING
8 REQUIREMENT OF ANNUAL FINANCIAL AUDIT BY STATE AUDITOR; CREATING
9 THE BLUE RIBBON COMMISSION ON THE WORKERS' COMPENSATION FUND OF
10 UTAH; PROVIDING FOR MEMBERSHIP OF COMMISSION; DELINEATING
11 RESPONSIBILITIES AND PROCEDURES OF COMMISSION; PROVIDING A
12 REPORTING DATE FOR COMMISSION; APPROPRIATING $21,250 FROM THE
13 GENERAL FUND; MAKING TECHNICAL CORRECTIONS; PROVIDING AN EFFECTIVE
14 DATE; AND PROVIDING A REPEAL DATE.
15 This act affects sections of Utah Code Annotated 1953 as follows:
16 AMENDS:
17 31A-33-103 (Effective 07/01/97), as renumbered and amended by Chapter 240, Laws of Utah
18 1996
19 31A-33-107 (Effective 07/01/97), as renumbered and amended by Chapter 240, Laws of Utah
20 1996
21 31A-33-110 (Effective 07/01/97), as renumbered and amended by Chapter 240, Laws of Utah
22 1996
23 35A-1-404, as enacted by Chapter 240, Laws of Utah 1996
24 67-3-9, as enacted by Chapter 323, Laws of Utah 1990
25 ENACTS:
26 31A-33-103.5, Utah Code Annotated 1953
27 This act enacts uncodified material.

1 Be it enacted by the Legislature of the state of Utah:
2 Section 1. Section 31A-33-103 (Effective 07/01/97) is amended to read:
3 31A-33-103 (Effective 07/01/97). Legal nature of Workers' Compensation Fund.
4 (1) The Workers' Compensation Fund is:
5 (a) a nonprofit, self-supporting, quasi-public corporation; and
6 (b) a legal entity, [which] that may sue and be sued in its own name.
7 (2) All of the business and affairs of the corporation shall be conducted in the name of the
8 Workers' Compensation Fund of Utah or if conducted through a subsidiary, such other corporate
9 names that comply with state law.
10 Section 2. Section 31A-33-103.5 is enacted to read:
11 31A-33-103.5. Powers of Fund -- Limitations.
12 (1) The fund may form or acquire subsidiaries in accordance with Section 31A-33-107
13 except as limited by Subsections (2) and (3).
14 (2) Subject to applicable insurance rules and statutes, the Workers' Compensation Fund
15 of Utah, or its subsidiaries, may offer only workers' compensation insurance products and services
16 in Utah and other states until the Legislature enacts legislation addressing the recommendations
17 of a legislatively authorized study of the fund's authority, if any, to offer insurance products or
18 services other than workers' compensation insurance products or services either directly, through
19 a subsidiary, or through a joint venture.
20 (3) There is a moratorium until July 1, 2000, on the Workers' Compensation Fund of
21 Utah's authority, if any, to offer health insurance services including medical, surgical, hospital, and
22 other ancillary medical expenses, by any means including directly, through a subsidiary, or
23 through a joint venture.
24 Section 3. Section 31A-33-107 (Effective 07/01/97) is amended to read:
25 31A-33-107 (Effective 07/01/97). Duties of board -- Creation of subsidiaries.
26 (1) The board shall:
27 (a) appoint a chief executive officer to administer the Workers' Compensation Fund;
28 (b) receive and act upon financial, management, and actuarial reports covering the
29 operations of the Workers' Compensation Fund;
30 (c) ensure that the Workers' Compensation Fund is administered according to law;
31 (d) examine and approve an annual operating budget for the Workers' Compensation Fund;

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1 (e) serve as investment trustees and fiduciaries of the Injury Fund;
2 (f) receive and act upon recommendations of the chief executive officer;
3 (g) develop broad policy for the long-term operation of the Workers' Compensation Fund,
4 consistent with its mission and fiduciary responsibility;
5 (h) subject to Sections 31A-19-401 through 31A-19-420, approve any rating plans that
6 would modify a policyholder's premium;
7 (i) subject to Sections 31A-19-401 through 31A-19-420, approve the amount of deviation,
8 if any, from standard insurance rates;
9 (j) approve the amount of the dividends, if any, to be returned to policyholders;
10 (k) adopt a procurement policy consistent with the provisions of Title 63, Chapter 56, Utah
11 Procurement Code;
12 (l) develop and publish an annual report to policyholders, the governor, the Legislature,
13 and interested parties that describes the financial condition of the Injury Fund, including a
14 statement of expenses and income and what measures were taken or will be necessary to keep the
15 Injury Fund actuarially sound;
16 (m) establish a fiscal year;
17 (n) determine and establish an actuarially sound price for insurance offered by the fund;
18 (o) establish conflict of interest requirements that govern the board, officers, and
19 employees; and
20 (p) perform all other acts necessary for the policymaking and oversight of the Workers'
21 Compensation Fund.
22 (2) Subject to board review and its responsibilities under Subsection (1)(e), the board may
23 delegate authority to make daily investment decisions.
24 (3) The fund may form or acquire a subsidiary under Section 31A-33-103.5 only if that
25 action is approved by the board.
26 Section 4. Section 31A-33-110 (Effective 07/01/97) is amended to read:
27 31A-33-110 (Effective 07/01/97). Audits and examinations required.
28 (1) (a) The [state auditor shall audit the] Workers' Compensation Fund shall annually
29 obtain an audit from a national firm of certified public accountants.
30 (b) The fund shall provide the audit performed under Subsection (1)(a) to the state auditor
31 within 30 days of its completion.

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1 (2) (a) The insurance commissioner shall examine the Injury Fund according to the
2 purposes and procedures provided in Sections 31A-2-203 through 31A-2-205 at least once every
3 five years.
4 (b) The chief executive officer shall pay the necessary expense of this examination from
5 the Injury Fund.
6 Section 5. Section 35A-1-404 is amended to read:
7 35A-1-404. Implementation of consolidation.
8 (1) (a) The administration, adjudication, management, authority, statutes, rules, staffing,
9 or operations of the Industrial Commission may not change substantively as a result of the passage
10 of this act until:
11 (i) after July 1, 1997; and
12 (ii) the restructuring of the Industrial Commission is studied by a work group consisting
13 of an equal number of employer representatives and employee representatives that are voting
14 members and selected as follows:
15 (A) eight employer and eight employee representatives selected by the governor; and
16 (B) a ninth employer representative who has antidiscrimination experience selected by the
17 eight employer representatives selected under Subsection (1)(a)(ii)(A); and
18 (C) a ninth employee representative who has antidiscrimination experience selected by the
19 eight employee representatives selected under Subsection (1)(a)(ii)(A).
20 (b) The acting executive director shall:
21 (i) be a nonvoting ex officio member of the working group described in Subsection (1)(a);
22 (ii) chair the working group described in Subsection (1)(a); and
23 (iii) ensure staffing and support for the work group described in Subsection (1)(a).
24 (c) The following individuals may participate as nonvoting members of the work group
25 when the work group studies the restructuring of the Industrial Commission with regard to their
26 respective areas:
27 (i) the nonvoting members of the Workers' Compensation Advisory Council;
28 (ii) the public members of the Employment Security Advisory Council;
29 (iii) the members of the Utah Antidiscrimination Committee; and
30 (iv) the members of the Utah Occupational Safety and Health Advisory Council.
31 (d) The work group created under Subsection (1)(a) may invite the commissioners of the

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1 Industrial Commission to participate in the activities of the work group in an advisory capacity.
2 (e) The working group described in Subsection (1)(a) shall study:
3 (i) all aspects and issues of the Industrial Commission and may consider and recommend
4 that the responsibilities of the Industrial Commission be, in part or wholly:
5 (A) assigned to the department;
6 (B) consolidated or integrated into different departments of the state; or
7 (C) remain separate from the department or any other department of the state; and
8 (ii) (A) whether or not the costs of worker's compensation can more effectively be
9 managed by combining the benefits required by Chapters 3 and 3a with disability and health
10 insurance, as defined in Section 31A-1-301, in a program of 24-hour insurance coverage, to be
11 offered through:
12 (I) integrated management of separate, but jointly administered workers' compensation
13 and disability or health plans; or
14 (II) other means set forth in Title 31A, Insurance Code;
15 (B) the impact of a program described in Subsection (1)(e)(ii)(A) on:
16 (I) insured employers and workers;
17 (II) the exclusive remedy protections outlined in Sections 35A-3-105 and 35A-3a-102;
18 (III) competition among private and public insurers;
19 (IV) the regulatory functions of the Department of Workforce Services and the Department
20 of Insurance;
21 (V) the actuarial soundness of the Workers' Compensation Fund of Utah; and
22 (VI) liability of the state; and
23 (C) any issue related to the offering of 24-hour insurance coverage programs by workers'
24 compensation carriers, including the Workers' Compensation Fund of Utah's authority, if any, to
25 offer 24-hour insurance programs.
26 (f) The work group described in Subsection (1)(a) shall make final recommendations to
27 the Legislature including proposed legislation by October 15, 1996, concerning the study items
28 listed in Subsection (1)(e)(i).
29 (g) The work group described in Subsection (1)(a) shall make final recommendations to
30 the legislative work group created under Subsection (4)[(b)] by no later than August 1, 1996,
31 concerning the study items listed in Subsection (1)(e)(ii).

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1 (2) (a) The lieutenant governor jointly with the insurance commissioner shall create a work
2 group with representation from the private insurance industry and the Workers' Compensation
3 Fund of Utah.
4 (b) The lieutenant governor and the insurance commissioner shall serve as cochairs of the
5 work group created under Subsection (2)(a).
6 (c) The work group created under Subsection (2)(a), shall study:
7 (i) whether or not the costs of workers' compensation can more effectively be managed
8 by combining the benefits required by Chapters 3 and 3a with disability and health insurance, as
9 defined in Section 31A-1-301, in a program of 24-hour insurance coverage, to be offered through:
10 (A) integrated management of separate, but jointly administered workers' compensation
11 and disability or health plans; or
12 (B) other means set forth in Title 31A, Insurance Code;
13 (ii) the impact of a program described in Subsection (2)(c)(i) on:
14 (A) insured employers and workers;
15 (B) the exclusive remedy protections outlined in Sections 35A-3-105 and 35A-3a-102;
16 (C) competition among private and public insurers;
17 (D) the regulatory functions of the Department of Workforce Services and the Department
18 of Insurance;
19 (E) the actuarial soundness of the Workers' Compensation Fund of Utah; and
20 (F) liability of the state; and
21 (iii) any issue related to the offering of 24-hour insurance coverage programs by workers'
22 compensation carriers, including the Workers' Compensation Fund of Utah's authority, if any, to
23 offer 24-hour insurance programs.
24 (d) The work group created under Subsection (2)(a) shall make final recommendations to
25 the legislative workgroup created under Subsection (4)[(b)] by no later than August 1, 1996.
26 (e) The Department of Insurance shall provide staff support for the work group created
27 under Subsection (2)(a).
28 (3) (a) To avoid commingling of revenues from different sources, financial barriers
29 existing at the time of passage of this act shall be maintained between revenues from employer
30 premiums for workers' compensation, unemployment compensation, other dedicated credit funds
31 and the revenue used for social or other department programs normally funded from the General

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1 Fund or federal monies, grants, or loans.
2 (b) Funds collected for specific programs under this title shall:
3 (i) only be used for the purposes for which the funds were collected; and
4 (ii) be expended according to processes that can be verified by audit.
5 [(4) (a) There is a moratorium until July 1, 1998, on the Workers' Compensation Fund of
6 Utah's authority, if any, to offer disability or health insurance, as defined in Section 31A-1-301,
7 by any means including directly or through a subsidiary.]
8 [(b) (i)] (4) (a) There is created a legislative work group to study the issues listed in
9 Subsection (4)[(b)(v)] (e) composed of the following:
10 [(A)] (i) three members of the Senate, appointed by the president of the Senate; and
11 [(B)] (ii) five members of the House of Representatives, appointed by the speaker of the
12 House of Representatives[;].
13 [(ii)] (b) The president of the Senate shall designate a member of the Senate appointed to
14 the work group under Subsection (4)[(b)(i)] (a) as the Senate chair of the work group, and the
15 speaker of the House of Representatives shall designate a member of the House of Representatives
16 appointed to the work group under Subsection (4)[(b)(i)] (a) as the House chair of the work group.
17 [(iii)] (c) The work group shall comply with the rules applicable to legislative interim
18 committees.
19 [(iv)] (d) The work group may meet eight times.
20 [(v)] (e) The work group shall review and make recommendations on the following issues
21 to the Business, Labor, and Economic Development Interim Committee by no later than the
22 October interim of the interim committee:
23 [(A)] (i) whether or not the costs of workers' compensation can more effectively be
24 managed by combining the benefits required by Chapters 3 and 3a with disability and health
25 insurance, as defined in Section 31A-1-301, in a program of 24-hour insurance coverage, to be
26 offered through:
27 [(I)] (A) integrated management of separate, but jointly administered workers'
28 compensation and disability or health plans; or
29 [(II)] (B) other means set forth in Title 31A, Insurance Code;
30 [(B)] (ii) the impact of a program described in Subsection (4)[(b)(v)(A)] (e)(i) on:
31 [(I)] (A) insured employers and workers;

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1 [(II)] (B) the exclusive remedy protections outlined in Sections 35A-3-105 and
2 35A-3a-102;
3 [(III)] (C) competition among private and public insurers;
4 [(IV)] (D) the regulatory functions of the Department of Workforce Services and the
5 Department of Insurance;
6 [(V)] (E) the actuarial soundness of the Workers' Compensation Fund of Utah; and
7 [(VI)] (F) liability of the state;
8 [(C)] (iii) any issue related to the offering of 24-hour insurance coverage programs by
9 workers' compensation carriers, including the Workers' Compensation Fund of Utah's authority,
10 if any, to offer 24-hour insurance programs; and
11 [(D)] (iv) the nature, status, and scope of the Workers' Compensation Fund of Utah.
12 [(vi)] (f) Salaries and expenses of work group members shall be paid in accordance with
13 Section 36-2-2.
14 [(vii)] (g) The Office of Legislative Research and General Counsel shall provide staff
15 support to the work group.
16 [(viii)] (h) It is the intent of the Legislature to act on the recommendations of the study
17 under this Subsection (4)[(b)] during the 1997 Annual General Session.
18 [(ix)] (i) This Subsection (4)[(b)] providing for the study of 24-hour insurance coverage
19 is repealed December 31, 1996.
20 (5) (a) The acting executive director, with the concurrence of the Utah Association of
21 Counties Executive Board, shall establish a work group with broad representation from the Utah
22 Association of Counties, clients, providers, persons having oversight, and other persons interested
23 in the workforce development functions of the department including boards and councils
24 associated with programs administered prior to the consolidation. The work group shall develop
25 recommendations for:
26 (i) selecting the regional councils on workforce services;
27 (ii) enabling local governments within a consortium of counties that express interest in
28 writing to the acting executive director, to have greater autonomy in administering Division of
29 Employment Development services that are provided by regional workforce services areas;
30 (iii) enabling regional councils on workforce services to develop policies for administering
31 and delivering programs provided in regional workforce services areas in a manner as to be

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1 responsible to consortiums of counties;
2 (iv) providing funding for staff that is responsible to counties and other resources to enable
3 meaningful local involvement in the operations of the Division of Employment Development;
4 (v) a mechanism by which regional consortiums of counties shall contract for needed
5 services from counties, educational institutions, businesses, labor unions, or any other public or
6 private providers;
7 (vi) a process to ensure that the regional councils on workforce services that represent local
8 government and private interests, the State Council on Workforce Services, and the executive
9 director will work in partnership to determine how to implement federal block grants, if any,
10 administered through the Division of Employment Development;
11 (vii) a process by which funds will be allocated to regional workforce services areas for
12 administration and delivery of services according to regional and local priorities;
13 (viii) use of the Job Training Partnership Act, Turning Point, SPEID, and other case
14 management models for job descriptions and responsibilities in the department; and
15 (ix) process whereby specific county needs for priorities of training emphasis can be met
16 within the consortium of counties through the regional council on workforce services; and
17 (x) processes to ensure equity and full participation by all counties in a consortium of
18 counties.
19 (b) The recommendations made under Subsection (5)(a) shall ensure the concepts of:
20 (i) employment assistance centers;
21 (ii) unified case management;
22 (iii) statewide consistency in:
23 (A) information systems;
24 (B) administrative criteria;
25 (C) legal restrictions; and
26 (D) personnel management and equitable personnel benefit systems;
27 (iv) Turning Point clients and services will continue to be offered in educational settings,
28 when possible; and
29 (v) state and federal law requirements for or restrictions on the operation of the
30 department.
31 (c) The acting executive director and the Utah Association of Counties' through its

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1 executive board or their designees shall jointly suggest legislation for presentation during the 1997
2 Annual General Session based on the recommendations made by the work group under Subsection
3 (5)(a). If no joint agreement is reached, separate reports may be presented.
4 Section 6. Section 67-3-9 is amended to read:
5 67-3-9. Audit of independent agencies.
6 (1) As used in this section:
7 (a) "Auditor" means the state auditor.
8 (b) "Compliance audit" means an audit of an independent agency's compliance with
9 relevant statutes, rules, policies, and regulations that govern that independent agency.
10 (c) (i) "Governing board" means the board, committee, council or other body, however
11 designated, with responsibility for making policy and overseeing the operations of the independent
12 agency.
13 (ii) "Governing board" does not mean the manager, president, or other individual
14 responsible for daily management of the independent agency.
15 (d) "Independent agency" means:
16 (i) the Workers' Compensation Fund[,] of Utah;
17 (ii) the Utah Technology Finance Corporation[,];
18 (iii) the Utah Housing Finance Agency[,]; and
19 (iv) the Retirement Board and Office.
20 (2) [The] Except as provided in Subsection (3), the auditor shall:
21 (a) conduct an annual financial and compliance audit of each independent agency; and
22 (b) issue an audit report detailing [his] the auditor's findings and recommendations to:
23 (i) the governing board of each independent agency; and
24 (ii) the Office of the Legislative Fiscal Analyst for submission to the relevant legislative
25 appropriations subcommittee.
26 (3) The auditor shall conduct only a compliance audit of the Workers' Compensation Fund
27 of Utah.
28 Section 7. Blue Ribbon Workers' Compensation Commission -- Creation --
29 Membership -- Quorum -- Compensation -- Staff.
30 (1) There is created the Blue Ribbon Commission on the Workers' Compensation Fund
31 of Utah consisting of the following 15 members:

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1 (a) two members of the Senate appointed by the president of the Senate, no more than one
2 of whom may be from the same political party;
3 (b) three members of the House of Representatives appointed by the speaker of the House
4 of Representatives, no more than two of whom may be from the same political party; and
5 (c) the following members jointly appointed by the president of the Senate and the speaker
6 of the House of Representatives:
7 (i) the commissioner of insurance;
8 (ii) the chair of the Industrial Commission;
9 (iii) a representative of the Workers' Compensation Fund of Utah;
10 (iv) three representatives of the insurance industry;
11 (v) two representatives of employers; and
12 (vi) two representatives of employees.
13 (2) (a) The president of the Senate shall designate a member of the Senate appointed under
14 Subsection (1)(a) as a cochair of the commission.
15 (b) The speaker of the House of Representatives shall designate a member of the House
16 of Representatives appointed under Subsection (1)(b) as a cochair of the commission.
17 (3) A majority of the members of the commission constitutes a quorum. The action of a
18 majority of a quorum constitutes the action of the commission.
19 (4) (a) Salaries and expenses of the members of the commission who are legislators shall
20 be paid in accordance with Section 36-2-2 and Legislative Joint Rule 15.03.
21 (b) Members of the commission who are state employees shall receive no compensation
22 or expenses for their service on the commission except for compensation and expenses provided
23 by the agency by which they are employed.
24 (c) Members of the commission who are not legislators or state employees shall receive
25 no compensation or expenses for their service on the commission.
26 (5) The Office of Legislative Research and General Counsel shall provide staff support
27 to the commission.
28 Section 8. Duties -- Interim report.
29 (1) The commission shall review and make recommendations on the following issues:
30 (a) privatization of the Workers' Compensation Fund of Utah;
31 (b) how to serve the residual market;

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1 (c) the granting of new insurance authority to the Workers' Compensation Fund of Utah
2 for competitive reasons; and
3 (d) any related issue.
4 (2) A final report, including any proposed legislation, or recommendation to reauthorize
5 the commission, shall be presented to the Business, Labor, and Economic Development Interim
6 Committee by the interim committee's November meeting.
7 Section 9. Appropriation.
8 There is appropriated from the General Fund for fiscal year 1996-97:
9 (1) $2,500 to the Senate to pay for the compensation and expenses of senators on the
10 commission;
11 (2) $3,750 to the House of Representatives to pay for the compensation and expenses of
12 representatives on the commission; and
13 (3) $15,000 to the Office of Legislative Research and General Counsel to pay for staffing
14 the commission.
15 Section 10. Effective date.
16 Sections 31A-33-103, 31A-33-103.5, 31A-33-107, 31A-33-110, 35A-1-404, and 67-3-9
17 take effect July 1, 1997. Sections 7 through 11, uncodified material, take effect May 5, 1997.
18 Section 11. Repeal date.
19 Sections 7 through 9 are repealed November 30, 1997.




Legislative Review Note
as of 12-2-96 11:35 AM

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

Office of Legislative Research and General Counsel

Committee Note

The Business, Labor, and Economic Development Interim Committee recommended this bill.

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