H.B. 167 Enrolled

AMENDMENTS RELATED TO WORKERS' COMPENSATION
1998 GENERAL SESSION
STATE OF UTAH
Sponsor: Gerry A. Adair
AN ACT RELATING TO INSURANCE; DEFINING TERMS; AMENDING PROVISIONS
RELATED TO THE LEGAL NATURE AND POWERS OF THE WORKERS'
COMPENSATION FUND OF UTAH; ADDRESSING ACTIVITIES OF THE FUND AND
SUBSIDIARIES; PERMITTING JOINT ENTERPRISES UNDER CERTAIN
CIRCUMSTANCES; AND MAKING TECHNICAL CORRECTIONS.
This act affects sections of Utah Code Annotated 1953 as follows:
AMENDS:
31A-33-101, as renumbered and amended by Chapter 240, Laws of Utah 1996
31A-33-103.5, as enacted by Chapters 204 and 375, Laws of Utah 1997
31A-33-105, as renumbered and amended by Chapter 240, Laws of Utah 1996
31A-33-107, as last amended by Chapter 204, Laws of Utah 1997
31A-33-118, as enacted by Chapter 240, Laws of Utah 1996
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 31A-33-101 is amended to read:
31A-33-101. Definitions.
As used in this chapter:
(1) "Board" means the board of directors of the Workers' Compensation Fund.
(2) "Chief executive officer" means the chief executive officer appointed by the board.
(3) "Director" means a member of the board.
(4) "Fund" and "Workers' Compensation Fund" mean the nonprofit, quasi-public
corporation established by this chapter.
(5) "Injury Fund" means the premiums, reserves, investment income, and any other funds
administered by the Workers' Compensation Fund as provided in this chapter.
(6) "Joint enterprise" means a joint business activity either for-profit or not-for-profit:
(a) by which two or more persons provide insurance, products, or services; and

(b) that is established by contract between the persons providing the insurance, products, or
services.
(7) "Workers' compensation products and services" means:
(a) medical or lost time claims management;
(b) utilization review;
(c) rehabilitation counseling or training;
(d) fraud detection for workers' compensation claims;
(e) loss prevention or safety consultation; and
(f) data or information reporting or processing involving workers' compensation.
Section 2. Section 31A-33-103.5 is amended to read:
31A-33-103.5. Powers of Fund -- Limitations.
(1) The fund may form or acquire subsidiaries or enter into a joint enterprise:
(a) in accordance with Section 31A-33-107; and
(b) except as limited by [Subsections (2) and (3)] this section and applicable insurance rules
and statutes.
(2) [(a)] Subject to applicable insurance rules and statutes, the [Workers' Compensation Fund
of Utah, or its subsidiaries,] fund may [offer] only offer:
(a) 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) workers' compensation insurance in a state other than Utah to the extent necessary to:
(i) accomplish its purpose under Subsection 31A-33-102(1)(b); and
(ii) provide workers' compensation or occupational disease insurance coverage to Utah
employers and their employees engaged in interstate commerce; and
(c) workers' compensation products and services in Utah or other states.
[(b) A] (3) Subject to applicable insurance rules and statutes, a subsidiary of the [Workers'

- 2 -

Compensation Fund of Utah] fund may:
(a) offer workers' compensation insurance coverage only:
(i) in a state other than Utah; and
(ii) (A) to insure the following against liability for compensation based on job-related
accidental injuries and occupational diseases;
(I) an employer, as defined in Section 34A-2-103, that has a majority of its employees, as
defined in Section 34A-2-104, hired or regularly employed in Utah;
(II) an employer, as defined in Section 34A-2-103, whose principal administrative office is
located in Utah; or
(III) a subsidiary or affiliate of an employer described in Subsection (3)(a)(ii)(A)(I) or (II);
or
(B) for a state fund organization that is not an admitted insurer in the other state:
(I) on a fee for service basis; and
(II) without bearing any insurance risk; and
(b) offer workers' compensation products and services in Utah and other states.
[(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.]
(4) The fund shall write workers' compensation insurance in accordance with Section
31A-22-1001.
(5) (a) The fund may enter into a joint enterprise that offers workers' compensation insurance
and other coverage only in the state, provided:
(i) the joint enterprise offers only property or liability insurance in addition to workers'
compensation insurance;
(ii) the fund may not bear any insurance risk associated with the insurance coverage other
than risk associated with workers' compensation insurance; and
(iii) the offer of other insurance shall be part of an insurance program that includes workers'

- 3 -

compensation insurance coverage that is provided by the fund.
(b) The fund or a subsidiary of the fund may not offer, or enter into a joint enterprise that
offers, or otherwise participate in the offering of health or disability insurance.
Section 3. Section 31A-33-105 is amended to read:
31A-33-105. Price of insurance -- Liability of state.
(1) The Workers' Compensation Fund shall provide workers' compensation insurance at an
actuarially sound price, which the board shall determine.
(2) The state:
(a) is not liable for the expenses, liabilities, or debts of:
(i) the Workers' Compensation Fund[,];
(ii) a subsidiary of the fund; or
(iii) a joint enterprise in which the fund participates; and
(b) may not use any assets of the Injury Fund for any purpose.
Section 4. Section 31A-33-107 is amended to read:
31A-33-107. Duties of board -- Creation of subsidiaries -- Entering into joint
enterprises.
(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
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,] Chapter 19, Part IV, Workers'
Compensation Ratemaking, approve any rating plans that would modify a policyholder's premium;

- 4 -

(i) subject to [Sections 31A-19-401 through 31A-19-420,] Chapter 19, Part IV, Workers'
Compensation Ratemaking, 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] or enter into
a joint enterprise:
(a) only if that action is approved by the board; and
(b) subject to the limitations in Section 31A-33-103.5.
Section 5. Section 31A-33-118 is amended to read:
31A-33-118. Scope of chapter.
The placement of this chapter in this title may not be construed to[: (1)] change the Workers'
Compensation Fund's legal nature or purpose as set forth in this chapter[; or].
[(2) change the Workers' Compensation Fund's obligation to write workers' compensation
insurance pursuant to Section 31A-22-1001.]

- 5 -