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S.B. 220

             1     

FUNDS RELATED TO WORKPLACE SAFETY

             2     
AND WORKERS' COMPENSATION

             3     
2003 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Sponsor: Scott K. Jenkins

             6      This act modifies the Utah Labor Code to expand the purposes for which funds in the
             7      Workplace Safety Account and the Uninsured Employers' Fund may be used. This act
             8      makes technical changes.
             9      This act affects sections of Utah Code Annotated 1953 as follows:
             10      AMENDS:
             11          34A-2-701, as renumbered and amended by Chapter 375, Laws of Utah 1997
             12          34A-2-704, as last amended by Chapter 71, Laws of Utah 2002
             13      Be it enacted by the Legislature of the state of Utah:
             14          Section 1. Section 34A-2-701 is amended to read:
             15           34A-2-701. Premium assessment restricted account for safety.
             16          (1) There is created in the General Fund a restricted account known as the Workplace
             17      Safety Account.
             18          (2) An amount equal to 0.25% of the premium income remitted to the state treasurer
             19      pursuant to Subsection 59-9-101 (2)(c) shall be deposited in the Workplace Safety Account in
             20      the General Fund for use by the commission [to promote Utah workplace safety] as provided in
             21      Subsection (3).
             22          (3) Monies shall be appropriated by the Legislature from the restricted account to the
             23      commission for use by the commission to:
             24          (a) improve safety consultation services available to Utah employers; [or]
             25          (b) provide for electronic or print media advertising campaigns designed to promote
             26      workplace safety[.];
             27          [(4) From monies appropriated by the Legislature from the restricted account to the



             28      commission for use by the commission, the commission may]
             29          (c) fund [other] safety programs or initiatives [recommended to it by its state] the
             30      commission elects to fund on the basis of recommendations to the commission by the workers'
             31      compensation advisory council created under Section 34A-2-107 [.]; or
             32          (d) fund reasonable costs of administering the division.
             33          [(5)] (4) The commission shall annually report to the governor, the Legislature, and [its
             34      state] the workers' compensation advisory council regarding:
             35          (a) the use of the monies appropriated under Subsection (3) [or (4)]; and
             36          (b) the use of the monies on the safety of Utah's workplaces.
             37          [(6)] (5) The monies deposited in the restricted account:
             38          (a) shall be:
             39          (i) used only for the activities described in Subsection (3) [or (4)]; and
             40          (ii) expended according to processes that can be verified by audit; and
             41          (b) may not be used for[: (i) administrative costs unrelated to the restricted account; or
             42      (ii)] any activity of the commission other than the activities of the commission described in
             43      Subsection (3) [or (4)].
             44          Section 2. Section 34A-2-704 is amended to read:
             45           34A-2-704. Uninsured Employers' Fund.
             46          (1) (a) There is created an Uninsured Employers' Fund.
             47          (b) The Uninsured Employers' Fund has the purpose of assisting in the funding of the
             48      administration of the division in accordance with Subsection (2)(c)(ii) and assisting in the
             49      payment of workers' compensation benefits to any person entitled to the benefits, if:
             50          (i) that person's employer:
             51          (A) is individually, jointly, or severally liable to pay the benefits; and
             52          (B) (I) becomes or is insolvent;
             53          (II) appoints or has appointed a receiver; or
             54          (III) otherwise does not have sufficient funds, insurance, sureties, or other security to
             55      cover workers' compensation liabilities; and
             56          (ii) the employment relationship between that person and the person's employer is
             57      localized within the state as provided in Subsection (20).
             58          [(b)] (c) The Uninsured Employers' Fund succeeds to all monies previously held in the


             59      Default Indemnity Fund.
             60          [(c)] (d) If it becomes necessary to pay benefits, the Uninsured Employers' Fund is
             61      liable for all obligations of the employer as set forth in this chapter and Chapter 3, Utah
             62      Occupational Disease Act, with the exception of penalties on those obligations.
             63          (2) (a) Monies for the Uninsured Employers' Fund shall be deposited into the
             64      Uninsured Employers' Fund in accordance with [Section 34A-2-202 ] this chapter and
             65      Subsection 59-9-101 (2).
             66          (b) The commissioner shall appoint an administrator of the Uninsured Employers'
             67      Fund.
             68          (c) [The] (i) Except as provided in Subsection (2)(c)(ii), the state treasurer is the
             69      custodian of the Uninsured Employers' Fund, and the administrator shall make provisions for
             70      and direct [its distribution] distributions from the Uninsured Employers' Fund.
             71          (ii) Notwithstanding Subsection (2)(c)(i), the Legislature may appropriate monies from
             72      the Uninsured Employers' Fund to fund administration of the division.
             73          (3) [Reasonable] The following may be paid from the Uninsured Employers' Fund:
             74          (a) the reasonable costs of administering the Uninsured Employers' Fund [or];
             75          (b) the reasonable costs of administering the division; or
             76          (c) to pay other fees required to be paid by the Uninsured Employers' Fund [may be
             77      paid from the Uninsured Employers' Fund].
             78          (4) The state treasurer shall:
             79          (a) receive workers' compensation premium assessments from the State Tax
             80      Commission; and
             81          (b) invest monies deposited into the Uninsured Employers' Fund to ensure maximum
             82      investment return for both long and short term investments in accordance with Section
             83      51-7-12.5 .
             84          (5) (a) The administrator may employ, retain, or appoint counsel to represent the
             85      Uninsured Employers' Fund in all proceedings brought to enforce claims against or on behalf of
             86      the Uninsured Employers' Fund.
             87          (b) If requested by the commission, the following shall aid in the representation of the
             88      Uninsured Employers' Fund:
             89          (i) the attorney general; or


             90          (ii) the city attorney, or county attorney of the locality in which:
             91          (A) any investigation, hearing, or trial under this chapter or Chapter 3, Utah
             92      Occupational Disease Act, is pending;
             93          (B) the employee resides; or
             94          (C) an employer:
             95          (I) resides; or
             96          (II) is doing business.
             97          (6) To the extent of the compensation and other benefits paid or payable to or on behalf
             98      of an employee or the employee's dependents from the Uninsured Employers' Fund, the
             99      Uninsured Employers' Fund, by subrogation, has all the rights, powers, and benefits of the
             100      employee or the employee's dependents against the employer failing to make the compensation
             101      payments.
             102          (7) (a) The receiver, trustee, liquidator, or statutory successor of an insolvent employer
             103      is bound by settlements of covered claims by the Uninsured Employers' Fund.
             104          (b) The court with jurisdiction shall grant all payments made under this section a
             105      priority equal to that to which the claimant would have been entitled in the absence of this
             106      section against the assets of the insolvent employer.
             107          (c) The expenses of the Uninsured Employers' Fund in handling claims shall be
             108      accorded the same priority as the liquidator's expenses.
             109          (8) (a) The administrator shall periodically file the information described in Subsection
             110      (8)(b) with the receiver, trustee, or liquidator of:
             111          (i) an insolvent employer;
             112          (ii) an insolvent public agency insurance mutual as defined in Section 31A-1-103 ; or
             113          (iii) an insolvent insurance carrier.
             114          (b) The information required to be filed under Subsection (8)(a) is:
             115          (i) statements of the covered claims paid by the Uninsured Employers' Fund; and
             116          (ii) estimates of anticipated claims against the Uninsured Employers' Fund.
             117          (c) The filings under this Subsection (8) shall preserve the rights of the Uninsured
             118      Employers' Fund for claims against the assets of the insolvent employer.
             119          (9) When any injury or death for which compensation is payable from the Uninsured
             120      Employers' Fund has been caused by the wrongful act or neglect of another person not in the


             121      same employment, the Uninsured Employers' Fund has the same rights as allowed under
             122      Section 34A-2-106 .
             123          (10) The Uninsured Employers' Fund, subject to approval of the administrator, shall
             124      discharge its obligations by:
             125          (a) adjusting its own claims; or
             126          (b) contracting with an adjusting company, risk management company, insurance
             127      company, or other company that has expertise and capabilities in adjusting and paying workers'
             128      compensation claims.
             129          (11) (a) For the purpose of maintaining the Uninsured Employers' Fund, an
             130      administrative law judge, upon rendering a decision with respect to any claim for workers'
             131      compensation benefits in which an uninsured employer was duly joined as a party, shall:
             132          (i) order the uninsured employer to reimburse the Uninsured Employers' Fund for all
             133      benefits paid to or on behalf of an injured employee by the Uninsured Employers' Fund along
             134      with interest, costs, and attorneys' fees; and
             135          (ii) impose a penalty against the uninsured employer of 15% of the value of the total
             136      award in connection with the claim that shall be paid into the Uninsured Employers' Fund.
             137          (b) Awards may be docketed as other awards under this chapter and Chapter 3, Utah
             138      Occupational Disease Act.
             139          (12) The liability of the state, the commission, and the state treasurer, with respect to
             140      payment of any compensation benefits, expenses, fees, or disbursement properly chargeable
             141      against the Uninsured Employers' Fund, is limited to the assets in the Uninsured Employers'
             142      Fund, and they are not otherwise in any way liable for the making of any payment.
             143          (13) The commission may make reasonable rules for the processing and payment of
             144      claims for compensation from the Uninsured Employers' Fund.
             145          (14) (a) (i) If it becomes necessary for the Uninsured Employers' Fund to pay benefits
             146      under this section to an employee described in Subsection (14)(a)(ii), the Uninsured Employers'
             147      Fund may assess all other self-insured employers amounts necessary to pay:
             148          (A) the obligations of the Uninsured Employers' Fund subsequent to an insolvency;
             149          (B) the expenses of handling covered claims subsequent to an insolvency;
             150          (C) the cost of examinations under Subsection (15); and
             151          (D) other expenses authorized by this section.


             152          (ii) This Subsection (14) applies to benefits paid to an employee of:
             153          (A) a self-insured employer, as defined in Section 34A-2-201.5 , that is insolvent; or
             154          (B) if the insolvent self-insured employer is a public agency insurance mutual, a
             155      member of the public agency insurance mutual.
             156          (b) The assessments of each self-insured employer shall be in the proportion that the
             157      manual premium of the self-insured employer for the preceding calendar year bears to the
             158      manual premium of all self-insured employers for the preceding calendar year.
             159          (c) Each self-insured employer shall be notified of the employer's assessment not later
             160      than 30 days before the assessment is due.
             161          (d) (i) A self-insured employer may not be assessed in any year an amount greater than
             162      2% of that self-insured employer's manual premium for the preceding calendar year.
             163          (ii) If the maximum assessment does not provide in any one year an amount sufficient
             164      to make all necessary payments from the Uninsured Employers' Fund for one or more insolvent
             165      self-insured employers, the unpaid portion shall be paid as soon as funds become available.
             166          (e) All self-insured employers are liable under this section for a period not to exceed
             167      three years after the self-insured employer's voluntary or involuntary termination of
             168      self-insurance privileges within this state.
             169          (f) This Subsection (14) does not apply to claims made against an insolvent
             170      self-insured employer if the insolvency occurred prior to July 1, 1986.
             171          (15) (a) The following shall notify the division of any information indicating that any
             172      of the following may be insolvent or in a financial condition hazardous to its employees or the
             173      public:
             174          (i) a self-insured employer; or
             175          (ii) if the self-insured employer is a public agency insurance mutual, a member of the
             176      public agency insurance mutual.
             177          (b) Upon receipt of the notification described in Subsection (15)(a) and with good
             178      cause appearing, the division may order an examination of:
             179          (i) that self-insured employer; or
             180          (ii) if the self-insured employer is a public agency insurance mutual, a member of the
             181      public agency mutual.
             182          (c) The cost of the examination ordered under Subsection (15)(b) shall be assessed


             183      against all self-insured employers as provided in Subsection (14).
             184          (d) The results of the examination ordered under Subsection (15)(b) shall be kept
             185      confidential.
             186          (16) (a) In any claim against an employer by the Uninsured Employers' Fund, or by or
             187      on behalf of the employee to whom or to whose dependents compensation and other benefits
             188      are paid or payable from the Uninsured Employers' Fund, the burden of proof is on the
             189      employer or other party in interest objecting to the claim. [The]
             190          (b) A claim described in Subsection (16)(a) is presumed to be valid up to the full
             191      amount of workers' compensation benefits claimed by the employee or the employee's
             192      dependents.
             193          (c) This Subsection (16) applies whether the claim is filed in court or in an adjudicative
             194      proceeding under the authority of the commission.
             195          (17) A partner in a partnership or an owner of a sole proprietorship may not recover
             196      compensation or other benefits from the Uninsured Employers' Fund if:
             197          (a) the person is not included as an employee under Subsection 34A-2-104 (3); or
             198          (b) the person is included as an employee under Subsection 34A-2-104 (3), but:
             199          (i) the person's employer fails to insure or otherwise provide adequate payment of
             200      direct compensation; and
             201          (ii) the failure described in Subsection (17)(b)(i) is attributable to an act or omission
             202      over which the person had or shared control or responsibility.
             203          (18) A director or officer of a corporation may not recover compensation or other
             204      benefits from the Uninsured Employers' Fund if the director or officer is excluded from
             205      coverage under Subsection 34A-2-104 (4).
             206          (19) The Uninsured Employers' Fund:
             207          (a) shall be:
             208          (i) used in accordance with this section only for:
             209          (A) the purpose of assisting in the payment of workers' compensation benefits in
             210      accordance with Subsection (1); [and]
             211          (B) in accordance with Subsection (3), payment of:
             212          (I) reasonable costs of administering the Uninsured Employers' Fund; or
             213          (II) fees required to be paid by the Uninsured Employers' Fund; and


             214          (C) funding the administrative costs of the division in accordance with Subsection
             215      (2)(c)(ii); and
             216          (ii) expended according to processes that can be verified by audit; and
             217          (b) may not be used for:
             218          (i) administrative costs unrelated to the Uninsured Employers' Fund or the division; or
             219          (ii) any activity of the commission other than an activity described in Subsection
             220      (19)(a).
             221          (20) (a) For purposes of Subsection (1), an employment relationship is localized in the
             222      state if:
             223          (i) (A) the employer who is liable for the benefits has a business premise in the state;
             224      and
             225          (B) (I) the contract for hire is entered into in the state; or
             226          (II) the employee regularly performs work duties in the state for the employer who is
             227      liable for the benefits; or
             228          (ii) the employee is:
             229          (A) a resident of the state; and
             230          (B) regularly performs work duties in the state for the employer who is liable for the
             231      benefits.
             232          (b) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             233      commission shall by rule define what constitutes regularly performing work duties in the state.




Legislative Review Note
    as of 2-19-03 4:17 PM


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

Office of Legislative Research and General Counsel


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