S.B. 180

This document includes Senate Committee Amendments incorporated into the bill on Mon, Feb 14, 2005 at 11:23 AM by rday. --> This document includes Senate 3rd Reading Floor Amendments incorporated into the bill on Fri, Feb 18, 2005 at 11:16 AM by rday. -->

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Senate Committee Amendments 2-14-2005 rd/po 1

WORKERS COMPENSATION - COMPETITIVE
2 BID REQUIREMENTS
3 2005 GENERAL SESSION
4 STATE OF UTAH
5 Sponsor: Michael G. Waddoups
6
7 LONG TITLE
8 General Description:
9 This bill modifies the Insurance Code to require state agencies to bid for workers'
10 compensation coverage.
11 Highlighted Provisions:
12 This bill:
12a S. . addresses the makeup of the Workers' Compensation Fund's board of directors; .S
13 . deletes the requirement that state entities pay the Workers' Compensation Fund for
14 workers' compensation coverage;
15 . requires that state entities seek competitive bids for workers' compensation
16 insurance every three years in accordance with the Utah Procurement Code; S. and
17 [ . requires the Department of Insurance to determine the criteria and process for
18 insurance companies submitting competitive bids; and ] .S
19 . makes technical changes.
20 Monies Appropriated in this Bill:
21 None
22 Other Special Clauses:
23 None
24 Utah Code Sections Affected:
25 AMENDS:
26 31A-33-106, as last amended by Chapters 176 and 186, Laws of Utah 2002

27 34A-2-203, as last amended by Chapter 222, Laws of Utah 2000

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Senate Committee Amendments 2-14-2005 rd/po 28

29 Be it enacted by the Legislature of the state of Utah:
30 Section 1. Section 31A-33-106 is amended to read:
31 31A-33-106. Board of directors -- Status of the fund in relationship to the state.
32 (1) There is created a board of directors of the Workers' Compensation Fund.
33 (2) The board shall consist of seven directors.
34 (3) One director S. [ [ ] : (a) [ ] ] .S shall be the executive director of the Department of
35 Administrative Services or the executive director's designee S. [ [ ] ; and [ ]. ] ;
36 [ [ ] (b) acts as the representative of the state as a policyholder of the Workers'
37 Compensation Fund. [ ] ] ; and
37a (c) shall resign when required by Subsection (8). .S
38 (4) One director shall be the chief executive officer of the fund.
39 (5) (a) In accordance with a plan that meets the requirements of this section , the
40 governor, with the consent of the Senate, shall appoint five public directors as follows:
41 (i) three directors who are owners, officers, or employees of policyholders other than
42 the state, each of whom is an owner, officer, or employee of a policyholder that has been
43 insured by the Workers' Compensation Fund for at least one year before the appointment of the
44 director representing the policyholder; and
45 (ii) two directors from the public in general.
46 (b) The plan described in Subsection (5)(a) shall comply with Section 31A-5-409 to the
47 extent that Section 31A-5-409 does not conflict with this section.
48 (6) No two directors may represent the same policyholder.
49 (7) At least four directors appointed by the governor shall have had previous
50 experience in:
51 (a) the actuarial profession;
52 (b) accounting;
53 (c) investments;
54 (d) risk management;
55 (e) occupational safety;
56 (f) casualty insurance; or
57 (g) the legal profession.

58 (8) S. (a) .S Any director who represents a policyholder that fails to maintain workers'

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Senate 3rd Reading Amendments 2-18-2005 rd/po

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Senate Committee Amendments 2-14-2005 rd/po 59

compensation insurance through the Workers' Compensation Fund shall immediately resign
60 from the board S. including the executive director of the Department of Administrative
60a Services of the executive director's designee resigning on the day on which the state is no
60b longer insured by the Workers' Compensation
60c Fund pursuant to Section 34-2-203.
60d (b) If the state is no longer insured by the
60e Workers' Compensation Fund pursuant to Section 34A-2-203, the governor, with the consent
60f of the Senate, shall appoint a member to replace the executive director of the Department of
60g Administrative Services or the executive director's designee. The member appointed under this
60h Subsection (8)(b) shall:
60i (i) be an owner, officer, or employee of a policyholder that has been insured by the
60j Workers' Compensation Fund for at least one year before the appointment of the director
60k representing the policyholder; and
60l (ii) shall have the experience outlined in Subsection (7) .S .
61 (9) A person may not be a director if that person:
62 (a) has any interest as a stockholder, employee, attorney, or contractor of a competing
63 insurance carrier providing workers' compensation insurance in Utah;
64 (b) fails to meet or comply with the conflict of interest policies established by the
65 board; or
66 (c) is not bondable.
67 (10) After notice and a hearing, the governor may remove any director for cause which
68 includes:
69 (a) neglect of duty; or
70 (b) malfeasance.
71 (11) (a) Except as required by Subsection (11)(b), the term of office of the directors
72 appointed by the governor shall be four years, beginning July 1 of the year of appointment.
73 (b) Notwithstanding the requirements of Subsection (11)(a), the governor shall, at the
74 time of appointment or reappointment, adjust the length of terms to ensure that the terms of
75 directors are staggered so that approximately half of the S. appointed members of the .S board
75a S. [ is ] are .S appointed every two years S. , provided that no more than two directors may
75b be appointed in a single year .S .
76 (12) Each director shall hold office until the director's successor is appointed and
77 qualified.
78 (13) When a vacancy occurs in the membership of the board for any reason, the

79 replacement shall be appointed for the unexpired term.
80 (14) The board shall annually elect a chair and other officers as needed from its
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Senate Committee Amendments 2-14-2005 rd/po 81

membership.
82 (15) (a) The board shall meet at least quarterly at a time and place designated by the
83 chair.
84 (b) The chair:
85 (i) may call board meetings more frequently than quarterly; and
86 (ii) shall call additional board meetings if requested to do so by a majority of the board.
87 (16) Four directors are a quorum for the purpose of transacting all business of the
88 board.
89 (17) Each decision of the board requires the affirmative vote of at least four directors

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Senate Committee Amendments 2-14-2005 rd/po 90

for approval.
91 (18) (a) Directors shall receive no compensation or benefits for their services, but may
92 receive per diem and expenses incurred in the performance of the director's official duties at the
93 rates established by the Division of Finance under Sections 63A-3-106 and 63A-3-107.
94 (b) Directors may decline to receive per diem and expenses for their service.
95 (c) The fund shall pay the per diem allowance and expenses from the Injury Fund upon
96 vouchers drawn in the same manner as the Workers' Compensation Fund pays its normal
97 operating expenses.
98 (d) The executive director of the Department of Administrative Services, or the
99 executive director's designee, and the chief executive officer of the Workers' Compensation
100 Fund shall serve on the board without a per diem allowance.
101 (19) The requirement that the governor, with the consent of the Senate, appoint the
102 directors of the Workers' Compensation Fund specified in Subsection (5), does not:
103 (a) remove from the board of directors the managerial, financial, or operational control
104 of the Workers' Compensation Fund;
105 (b) give to the state or the governor managerial, financial, or operational control of the
106 Workers' Compensation Fund;
107 (c) consistent with Section 31A-33-105 , cause the state to be liable for any:
108 (i) obligation of the Workers' Compensation Fund; or
109 (ii) expense, liability, or debt described in Section 31A-33-105 ;
110 (d) alter the legal status of the Workers' Compensation Fund as:
111 (i) a nonprofit, self-supporting, quasi-public corporation; and
112 (ii) an insurer:
113 (A) regulated under this title;
114 (B) that is structured to operate in perpetuity; and
115 (C) domiciled in the state; or
116 (e) alter the requirement that the Workers' Compensation Fund provide workers'
117 compensation:
118 (i) for the purposes set forth in Section 31A-33-102 ;
119 (ii) consistent with Section 34A-2-201 ; and
120 (iii) as provided in Section 31A-22-1001 .

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Senate 3rd Reading Amendments 2-18-2005 rd/po 121

Section 2. Section 34A-2-203 is amended to read:
122 34A-2-203. Payment of premiums by state department, commission, board, or
123 other agency.
124 [Each] (1) S. [ (a) ] .S Beginning on the day on which any contract in effect on May 2,
124a 2005,
125 between the state and the Workers' Compensation Fund for workers' compensation coverage
126 terminates, S. [ each department, commission, board, or other agency of ] consistent with Title
126a 63A, Chapter 4, Risk Management, .S the state shall [pay the
127 insurance premium on its employees direct to the Workers' Compensation Fund] obtain
128 workers' compensation insurance under this title by way of a competitive bid process.
129 S. [ (b) ] (2) .S The competitive bid process required by Subsection (1) S. [ (a) ] .S shall:
130 S. [ (i) ] (a) .S occur once every three years; and
131 S. [ (ii) ] (b) be conducted .S in accordance with Title 63, Chapter 56, Utah Procurement
131a Code.
132 S. [ (2) Notwithstanding Subsection (1)(b), the Insurance Department shall determine the
133 criteria and process for an insurance carrier to bid for the opportunity to provide workers'
134 compensation insurance to a department, commission, board, or other agency of the state. ] .S

Legislative Review Note
as of 2-3-05 10:42 AM

Based on a limited legal review, this legislation has not been determined to have a high
probability of being held unconstitutional.

Office of Legislative Research and General Counsel