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[Introduced][Status][Bill Documents][Fiscal Note][Bills Directory]

S.B. 159 Enrolled

             1     

WORKERS' COMPENSATION AMENDMENTS

             2     
2008 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Dan R. Eastman

             5     
House Sponsor: Todd E. Kiser

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill modifies provisions related to workers' compensation.
             10      Highlighted Provisions:
             11          This bill:
             12          .    modifies provisions related to workers' compensation and a workers' compensation
             13      coverage waiver;
             14          .    modifies provisions related to workers' compensation insurance fraud; and
             15          .    makes technical and conforming amendments.
             16      Monies Appropriated in this Bill:
             17          None
             18      Other Special Clauses:
             19          None
             20      Utah Code Sections Affected:
             21      AMENDS:
             22          31A-21-104, as last amended by Laws of Utah 2007, Chapters 89 and 307
             23          31A-22-501.1, as enacted by Laws of Utah 2005, Chapter 125
             24          34A-2-103, as last amended by Laws of Utah 2006, Chapter 295
             25          34A-2-110, as last amended by Laws of Utah 2007, Chapter 339
             26      ENACTS:
             27          31A-22-1011, Utah Code Annotated 1953
             28     
             29      Be it enacted by the Legislature of the state of Utah:


             30          Section 1. Section 31A-21-104 is amended to read:
             31           31A-21-104. Insurable interest and consent -- Scope.
             32          (1) As used in this chapter:
             33          (a) For purposes of this section, "exchange" means an exchange made pursuant to
             34      Section 1035, Internal Revenue Code, as may be amended.
             35          (b) "Insurable interest" in a person means the following, including a circumstance
             36      described in Subsection (3):
             37          (i) for [persons] a person closely related by blood or by law, a substantial interest
             38      engendered by love and affection; or
             39          (ii) in the case of [other persons] a person not described in Subsection (1)(b)(i), a lawful
             40      and substantial interest in having the life, health, and bodily safety of the person insured
             41      continue.
             42          (c) "Insurable interest" in property or liability means any lawful and substantial
             43      economic interest in the nonoccurrence of the event insured against.
             44          (d) "Viatical settlement" is as defined in Section 31A-36-102 .
             45          (2) (a) An insurer may not knowingly provide insurance to a person who does not have
             46      or expect to have an insurable interest in the subject of the insurance.
             47          (b) A person may not knowingly procure, directly, by assignment, or otherwise, an
             48      interest in the proceeds of an insurance policy unless that person has or expects to have an
             49      insurable interest in the subject of the insurance.
             50          (c) In the case of life insurance, the insurable interest requirements of Subsections (2)(a)
             51      and (b):
             52          (i) are satisfied if the requirements are met:
             53          (A) at the effective date of the insurance policy; and
             54          (B) at the time of a later procurement, if any, of an interest in the proceeds of an
             55      insurance policy; and
             56          (ii) do not need to be met at the time that proceeds of an insurance policy are payable if
             57      the requirements are met at the times specified in Subsection (2)(c)(i).


             58          (d) Except as provided in Subsections (7)[,] and (8), [and (9), any] insurance provided
             59      in violation of this Subsection (2) is subject to Subsection (6).
             60          (e) A policy holder in a group insurance policy does not need an insurable interest if a
             61      certificate holder or a person other than the group policyholder who is specified by the
             62      certificate holder is the recipient of the proceeds of the group insurance policy.
             63          (3) The following is a nonexhaustive list of insurable interests:
             64          (a) Each person has an unlimited insurable interest in that person's own life and health.
             65          (b) A shareholder, member, or partner has an insurable interest in the life of [other
             66      shareholders, members, or partners] another shareholder, member, or partner for purposes of an
             67      insurance [contracts that are] contract that is an integral part of a legitimate buy-sell agreement
             68      respecting shares, membership interests, or partnership interests in the business.
             69          (c) A trust has an insurable interest in the subject of the insurance to the extent that a
             70      beneficiary of the trust has the insurable interest.
             71          (d) (i) Subject to Subsection (3)(d)(v), an employer or an employer sponsored trust:
             72          (A) has an insurable interest in the lives of the employer's:
             73          (I) directors;
             74          (II) officers;
             75          (III) managers;
             76          (IV) nonmanagement employees; and
             77          (V) retired employees; and
             78          (B) may insure [the lives] a life listed in Subsection (3)(d)(i)(A):
             79          (I) on an individual or group basis; and
             80          (II) with the written consent of the insured.
             81          (ii) (A) A trustee of a trust established by an employer for the sole benefit of the
             82      employer has the same insurable interest in the life and health of any person as does the
             83      employer.
             84          (B) Without limiting the general principle in Subsection (3)(d)(ii)(A), a trustee of a trust
             85      established by an employer that provides life, health, disability, retirement, or similar benefits to


             86      an individual identified in Subsection (3)(d)(i)(A) has an insurable interest in the life of the
             87      individual described in Subsection (3)(d)(i)(A) for whom the benefits are provided.
             88          (iii) (A) For the purpose of exchanging life insurance, [the individuals] an individual
             89      described in Subsection (3)(d)(i)(A) [include] includes an individual who was formerly included
             90      under Subsection (3)(d)(i)(A) if the life insurance to be exchanged:
             91          (I) is purchased or acquired while the individual is a current director, officer, manager,
             92      or employee; and
             93          (II) is exchanged for life insurance in an amount that does not exceed the amount of the
             94      insurance being exchanged.
             95          (B) Written consent of an individual described in this Subsection (3)(d)(iii) is not
             96      required at the time of the exchange of the life insurance.
             97          (C) This Subsection (3)(d)(iii) shall be interpreted in a manner consistent with
             98      Subsection (2)(c).
             99          (iv) (A) If an employer or trustee establishes an insurable interest as provided in this
             100      Subsection (3)(d) and all of the employer's business is acquired, purchased, merged into, or
             101      otherwise transferred to a subsequent employer, the insurable interest of the original employer
             102      or trustee in an individual described in Subsection (3)(d)(i)(A) is automatically transferred to:
             103          (I) the subsequent employer; or
             104          (II) the trustee of a trust established by the subsequent employer for the subsequent
             105      employer's sole benefit.
             106          (B) A subsequent employer or a trustee of a trust described in Subsection
             107      (3)(d)(iv)(A)(II) may exchange life insurance that is purchased or acquired in an individual
             108      described in Subsection (3)(d)(i)(A) by the original employer or trustee without establishing a
             109      new insurable interest at the time of the exchange of the insurance.
             110          (v) The extent of an employer's or employer sponsored trust's insurable interest for a
             111      nonmanagement or retired employee under Subsection (3)(d)(i) is limited to an amount
             112      commensurate with the employer's unfunded liabilities at the time insurance on the
             113      nonmanagement or retired employee is procured.


             114          (4) (a) Except as provided in Subsection (5), an insurer may not knowingly issue an
             115      individual life or accident and health insurance policy to a person other than the one whose life
             116      or health is at risk unless that person:
             117          (i) is 18 years of age or older;
             118          (ii) is not under guardianship under Title 75, Chapter 5, Protection of Persons Under
             119      Disability and Their Property; and
             120          (iii) gives written consent to the issuance of the policy.
             121          (b) A person shall express consent:
             122          (i) by signing an application for the insurance with knowledge of the nature of the
             123      document; or
             124          (ii) in any other reasonable way.
             125          (c) [Any insurance] Insurance provided in violation of this Subsection (4) is subject to
             126      Subsection (6).
             127          (5) (a) A life or accident and health insurance policy may be taken out without consent
             128      in a circumstance described in this Subsection (5)(a).
             129          (i) A person may obtain insurance on a dependent who does not have legal capacity.
             130          (ii) A creditor may, at the creditor's expense, obtain insurance on the debtor in an
             131      amount reasonably related to the amount of the debt.
             132          (iii) A person may obtain life and accident and health insurance on an immediate family
             133      member who is living with or dependent on the person.
             134          (iv) A person may obtain an accident and health insurance policy on others that would
             135      merely indemnify the policyholder against expenses the person would be legally or morally
             136      obligated to pay.
             137          (v) The commissioner may adopt rules permitting issuance of insurance for a limited
             138      term on the life or health of a person serving outside the continental United States who is in the
             139      public service of the United States, if the policyholder is related within the second degree by
             140      blood or by marriage to the person whose life or health is insured.
             141          (b) Consent may be given by another in a circumstance described in this Subsection


             142      (5)(b).
             143          (i) A parent, a person having legal custody of a minor, or a guardian of a person under
             144      Title 75, Chapter 5, Protection of Persons Under Disability and Their Property, may consent to
             145      the issuance of a policy on a dependent child or on a person under guardianship under Title 75,
             146      Chapter 5, Protection of Persons Under Disability and Their Property.
             147          (ii) A grandparent may consent to the issuance of life or accident and health insurance
             148      on a grandchild.
             149          (iii) A court of general jurisdiction may give consent to the issuance of a life or accident
             150      and health insurance policy on an ex parte application showing facts the court considers
             151      sufficient to justify the issuance of that insurance.
             152          (6) (a) An insurance policy is not invalid because:
             153          (i) the insurance policy is issued or procured in violation of Subsection (2); or
             154          (ii) consent has not been given.
             155          (b) Notwithstanding Subsection (6)(a), a court with appropriate jurisdiction may:
             156          (i) order the proceeds to be paid to some person who is equitably entitled to the
             157      proceeds, other than the one to whom the policy is designated to be payable; or
             158          (ii) create a constructive trust in the proceeds or a part of the proceeds on behalf of a
             159      person who is equitably entitled to the proceeds, subject to all the valid terms and conditions of
             160      the policy other than those relating to insurable interest or consent.
             161          (7) This section does not prevent [any] an organization described under [26 U.S.C.
             162      Sec.] Section 501(c)(3), (e), or (f), Internal Revenue Code, as amended, and the regulations
             163      made under this section, and which is regulated under Title 13, Chapter 22, Charitable
             164      Solicitations Act, from soliciting and procuring, by assignment or designation as beneficiary, a
             165      gift or assignment of an interest in life insurance on the life of the donor or assignor or from
             166      enforcing payment of proceeds from that interest.
             167          (8) An insurance policy transferred pursuant to Chapter 36, Viatical Settlements Act, is
             168      not subject to Subsection (6)(b) and nothing else in this section shall prevent:
             169          (a) [any] a policyholder of life insurance, whether or not the policyholder is also the


             170      subject of the insurance, from entering into a viatical settlement;
             171          (b) [any] a person from soliciting a person to enter into a viatical settlement;
             172          (c) a person from enforcing payment of proceeds from the interest obtained under a
             173      viatical settlement; or
             174          (d) a viatical settlement provider, a viatical settlement purchaser, a financing entity, a
             175      related provider trust, or a special purpose entity from executing any of the following with
             176      respect to the death benefit or ownership of any portion of a viaticated policy as provided for in
             177      Section 31A-36-109 :
             178          (i) an assignment;
             179          (ii) a sale;
             180          (iii) a transfer;
             181          (iv) a devise; or
             182          (v) a bequest.
             183          [(9) Notwithstanding Subsection (2), an insurer authorized under this title to issue a
             184      workers' compensation policy may issue a workers' compensation policy to a sole
             185      proprietorship, corporation, or partnership that elects not to include any owner, corporate
             186      officer, or partner as an employee under the policy even if at the time the policy is issued the
             187      sole proprietorship, corporation, or partnership has no employees.]
             188          [(10)] (9) (a) The insurable interests described in this section:
             189          (i) are not exclusive;
             190          (ii) are cumulative of an insurable interest that is not expressly included in this section
             191      but exists in common law; and
             192          (iii) are not in lieu of an insurable interest that is not expressly included in this section
             193      but exists in common law.
             194          (b) The inclusion of an insurable interest in this section may not be considered to be
             195      excluding another insurable interest that is similar to the insurable interest included in this
             196      section.
             197          (c) (i) The recognition of an insurable interest in this section by Chapter 89, Laws of


             198      Utah 2007, does not imply or create a presumption that the insurable interest did not exist
             199      before April 30, 2007.
             200          (ii) An insurable interest shall be presumed with respect to a life insurance policy issued
             201      before April 30, 2007 to a person whose insurable interest is recognized in this section by
             202      Chapter 89, Laws of Utah 2007.
             203          Section 2. Section 31A-22-501.1 is amended to read:
             204           31A-22-501.1. Employer groups.
             205          (1) The lives of a group of individuals may be insured under a policy:
             206          (a) issued as a policyholder, to:
             207          (i) an employer; or
             208          (ii) an employer sponsored trust for the benefit of the employer's employees;
             209          (b) having an insurable interest as stated in Subsection 31A-21-104 [(2)(a)(v)](3)(d);
             210      and
             211          (c) subject to the requirement of Subsection 31A-21-104 [(9)](3)(d)(v).
             212          (2) A policy issued under this section is not subject to:
             213          (a) Section 31A-21-311 ; and
             214          (b) Sections 31A-22-516 through 31A-22-522 .
             215          Section 3. Section 31A-22-1011 is enacted to read:
             216          31A-22-1011. Workers' compensation coverage waivers.
             217          (1) As used in this section:
             218          (a) "Business entity" means:
             219          (i) a sole proprietorship;
             220          (ii) a corporation;
             221          (iii) a partnership;
             222          (iv) a limited liability company; or
             223          (v) an entity similar to one described in Subsections (1)(a)(i) through (iv).
             224          (b) "Waiver" means a workers' compensation coverage waiver issued under this section.
             225          (2) (a) Notwithstanding Section 31A-21-104 , if the information required by Subsection


             226      (3) is provided, an insurer authorized under this title to issue a workers' compensation policy
             227      may issue a workers' compensation coverage waiver to a business entity that:
             228          (i) elects not to include an owner, partner, or corporate officer or director as an
             229      employee under a workers' compensation policy in accordance with Section 34A-2-103 and
             230      Subsection 34A-2-104 (4); and
             231          (ii) employs no other employee on the day on which the insurer issues the waiver to the
             232      business entity.
             233          (b) As of the day on which a business entity described in Subsection (2)(a) employs an
             234      employee other than an owner, partner, or corporate officer or director described in Subsection
             235      (2)(a):
             236          (i) the business entity's waiver is invalid; and
             237          (ii) the business entity is required to provide workers' compensation coverage for that
             238      employee in accordance with Section 34A-2-201 .
             239          (3) To obtain a waiver, a business entity shall submit to the insurer that issues the
             240      waiver:
             241          (a) a copy of two or more of the following:
             242          (i) the business entity's federal or state income tax return that shows business income
             243      for the complete taxable year that immediately precedes the day on which the business entity
             244      submits the information;
             245          (ii) a valid business license;
             246          (iii) a license to engage in an occupation or profession, including a license under Title
             247      59, Occupations and Professions; or
             248          (iv) documentation of an active liability insurance policy that covers the business entity's
             249      activities; or
             250          (b) a copy of an item listed in Subsection (3)(a) and a copy of two or more of the
             251      following:
             252          (i) proof of a bank account for the business entity;
             253          (ii) proof that for the business entity there is:


             254          (A) a telephone number; and
             255          (B) a physical location; or
             256          (iii) an advertisement of services in a newspaper of general circulation or telephone
             257      directory showing the business entity's:
             258          (A) name; and
             259          (B) contact information.
             260          (4) (a) An insurer that issues a waiver shall report to the Labor Commission for each
             261      business entity to which the insurer issues a waiver:
             262          (i) the name, address, and telephone number of the business entity;
             263          (ii) a name of an individual who can be contacted on behalf of the business entity; and
             264          (iii) other information required by the Labor Commission, by rule made in accordance
             265      with Title 63, Chapter 46a, Utah Administrative Rulemaking Act.
             266          (b) The Labor Commission, by rule made in accordance with Title 63, Chapter 46a,
             267      Utah Administrative Rulemaking Act, shall determine how frequently an insurer shall make a
             268      report required by Subsection (4)(a), except that the Labor Commission shall require that a
             269      report be submitted at least monthly.
             270          (5) (a) The Labor Commission may investigate a business entity to determine whether
             271      the business entity validly elects to not cover an owner, partner, or corporate officer or director
             272      as an employee under a workers' compensation policy in accordance with Section 34A-2-103 .
             273          (b) If the Labor Commission determines that a business entity's election as provided in
             274      this section is invalid, the Labor Commission may:
             275          (i) prohibit a business entity from using a waiver obtained under this section; and
             276          (ii) take any action provided for under Title 34A, Chapter 2 or 3 for failure to obtain
             277      workers' compensation coverage for an employee.
             278          Section 4. Section 34A-2-103 is amended to read:
             279           34A-2-103. Employers enumerated and defined -- Regularly employed --
             280      Statutory employers.
             281          (1) (a) The state, and each county, city, town, and school district in the state are


             282      considered employers under this chapter and Chapter 3, Utah Occupational Disease Act.
             283          (b) For the purposes of the exclusive remedy in this chapter and Chapter 3, Utah
             284      Occupational Disease Act prescribed in Sections 34A-2-105 and 34A-3-102 , the state is
             285      considered to be a single employer and includes any office, department, agency, authority,
             286      commission, board, institution, hospital, college, university, or other instrumentality of the state.
             287          (2) (a) Except as provided in Subsection (4), each person, including each public utility
             288      and each independent contractor, who regularly employs one or more workers or operatives in
             289      the same business, or in or about the same establishment, under any contract of hire, express or
             290      implied, oral or written, is considered an employer under this chapter and Chapter 3, Utah
             291      Occupational Disease Act.
             292          (b) As used in this Subsection (2):
             293          (i) "Independent contractor" means any person engaged in the performance of any work
             294      for another who, while so engaged, is:
             295          (A) independent of the employer in all that pertains to the execution of the work;
             296          (B) not subject to the routine rule or control of the employer;
             297          (C) engaged only in the performance of a definite job or piece of work; and
             298          (D) subordinate to the employer only in effecting a result in accordance with the
             299      employer's design.
             300          (ii) "Regularly" includes all employments in the usual course of the trade, business,
             301      profession, or occupation of the employer, whether continuous throughout the year or for only
             302      a portion of the year.
             303          (3) (a) The client company in an employee leasing arrangement under Title 58, Chapter
             304      59, Professional Employer Organization Registration Act, is considered the employer of leased
             305      employees and shall secure workers' compensation benefits for them by complying with
             306      Subsection 34A-2-201 (1) or (2) and commission rules.
             307          (b) An insurance carrier may underwrite workers' compensation secured in accordance
             308      with Subsection (3)(a) showing the leasing company as the named insured and each client
             309      company as an additional insured by means of individual endorsements.


             310          (c) Endorsements shall be filed with the division as directed by commission rule.
             311          (d) The division shall promptly inform the Division of Occupation and Professional
             312      Licensing within the Department of Commerce if the division has reason to believe that an
             313      employee leasing company is not in compliance with Subsection 34A-2-201 (1) or (2) and
             314      commission rules.
             315          (4) A domestic employer who does not employ one employee or more than one
             316      employee at least 40 hours per week is not considered an employer under this chapter and
             317      Chapter 3, Utah Occupational Disease Act.
             318          (5) (a) As used in this Subsection (5):
             319          (i) (A) "agricultural employer" means a person who employs agricultural labor as
             320      defined in Subsections 35A-4-206 (1) and (2) and does not include employment as provided in
             321      Subsection 35A-4-206 (3); and
             322          (B) notwithstanding Subsection (5)(a)(i)(A), only for purposes of determining who is a
             323      member of the employer's immediate family under Subsection (5)(a)(ii), if the agricultural
             324      employer is a corporation, partnership, or other business entity, "agricultural employer" means
             325      an officer, director, or partner of the business entity;
             326          (ii) "employer's immediate family" means:
             327          (A) an agricultural employer's:
             328          (I) spouse;
             329          (II) grandparent;
             330          (III) parent;
             331          (IV) sibling;
             332          (V) child;
             333          (VI) grandchild;
             334          (VII) nephew; or
             335          (VIII) niece;
             336          (B) a spouse of any person provided in Subsection (5)(a)(ii)(A)(II) through (VIII); or
             337          (C) an individual who is similar to those listed in Subsections (5)(a)(ii)(A) or (B) as


             338      defined by rules of the commission; and
             339          (iii) "nonimmediate family" means a person who is not a member of the employer's
             340      immediate family.
             341          (b) For purposes of this chapter and Chapter 3, Utah Occupational Disease Act, an
             342      agricultural employer is not considered an employer of a member of the employer's immediate
             343      family.
             344          (c) For purposes of this chapter and Chapter 3, Utah Occupational Disease Act, an
             345      agricultural employer is not considered an employer of a nonimmediate family employee if:
             346          (i) for the previous calendar year the agricultural employer's total annual payroll for all
             347      nonimmediate family employees was less than $8,000; or
             348          (ii) (A) for the previous calendar year the agricultural employer's total annual payroll for
             349      all nonimmediate family employees was equal to or greater than $8,000 but less than $50,000;
             350      and
             351          (B) the agricultural employer maintains insurance that covers job-related injuries of the
             352      employer's nonimmediate family employees in at least the following amounts:
             353          (I) $300,000 liability insurance, as defined in Section 31A-1-301 ; and
             354          (II) $5,000 for health care benefits similar to benefits under health care insurance as
             355      defined in Section 31A-1-301 .
             356          (d) For purposes of this chapter and Chapter 3, Utah Occupational Disease Act, an
             357      agricultural employer is considered an employer of a nonimmediate family employee if:
             358          (i) for the previous calendar year the agricultural employer's total annual payroll for all
             359      nonimmediate family employees is equal to or greater than $50,000; or
             360          (ii) (A) for the previous year the agricultural employer's total payroll for nonimmediate
             361      family employees was equal to or exceeds $8,000 but is less than $50,000; and
             362          (B) the agricultural employer fails to maintain the insurance required under Subsection
             363      (5)(c)(ii)(B).
             364          (6) An employer of agricultural laborers or domestic servants who is not considered an
             365      employer under this chapter and Chapter 3, Utah Occupational Disease Act, may come under


             366      this chapter and Chapter 3, Utah Occupational Disease Act, by complying with:
             367          (a) this chapter and Chapter 3, Utah Occupational Disease Act; and
             368          (b) the rules of the commission.
             369          (7) (a) (i) As used in this Subsection (7)(a), "employer" includes any of the following
             370      persons that procures work to be done by a contractor notwithstanding whether or not the
             371      person directly employs a person:
             372          (A) a sole proprietorship;
             373          (B) a corporation;
             374          (C) a partnership;
             375          (D) a limited liability company; or
             376          (E) a person similar to one described in Subsections (7)(a)(i)(A) through (D).
             377          [(7) (a)] (ii) If [any person who is] an employer procures any work to be done wholly
             378      or in part for the employer by a contractor over whose work the employer retains supervision or
             379      control, and this work is a part or process in the trade or business of the employer, the
             380      contractor, all persons employed by the contractor, all subcontractors under the contractor, and
             381      all persons employed by any of these subcontractors, are considered employees of the original
             382      employer for the purposes of this chapter and Chapter 3, Utah Occupational Disease Act.
             383          (b) Any person who is engaged in constructing, improving, repairing, or remodelling a
             384      residence that the person owns or is in the process of acquiring as the person's personal
             385      residence may not be considered an employee or employer solely by operation of Subsection
             386      (7)(a).
             387          (c) A partner in a partnership or an owner of a sole proprietorship is not considered an
             388      employee under Subsection (7)(a) if the employer who procures work to be done by the
             389      partnership or sole proprietorship obtains and relies on either:
             390          (i) a valid certification of the partnership's or sole proprietorship's compliance with
             391      Section 34A-2-201 indicating that the partnership or sole proprietorship secured the payment of
             392      workers' compensation benefits pursuant to Section 34A-2-201 ; or
             393          (ii) if a partnership or sole proprietorship with no employees other than a partner of the


             394      partnership or owner of the sole proprietorship, a workers' compensation [policy] coverage
             395      waiver issued by an insurer pursuant to [Subsection 31A-21-104 (8)] Section 31A-22-1011
             396      stating that:
             397          (A) the partnership or sole proprietorship is customarily engaged in an independently
             398      established trade, occupation, profession, or business; and
             399          (B) the partner or owner personally waives the partner's or owner's entitlement to the
             400      benefits of this chapter and Chapter 3, Utah Occupational Disease Act, in the operation of the
             401      partnership or sole proprietorship.
             402          (d) A director or officer of a corporation is not considered an employee under
             403      Subsection (7)(a) if the director or officer is excluded from coverage under Subsection
             404      34A-2-104 (4).
             405          (e) A contractor or subcontractor is not an employee of the employer under Subsection
             406      (7)(a), if the employer who procures work to be done by the contractor or subcontractor
             407      obtains and relies on either:
             408          (i) a valid certification of the contractor's or subcontractor's compliance with Section
             409      34A-2-201 ; or
             410          (ii) if a partnership, corporation, or sole proprietorship with no employees other than a
             411      partner of the partnership, officer of the corporation, or owner of the sole proprietorship, a
             412      workers' compensation [policy] coverage waiver issued by an insurer pursuant to [Subsection
             413      31A-21-104 (8)] Section 31A-22-1011 stating that:
             414          (A) the partnership, corporation, or sole proprietorship is customarily engaged in an
             415      independently established trade, occupation, profession, or business; and
             416          (B) the partner, corporate officer, or owner personally waives the partner's, corporate
             417      officer's, or owner's entitlement to the benefits of this chapter and Chapter 3, Utah Occupational
             418      Disease Act, in the operation of the partnership's, corporation's, or sole proprietorship's
             419      enterprise under a contract of hire for services.
             420          (f) (i) For purposes of this Subsection (7)(f), "eligible employer" means a person who:
             421          (A) is an employer; and


             422          (B) procures work to be done wholly or in part for the employer by a contractor,
             423      including:
             424          (I) all persons employed by the contractor;
             425          (II) all subcontractors under the contractor; and
             426          (III) all persons employed by any of these subcontractors.
             427          (ii) Notwithstanding the other provisions in this Subsection (7), if the conditions of
             428      Subsection (7)(f)(iii) are met, an eligible employer is considered an employer for purposes of
             429      Section 34A-2-105 of the contractor, subcontractor, and all persons employed by the contractor
             430      or subcontractor described in Subsection (7)(f)(i)(B).
             431          (iii) Subsection (7)(f)(ii) applies if the eligible employer:
             432          (A) under Subsection (7)(a) is liable for and pays workers' compensation benefits as an
             433      original employer under Subsection (7)(a) because the contractor or subcontractor fails to
             434      comply with Section 34A-2-201 ;
             435          (B) (I) secures the payment of workers' compensation benefits for the contractor or
             436      subcontractor pursuant to Section 34A-2-201 ;
             437          (II) procures work to be done that is part or process of the trade or business of the
             438      eligible employer; and
             439          (III) does the following with regard to a written workplace accident and injury
             440      reduction program that meets the requirements of Subsection 34A-2-111 (3)(d):
             441          (Aa) adopts the workplace accident and injury reduction program;
             442          (Bb) posts the workplace accident and injury reduction program at the work site at
             443      which the eligible employer procures work; and
             444          (Cc) enforces the workplace accident and injury reduction program according to the
             445      terms of the workplace accident and injury reduction program; or
             446          (C) (I) obtains and relies on:
             447          (Aa) a valid certification described in Subsection (7)(c)(i) or (7)(e)(i);
             448          (Bb) a workers' compensation [policy] coverage waiver described in Subsection
             449      (7)(c)(ii) or (7)(e)(ii); or


             450          (Cc) proof that a director or officer is excluded from coverage under Subsection
             451      34A-2-104 (4);
             452          (II) is liable under Subsection (7)(a) for the payment of workers' compensation benefits
             453      if the contractor or subcontractor fails to comply with Section 34A-2-201 ;
             454          (III) procures work to be done that is part or process in the trade or business of the
             455      eligible employer; and
             456          (IV) does the following with regard to a written workplace accident and injury
             457      reduction program that meets the requirements of Subsection 34A-2-111 (3)(d):
             458          (Aa) adopts the workplace accident and injury reduction program;
             459          (Bb) posts the workplace accident and injury reduction program at the work site at
             460      which the eligible employer procures work; and
             461          (Cc) enforces the workplace accident and injury reduction program according to the
             462      terms of the workplace accident and injury reduction program.
             463          Section 5. Section 34A-2-110 is amended to read:
             464           34A-2-110. Workers' compensation insurance fraud -- Elements -- Penalties --
             465      Notice.
             466          (1) As used in this section:
             467          (a) "Corporation" has the same meaning as in Section 76-2-201 .
             468          (b) "Intentionally" has the same meaning as in Section 76-2-103 .
             469          (c) "Knowingly" has the same meaning as in Section 76-2-103 .
             470          (d) "Person" has the same meaning as in Section 76-1-601 .
             471          (e) "Recklessly" has the same meaning as in Section 76-2-103 .
             472          (f) "Thing of value" means one or more of the following obtained under this chapter or
             473      Chapter 3, Utah Occupational Disease Act:
             474          (i) workers' compensation insurance coverage;
             475          (ii) disability compensation;
             476          (iii) a medical benefit;
             477          (iv) a good;


             478          (v) a professional service;
             479          (vi) a fee for a professional service; or
             480          (vii) anything of value.
             481          (2) (a) [Any] A person is guilty of workers' compensation insurance fraud if that person
             482      intentionally, knowingly, or recklessly:
             483          (i) devises [any] a scheme or artifice to [obtain workers' compensation insurance
             484      coverage, disability compensation, medical benefits, goods, professional services, fees for
             485      professional services, or anything of value under this chapter or Chapter 3, Utah Occupational
             486      Disease Act, by means of false or fraudulent pretenses, representations, promises, or material
             487      omissions; and] do the following by means of a false or fraudulent pretense, representation,
             488      promise, or material omission:
             489          (A) obtain a thing of value under this chapter or Chapter 3;
             490          (B) avoid paying the premium that an insurer charges, for an employee on the basis of
             491      the underwriting criteria applicable to that employee, to obtain a thing of value under this
             492      chapter or Chapter 3; or
             493          (C) deprive an employee of a thing of value under this chapter or Chapter 3; and
             494          (ii) communicates or causes a communication with another in furtherance of the scheme
             495      or artifice.
             496          (b) A violation of this Subsection (2) includes a scheme or artifice to:
             497          (i) make or cause to be made a false written or oral statement with the intent to obtain
             498      insurance coverage as mandated by this chapter or Chapter 3 at a rate that does not reflect the
             499      risk, industry, employer, or class code actually covered by the insurance coverage;
             500          (ii) form a business, reorganize a business, or change ownership in a business with the
             501      intent to obtain insurance coverage as mandated by this chapter or Chapter 3 at a rate that does
             502      not reflect the risk, industry, employer, or class code actually covered by the insurance
             503      coverage;
             504          (iii) misclassify an employee as one of the following so as to avoid the obligation to
             505      obtain insurance coverage as mandated by this chapter or Chapter 3:


             506          (A) an independent contractor;
             507          (B) a sole proprietor;
             508          (C) an owner;
             509          (D) a partner;
             510          (E) an officer; or
             511          (F) a member in a limited liability company;
             512          (iv) use a workers' compensation coverage waiver issued under Section 31A-22-1011
             513      to deprive an employee of workers' compensation coverage under this chapter or Chapter 3; or
             514          (v) collect or make a claim for temporary disability compensation as provided in Section
             515      34A-2-410 while working for gain.
             516          [(b)] (3) (a) Workers' compensation insurance fraud under Subsection (2)[(a)] is
             517      punishable in the manner prescribed [by Section 76-10-1801 for communication fraud] in
             518      Subsection (3)(c).
             519          [(3)] (b) A corporation or association is guilty of the offense of workers' compensation
             520      insurance fraud under the same conditions as those set forth in Section 76-2-204 .
             521          [(4) The] (c) (i) In accordance with Subsection (3)(c)(ii), the determination of the
             522      degree of [any] an offense under Subsection (2) shall be measured by the following on the basis
             523      of which creates the greatest penalty:
             524          (A) the total value of all property, money, or other things obtained or sought to be
             525      obtained by the scheme or artifice described in Subsection (2)[, except as provided in
             526      Subsection 76-10-1801 (1)(e).]; or
             527          (B) the number of individuals not covered under this chapter or Chapter 3 because of
             528      the scheme or artifice described in Subsection (2).
             529          (ii) A person is guilty of:
             530          (A) a class A misdemeanor:
             531          (I) if the value of the property, money, or other thing of value described in Subsection
             532      (3)(c)(i)(A) is less than $1,000; or
             533          (II) for each individual described in Subsection (3)(c)(i)(B), if the number of individuals


             534      described in Subsection (3)(c)(i)(B) is less than five;
             535          (B) a third degree felony:
             536          (I) if the value of the property, money, or other thing of value described in Subsection
             537      (3)(c)(i)(A) is equal to or greater than $1,000, but is less than $5,000; or
             538          (II) for each individual described in Subsection (3)(c)(i)(B), if the number of individuals
             539      described in Subsection (3)(c)(i)(B) is equal to or greater than five, but is less than 50; and
             540          (C) a second degree felony:
             541          (I) if the value of the property, money, or other thing of value described in Subsection
             542      (3)(c)(i)(A) is equal to or greater than $5,000; or
             543          (II) for each individual described in Subsection (3)(c)(i)(B), if the number of individuals
             544      described in Subsection (3)(c)(i)(B) is equal to or greater than 50.
             545          (4) The following are not a necessary element of an offense described in Subsection (2):
             546          [(5) Reliance] (a) reliance on the part of [any] a person [is not a necessary element of
             547      the offense described in Subsection (2).];
             548          [(6) An] (b) the intent on the part of the perpetrator of [any] an offense described in
             549      Subsection (2) to permanently deprive [any] a person of property, money, or anything of value
             550      [is not a necessary element of this offense.]; or
             551          [(7) An] (c) an insurer or self-insured employer giving written notice in accordance
             552      with Subsection [(10)] (5) that workers' compensation insurance fraud is a crime [is not a
             553      necessary element of the offense described in Subsection (2)].
             554          [(8) A scheme or artifice to obtain workers' compensation insurance coverage includes
             555      any scheme or artifice to make or cause to be made any false written or oral statement or
             556      business reorganization, incorporation, or change in ownership intended to obtain insurance
             557      coverage as mandated by this chapter or Chapter 3, Utah Occupational Disease Act, at rates
             558      that do not reflect the risk, industry, employer, or class codes actually covered by the policy.]
             559          [(9) A scheme or artifice to obtain disability compensation includes a scheme or artifice
             560      to collect or make a claim for temporary disability compensation as provided in Section
             561      34A-2-410 while working for gain.]


             562          [(10) (a) Each] (5) (a) An insurer or self-insured employer who, in connection with this
             563      chapter or Chapter 3, Utah Occupational Disease Act, prints, reproduces, or furnishes a form
             564      [to any person upon which that person applies for insurance coverage, reports payroll, makes a
             565      claim by reason of accident, injury, death, disease, or other claimed loss, or otherwise reports or
             566      gives notice to the insurer or self-insured employer,] described in Subsection (5)(b) shall cause
             567      to be printed or displayed in comparative prominence with other content on the form the
             568      statement: "Any person who knowingly presents false or fraudulent underwriting information,
             569      files or causes to be filed a false or fraudulent claim for disability compensation or medical
             570      benefits, or submits a false or fraudulent report or billing for health care fees or other
             571      professional services is guilty of a crime and may be subject to fines and confinement in state
             572      prison."
             573          (b) Subsection (5)(a) applies to a form upon which a person:
             574          (i) applies for insurance coverage;
             575          (ii) applies for a workers' compensation coverage waiver issued under Section
             576      31A-22-1011 ;
             577          (iii) reports payroll;
             578          (iv) makes a claim by reason of accident, injury, death, disease, or other claimed loss; or
             579          (v) makes a report or gives notice to an insurer or self-insured employer.
             580          [(b) Each] (c) An insurer or self-insured employer who issues a check, warrant, or
             581      other financial instrument in payment of compensation issued under this chapter or Chapter 3,
             582      [Utah Occupational Disease Act,] shall cause to be printed or displayed in comparative
             583      prominence above the area for endorsement a statement substantially similar to the following:
             584      "Workers' compensation insurance fraud is a crime punishable by Utah law."
             585          [(c) (i) Subsections (10)(a) and (b) apply]
             586          (d) This Subsection (5) applies only to the legal obligations of an insurer or a
             587      self-insured employer.
             588          [(ii)] (e) A person who violates Subsection (2) is guilty of workers' compensation
             589      insurance fraud, and the failure of an insurer or a self-insured employer to fully comply with


             590      [Subsections (10)(a) and (b) may not be] this Subsection (5) is not:
             591          [(A)] (i) a defense to violating Subsection (2); or
             592          [(B)] (ii) grounds for suppressing evidence.
             593          [(11)] (6) In the absence of malice, a person, employer, insurer, or governmental entity
             594      that reports a suspected fraudulent act relating to a workers' compensation insurance policy or
             595      claim is not subject to [any] civil liability for libel, slander, or [any other] another relevant cause
             596      of action.
             597          [(12)] (7) In [any] an action involving workers' compensation, this section supersedes
             598      Title 31A, Chapter 31, Insurance Fraud Act.


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