7 LONG TITLE
8 General Description:
9 This bill modifies the Insurance Code to address the Workers' Compensation Fund.
10 Highlighted Provisions:
11 This bill:
12 ▸ modifies Ĥ→ [
13 ▸ addresses the powers of the fund and its subsidiaries;
14 ▸ changes the method by which board members are selected;
15 ▸ removes references to the Governor's Office of Economic Development;
16 ▸ addresses compensation of board members; and
17 ▸ makes technical and conforming amendments.
18 Money Appropriated in this Bill:
20 Other Special Clauses:
21 This bill provides a special effective date.
22 Utah Code Sections Affected:
24 31A-33-101, as last amended by Laws of Utah 2000, Chapter 222
25 31A-33-103.5, as last amended by Laws of Utah 2001, Chapters 33 and 116
26 31A-33-106, as last amended by Laws of Utah 2007, Chapter 74
26a Ĥ→ 31A-33-107, as last amended by Laws of Utah 2012, Chapter 347 ←Ĥ
28 Be it enacted by the Legislature of the state of Utah:
29 Section 1. Section 31A-33-101 is amended to read:
30 31A-33-101. Definitions.
31 As used in this chapter:
32 (1) "Board" means the board of directors of the Workers' Compensation Fund.
33 (2) "Chief executive officer" means the chief executive officer appointed by the board.
34 (3) "Director" means a member of the board.
35 (4) "Fund" and "Workers' Compensation Fund" mean the nonprofit, quasi-public
36 corporation established by this chapter.
37 (5) "Injury Fund" means the premiums, reserves, investment income, and any other
38 funds administered by the Workers' Compensation Fund as provided in this chapter.
39 (6) "Joint enterprise" means a joint business activity either for-profit or not-for-profit:
40 (a) by which two or more persons provide insurance, products, or services; and
41 (b) that is established by contract between the persons providing the insurance,
42 products, or services.
43 (7) (a) "Workers' compensation products and services" means:
44 (i) medical or lost time claims management;
45 (ii) utilization review;
46 (iii) rehabilitation counseling or training;
47 (iv) fraud detection for workers' compensation claims;
48 (v) loss prevention or safety consultation;
49 (vi) data or information reporting or processing involving workers' compensation;
51 (vii) services related to improved employment practices, procedures, and data security;
54 to or arising out of:
55 (A) the sale of workers' compensation products and services described in Subsections
56 (7)(a)(i) through [
57 (I) the Workers' Compensation Fund; or
58 (II) a subsidiary of the fund; or
59 (B) workers' compensation insurance coverage through:
60 (I) the Workers' Compensation Fund; or
61 (II) a subsidiary of the fund in accordance with Section 31A-33-103.5.
62 (b) "Workers' compensation products and services" does not include the bearing of any
63 insurance risk associated with insurance coverage.
64 Section 2. Section 31A-33-103.5 is amended to read:
65 31A-33-103.5. Powers of fund -- Limitations.
66 (1) The fund may form or acquire subsidiaries or enter into a joint enterprise:
67 (a) in accordance with Section 31A-33-107; and
68 (b) except as limited by this section and applicable insurance rules and statutes.
69 (2) Subject to applicable insurance rules and statutes, the fund may only offer:
70 (a) workers' compensation insurance and, subject to Subsection (5)(b), reinsurance in
72 (b) workers' compensation insurance and workers' compensation reinsurance in a state
73 other than Utah [
77 (c) death, disability, or medical benefits arising from an industrial accident or
78 occupational disease arising from employment in Utah or other states; and
80 (3) Subject to applicable law, including insurance rules and statutes, a subsidiary of the
81 fund [
100 (4) The fund shall write workers' compensation insurance in accordance with Section
102 (5) (a) The fund may enter into a joint enterprise that offers workers' compensation
103 insurance and other coverage [
104 (i) the joint enterprise offers only property or liability insurance in addition to workers'
105 compensation insurance;
106 (ii) the fund may not bear any insurance risk associated with the insurance coverage
107 other than risk associated with workers' compensation insurance; and
108 (iii) the offer of other insurance shall be part of an insurance program that includes
109 workers' compensation insurance coverage that is provided by the fund.
110 (b) (i) The fund or a subsidiary of the fund may not offer, or enter into a joint enterprise
111 that offers, or otherwise participate in the offering of accident and health insurance or
112 administer a health benefit plan.
113 (ii) Subject to Subsection (5)(b)(i), the fund or a subsidiary of the fund may serve as a
114 reinsurer or reinsurance intermediary for medical or disability costs or exposures assumed by a
115 self-insured employer in Utah.
116 Section 3. Section 31A-33-106 is amended to read:
117 31A-33-106. Board of directors -- Status of the fund in relationship to the state.
118 (1) There is created a board of directors of the Workers' Compensation Fund.
119 (2) The board shall consist of seven directors.
129 incorporation and bylaws, the board shall nominate and the policyholders shall elect six public
130 directors as follows:
131 (i) [
133 insured by the Workers' Compensation Fund for at least one year before the [
134 election of the director representing the policyholder; and
135 (ii) two directors from the public in general.
136 (b) The plan described in Subsection [
137 to the extent that Section 31A-5-409 does not conflict with this section.
140 policyholders shall have had previous experience in:
141 (a) the actuarial profession;
142 (b) accounting;
143 (c) investments;
144 (d) risk management;
145 (e) occupational safety;
146 (f) casualty insurance; or
147 (g) the legal profession.
149 workers' compensation insurance through the Workers' Compensation Fund shall immediately
150 resign from the board[
168 (a) has any interest as a stockholder, employee, attorney, or contractor of a competing
169 insurance carrier providing workers' compensation insurance in Utah;
170 (b) fails to meet or comply with the conflict of interest policies established by the
171 board; or
172 (c) is not bondable.
174 cause which includes:
175 (a) neglect of duty; or
176 (b) malfeasance.
178 directors [
179 beginning July 1 of the year of appointment.
180 (b) Notwithstanding the requirements of Subsection [
181 board shall, at the time of [
182 length of terms to ensure that no more than two terms expire in a calendar year.
186 replacement shall be appointed by a majority of the board for the unexpired term, after which
187 time the replacement shall stand for policyholder election as described in the fund's articles of
188 incorporation and bylaws.
192 the chair.
193 (b) The chair:
194 (i) may call board meetings more frequently than quarterly; and
195 (ii) shall call additional board meetings if requested to do so by a majority of the board.
197 the board.
199 directors for approval.
201 reasonable expenses incurred in the performance of the director's official duties:
202 (A) as determined by the board of directors; and
203 (B) if the aggregate of compensation paid to all directors of the Workers'
204 Compensation Fund in a calendar year is less than or equal to the amount described in
205 Subsection [
206 (ii) (A) For the period beginning [
207 31, [
211 (B) For calendar years beginning on or after January 1, [
212 described in Subsection [
214 (I) an amount calculated by multiplying the amount under this Subsection [
215 (17)(a) for the previous year by the actual percent change during the previous calendar year in
216 the consumer price index; and
217 (II) 0.
218 (C) For purposes of this Subsection [
219 calculated as provided in Sections 1(f)(4) and 1(f)(5), Internal Revenue Code.
220 (b) Directors may decline to receive compensation and expenses for their service.
221 (c) The Worker's Compensation Fund shall pay compensation to and reimburse
222 reasonable expenses of directors as permitted by this section:
223 (i) from the Injury Fund; and
224 (ii) upon vouchers drawn in the same manner as the Workers' Compensation Fund pays
225 its normal operating expenses.
226 (d) The [
226a Workers' Compensation Fund shall
227 serve on the board without payment of compensation, but may be reimbursed for reasonable
228 expenses in accordance with Subsection [
234 (e) The Workers' Compensation Fund shall annually report to the commissioner
235 compensation and expenses paid to the directors on the board.
238 (18) The placement of this chapter in this title does not:
239 (a) remove from the board of directors the managerial, financial, or operational control
240 of the Workers' Compensation Fund;
241 (b) give to the state or the governor managerial, financial, or operational control of the
242 Workers' Compensation Fund;
243 (c) consistent with Section 31A-33-105, cause the state to be liable for any:
244 (i) obligation of the Workers' Compensation Fund; or
245 (ii) expense, liability, or debt described in Section 31A-33-105;
246 (d) alter the legal status of the Workers' Compensation Fund as:
247 (i) a nonprofit, self-supporting, quasi-public corporation; and
248 (ii) an insurer:
249 (A) regulated under this title;
250 (B) that is structured to operate in perpetuity; and
251 (C) domiciled in the state; or
252 (e) alter the requirement that the Workers' Compensation Fund provide workers'
254 (i) for the purposes set forth in Section 31A-33-102;
255 (ii) consistent with Section 34A-2-201; and
256 (iii) as provided in Section 31A-22-1001.
256a Ĥ→ Section 4. Section 31A-33-107 is amended to read:
256b 31A-33-107. Duties of board -- Creation of subsidiaries -- Entering into joint enterprises.
256c (1) The board shall:
256d (a) appoint a chief executive officer to administer the Workers' Compensation Fund;
256e (b) receive and act upon financial, management, and actuarial reports covering the operations
256f of the Workers' Compensation Fund;
256g (c) ensure that the Workers' Compensation Fund is administered according to law;
256h (d) examine and approve an annual operating budget for the Workers' Compensation Fund;
256i (e) serve as investment trustees and fiduciaries of the Injury Fund;
256j (f) receive and act upon recommendations of the chief executive officer;
256k (g) develop broad policy for the long-term operation of the Workers' Compensation Fund,
256l consistent with its mission and fiduciary responsibility;
256m (h) subject to Chapter 19a, Part 4, Workers' Compensation Rates, approve any rating plans
256n that would modify a policyholder's premium;
256o (i) subject to Chapter 19a, Part 4, Workers' Compensation Rates, approve the amount of
256p deviation, if any, from standard insurance rates;
256q (j) approve the amount of the dividends, if any, to be returned to policyholders;
256r (k) adopt a procurement policy consistent with the provisions of Title 63G, Chapter 6a, Utah
256s Procurement Code;
256t (l) develop and publish an annual report to policyholders, the governor, the Legislature, and
256u interested parties that describes the financial condition of the Injury Fund, including a statement of
256v expenses and income and what measures were taken or will be necessary to keep the Injury ☆
256w ☆ Fund actuarially sound;
256x (m) establish a fiscal year;
256y (n) determine and establish an actuarially sound price for insurance offered by the fund;
256z (o) establish conflict of interest requirements that govern the board, officers, and employees;
256aa (p) establish compensation and reasonable expenses to be paid to directors on the board
256ab subject to the requirements of Section 31A-33-106, so that the board may not approve compensation
256ac that exceeds the amount described in Subsection 31A-33-106 [
256ad (q) perform all other acts necessary for the policymaking and oversight of the Workers'
256ae Compensation Fund.
256af (2) Subject to board review and its responsibilities under Subsection (1)(e), the board may
256ag delegate authority to make daily investment decisions.
256ah (3) The fund may form or acquire a subsidiary or enter into a joint enterprise:
256ai (a) only if that action is approved by the board; and
256aj (b) subject to the limitations in Section 31A-33-103.5. ←Ĥ
257 Section Ĥ→ [
258 This bill takes effect on May 12, 2015, except that the amendments to
258a Ĥ→ [
259 31A-33-106 Ĥ→ and 31A-33-107 ←Ĥ in this bill take effect on January 1, 2016.