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 definitions;
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
27 31A-33-107, as last amended by Laws of Utah 2012, Chapter 347
29 Be it enacted by the Legislature of the state of Utah:
30 Section 1. Section 31A-33-101 is amended to read:
31 31A-33-101. Definitions.
32 As used in this chapter:
33 (1) "Board" means the board of directors of the Workers' Compensation Fund.
34 (2) "Chief executive officer" means the chief executive officer appointed by the board.
35 (3) "Director" means a member of the board.
36 (4) "Fund" and "Workers' Compensation Fund" mean the nonprofit, quasi-public
37 corporation established by this chapter.
38 (5) "Injury Fund" means the premiums, reserves, investment income, and any other
39 funds administered by the Workers' Compensation Fund as provided in this chapter.
40 (6) "Joint enterprise" means a joint business activity either for-profit or not-for-profit:
41 (a) by which two or more persons provide insurance, products, or services; and
42 (b) that is established by contract between the persons providing the insurance,
43 products, or services.
44 (7) (a) "Workers' compensation products and services" means:
45 (i) medical or lost time claims management;
46 (ii) utilization review;
47 (iii) rehabilitation counseling or training;
48 (iv) fraud detection for workers' compensation claims;
49 (v) loss prevention or safety consultation;
50 (vi) data or information reporting or processing involving workers' compensation;
52 (vii) services related to improved employment practices, procedures, and data security;
55 to or arising out of:
56 (A) the sale of workers' compensation products and services described in Subsections
57 (7)(a)(i) through [
58 (I) the Workers' Compensation Fund; or
59 (II) a subsidiary of the fund; or
60 (B) workers' compensation insurance coverage through:
61 (I) the Workers' Compensation Fund; or
62 (II) a subsidiary of the fund in accordance with Section 31A-33-103.5.
63 (b) "Workers' compensation products and services" does not include the bearing of any
64 insurance risk associated with insurance coverage.
65 Section 2. Section 31A-33-103.5 is amended to read:
66 31A-33-103.5. Powers of fund -- Limitations.
67 (1) The fund may form or acquire subsidiaries or enter into a joint enterprise:
68 (a) in accordance with Section 31A-33-107; and
69 (b) except as limited by this section and applicable insurance rules and statutes.
70 (2) Subject to applicable insurance rules and statutes, the fund may only offer:
71 (a) workers' compensation insurance and, subject to Subsection (5)(b), reinsurance in
73 (b) workers' compensation insurance and workers' compensation reinsurance in a state
74 other than Utah [
78 (c) death, disability, or medical benefits arising from an industrial accident or
79 occupational disease arising from employment in Utah or other states; and
81 (3) Subject to applicable law, including insurance rules and statutes, a subsidiary of the
82 fund [
101 (4) The fund shall write workers' compensation insurance in accordance with Section
103 (5) (a) The fund may enter into a joint enterprise that offers workers' compensation
104 insurance and other coverage [
105 (i) the joint enterprise offers only property or liability insurance in addition to workers'
106 compensation insurance;
107 (ii) the fund may not bear any insurance risk associated with the insurance coverage
108 other than risk associated with workers' compensation insurance; and
109 (iii) the offer of other insurance shall be part of an insurance program that includes
110 workers' compensation insurance coverage that is provided by the fund.
111 (b) (i) The fund or a subsidiary of the fund may not offer, or enter into a joint enterprise
112 that offers, or otherwise participate in the offering of accident and health insurance or
113 administer a health benefit plan.
114 (ii) Subject to Subsection (5)(b)(i), the fund or a subsidiary of the fund may serve as a
115 reinsurer or reinsurance intermediary for medical or disability costs or exposures assumed by a
116 self-insured employer in Utah.
117 Section 3. Section 31A-33-106 is amended to read:
118 31A-33-106. Board of directors -- Status of the fund in relationship to the state.
119 (1) There is created a board of directors of the Workers' Compensation Fund.
120 (2) The board shall consist of seven directors.
130 incorporation and bylaws, the board shall nominate and the policyholders shall elect six public
131 directors as follows:
132 (i) [
134 insured by the Workers' Compensation Fund for at least one year before the [
135 election of the director representing the policyholder; and
136 (ii) two directors from the public in general.
137 (b) The plan described in Subsection [
138 to the extent that Section 31A-5-409 does not conflict with this section.
141 policyholders shall have had previous experience in:
142 (a) the actuarial profession;
143 (b) accounting;
144 (c) investments;
145 (d) risk management;
146 (e) occupational safety;
147 (f) casualty insurance; or
148 (g) the legal profession.
150 workers' compensation insurance through the Workers' Compensation Fund shall immediately
151 resign from the board[
169 (a) has any interest as a stockholder, employee, attorney, or contractor of a competing
170 insurance carrier providing workers' compensation insurance in Utah;
171 (b) fails to meet or comply with the conflict of interest policies established by the
172 board; or
173 (c) is not bondable.
175 cause which includes:
176 (a) neglect of duty; or
177 (b) malfeasance.
179 directors [
180 beginning July 1 of the year of appointment.
181 (b) Notwithstanding the requirements of Subsection [
182 board shall, at the time of [
183 length of terms to ensure that no more than two terms expire in a calendar year.
187 replacement shall be appointed by a majority of the board for the unexpired term, after which
188 time the replacement shall stand for policyholder election as described in the fund's articles of
189 incorporation and bylaws.
193 the chair.
194 (b) The chair:
195 (i) may call board meetings more frequently than quarterly; and
196 (ii) shall call additional board meetings if requested to do so by a majority of the board.
198 the board.
200 directors for approval.
202 reasonable expenses incurred in the performance of the director's official duties:
203 (A) as determined by the board of directors; and
204 (B) if the aggregate of compensation paid to all directors of the Workers'
205 Compensation Fund in a calendar year is less than or equal to the amount described in
206 Subsection [
207 (ii) (A) For the period beginning [
208 31, [
212 (B) For calendar years beginning on or after January 1, [
213 described in Subsection [
215 (I) an amount calculated by multiplying the amount under this Subsection [
216 (17)(a) for the previous year by the actual percent change during the previous calendar year in
217 the consumer price index; and
218 (II) 0.
219 (C) For purposes of this Subsection [
220 calculated as provided in Sections 1(f)(4) and 1(f)(5), Internal Revenue Code.
221 (b) Directors may decline to receive compensation and expenses for their service.
222 (c) The Worker's Compensation Fund shall pay compensation to and reimburse
223 reasonable expenses of directors as permitted by this section:
224 (i) from the Injury Fund; and
225 (ii) upon vouchers drawn in the same manner as the Workers' Compensation Fund pays
226 its normal operating expenses.
227 (d) The [
228 serve on the board without payment of compensation, but may be reimbursed for reasonable
229 expenses in accordance with Subsection [
235 (e) The Workers' Compensation Fund shall annually report to the commissioner
236 compensation and expenses paid to the directors on the board.
239 (18) The placement of this chapter in this title does not:
240 (a) remove from the board of directors the managerial, financial, or operational control
241 of the Workers' Compensation Fund;
242 (b) give to the state or the governor managerial, financial, or operational control of the
243 Workers' Compensation Fund;
244 (c) consistent with Section 31A-33-105, cause the state to be liable for any:
245 (i) obligation of the Workers' Compensation Fund; or
246 (ii) expense, liability, or debt described in Section 31A-33-105;
247 (d) alter the legal status of the Workers' Compensation Fund as:
248 (i) a nonprofit, self-supporting, quasi-public corporation; and
249 (ii) an insurer:
250 (A) regulated under this title;
251 (B) that is structured to operate in perpetuity; and
252 (C) domiciled in the state; or
253 (e) alter the requirement that the Workers' Compensation Fund provide workers'
255 (i) for the purposes set forth in Section 31A-33-102;
256 (ii) consistent with Section 34A-2-201; and
257 (iii) as provided in Section 31A-22-1001.
258 Section 4. Section 31A-33-107 is amended to read:
259 31A-33-107. Duties of board -- Creation of subsidiaries -- Entering into joint
261 (1) The board shall:
262 (a) appoint a chief executive officer to administer the Workers' Compensation Fund;
263 (b) receive and act upon financial, management, and actuarial reports covering the
264 operations of the Workers' Compensation Fund;
265 (c) ensure that the Workers' Compensation Fund is administered according to law;
266 (d) examine and approve an annual operating budget for the Workers' Compensation
268 (e) serve as investment trustees and fiduciaries of the Injury Fund;
269 (f) receive and act upon recommendations of the chief executive officer;
270 (g) develop broad policy for the long-term operation of the Workers' Compensation
271 Fund, consistent with its mission and fiduciary responsibility;
272 (h) subject to Chapter 19a, Part 4, Workers' Compensation Rates, approve any rating
273 plans that would modify a policyholder's premium;
274 (i) subject to Chapter 19a, Part 4, Workers' Compensation Rates, approve the amount
275 of deviation, if any, from standard insurance rates;
276 (j) approve the amount of the dividends, if any, to be returned to policyholders;
277 (k) adopt a procurement policy consistent with the provisions of Title 63G, Chapter 6a,
278 Utah Procurement Code;
279 (l) develop and publish an annual report to policyholders, the governor, the Legislature,
280 and interested parties that describes the financial condition of the Injury Fund, including a
281 statement of expenses and income and what measures were taken or will be necessary to keep
282 the Injury Fund actuarially sound;
283 (m) establish a fiscal year;
284 (n) determine and establish an actuarially sound price for insurance offered by the
286 (o) establish conflict of interest requirements that govern the board, officers, and
288 (p) establish compensation and reasonable expenses to be paid to directors on the board
289 subject to the requirements of Section 31A-33-106, so that the board may not approve
290 compensation that exceeds the amount described in Subsection 31A-33-106[
292 (q) perform all other acts necessary for the policymaking and oversight of the Workers'
293 Compensation Fund.
294 (2) Subject to board review and its responsibilities under Subsection (1)(e), the board
295 may delegate authority to make daily investment decisions.
296 (3) The fund may form or acquire a subsidiary or enter into a joint enterprise:
297 (a) only if that action is approved by the board; and
298 (b) subject to the limitations in Section 31A-33-103.5.
299 Section 5. Effective date.
300 This bill takes effect on May 12, 2015, except that the amendments to Sections
301 31A-33-106 and 31A-33-107 in this bill take effect on January 1, 2016.