34A-2-704 - Uninsured Employers' Fund.
34A-2-704. Uninsured Employers' Fund.
(1) (a) There is created an Uninsured Employers' Fund. The Uninsured Employers' Fundhas the purpose of assisting in the payment of workers' compensation benefits to a person entitledto the benefits, if:
(i) that person's employer:
(A) is individually, jointly, or severally liable to pay the benefits; and
(B) (I) becomes or is insolvent;
(II) appoints or has appointed a receiver; or
(III) otherwise does not have sufficient funds, insurance, sureties, or other security tocover workers' compensation liabilities; and
(ii) the employment relationship between that person and the person's employer islocalized within the state as provided in Subsection (20).
(b) The Uninsured Employers' Fund succeeds to monies previously held in the DefaultIndemnity Fund.
(c) If it becomes necessary to pay benefits, the Uninsured Employers' Fund is liable forthe obligations of the employer set forth in this chapter and Chapter 3, Utah OccupationalDisease Act, with the exception of a penalty on those obligations.
(2) (a) Monies for the Uninsured Employers' Fund shall be deposited into the UninsuredEmployers' Fund in accordance with this chapter and Subsection 59-9-101(2).
(b) The commissioner shall appoint an administrator of the Uninsured Employers' Fund.
(c) (i) The state treasurer is the custodian of the Uninsured Employers' Fund.
(ii) The administrator shall make provisions for and direct distribution from theUninsured Employers' Fund.
(3) Reasonable costs of administering the Uninsured Employers' Fund or other feesrequired to be paid by the Uninsured Employers' Fund may be paid from the UninsuredEmployers' Fund.
(4) The state treasurer shall:
(a) receive workers' compensation premium assessments from the State TaxCommission; and
(b) invest the Uninsured Employers' Fund to ensure maximum investment return for bothlong and short term investments in accordance with Section 51-7-12.5.
(5) (a) The administrator may employ, retain, or appoint counsel to represent theUninsured Employers' Fund in a proceeding brought to enforce a claim against or on behalf ofthe Uninsured Employers' Fund.
(b) If requested by the commission, the following shall aid in the representation of theUninsured Employers' Fund:
(i) the attorney general; or
(ii) the city attorney, or county attorney of the locality in which:
(A) an investigation, hearing, or trial under this chapter or Chapter 3, Utah OccupationalDisease Act, is pending;
(B) the employee resides; or
(C) an employer:
(I) resides; or
(II) is doing business.
(c) (i) Notwithstanding Title 63A, Chapter 8, Office of State Debt Collection, the
administrator shall provide for the collection of monies required to be deposited in the UninsuredEmployers' Fund under this chapter and Chapter 3, Utah Occupational Disease Act.
(ii) To comply with Subsection (5)(c)(i), the administrator may:
(A) take appropriate action, including docketing an award in a manner consistent withSection 34A-2-212; and
(B) employ counsel and other personnel necessary to collect the monies described inSubsection (5)(c)(i).
(6) To the extent of the compensation and other benefits paid or payable to or on behalfof an employee or the employee's dependents from the Uninsured Employers' Fund, theUninsured Employers' Fund, by subrogation, has the rights, powers, and benefits of the employeeor the employee's dependents against the employer failing to make the compensation payments.
(7) (a) The receiver, trustee, liquidator, or statutory successor of an employer meeting acondition listed in Subsection (1)(a)(i)(B) is bound by a settlement of a covered claim by theUninsured Employers' Fund.
(b) A court with jurisdiction shall grant a payment made under this section a priorityequal to that to which the claimant would have been entitled in the absence of this section againstthe assets of the employer meeting a condition listed in Subsection (1)(a)(i)(B).
(c) The expenses of the Uninsured Employers' Fund in handling a claim shall beaccorded the same priority as the liquidator's expenses.
(8) (a) The administrator shall periodically file the information described in Subsection(8)(b) with the receiver, trustee, or liquidator of:
(i) an employer that meets a condition listed in Subsection (1)(a)(i)(B);
(ii) a public agency insurance mutual, as defined in Section 31A-1-103, that meets acondition listed in Subsection (1)(a)(i)(B); or
(iii) an insolvent insurance carrier.
(b) The information required to be filed under Subsection (8)(a) is:
(i) a statement of the covered claims paid by the Uninsured Employers' Fund; and
(ii) an estimate of anticipated claims against the Uninsured Employers' Fund.
(c) A filing under this Subsection (8) preserves the rights of the Uninsured Employers'Fund for claims against the assets of the employer that meets a condition listed in Subsection(1)(a)(i)(B).
(9) When an injury or death for which compensation is payable from the UninsuredEmployers' Fund has been caused by the wrongful act or neglect of another person not in thesame employment, the Uninsured Employers' Fund has the same rights as allowed under Section34A-2-106.
(10) The Uninsured Employers' Fund, subject to approval of the administrator, shalldischarge its obligations by:
(a) adjusting its own claims; or
(b) contracting with an adjusting company, risk management company, insurancecompany, or other company that has expertise and capabilities in adjusting and paying workers'compensation claims.
(11) (a) For the purpose of maintaining the Uninsured Employers' Fund, anadministrative law judge, upon rendering a decision with respect to a claim for workers'compensation benefits in which an employer that meets a condition listed in Subsection(1)(a)(i)(B) is duly joined as a party, shall:
(i) order the employer that meets a condition listed in Subsection (1)(a)(i)(B) toreimburse the Uninsured Employers' Fund for the benefits paid to or on behalf of an injuredemployee by the Uninsured Employers' Fund along with interest, costs, and attorney fees; and
(ii) impose a penalty against the employer that meets a condition listed in Subsection(1)(a)(i)(B):
(A) of 15% of the value of the total award in connection with the claim; and
(B) that shall be deposited into the Uninsured Employers' Fund.
(b) An award under this Subsection (11) shall be collected by the administrator inaccordance with Subsection (5)(c).
(12) The state, the commission, and the state treasurer, with respect to payment ofcompensation benefits, expenses, fees, or disbursement properly chargeable against theUninsured Employers' Fund:
(a) are liable only to the assets in the Uninsured Employers' Fund; and
(b) are not otherwise in any way liable for the making of a payment.
(13) The commission may make reasonable rules for the processing and payment of aclaim for compensation from the Uninsured Employers' Fund.
(14) (a) (i) If it becomes necessary for the Uninsured Employers' Fund to pay benefitsunder this section to an employee described in Subsection (14)(a)(ii), the Uninsured Employers'Fund may assess all other self-insured employers amounts necessary to pay:
(A) the obligations of the Uninsured Employers' Fund subsequent to a condition listed inSubsection (1)(a)(i)(B) occurring;
(B) the expenses of handling covered a claim subsequent to a condition listed inSubsection (1)(a)(i)(B) occurring;
(C) the cost of an examination under Subsection (15); and
(D) other expenses authorized by this section.
(ii) This Subsection (14) applies to benefits paid to an employee of:
(A) a self-insured employer, as defined in Section 34A-2-201.5, that meets a conditionlisted in Subsection (1)(a)(i)(B); or
(B) if the self-insured employer that meets a condition described in Subsection(1)(a)(i)(B) is a public agency insurance mutual, a member of the public agency insurancemutual.
(b) The assessments of a self-insured employer shall be in the proportion that the manualpremium of the self-insured employer for the preceding calendar year bears to the manualpremium of all self-insured employers for the preceding calendar year.
(c) A self-insured employer shall be notified of the self-insured employer's assessmentnot later than 30 days before the day on which the assessment is due.
(d) (i) A self-insured employer may not be assessed in any year an amount greater than2% of that self-insured employer's manual premium for the preceding calendar year.
(ii) If the maximum assessment does not provide in a year an amount sufficient to makeall necessary payments from the Uninsured Employers' Fund for one or more self-insuredemployers that meet a condition listed in Subsection (1)(a)(i)(B), the unpaid portion shall be paidas soon as monies become available.
(e) A self-insured employer is liable under this section for a period not to exceed threeyears after the day on which the Uninsured Employers' Fund first pays benefits to an employeedescribed in Subsection (14)(a)(ii) for the self-insured employer that meets a condition listed in
Subsection (1)(a)(i)(B).
(f) This Subsection (14) does not apply to a claim made against a self-insured employerthat meets a condition listed in Subsection (1)(a)(i)(B) if the condition listed in Subsection(1)(a)(i)(B) occurred before July 1, 1986.
(15) (a) The following shall notify the division of any information indicating that any ofthe following may be insolvent or in a financial condition hazardous to its employees or thepublic:
(i) a self-insured employer; or
(ii) if the self-insured employer is a public agency insurance mutual, a member of thepublic agency insurance mutual.
(b) Upon receipt of the notification described in Subsection (15)(a) and with good causeappearing, the division may order an examination of:
(i) that self-insured employer; or
(ii) if the self-insured employer is a public agency insurance mutual, a member of thepublic agency mutual.
(c) The cost of the examination ordered under Subsection (15)(b) shall be assessedagainst all self-insured employers as provided in Subsection (14).
(d) The results of the examination ordered under Subsection (15)(b) shall be keptconfidential.
(16) (a) In a claim against an employer by the Uninsured Employers' Fund, or by or onbehalf of the employee to whom or to whose dependents compensation and other benefits arepaid or payable from the Uninsured Employers' Fund, the burden of proof is on the employer orother party in interest objecting to the claim.
(b) A claim described in Subsection (16)(a) is presumed to be valid up to the full amountof workers' compensation benefits claimed by the employee or the employee's dependents.
(c) This Subsection (16) applies whether the claim is filed in court or in an adjudicativeproceeding under the authority of the commission.
(17) A partner in a partnership or an owner of a sole proprietorship may not recovercompensation or other benefits from the Uninsured Employers' Fund if:
(a) the person is not included as an employee under Subsection 34A-2-104(3); or
(b) the person is included as an employee under Subsection 34A-2-104(3), but:
(i) the person's employer fails to insure or otherwise provide adequate payment of directcompensation; and
(ii) the failure described in Subsection (17)(b)(i) is attributable to an act or omission overwhich the person had or shared control or responsibility.
(18) A director or officer of a corporation may not recover compensation or otherbenefits from the Uninsured Employers' Fund if the director or officer is excluded from coverageunder Subsection 34A-2-104(4).
(19) The Uninsured Employers' Fund:
(a) shall be:
(i) used in accordance with this section only for:
(A) the purpose of assisting in the payment of workers' compensation benefits inaccordance with Subsection (1); and
(B) in accordance with Subsection (3), payment of:
(I) reasonable costs of administering the Uninsured Employers' Fund; or
(II) fees required to be paid by the Uninsured Employers' Fund; and
(ii) expended according to processes that can be verified by audit; and
(b) may not be used for:
(i) administrative costs unrelated to the Uninsured Employers' Fund; or
(ii) an activity of the commission other than an activity described in Subsection (19)(a).
(20) (a) For purposes of Subsection (1), an employment relationship is localized in thestate if:
(i) (A) the employer who is liable for the benefits has a business premise in the state; and
(B) (I) the contract for hire is entered into in the state; or
(II) the employee regularly performs work duties in the state for the employer who isliable for the benefits; or
(ii) the employee is:
(A) a resident of the state; and
(B) regularly performs work duties in the state for the employer who is liable for thebenefits.
(b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, thecommission shall by rule define what constitutes regularly performing work duties in the state.
Amended by Chapter 288, 2009 General Session