Opinion ID: 2625573
Heading Depth: 2
Heading Rank: 1

Heading: history of workers' compensation insurance in utah

Text: ¶ 4 In 1917, the Legislature created the Industrial Commission of Utah and endowed it with the power, among other things, [t]o administer and enforce all laws for the protection of life, health, safety and welfare of employe[e]s. Ch. 100, § 16(1), 1917 Utah Laws at 309. The SIF was created within the Industrial Commission for the purpose of insuring employers against liability for compensation under this Act, and of assuring to the persons entitled thereto the compensation provided by this Act. Id. § 35, 1917 Utah Laws at 316. The SIF consisted of all premiums and penalties received and paid into the fund, id., and the state treasurer was designated to be the custodian of the State insurance fund, and all disbursements therefrom [were to] be paid by him, id. § 46, 1917 Utah Laws at 320. ¶ 5 The SIF was to be administered by the [Industrial] [C]ommission without liability on the part of the State beyond the amount of such fund. Id. § 35, 1917 Utah Laws at 316. The 1917 statute further stated that it was the duty of the [Industrial] [C]ommission to conduct the business of the State insurance fund, id. § 36, 1917 Utah Laws at 317, and that the commission is hereby vested with full authority over the said fund, and may do any and all things which are necessary or convenient in the administration thereof, or in connection with the insurance business to be carried on by it. Id. Such authority included the ability to sue and be sued on behalf of the SIF, id. § 38, 1917 Utah Laws at 317, and to make contracts of insurance, id. § 39, 1917 Utah Laws at 317. ¶ 6 In 1941, the Legislature transferred the administration of the SIF to the Commission of Finance. Act of July 1, 1941, ch. 16, sec. 1, § 42-2-3, 1941 Utah Laws 1st Spec. Sess. 46, 46. The status of the SIF and its place within the Industrial Commission statutes remained unchanged, except that the Finance Commission assumed the responsibilities of the Industrial Commission in administering the SIF. These duties included conduct[ing] all business thereto appertaining and belonging, and being vested with full authority over said fund. Id. With this change, the Finance Commission also acquired the ability to appoint, with the governor's approval, managers, attorneys, accountants, and such other experts and assistants as needed to assist in administering the business of the SIF. Id. ¶ 7 The Finance Commission's full authority over the SIF persisted until 1986, when the Legislature repealed and reenacted chapter three of title 35, entitled Labor-Industrial Commission. See Insurance Recodification Amendments, ch. 204, § 279, 1986 Utah Laws 477, 626-28. Previously the statute describing the SIF, the new chapter three renamed the fund the Workers' Compensation Fund of Utah. Id. sec. 279, § 35-3-2, 1986 Utah Laws at 626. While the fund still existed for the purpose of providing workers' compensation insurance and consisted of all assets acquired from premiums and penalties which are paid into the fund, id., authority over the fund shifted significantly. ¶ 8 First, authority to manage and conduct the business and affairs of the fund was transferred to the newly created director of the WCF. Id. sec. 279, § 35-3-6, 1986 Utah Laws at 626. This individual was to be appointed by the executive director of the Department of Administrative Services, and the management of the fund by the former was subject to the approval of the latter. Id. sec. 279, §§ 35-3-1, 35-3-6, 1986 Utah Laws at 626. Among the director's managerial powers were the ability to enter into workers' compensation insurance contracts, and, with the approval of the executive director, to employ attorneys, accountants, and other experts in managing the business of the WCF. Id. sec. 279, § 35-3-7(1), (8), 1986 Utah Laws at 626-27. These privileges, which were previously held by the state agency administering the fund, now belonged to the fund itself. ¶ 9 Furthermore, the State was explicitly prohibited from us[ing] any assets of the fund for any purpose other than the operation of the fund. Id. sec. 279, § 35-3-4, 1986 Utah Laws at 626. However, the state treasurer was still the custodian over the fund's money and assets, id. sec. 279, § 35-3-13, 1986 Utah Laws at 627, and provided investment services for the fund subject to the State Money Management Act of 1974, id., which governs the investment of public funds, see Utah Code Ann. § 51-7-4 (1981) (current version at Utah Code Ann. § 51-7-4 (2002)). Additionally, while the State was still shielded from liability for the expenses or debts of the fund, Ch. 204, sec. 279, § 35-3-4, 1986 Utah Laws at 626, the fund, for the first time, was described as a legal entity [that] may sue and be sued in its own name, id. sec. 279, § 35-3-3, 1986 Utah Laws at 626. ¶ 10 In 1988, the Legislature again changed the administrative structure of the WCF. It began by bifurcating the organizational apparatus of the WCF from its assets. Workers' Compensation Fund Amendments, ch. 56, sec. 5, § 35-3-2, 1988 Utah Laws 374, 375. The purpose of the WCF remained the same, id., sec. 5, § 35-3-2(1), 1988 Utah Laws at 375, but a separate enterprise fund, called the Injury Fund, was created, which consisted of all assets acquired from premiums and penalties paid into the Injury Fund, and was to be maintained by the Workers' Compensation Fund, id. sec. 5, § 35-3-2(2), 1988 Utah Laws at 375. The State, under this dichotomous system, was still protected from liability for any expenses or debts of the WCF and was now prohibited from accessing the assets of the Injury Fund. Id. sec. 7, § 35-3-4(2), 1988 Utah Laws at 375. ¶ 11 The State's relationship to the WCF was also modified in other aspects. First, a board of directors was created, consisting of the executive director of the Department of Administrative Services and four other members appointed by the governor. Id. sec. 8, § 35-3-5(1), 1988 Utah Laws at 375. The duties of the board included the responsibility to appoint a chief executive officer to administer the fund, to serve as investment trustees of the injury fund, and to perform other acts related to the policymaking and oversight of the WCF. Id. sec. 9, § 35-3-6(1), (5), (13), 1988 Utah Laws at 376. ¶ 12 The chief executive officer, in turn, was charged with administer[ing] all operations of the [WCF] under the direction of the board. Id. sec. 10, § 35-3-7(1)(a), 1988 Utah Laws at 376. Among other things, this included entering into contracts for workers' compensation insurance, id. sec. 10, § 35-3-7(2)(a), 1988 Utah Laws at 377, and employing attorneys, accountants, and other specialists to assist in administering the fund, id. sec. 10, § 35-3-7(1)(m), 1988 Utah Laws at 376. ¶ 13 The chief executive was also responsible for investing the assets of the Injury Fund. Id. sec. 10, § 35-3-7(1)(f), 1988 Utah Laws at 376. Although these investments were to be conducted under the guidance of the board of directors, id., unlike the state treasurer, who had previously been charged with investing the fund's assets in accordance with the Money Management Act, Ch. 204, sec. 279, § 35-3-13, 1986 Utah Laws at 627, the chief executive was now required to invest the fund's assets according to chapter 18 of Utah's Insurance Code, Ch. 56, sec. 10, § 35-3-7(f), 1988 Utah Laws at 376, which governs all insurers doing business in the State. See Utah Code Ann. § 31A-18-101 (1986) (current version at Utah Code Ann. 31A-18-101 (2003)). ¶ 14 In addition, the 1988 enactment defined the legal nature of the WCF. It stated that the WCF was a nonprofit, self-supporting, quasi-public corporation. It is an independent state agency and a body politic and corporate. It is a legal entity and may sue and be sued in its own name. All of its business and affairs shall be conducted in the name of the Workers' Compensation Fund of Utah. Ch. 56, sec. 6, § 35-3-3, 1988 Utah Laws at 375. However, this language was modified two years later, when, in 1990, the Legislature deleted the language an independent state agency and a body politic and corporate. Workers' Compensation Fund Amendments, ch. 24, sec. 3, § 35-3-3(1)(a), 1990 Utah Laws 132, 132. ¶ 15 Finally, the last decade has seen some significant changes in the State's relationship with the WCF. First, in 1996, the Legislature relocated the WCF from its historical position in title 35, entitled LaborIndustrial Commission, to its present place in title 31A, entitled Insurance Code. Act of Feb. 27, 1996, ch. 240, §§ 20-37, 1996 Utah Laws 893, 910-14. Second, a 2002 enactment defined the extent of the State's authority over the WCF that stemmed from the governor's ability to appoint its board of directors: (19) The requirement that the governor, with the consent of the Senate, appoint the directors of the Workers' Compensation Fund ... does not: (a) remove from the board of directors the managerial, financial, or operational control of the Workers' Compensation Fund; [or] (b) give to the state or the governor managerial, financial, or operational control of the Workers' Compensation Fund[.] Workers' Compensation Insurance Related Amendments, ch. 186, sec. 2, § 31A-33-106(19), 2002 Utah Laws 675, 677.