State Fund Issue Could Call Utah Leg. Back in Session

March 13, 2003

Efforts to privatize the Workers Compensation Fund of Utah (WCF) failed during the state’s recently completed legislative session.
However, the governor has indicated that he may be willing to call a special session if lawmakers are likely to agree on how to resolve the issue.

In the closing days of the session, legislators tabled Senate Bill 170, which would have enabled WCF to break its ties with state government. The bill would have taken away the governor’s ability to appoint WCF’s board of directors, required WCF to pay the state $50 million and preserved WCF’s federal tax-exempt status.

WCF, like other such state funds, was originally created as a residual market to offer coverage to employers who could not get insurance on the open market. However, the Utah state fund has reportedly been allowed to become a quasi-governmental organization that operates in 20 states. Some states such as Idaho have prevented WCF from expanding into their state due to the fund’s link to Utah state government. The situation in Idaho prompted the move by WCF to push for further privatization.

“The National Association of Independent Insurers has been strongly
opposed to this effort because the tax-exempt status provides the fund with an unfair advantage over other private insurers,” Ann Weber, counsel for NAII, remarked.

*In other action, the legislature defeated House Bill 216 that would have banned the use of credit-based insurance scores and Senate Bill 119 that would have increased personal injury protection coverage for necessary medical expenses from $3,000 to $8,000 per person. “NAII opposed these measures that would have harmed Utah consumers,” Weber added.

The legislature also defeated an NAII-supported tort reform bill and an attempt to address last year’s changes to the Uniform Arbitration Act.

Senate Bill 44 would have prevented a defendant from being held liable if the injured person assumed the risk of injury or harm. House Bill 357 sought to revise the Uniform Arbitration Act to state that punitive damages and attorney’s fees would only be permissible if agreed upon by the parties.

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