The Utah Workers Compensation Fund (WCF) announced that it has filed a lawsuit against the State of Utah over the ownership of the assets of WCF.
This dispute has been long standing. WCF believes that the assets of the company are owned by its policyholders – that it is a mutual insurance company. WCF began in 1917 with $40,000 in seed capital from the State. That $40,000 was repaid in 1922 and since that time, the State has contributed no money to the company, except the premium it pays as a policyholder.
Over the years, the State of Utah has advanced theories of ownership of the assets of WCF, none of which has been persuasive in the view of outside counsel retained by WCF. On the other hand, there are four Utah Supreme Court decisions, occurring over many decades, supporting the position that WCF’s assets are owned by its policyholders.
This action is even more necessary now with last week’s announcement that WCF intends to spin off its subsidiary, Advantage Workers Compensation Insurance Company. Under that plan, Advantage would become a publicly traded company and the shares would be distributed to the policyholders of WCF. This plan could be placed in jeopardy if the State of Utah claims it owns the assets of the company and would somehow be entitled to a disproportionate share in the proceeds of that spin-off.
“This action is to protect the rightful owners, the policyholders of the Company,” said Lane A. Summerhays, WCF president and CEO. “After lengthy consideration, the Board of Directors agreed and voted unanimously to file this lawsuit. We look forward to an expedited resolution of the matter.”
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