34A-2-201.5 - Self-insured employer -- Acceptable security -- Procedures.
34A-2-201.5. Self-insured employer -- Acceptable security -- Procedures.
(1) As used in this section:
(a) "Acceptable security" means one or more of the following:
(i) cash;
(ii) a surety bond issued:
(A) by a person acceptable to the division; and
(B) in a form approved by the division;
(iii) an irrevocable letter of credit issued:
(A) by a depository institution acceptable to the division; and
(B) in a form approved by the division;
(iv) a United States Treasury Bill;
(v) a deposit in a depository institution that:
(A) has an office located in Utah; and
(B) is insured by the Federal Deposit Insurance Corporation; or
(vi) a certificate of deposit in a depository institution that:
(A) has an office located in Utah; and
(B) is insured by the Federal Deposit Insurance Corporation.
(b) "Compensation" is as defined in Section 34A-2-102.
(c) "Depository institution" is as defined in Section 7-1-103.
(d) "Member of a public agency insurance mutual" means a political subdivision or publicagency that is included within a public agency insurance mutual.
(e) "Public agency insurance mutual" is as defined in Section 31A-1-103.
(f) "Self-insured employer" means one of the following that is authorized by the divisionto pay direct workers' compensation benefits under Subsection (2):
(i) an employer; or
(ii) a public agency insurance mutual.
(2) (a) If approved by the division as a self-insured employer in accordance with thissection:
(i) an employer may directly pay compensation in the amount, in the manner, and whendue as provided for in this chapter and Chapter 3, Utah Occupational Disease Act; and
(ii) a public agency insurance mutual may directly pay compensation:
(A) on behalf of the members of the public agency insurance mutual; and
(B) in the amount, in the manner, and when due as provided in this chapter and Chapter3, Utah Occupational Disease Act.
(b) If an employer's or a public agency insurance mutual's application to directly paycompensation as a self-insured employer is approved by the division, the application is consideredacceptance:
(i) of the conditions, liabilities, and responsibilities imposed by this chapter and Chapter3, Utah Occupational Disease Act, including the liability imposed pursuant to Subsection34A-2-704(14);
(ii) by:
(A) the employer; or
(B) (I) the public agency insurance mutual; and
(II) the members of the public agency insurance mutual.
(c) The division's denial under this Subsection (2) of an application to directly pay
compensation as a self-insured employer becomes a final order of the commission 30 calendardays from the date of the denial unless within that 30 days the employer or the public agencyinsurance mutual that filed the application files an application for a hearing in accordance withPart 8, Adjudication.
(3) To qualify as a self-insured employer, an employer or a public agency insurancemutual shall:
(a) submit a written application requesting to directly pay compensation as a self-insuredemployer;
(b) annually provide the division proof of the employer's or the public agency insurancemutual's ability to directly pay compensation in the amount, manner, and time provided by thischapter and Chapter 3, Utah Occupational Disease Act; and
(c) if requested by the division, deposit acceptable security in the amounts determined bythe division to be sufficient to secure the employer's or the public agency insurance mutual'sliabilities under this chapter and Chapter 3, Utah Occupational Disease Act.
(4) (a) Acceptable security deposited by a self-insured employer in accordance withSubsection (3)(c) shall be:
(i) deposited on behalf of the division by the self-insured employer with the statetreasurer; and
(ii) withdrawn only upon written order of the division.
(b) The self-insured employer has no right, title, interest in, or control over acceptablesecurity that is deposited in accordance with this section.
(c) If the division determines that the amount of acceptable security deposited inaccordance with this section is in excess of that needed to secure payment of the self-insuredemployer's liability under this chapter and Chapter 3, Utah Occupational Disease Act, the divisionshall return the amount that is determined to be excess to the self-insured employer.
(5) (a) The division may at any time require a self-insured employer to:
(i) increase or decrease the amount of acceptable security required to be deposited underSubsection (3)(c); or
(ii) modify the type of acceptable security to be deposited under Subsection (3)(c).
(b) (i) If the division requires a self-insured employer to take an action described inSubsection (5)(a), a perfected security interest is created in favor of the division in the assets ofthe self-insured employer to the extent necessary to pay any amount owed by the self-insuredemployer under this chapter and Chapter 3, Utah Occupational Disease Act, that cannot be paidby acceptable security deposited in accordance with this section.
(ii) The perfected security interest created in Subsection (5)(b)(i) ends when theself-insured employer complies with the division's request under Subsection (5)(a) to thesatisfaction of the division.
(6) (a) If an employer or a public agency insurance mutual is approved under Subsection(2) to directly pay compensation as a self-insured employer, the division may revoke theemployer's or the public agency insurance mutual's approval.
(b) The division's revocation of the employer's or the public agency insurance mutual'sapproval under Subsection (6)(a) becomes a final order of the commission 30 calendar days fromthe date of the revocation unless within that 30 days the employer or the public agency insurancemutual files an application for a hearing in accordance with Part 8, Adjudication.
(7) If the division finds that a self-insured employer has failed to pay compensation that
the self-insured employer was liable to pay under this chapter or Chapter 3, Utah OccupationalDisease Act, the division may use the acceptable security deposited and any interest earned on theacceptable security to pay:
(a) the self-insured employer's liability under this chapter and Chapter 3, UtahOccupational Disease Act; and
(b) any costs, including legal fees, associated with the administration of the compensationincurred by:
(i) the division;
(ii) a surety;
(iii) an adjusting agency; or
(iv) the Uninsured Employers' Fund.
(8) (a) If the division determines that the acceptable security deposited under Subsection(3)(c) should be available for payment of the self-insured employer's liabilities under Subsection(7), the division shall:
(i) determine the method of claims administration, which may include administration by:
(A) a surety;
(B) an adjusting agency;
(C) the Uninsured Employers' Fund; or
(D) any combination of Subsections (8)(a)(i)(A) through (C); and
(ii) audit the self-insured employer's liabilities under this chapter and Chapter 3, UtahOccupational Disease Act.
(b) The following shall cooperate in the division's audit under Subsection (8)(a)(ii) andprovide any relevant information in its possession:
(i) the self-insured employer;
(ii) if the self-insured employer is a public agency insurance mutual, a member of thepublic agency insurance mutual;
(iii) any excess insurer;
(iv) any adjusting agency;
(v) a surety;
(vi) an employee of a self-insured employer if the employee makes a claim forcompensation under this chapter or Chapter 3, Utah Occupational Disease Act; and
(vii) an employee of a member of a public agency insurance mutual that is approved as aself-insured employer under this section, if the employee makes a claim for compensation underthis chapter or Chapter 3, Utah Occupational Disease Act.
(9) (a) Payment by a surety is a full release of the surety's liability under the bond to theextent of that payment, and entitles the surety to full reimbursement by the principal or theprincipal's estate including reimbursement of:
(i) necessary attorney's fees; and
(ii) other costs and expenses.
(b) A payment, settlement, or administration of benefits made in good faith pursuant tothis section by a surety, an adjusting agency, the Uninsured Employers' Fund, or this division isvalid and binding as between:
(i) (A) the surety;
(B) adjusting agency;
(C) the Uninsured Employers' Fund; or
(D) the division;
(ii) the self-insured employer; and
(iii) if the self-insured employer is a public agency insurance mutual, the members of thepublic agency insurance mutual.
(10) (a) The division shall resolve any dispute concerning:
(i) the depositing, renewal, termination, exoneration, or return of all or any portion ofacceptable security deposited under this section;
(ii) any liability arising out of the depositing or failure to deposit acceptable security;
(iii) the adequacy of the acceptable security; or
(iv) the reasonableness of administrative costs under Subsection (7)(b), including legalfees.
(b) The division's decision under Subsection (10)(a) becomes a final order of thecommission 30 calendar days from the date of the decision, unless within that 30 days theemployer or public agency insurance mutual files an application for hearing in accordance withPart 8, Adjudication.
Amended by Chapter 71, 2002 General Session