No. 40814 (Amendment): Rule R131-13. Health Reform -- Health Insurance Coverage in State Contracts -- Implementation

(Amendment)

DAR File No.: 40814
Filed: 09/22/2016 09:30:49 AM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The purpose of this amendment is to comply with the provisions of Section 63C-9-403. H.B. 282 from the 2016 General Session updated Section 63C-9-403, and the changes in this rule are to comply with H.B. 282.

Summary of the rule or change:

The changes in this rule outline the requirements of contractors and subcontractors that do work for the state of Utah, to carry health insurance for their employees.

Statutory or constitutional authorization for this rule:

• Subsection 63C-9-301(3)(a)

Anticipated cost or savings to:

the state budget:

There are no anticipated costs or savings that are expected to the state budget as a result of this rule. The changes to this rule only incorporate the changes in statute. The statute directly determines the affects upon budget and not this rule.

local governments:

There are no anticipated costs or savings to local government budget. The changes to the rule do not affect local government.

small businesses:

There are no anticipated costs or savings that are expected to small businesses as a result of this rule. The changes to this rule only incorporate the changes in statute. The statute directly determines the affects upon budget and not this rule.

persons other than small businesses, businesses, or local governmental entities:

There are no anticipated costs or savings that are expected as a result of this rule. The changes to this rule only incorporate the changes in statute. The statute directly determines the affects upon budget and not this rule.

Compliance costs for affected persons:

There are no anticipated compliance costs for affected persons as a result of this rule. The changes to this rule only incorporate the changes in statute. The statute directly determines the affects upon costs and not this rule.

Comments by the department head on the fiscal impact the rule may have on businesses:

There are no anticipated fiscal impacts that are expected as a result of this rule. The changes to this rule only incorporate the changes in statute. The statute directly determines any fiscal impacts and not this rule.

Allyson Gamble, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Office of Administrative Rules, or at:

Capitol Preservation Board (State)
Administration
Room E110 EAST BUILDING
420 N STATE ST
SALT LAKE CITY, UT 84114-2110

Direct questions regarding this rule to:

• Allyson Gamble at the above address, by phone at 801-537-9156, by FAX at 801-538-3221, or by Internet E-mail at [e-mail]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

11/14/2016

This rule may become effective on:

11/21/2016

Authorized by:

Allyson Gamble, Executive Director

RULE TEXT

R131. Capitol Preservation Board (State), Administration.

R131-13. Health Reform -- Health Insurance Coverage in State Contracts -- Implementation.

R131-13-1. Purpose.

The purpose of this rule is to comply with the provisions of Section 63C-9-403.

 

R131-13-2. Authority.

This rule is authorized under Subsection 63C-9-301(3)(a) whereby the Capitol Preservation Board may make rules to govern, administer, and regulate the capitol hill complex, capitol hill facilities, and capitol hill grounds by following the procedures and requirements of Title 63G, Chapter 3, Utah Administrative Rulemaking Act, as well as Section 63C-9-403 that requires this rule related to health insurance provisions in certain design and construction contracts.

 

R131-13-3. Definitions.

(1) Except as otherwise stated in this rule, terms used in this rule are defined in Section 63C-9-403.

(2) In addition:

(a) "Board" means the Capitol Preservation Board established pursuant to Section 63C-9-201.

(b) "Executive Director" means the executive director of the Capitol Preservation Board including, unless otherwise stated, the executive director's duly authorized designee.

(c) "Employee(s)" means an "employee," "worker," or "operative" as defined in Section 34A-2-104 who:

(i) works at least 30 hours per calendar week; and

(ii) meets employer eligibility waiting requirements for health care insurance which may not exceed the first day of the calendar month following 60 days from the date of hire.

(d) "State" means the state of Utah.

 

R131-13-4. Applicability of Rule.

(1) Except as provided in Subsection R131-13-4(2) or R131-13-4(3) below, R131-13 applies to all design or construction contracts entered into by the Board or the executive director, [or ]on behalf of the Board, on or after July 1, 2009, and

(a) applies to a prime contractor if the prime contract is in the amount of $2,000,000 or greater at the original execution of the contract[$1,500,000 or greater]; and

(b) applies to a subcontractor if the subcontract[, at any tier] is in the amount of $1,000,000 or greater at the original execution of the contract.[$750,000 or greater.]

(2) Rule R131-13 does not apply if:

(a) the application of this Rule R131-13 jeopardizes the receipt of federal funds;

(b) the contract is a sole source contract; or

(c) the contract is an emergency procurement.

(3) This Rule R131-13 does not apply to a change order as defined in Section 63G-6a-103, or a modification to a contract, when the contract does not meet the initial threshold required by Subsection R131-13-4(1).

(4) A person who intentionally uses change orders or contract modifications to circumvent the requirements of Subsection R131-13-4(1) is guilty of an infraction.

 

R131-13-5. Contractor and Subcontractors to Comply with Section 63C-9-403.

All contractors and subcontractors that are subject to the requirements of Section 63C-9-403 shall comply with all the requirements, penalties and liabilities of Section 63C-9-403.

(2) If a subcontractor of the contractor is subject to Section 63C-9-403(2) or Rule R131-13-4 , the contractor shall:

(a) Place a requirement in the subcontract that the subcontractor shall obtain and maintain an offer of qualified health insurance coverage for the subcontractor's employees and the employees' dependents during the duration of the subcontract; and

(b) certify to the executive director that the subcontractor has and will maintain an offer of qualified health insurance coverage for the subcontractor's employees and the employees' dependents during the duration of the prime contract.

 

R131-13-6. Not Basis for Protest or Suspend, Disrupt, or Terminate Design or Construction.

(1) The failure of a contractor or subcontractor to provide qualified health insurance coverage as required by this Rule R131-13 or Section 63C-9-403:

(a) may not be the basis for a protest or other action from a prospective bidder, offeror, or contractor under Section 63G-6a-1603[63G-6a-801] or any other provision in Title 63G, Chapter 6a, Utah Procurement Code; and

(b) may not be used by the procurement entity or a prospective bidder, offeror, or contractor as a basis for any action or suit that would suspend, disrupt or terminate the design or construction.

 

R131-13-7. Requirements and Procedures a Contractor Must Follow.

A contractor, including consultants and designers, must comply with the following requirements and procedures in order to demonstrate compliance with Section 63C-9-403.

(1) Demonstrating Compliance with Health Insurance Requirements. A Contractor (including Design Professional) shall demonstrate compliance with Section 63C-9-403(5) (a) or (b) at the time of execution of each initial contract described in Section 63C-9-403(2).

(a) The compliance is subject to an audit by the Department (Capitol Preservation Board) or the Office of the Legislative Auditor General.

(b) A Contractor (including Design Professional) subject to Section 63C-9-403(2) shall demonstrate to the executive director that the Contractor has and will maintain an offer of qualified health insurance coverage for the Contractor's employees and employees' dependents.

(c) Such demonstration shall be a certification on the form provided by the executive director. [The following requirements must be met by a contractor, including consultants, designers and others under contract with the Board or the executive director that is subject to the requirements of Rule R131-13 no later than the time the contract is entered into or renewed:] The form shall also require compliance with R131-13-5(2) regarding subcontractors.

(d) The actuarially equivalent determination required for the qualified health insurance coverage is met by the Contractor if the Contractor provides the executive director with a written statement of actuarial equivalency attached to the certification, which is not more than one year old, regarding the contractor's offer of qualified health coverage from an actuary selected by the contractor or the contractor's insurer, or an underwriter who is responsible for developing the employer group's premium rates. The Contractor is responsible for collecting the statements as required by law from any of the subcontractors at any tier that must do so.

[(a) demonstrate compliance by a written certification to the executive director that the contractor has and will maintain for the duration of the contract an offer of qualified health insurance coverage for the contractor's employees and the employees' dependents; and

(b) the contractor shall also provide such written certification prior to the execution of the contract, in regard to all subcontractors, including subconsultants, at any tier that are subject to the requirements of Rule R131-13.

(2) Recertification. The executive director shall have the right to request a recertification by the contractor by submitting a written request to the contractor, and the contractor shall so comply with the written request within ten working days of receipt of the written request; however, in no case may the contractor be required to demonstrate such compliance more than twice in any 12-month period.

(3) Demonstrating Compliance with Actuarially Equivalent Determination. The actuarially equivalent determination required by Subsection 63C-9-403(1)(c) and defined in Section 26-40-115 is met by the contractor if the contractor provides the executive director with a written statement of actuarial equivalency from either the Utah Insurance Department; an actuary selected by the contractor; or the contractor's insurer; or an underwriter who is responsible for developing the employer group's premium rates.]

(2) For purposes of this Rule R131-13-7[(3)], actuarially equivalency is achieved by meeting or exceeding the commercially equivalent benchmark for the qualified health insurance coverage identified in Subsection 63C-9-403(1)(c) that is provided by the department of Health, in accordance with Subsection 26-40-115(2).[requirements of Section 26-40-115 which are also delineated on the DFCM website at http://dfcm.utah.gov/downloads/1const/Health_Insurance_Benchmark.pdf.]

([4]3) The health insurance must be available upon the first day of the calendar month following sixty days from the date of hire.

[(5) Architect and Engineer Compliance Process. Architects and engineers that are subject to Rule R131-13 must demonstrate compliance with Rule R131-13 in any annual submittal. During the procurement process and no later than the execution of the contract with the architect or engineer, the architect or engineer shall confirm that their applicable subcontractors or subconsultants meet the requirements of Rule R131-13.

(6) General (Prime) Contractors Compliance Process. Contractors that are subject to Rule R131-13 must demonstrate compliance with Rule R131-13 for their own firm and any applicable subcontractors, in any pre-qualification process that may be used for the procurement. At the time of execution of the contract, the contractor shall confirm that their applicable subcontractors or subconsultants meet the requirements of Rule R131-13.]

([7]4) [Notwithstanding any prequalification process, ]A[a]ny contract subject to this Rule R131-13 shall contain a provision requiring compliance with this Rule R131-13 from the time of execution and throughout the duration of the contract.

([8]5) Hearing and Penalties.

(a) Hearing. Any hearing for any penalty under this Rule R131-13 conducted by the Board or executive director shall be conducted in the same manner as any hearing required for a suspension or debarment.

(b) Penalties that may be imposed by the Board or Executive Director. The penalties that may be imposed by the Board or executive director if a contractor, consultant, subcontractor or subconsultant, at any tier, intentionally violates the provisions of Subsections (2) through (9) of 63C-9-403[Rule R131-13 may] include:

(i) a three-month suspension of the contractor or subcontractor from entering into future contracts with the State upon the first violation, regardless of which tier the contractor or subcontractor is involved with the future design and/or construction contract;

(ii) a six-month suspension of the contractor or subcontractor from entering into future contracts with the State upon the second violation, regardless of which tier the contractor or subcontractor is involved with the future design and/or construction contract;

(iii) an action for debarment of the contractor or subcontractor in accordance with Section 63G-6a-904 upon the third or subsequent violation; and

(iv) monetary penalties which may not exceed 50% of the amount necessary to purchase qualified health insurance coverage for an employee and dependents of an employee of the contractor or subcontractor who was not offered qualified health insurance coverage during the duration of the contract.

(c)(i) In addition to the penalties imposed above, a contractor, consultant, subcontractor or subconsultant who intentionally violates the provisions of Section 63C-9-403[this Rule R131-13] shall be liable to the employee for health care costs that would have been covered by qualified health insurance coverage.

(ii) An employer has an affirmative defense to a cause of action under Rule[Subsection] R131-13-7( 5[8])(c)(i) as provided in Subsection 63C-9-403(7)(a)(ii). An employee has a private right of action only against the employee's employer to enforce the provisions of Subsection 63C-9-403(7).

 

R131-13-8. Not Create any Contractual Relationship with any Subcontractor or Subconsultant.

Nothing in Rule R131-13 shall be construed as to create any contractual relationship whatsoever between the State, the Board, or the executive director with any subcontractor or subconsultant at any tier.

 

KEY: health insurance, contractors, contracts

Date of Enactment or Last Substantive Amendment: [July 8, 2014]2016

Notice of Continuation: May 1, 2014

Authorizing, and Implemented or Interpreted Law: 63C-9-403; 63C-9-301(3)(a)

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