No. 34725 (Repeal and Reenact): Rule R612-12. Reporting Requirements for Workers' Compensation Coverage Waivers

(Repeal and Reenact)

DAR File No.: 34725
Filed: 04/27/2011 02:05:00 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

Section 31A-22-1011 authorizes workers' compensation insurance carriers to issue coverage waivers to business entities with no employees. Effective 07/01/2011, S.B. 191 (2011 General Session) will repeal Section 31A-22-1011 and enacted the Workers' Compensation Coverage Waivers Act, Section 34A-2-1001 et seq. The Act transfers responsibility for issuing coverage waivers from insurance carriers to the Utah Labor Commission. The Act also defines terms, specifies the information a business entity must submit to obtain a waiver, authorizes the Labor Commission to charge fees for coverage waivers, and makes other technical changes. The Labor Commission's existing Rule R612-12 addresses issues related to coverage waivers issued by insurance carriers under Section 31A-22-1011. Because that provision of law has been repealed by S.B. 191 and replaced with the Workers' Compensation Coverage Waivers Act, the Labor Commission proposes to repeal the existing Rule R612-12 and adopt a new Rule R612-12 to addresses the Labor Commission's responsibilities for issuing coverage waivers.

Summary of the rule or change:

The old rule provided that the waiver be issued by insurance carriers; this will no longer be the case as of 07/01/2011, when waivers will then be issued by the Commission. Section R612-12-2 provides that the coverage waiver program will be administered by the Labor Commission's Division of Industrial Accidents. Section R612-12-3 establishes procedures for business entities to apply for coverage waivers, lists the types of documentation a business entity must submit in order to qualify for a coverage waiver, and requires payment of a $50 application fee. Section R612-12-4 specifies that coverage waivers previously issued by insurance carriers pursuant to Section 31A-22-1011 remain in effect until their stated expiration date; coverage waivers issued by the Labor Commission pursuant to the Workers' Compensation Coverage Waivers Act will remain effective for a period of one year. Section R612-12-4 also addresses renewal and revocation of coverage waivers. Section R612-12-5 provides for Labor Commission review of decisions by the Division of Industrial Accidents to deny or revoke waiver certificates. Section R612-12-6 explains the effect and limitations of coverage waivers. R612-12-6 specifically provides that an employer seeking to rely on a coverage waiver provided by a business entity must retain: 1) a copy of the coverage waiver; and 2) a printout from the Division�s web page showing that the coverage waiver has not been revoked as of the date on which the employer contracted with the business entity.

State statutory or constitutional authorization for this rule:

• Section 34A-2-101 et seq.
• Section 34A-1-104
• Section 34A-3-101 et seq.
• Section 78B-8-402
• Section 78B-8-404

Anticipated cost or savings to:

the state budget:

The proposed rule has no fiscal impact on the state budget. Any costs or savings associated with the Labor Commission's issuance of coverage waivers are the result of S.B. 191 and have been addressed by the fiscal note attached to that bill.

local governments:

Not affected because waivers only apply to companies that are owner operated.

small businesses:

The proposed rule has no effect on small businesses that have one or more employees, since such business do not qualify for coverage waivers under existing law (Section 31A-22-1011) or under the new Workers' Compensation Coverage Waiver Act enacted by S.B. 191. As to small businesses with no employees, the proposed rule does not change the existing conditions for obtaining a coverage waiver. Likewise, the $50 coverage waiver application fee required by the proposed rule is the same amount that insurance carriers have been charging for coverage waivers. Consequently, the proposed rule will not result in any additional costs or savings to small business.

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

Because coverage waivers are available only to a statutorily-defined class of business entities, the proposed rule will have no financial impact on persons other than small businesses.

Compliance costs for affected persons:

Business entities applying for coverage waivers must submit an application fee of $50 to the Labor Commission. This is the same fee that insurance carriers are currently charging for such waivers.

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

The Workers' Compensation Coverage Waivers Act enacted by S.B. 191 does not change the substance of Utah's coverage waivers program; it merely transfers responsibility for administering the program from insurance carriers to the Labor Commission. The only additional paperwork requirement established by the proposed rule is the obligation of those seeking to rely upon a coverage waiver to retain copies of: 1) the coverage waiver and 2) verification from the Labor Commission's website that the waiver remains in effect. Any cost associated with this requirement will be negligible. In summary, the Labor Commission does not expect the proposed rule to have any fiscal impact on businesses.

Sherrie Hayashi, Commissioner

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

Labor Commission
Industrial Accidents
160 E 300 S
SALT LAKE CITY, UT 84111-2316

Direct questions regarding this rule to:

• Ron Dressler at the above address, by phone at 801-530-6841, by FAX at 801-530-6804, 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:

06/14/2011

This rule may become effective on:

06/21/2011

Authorized by:

Sherrie Hayashi, Commissioner

RULE TEXT

R612. Labor Commission, Industrial Accidents.

[R612-12. Reporting Requirements for Workers' Compensation Coverage Waivers.

R612-12-1. Authority.

This rule is enacted under the authority of U.C.A. Sections 34A-1-104, 31A-22-1011, and 63G-3.

 

R612-12-2. Time Period for Insurance Carriers to File Waiver Report.

Insurance carriers issuing a waiver pursuant to Section 31A-22-1011 shall file with the Labor Commission a report, as required by this section, once monthly but in any event no later than the 5th of each month or the first business day thereafter.

]R612-12. Workers' Compensation Coverage Waivers.

R612-12-1. Authority and Purpose.

This rule is enacted under authority of 34A-1-104 of the Utah Labor Commission Act and Title 34A, Chapter Two, Part One, the Workers' Compensation Coverage Waivers Act ("the Act"). The purpose of this rule is to establish procedures for workers' compensation coverage waivers ("coverage waivers"). The rule also addresses the effect of coverage waivers and the adjudicative procedures to be followed by the Division in granting, denying, or revoking coverage waivers.

 

R612-12-2. Administration by Industrial Accidents Division.

Except as otherwise provided, the Utah Labor Commission's Division of Industrial Accidents ("Division") shall administer the provisions of the Act and this rule.

 

R612-12-3. Procedure for Application and Issuance of Certificate.

A. A business entity may apply for a coverage waiver by completing a form provided by the Commission, submitting required supporting documents, and paying a fee of $50. The Division's determination of whether to grant or deny a request for coverage waiver shall be conducted as informal proceedings under the Utah Administrative Procedures Act.

B. Supporting documents. 34A-2-1004 of the Workers' Compensation Coverage Waivers Act requires a business entity to submit the following documentation to support its request for a coverage waiver:

(1) a copy of two or more of the following:

(a) the business entity's federal or state income tax return that shows business income for the complete taxable year that immediately precedes the day on which the business entity submits the information;

(b) a valid business license;

(c) a license to engage in an occupation or profession, including a license under Title 58, Occupations and Professions; or

(d) documentation of an active liability insurance policy that covers the business entity's activities; or

(2) a copy of one item listed in Subsection (1) and a copy of two or more of the following:

(a) proof of a bank account for the business entity;

(b) proof that for the business entity there is:

(i) a telephone number; and

(ii) a physical location; or

(c) an advertisement of services in a newspaper of general circulation or telephone directory showing the business entity's:

(i) name; and

(ii) contact information.

C. Fee. A business entity applying for a workers' compensation coverage waiver certificate shall submit payment of a fee of $50.00. Such fees are used to defray the costs of processing and evaluating the application and are nonrefundable. If payment of the fee is made by check, the Division may delay issuance of a coverage waiver until it has verified that the check will be honored.

D. Issuance or Denial of Certificate. If the Division determines that a business entity has satisfied each requirement for a coverage waiver, the Division will issue the coverage waiver. If the Division determines that a business entity has not satisfied each requirement for a workers' compensation insurance waiver, the Division will issue a written denial to the business entity, stating the basis for denial and setting forth the business entity's appeal rights.

 

R612-12-4. Duration, Renewal and Revocation.

A. Duration. Subject to revocation of a coverage waiver as provided by subparagraph C. of this section, a coverage waiver remains in effect for the following time periods:

1. A coverage waiver issued by a licensed workers' compensation insurance company prior to July 1, 2011, the effective date of the Workers' Compensation Coverage Waivers Act, shall remain effective for the period shown on the coverage waiver.

2. A coverage waiver issued by the Division after July 1, 2011, shall be effective for one year from the date the coverage waiver is issued.

B. Renewal. The Division will renew a business entity's coverage waiver if:

1. The business entity requests renewal; and

2. The business entity satisfies all requirements in effect at the time of the renewal request.

C. Revocation. If the Division has reason to believe that a business entity no longer qualifies for a coverage waiver, the Division shall institute proceedings to determine whether the business entity's coverage waiver should be revoked. Such proceedings shall be conducted as informal proceedings under the Utah Administrative Procedures Act. If the Division concludes that the business entity does not satisfy each requirement for a workers' compensation insurance waiver, the Division will issue a written order revoking the waiver certificate, stating the basis for revocation, and setting forth the business entity's appeal rights. The Division may also initiate other proceedings authorized by the Utah Workers' Compensation Act to compel the business entity to obtain workers' compensation coverage for its employees.

 

R612-12-5. Review of Division Decisions to Deny or Revoke Waiver Certificate.

A business entity may challenge a Division decision to deny or revoke the business entity's coverage waiver by filing an appeal of the decision with the Commission's Adjudication Division. Such appeal proceedings shall be assigned to an administrative law judge and conducted as de novo formal adjudicatory proceedings pursuant to the Utah Administrative Procedures Act.

 

R612-12-6. Effect, Verification and Limitation of Coverage Waiver.

A. Effect of coverage waiver. 34A-2-103 (7) (c) permits an employer contracting with a business entity to rely upon a valid coverage waiver issued by the Division as proof that the business entity is not required to have a workers' compensation insurance policy.

B. Verification of coverage waiver. An employer seeking to rely upon a business entity's coverage waiver shall retain the following documents:

1. A photocopy of the coverage waiver issued to the business entity by the Division; and

2. A printout of the Division's web page showing that the business entity's coverage waiver had not been revoked as of the date on which the employer contracted with the business entity.

C. Limitations to effect of coverage waiver. A coverage waiver does not excuse a business entity from obtaining and maintaining workers' compensation insurance coverage for employees who are entitled to such coverage under the Utah Workers' Compensation Act. If and when a business entity has such employees, any coverage waiver previously issued to that business entity becomes void and the business entity must immediately obtain workers' compensation coverage.

 

KEY: workers' compensation, administrative procedures, reporting, settlements

Date of Enactment or Last Substantive Amendment: [August 11, 2008]2011

Authorizing, and Implemented or Interpreted Law: 34A-2-101 et seq.; 34A-3-101 et seq.; 34A-1-104; 78B-8-402; 78B-8-404

 

---