No. 42846 (Amendment): Rule R23-23. Health Reform -- Health Insurance Coverage in State Contracts -- Implementation

(Amendment)

DAR File No.: 42846
Filed: 04/24/2018 08:39:21 AM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The purpose of this rule change is to comply with the provisions of Section 63A-5-205.5. These amendments to Rule R23-23 are required and necessary to conform Rule R23-23 with new Utah Code Section 63A-5-205.5, passed pursuant to H.B. 39 in the 2018 General Session.

Summary of the rule or change:

Rule R23-23 is authorized under Subsection 63A-5-103(2)(a), which directs the Building Board to make rules necessary for the discharge of duties for the Division of Facilities Construction and Management. These amendments to Rule R23-23 are required and necessary to conform Rule R23-23 with the new Utah Code Section 63A-5-205.5, passed pursuant to H.B. 39 in the 2018 General Session, signed by the Governor on 03/20/2018 and scheduled to take effect 05/07/2018.

Statutory or constitutional authorization for this rule:

• Subsection 63A-5-103(2)(a)
• Section 63A-5-205.5

Anticipated cost or savings to:

the state budget:

Amendments to Rule R23-23 will have no anticipated cost or savings for the state. The amendment of Rule R23-23 is required so that the rule is consistent with changes that were made to Section 63A-5-205 by H.B. 39 (2018). Any associated fiscal impacts are attributable to the changes in the statue and not the amendments to this rule, which simply mirrors the changes in the statute. All anticipated impacts have been accounted for in the fiscal note for H.B. 39 (2018).

local governments:

Amendments to Rule R23-23 will not affect local governments. The amendment of Rule R23-23 is required so that the rule is consistent with changes that were made to Section 63A-5-205 by H.B. 39 (2018). Any associated fiscal impacts are attributable to the changes in the statue and not the amendments to this rule, which simply mirrors the changes in the statute. All anticipated impacts have been accounted for in the fiscal note for H.B. 39 (2018).

small businesses:

Amendments to Rule R23-23 will not affect small businesses. The amendment of Rule R23-23 is required so that the rule is consistent with changes that were made to Section 63A-5-205 by H.B. 39 (2018). Any associated fiscal impacts are attributable to the changes in the statue and not the amendments to this rule, which simply mirrors the changes in the statute. All anticipated impacts have been accounted for in the fiscal note for H.B. 39 (2018).

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

Amendments to Rule R23-23 will not affect persons other than small businesses, businesses, or local government entities. The amendment of Rule R23-23 is required so that the rule is consistent with changes that were made to Section 63A-5-205 by H.B. 39 (2018). Any associated fiscal impacts are attributable to the changes in the statue and not the amendments to this rule, which simply mirrors the changes in the statute. All anticipated impacts have been accounted for in the fiscal note for H.B. 39 (2018).

Compliance costs for affected persons:

There are no anticipated compliance costs for affected persons.

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

There are no anticipated fiscal impacts that this rule may have on businesses. These amendments to Rule R23-23 are required and necessary to conform Rule R23-23 with the new Utah Code Section 63A-5-205.5, passed pursuant to H.B. 39 (2018).

Jeff Reddoor, Director

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

Administrative Services
Facilities Construction and Management
Room 4110 STATE OFFICE BLDG
450 N STATE ST
SALT LAKE CITY, UT 84114-1201

Direct questions regarding this rule to:

• Cecilia Niederhauser at the above address, by phone at 801-538-3261, by FAX at 801-538-9694, or by Internet E-mail at [e-mail]
• Jeff Reddoor at the above address, by phone at 801-971-9830, by FAX at , or by Internet E-mail at [e-mail]
• Michael Kelley at the above address, by phone at 801-538-3105, by FAX at , 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:

06/14/2018

This rule may become effective on:

06/21/2018

Authorized by:

Ned Carnahan, Building Board Chair

RULE TEXT

Appendix 1: Regulatory Impact Summary Table*

Fiscal Costs

FY 2018

FY 2019

FY 2020

State Government

$0

$0

$0

Local Government

$0

$0

$0

Small Businesses

$0

$0

$0

Non-Small Businesses

$0

$0

$0

Other Person

$0

$0

$0

Total Fiscal Costs:

$0

$0

$0

Fiscal Benefits

State Government

$0

$0

$0

Local Government

$0

$0

$0

Small Businesses

$0

$0

$0

Non-Small Businesses

$0

$0

$0

Other Persons

$0

$0

$0

Total Fiscal Benefits:

$0

$0

$0

Net Fiscal Benefits:

$0

$0

$0

*This table only includes fiscal impacts that could be measured. If there are inestimable fiscal impacts, they will not be included in this table. Inestimable impacts for State Government, Local Government, Small Businesses and Other Persons are described above. Inestimable impacts for Non-Small Businesses are described below.

 

Appendix 2: Regulatory Impact to Non-Small Businesses

There are no anticipated regulatory or fiscal impact that the changes to this rule with have on non-small businesses.

 

The amendment of Rule R23-23 is required so that the rule is consistent with changes that were made to Section 63A-5-205 by H.B. 39 passed in the 2018 General Session, which has been signed by the Governor and scheduled to go into effect May 7, 2018. Any associated fiscal impacts are attributable to the changes in the statue and not the amendments to this rule, which simply mirrors the changes in the statute. All anticipated impacts have been accounted for in the fiscal note for H.B. 39 (2018).

 

 

R23. Administrative Services, Facilities Construction and Management.

R23-23. Health Reform -- Health Insurance Coverage in State Contracts -- Implementation.

[R23-23-1. Purpose.

The purpose of this rule is to comply with the provisions of Section 63A-5-205.

 

R23-23-2. Authority.

This rule is authorized under Subsection 63A-5-103(1)(e), which directs the Utah State Building Board to make rules necessary for the discharge of the duties of the Division of Facilities Construction and Management as well as Section 63A-5-205 which requires this rule related to health insurance provisions in certain design and/or construction contracts.

 

R23-23-3. Definitions.

(1) Except as otherwise stated in this rule, terms used in this rule are defined in Section 63A-5-205.

(2) In addition:

(a) "Board" means the State Building Board established pursuant to Section 63A-5-101.

(b) "Director" means the Director of the Division, including, unless otherwise stated, the Director's duly authorized designee.

(c) "Division" means the Division of Facilities Construction and Management established pursuant to Section 63A-5-201.

(d) "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.

(e) "State" means the State of Utah.

 

R23-23-4. Applicability of Rule.

(1) Except as provided in Subsections R23-23-4(2) or R23-23-4(3) below, this Rule R23-23 applies to all design or construction contracts entered into by the Division or the Board, 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; and

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

(2) This Rule R23-23 does not apply if:

(a) the application of this Rule R23-23 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 R23-23 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 R23-23-4(1).

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

 

R23-23-5. Contractors and Subcontractors to Comply with Section 63A-5-205.

(1) All contractors and subcontractors that are subject to the requirements of Section 63A-5-205 shall comply with all the requirements, penalties and liabilities of Section 63A-5-205.

(2) If a subcontractor of the contractor is subject to Section 63A-5-205(3) or Section R23-23-4, 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 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.

 

R23-23-6. 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 or Section 63A-5-205:

(a) may not be the basis for a protest or other action from a prospective bidder, offeror, or contractor under Section 63G-6a-1603 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.

 

R23-23-7. 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 63A-5-205.

(1) Demonstrating Compliance with Health Insurance Requirements. A Contractor (including Design Professional) shall demonstrate compliance with Subsection 63A-5-205(6)(a) or (b) at the time of execution of each initial contract described in Subsection 63A-5-205(3).

(a) The compliance is subject to an audit by the Department of Administrative Services, the Division or the Office of the Legislative Auditor General.

(b) A Contractor (including Design Professional) subject to Subsection 63A-5-205(3) shall demonstrate to the 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 Division. The form shall also require compliance with Subsection R23-23-5(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 Division 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.

(2) For purposes of this Rule R23-23-7, actuarially equivalency is achieved by meeting or exceeding the commercially equivalent benchmark for the qualified health insurance coverage identified in Subsection 63A-5-205(1)(e) that is provided by the Department of Health, in accordance with Subsection 26-40-115(2).

(3) The health insurance must be available upon the first day of the calendar month following sixty (60) days from the date of hire.

(4) Any contract subject to this Rule shall contain a provision requiring compliance with this Rule from the time of execution and throughout the duration of the contract.

(5) Hearing and Penalties.

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

(b) Penalties that may be imposed by Board or Division. The penalties that may be imposed by the Board or the Division if a contractor, consultant, subcontractor or subconsultant, at any tier, intentionally violates the provisions of Subsections (3) through (10) of 63A-5-205 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 percent of the amount necessary to purchase qualified health insurance coverage for an employee and the 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 63A-5-205 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 Subsection R23-23-7(5)(c)(i) as provided in Subsection 63A-5-205(8)(b). An employee has a private right of action only against the employee's employer to enforce the provision of Subsection 63A-5-205(8).

 

R23-23-8. Not Create any Contractual Relationship with any Subcontractor or Subconsultant.

Nothing in this Rule shall be construed as to create any contractual relationship whatsoever between the State of Utah, the Board, or the Division with any subcontractor or subconsultant at any tier.]

R23-23-1. Purpose.

The purpose of this rule is to comply with the provisions of Section 63A-5-205.5.

 

R23-23-2. Authority.

This rule is authorized under Subsection 63A-5-103(2)(a), which directs the Utah State Building Board to make rules necessary for the discharge of the duties of the Division of Facilities Construction and Management as well as Section 63A-5-205.5 which requires this rule related to health insurance provisions in certain design and/or construction contracts.

 

R23-23-3. Demonstration of Compliance.

(1) At such time as a contractor becomes subject to the requirements of Section 63A-5-205.5, the contractor shall obtain and submit to the director a written Statement of Compliance in the form published on the division's website.

(2) At such time as a subcontractor of a contractor becomes subject to the requirements of Section 63A-5-205.5, the contractor shall obtain from the subcontractor a written Statement of Compliance in the form published on the division's website.

 

R23-23-4. Compliance Subject to Audit.

A contractor or subcontractor's compliance with Section 63A-5-205.5 is subject to an audit by the division or the Office of the Legislative Auditor General.

 

R23-23-5. Penalties.

The penalties that may be imposed if a contractor or subcontractor intentionally violates the provisions of Section 63A-5-205.5 may include:

(1) a three-month suspension of the contractor or subcontractor from entering into future contracts with the state upon the first violation;

(2) a six-month suspension of the contractor or subcontractor from entering into future contracts with the state upon the second violation;

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

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

 

R23-23-6. Benchmark Available on Division's Website.

The commercially equivalent benchmark for the qualified health insurance coverage that is provided by the Department of Health in accordance with Utah Code Subsection 26-40-115(2) is available on the division's website.

 

KEY: health insurance, contractors, contracts, contract requirements

Date of Enactment or Last Substantive Amendment: [July 22, 2016]2018

Notice of Continuation: June 10, 2014

Authorizing, and Implemented or Interpreted Law: 63A-5-103([1]2)([e]a); 63A-5-205.5

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