Utah workers comp fight is far from over

The state's fight to retain its hold on the Workers Compensation Fund of Utah will not end with Gov. Mike Leavitt's resignation next week.

Instead, Leavitt was joined Thursday at a press conference by the four other elected state officers who vowed to "vigorously" defend the state against a lawsuit filed by fund officials earlier this month.

The suit, in 3rd District Court, asks a judge to determine who "owns" the assets of the fund — its policyholders or the state of Utah.

Any question that soon-to-be-governor Olene Walker might take a position other than Leavitt's was quickly answered with her comments.

"I want it strongly understood that I will not waver," Walker said, from the position "to keep the Workers Compensation Fund as it is constituted."

Walker and Leavitt were joined by Attorney General Mark Shurtleff, State Auditor Auston Johnson and State Treasurer Ed Alter, with Alter describing the fund as a "gorilla in the marketplace" throwing its tax-exempt status around and asking for incredible favors from Utah.

The suit "is completely unnecessary and a complete waste of taxpayers' money," Alter said.

Workers Compensation officials want the state to relinquish its statutory ability for the governor to appoint its board of directors, saying the tie links it too closely to Utah government for it to continue to write its out-of-state business through a for-profit subsidiary.

The change, it says, is necessary for the fund to remain financially viable because the out-of-state business helps it keep rates the second-lowest in the country. Other states have balked at the link, saying it is unfair for the fund, with its federal tax-exempt status, to compete in the same marketplace.

Fund executives, facing a Nov. 1 deadline to cease the $30 million in business it writes in Idaho, are in the beginning stages of divesting the for-profit subsidiary.

But in the meantime, they are hopeful a letter ruling by the Internal Revenue Service will allow them to continue to operate "as is" and seek privatization.

At one point, the fund was ready to "pay" Utah $50 million to settle the question of claim to assets, but Leavitt, joined by state elected officers and some lawmakers, say the $50 million doesn't come close to compensating the state for its interest in the fund.

Shurtleff, Alter, Johnson, Leavitt and Walker said taxpayers will be compromised if the privatization happens, with the fund walking away with hundreds of millions of taxpayer dollars.

"We stand by the belief that the Workers Compensation Fund belongs to the taxpayers," Shurtleff said.

Lane Summerhays, the fund's president and chief executive officer, said the assertions made by Utah officials paint an inaccurate and needlessly inflammatory picture.

"We have never asserted that these assets are owned by the management or the board of the company. They belong to the policyholders and those policyholders are the taxpayers of Utah."

Summerhays said that is the issue the court ultimately needs to resolve for everyone's sake.

"At the end of the day, the court will decide if the fund is owned by the policyholders or the state," he said.

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E-mail: amyjoi@desnews.com

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