DAR File No. 40440
This rule was published in the June 15, 2016, issue (Vol. 2016, No. 12) of the Utah State Bulletin.
Administrative Services, Facilities Construction and Management
Health Reform -- Health Insurance Coverage in State Contracts -- Implementation
Notice of 120-Day (Emergency) Rule
DAR File No.: 40440
Filed: 05/23/2016 12:24:57 PM
Purpose of the rule or reason for the change:
The purpose of this rule is to comply with the provisions of Section 63A-5-205. H.B. 282 from the 2016 General Session updated Section 63A-5-205, 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. (Editor's Note: A corresponding proposed amendment to Rule R23-23 is under Filing No. 40441 in this issue, June 15, 2016, of the Bulletin.)
Emergency rule reason and justification:
Regular rulemaking procedures would place the agency in violation of federal or state law.
Justification: H.B. 282 (2016) is currently in effect, and this rule is out of compliance.
State statutory or constitutional authorization for this rule:
- Section 63A-5-205
- Subsection 63A-5-103(1)(e)
Anticipated cost or savings to:
the state budget:
There are no anticipated costs or savings that are expected to state budget as a result of this rule. The changes to this rule only incorporate the changes in the statute. The statute directly determines the affects upon budget, and not this rule.
There are no anticipated costs or savings to local government budget. The changes to the rule do not affect local government.
There are no anticipated costs or savings that are expected to small business 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 that are expected as a result of this rule. The changes to this rule only incorporate the changes in statute. The statute directly determines costs for affected persons 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 the potential fiscal impact and not this rule.
Kimberly Hood, Executive Director
The full text of this rule may be inspected, during regular business hours, at the Division 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:
- Alan Bachman at the above address, by phone at 801-538-3105, by FAX at 801-538-3313, or by Internet E-mail at firstname.lastname@example.org
- Nicole Alder at the above address, by phone at 801-538-3240, by FAX at , or by Internet E-mail at email@example.com
This rule is effective on:
Eric Tholen, Director
R23. Administrative Services, Facilities Construction and Management.
R23-23. Health Reform -- Health Insurance Coverage in State Contracts -- Implementation.
The purpose of this rule is to comply with the provisions of Section 63A-5-205.
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.
(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 Subsection
below, this Rule R23-23 applies to all design
or construction contracts entered into by the Division or the
on or after July 1, 2009], and
(a) applies to a prime contractor if the
prime contract is in the amount of
$1,500,000 or greater]; and
(b) applies to a subcontractor if the
subcontract is in the amount of
$750,000 or greater.]
(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. Contractor to Comply with Section 63A-5-205.
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.
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.
The following requirements must be met by a contractor
(including consultants, designers and others under contract with
the Division) that is subject to the requirements of this Rule no
later than the time the contract is entered into or
(a) demonstrate compliance by a written certification to
the 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 employee's
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
is subject to the requirements of this Rule. (2) Recertification. The 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 (10) 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 63A-5-205(1)(e) and defined in Section 26-40-115 is met
by the contractor if the contractor provides the 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.]
For purposes of this Rule R23-23-7[ (3)], actuarially equivalency is achieved by
meeting or exceeding the
[ requirements of Section 26-40-115 which are also delineated
on the DFCM website at
4]) The health insurance must be available upon
the first day of the calendar month following sixty (60) days from
the date of hire.
(5) Architect and Engineer Compliance Process. Architects
and engineers that are subject to this Rule must demonstrate
compliance with this Rule in any annual submittal under Section
63G-6-702. 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 this
Rule. (6) General (Prime) Contractors Compliance Process.
Contractors that are subject to this Rule must demonstrate
compliance with this Rule 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 this Rule.]
7]) [ Notwithstanding any prequalification process, ][ a]ny 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.
8]) 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
this Rule R23-23, 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 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
this rule] shall be liable to the employee for
health care costs that would have been covered by qualified health
(ii) An employer has an affirmative
defense to a cause of action under Subsection R23-23-7(
8])(c)(i) as provided in Subsection 63A-5-205
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.
KEY: health insurance, contractors, contracts, contract requirements
Date of Enactment or Last Substantive Amendment: May 23, 2016
Notice of Continuation: June 10, 2014
Authorizing, and Implemented or Interpreted Law: 63A-5-103(1)(e); 63A-5-205
More information about a Notice of 120-Day (Emergency) Rule is available online.
The Portable Document Format (PDF) version of the Bulletin is the official version. The PDF version of this issue is available at https://rules.utah.gov/publicat/bull-pdf/2016/b20160615.pdf. The HTML edition of the Bulletin is a convenience copy. Any discrepancy between the PDF version and HTML version is resolved in favor of the PDF version.
Text to be deleted is struck through and surrounded by brackets ([
example]). Text to be added is underlined (). Older browsers may not depict some or any of these attributes on the screen or when the document is printed.
For questions regarding the content or application of this rule, please contact Alan Bachman at the above address, by phone at 801-538-3105, by FAX at 801-538-3313, or by Internet E-mail at firstname.lastname@example.org; Nicole Alder at the above address, by phone at 801-538-3240, by FAX at , or by Internet E-mail at email@example.com. For questions about the rulemaking process, please contact the Division of Administrative Rules.