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Workers-comp bill stalled — for now

Legal questions, doubts about the asking price and private industry opposition conspired to delay — and perhaps kill — a controversial proposal to privatize the state's Workers Compensation Fund.

SB170, sponsored by Sen. Curt Bramble, R-Provo, would have removed the governor's power to appoint members to the board of directors — the final government tie to the quasi-public insurance fund.

But a major hangup to the deal was how much the state would be paid for its founding interest in the fund. The bill proposed $50 million, and some lawmakers questioned whether that was a fair price.

The breakaway from the state is being pursued so the fund can retain the $30 million business it does in Idaho.

Workers Comp serves what is called the "residual market," acting as the carrier of last resort for those whose high-risk occupations prevent them from getting insurance elsewhere.

Overall, it has 60 percent of the market in Utah — a number its competitors would like to see decreased.

Although the privatization proposal was pursued as early as last fall at the behest of Gov. Mike Leavitt, it was the governor who pulled back from going ahead with the deal during the 2003 session.

Leavitt, an insurance man by profession, said more study is needed and legal questions have to be answered before the fund is allowed to essentially become a mutual insurance company — as proposed by Bramble's measure.

The governor's brother, Dane Leavitt, sent three memos to lawmakers urging rejection of the proposal, saying the fund should convert to a stock company and have the residual market be split among private insurance carriers.

Dane Leavitt is chief executive officer of the Leavitt Group, which the governor also owns an interest in.

Leavitt has since requested an additional valuation of the fund and has promised he'll call a special session should the deal become workable.