Arizona: Judge rules against state in use of workers' comp funds
A Maricopa County Superior Court judge examined a lawsuit filed by the Industrial Commission of Arizona and later joined by the National Federation of Independent Business Small Business Legal Center and other organizations. The case centers on S.B. 1001, signed into law in January 2009, which authorized the transfer of more than $4 million from the commission's special fund. The fund provides benefits to injured workers when an employer is uninsured or the insurance carrier is insolvent.
The commission's legal move temporarily stopped the transfer, pending the outcome of the lawsuit. Arizona officials argued that the money could simply be repaid by increasing workers' comp premiums. However, the agency stated in its filing that the legislation violated the state's Constitution and that Arizona law clearly states that the money from the fund can only be used to cover workers' comp matters.
Farrell Quinlan, director of the Arizona chapter of the NFIB, said diverting the funds to cover budget shortfalls threatened the solvency of the workers' comp system.
"The special fund was never intended to be an optional source of revenue to assist the state in balancing its budget," he said. "Monies in the special fund are not public funds. They are by law designated to be used only for workers' compensation costs."
Judge Larry Grant agreed with the argument, ruling that money in the special fund trust was not public and could not be transferred.
Read more at the WorkersComp Forum homepage.
August 9, 2010
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