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| | Arizona Court of Appeals Overturns Lower Court Decision And States That Lawmakers Can Access State Compensation Fund To Balance The Budget.
By Lonce LaMon - November 24, 2012
Arizona lawmakers can access funds from the Arizona State Compensation Fund to balance the budget, the Court of Appeals ruled Friday. Reversing a lower court ruling, the judges said the Legislature authorized the collection of money from employers. Therefore, lawmakers are free to take that money for other uses.
Judge Maurice Portley, writing for the unanimous court, acknowledged that the money in the account is earmarked to pay the medical bills and lost wages of workers who are injured on the job, but Portley said attorneys for the fund as well as employer groups presented no evidence that taking nearly $4.7 million from the fund would prevent it from being able to meet its obligations.
The Industrial Commission, which administers workers' compensation laws in Arizona, also maintains a special fund for cases in which an employer has not obtained workers’ compensation insurance. It also provides coverage for workers who, having been injured elsewhere, are hurt again. That is designed to encourage companies to hire these previously injured workers. The account is funded by a special levy on employers.
Lawmakers, looking to balance the 2009 budget, voted to take money from various special accounts, ranging from the Central Arizona Project to tobacco-education funds. The special fund at the Industrial Commission was one of those on the list. The commission sued, as did business groups, contending the "sweep'' exceeded legal authority.
Two years ago, Maricopa County Superior Court Judge Larry Grant ruled that the governor and lawmakers broke the law. He said the fund is legally required to hold the money "in trust'' for the benefit of injured workers.
An appeal to the Arizona Supreme Court remains possible, not so much because of the amount of money but because of the precedent the ruling could set.
During the legal fight, Farrell Quinlan, director of the Arizona chapter of the National Federation of Independent Business, said employers have a financial interest in the workers' compensation system being solvent. He said that's what made Grant's original ruling significant.
"The court agreed with National Federation of Independent Business and other plaintiffs that the special fund was never intended to be an optional piggy bank ready to be broken open when the state can't balance its budget,'' he said.
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