State lawyers seek $50M from compensation fund - East Valley Tribune: Business

State lawyers seek $50M from compensation fund

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Posted: Wednesday, August 13, 2003 9:28 am | Updated: 1:09 pm, Thu Oct 6, 2011.

State lawyers are seeking to force the state’s largest wo rkers’ compensation insurance company to fork over $50 million in exchange for some buildings it may not want.

Chief assistant attorney general Robert Myers wants a court order forcing the State Compensation Fund to transfer $50 million to the state General Fund.

Myers, in legal papers filed in Maricopa County Superior Court, said the compensation fund and its managers must obey state lawmakers who ordered the transfer.

That argument, though, is getting a fight from attorneys for the compensation fund.

The $50 million was supposed to go towards balancing the budget for the fiscal year that ended June 30. As it turned out, revenue was higher than anticipated and the money was not needed to keep the state from unconstitutionally going in the red.

But there is $50 million less of surplus for the state.

Potentially more significant, the legal battle will determine whether lawmakers can tap the compensation fund in future years when state revenue again falls short of expectations.

The legal issue is who owns the State Compensation Fund.

State law requires companies to either self-insure or purchase coverage to pay for employees who are injured on the job. About two thirds buy their coverage through the compensation fund.

Although originally set up by the Legislature in 1925, a start-up loan was repaid. And while it was part of the state Industrial Commission, it has been its own agency since 1968, operated by a manager appointed by the governor.

Compensation fund managers had been willing to purchase state buildings to help generate immediate cash to balance the budget.

They even had tentatively settled on taking title to the Arizona State Hospital in Phoenix.

But in return they wanted a state law spelling out that assets are held in trust for employers and their workers — language designed to prevent future involuntary raids.

While the Senate gave unanimous approval, the House balked and the compensation fund refused to surrender the money.

Bill Jones, one of the lawyers for the compensation fund, said he still hopes the issue can be resolved without having a judge make a final decision.

He said, though, his client believes that still requires lawmakers to concede they do not have unilateral authority to raid compensation fund assets.

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