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Court rules Legislature can take money from workers comp fund

The Arizona Court of Appeals ruled Friday that the Legislature can sweep money from a workers’ compensation fund that provides additional awards for catastrophically injured workers.

The court overturned a 2009 trial court ruling that found the Industrial Commission of Arizona’s Special Fund untouchable by the Legislature.

The Court of Appeals found that the Special Fund’s monies are “public funds subject to appropriation. “

The case is one of at least six “sweeps” lawsuits filed against the state when the 49th Legislature raided their various specialized money for transfer to the general fund. The Legislature in 2009 had the task of keeping the state financially afloat during a massive economic downturn.  It raided more than 100 of the type funds.

Each of the plaintiffs in those lawsuits made the same basic argument that the money in their respective funds wasn’t the state’s to take.

The Legislature swept $4.7 million from the Industrial Commission’s Special Fund, which was designed to provide extra money for workers whose injuries permanently disabled them to the point of not being able to care for themselves. It also provides compensation for costs related to a second injury after workers suffer an injury such as a loss of a limb.

Judge Larry Grant of Maricopa County Superior Court found that the Special Fund monies were not public funds because they were insurance proceeds held in trust.

The Court of Appeals disagreed, saying the monies are public funds because the Legislature can amend or dissolve the Special Fund, and because money goes to the state treasurer for the benefit of the Industrial Commission.

Grant’s ruling prevented the transfer of the money, but future Legislatures will know where they stand on the issue.

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