An Arizona appeals court has ruled that the Arizona Legislature acted within its authority when it voted to dip into a state fund meant to provide workers' compensation benefits so that the Legislature could balance the state's budget.
The court held that because the Legislature created this fund in the first place, the Legislature had a right to use the fund for other pressing government needs. Furthermore, the court indicated that while the fund was to provide for medical expenses and lost wages under Arizona's workers' compensation laws, the court found no proof that Arizona workers would actually lose benefits because of the Legislature's decision.
Attorneys for the fund and other interested groups contended that, as a matter of principle, the state held the fund "in trust" for the benefit of injured workers. As a matter of law, they argued, this meant that the money in the fund must go to expenditures that benefit those workers directly. The court rejected this argument.
The fund that the Legislature tapped for other state projects does not make up the core of Arizona's workers' compensation system. Employers must provide their own workers' compensation insurance at their expense.
This fund, which receives revenues via a surcharge on Arizona employers, covers the medical expenses and lost wages of injured workers when their employers, for whatever reason, do not carry workers' compensation insurance. As an incentive for employers to hire injured workers, it also covers certain pre-existing injuries that get re-aggravated while on the job.
Nevertheless, this court decision is of serious concern to advocates for injured workers, as it is difficult to see why the money in this state fund should be used for anything other than its intended purpose.
Source: Yuma Sun, "Arizona gets OK to raid fund for workers," Howard Fischer, Nov. 23, 2012