Court Rules in Favor of Arizona SCF, Injured Workers

April 16, 2004

Maricopa County Superior Court ruled this week that the Arizona Legislature violated the State Constitution last Spring when it passed a bill (HR 2002) requiring SCF of Arizona to transfer $50 million to the General Fund.

In granting SCF’s motion for summary judgment, Superior Court Judge Rebecca Albrecht ruled that such a required transfer “interferes with the contracted rights, responsibilities and expectations” of SCF policyholders.

SCF of Arizona is the state’s largest provider of workers’ compensation insurance. Although it was established in 1926 through enabling legislation, Albrecht pointed out in her ruling the statutory provisions governing SCF “provide that the assets must be used solely to pay workers’ compensation benefits and administrative expenses of the Fund.”

She also wrote, “The relationship between the Fund and the employers is contractual. The directors of the Fund bear a fiduciary duty to make its decisions in the best interest” of the policyholders it insures.

Former Arizona Supreme Court Chief Justice Stanley Feldman, who argued the case for SCF, said he is pleased with the ruling.

“The judge correctly decided the case on the merits and not on procedural issues,” Feldman said. “The ruling addresses the issue of who actually owns SCF’s assets, and the judge ruled the assets are held in trust for the policyholders who buy the insurance and for their workers.”

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