Oregon Supreme Court Rules SAIF Not Immune from Lawsuits

July 31, 2007

The Oregon Supreme Court ruled the State Accident Insurance Fund Corp. can be sued for violations of federal constitutional rights.

The court said that SAIF can be considered a “person” under federal law and, unlike state agencies, is not immune from such lawsuits under the Eleventh Amendment of the U.S. Constitution.

SAIF is a state-chartered workers’ compensation insurance company that operates as a not-for-profit to provide coverage to more than 500,000 workers across Oregon.

The case resulted from a 1989 ruling by the state Workers’ Compensation Board, which ordered SAIF to pay John Johnson permanent total disability benefits as a result of a workplace injury.

SAIF conducted periodic reviews of Johnson’s condition, as required by law, before notifying him in September 2001 that it had determined he was entitled only to permanent partial disability benefits for a lesser amount than full disability benefits.

Johnson sued SAIF, alleging the company had violated his constitutional rights.

A trial court sided with SAIF, concluding the company was not a person. But the Oregon Court of Appeals reversed that decision and the Oregon Supreme Court affirmed.

In a ruling by Justice Thomas Balmer, the court concluded SAIF is not immune from lawsuits “and therefore is a ‘person’ for purposes of claims” partly because the state treasury is not liable for its obligations as a semi-independent corporation.

Rick Hanson, SAIF spokesman, said the company will study the ruling and consult with the Oregon Department of Justice and Gov. Ted Kulongoski.

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