Sale of California Workers’ Compensation Fund Assets Faces Challenge

California Insurance Commissioner Steve Poizner on Thursday, August 27, said he will file a lawsuit to have the sale of $1 billion in State Compensation Insurance Fund assets declared unconstitutional.

After a recommendation by California Gov. Arnold Schwarzenegger, a state budget revision in July authorized selling $1 billion in SCIF’s assets to bolster the state’s ailing general fund.

But Poizner said the budget revision violates a provision of California’s constitution that requires “appropriate legislation” to establish a workers’ comp system.

“The pilfering of funds used to pay the claims of injured workers to instead help fill the state budget gap is both unconscionable and unconstitutional,” the commissioner said in a statement. “This $1 billion sale of SCIF assets could not only endanger the solvency of SCIF, but is a direct affront to the state’s jobs and business climate.”

The lawsuit, naming California Department of Finance Director Michael Genest and State Treasurer Bill Lockyer as defendants, is expected to be filed in Sacramento County Superior Court in the coming days, the commissioner said.

Filed by Roberto Ceniceros of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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