Committees pass bills ending workers’ comp fund

Legislators voted out of committee Thursday a bill that would close new claims to the Workers’ Compensation Commission’s Death and Permanent Total Disability Trust Fund, and eventually end the fund completely.

Meeting in special session, legislators in both the House and Senate Insurance and Commerce Committees voted to pass their chamber’s version with little discussion.

The Death and Permanent Total Disability Trust Fund provides benefits to seriously injured employees and dependents of those killed on the job.

The legislation by Rep. Doug House, R-North Little Rock, and Sen. Greg Standridge, R-Russellville, would close the fund to new claims on June 30, 2019, while existing claims are slowly paid down over decades. Meanwhile, new claims would be handled by employers and their insurers.

Funding comes from a 3% tax paid by employers on their workers’ comp premiums, while self-insured companies, including many of the state’s largest employers, pay an equivalent.

According to Barbara Webb, Arkansas Workers Compensation chief executive officer, the fund has $100 million in reserve but $230 million in obligations. The reserves are being reduced $5 million a year because the commission is paying out $15 million in claims but only collecting $10 million in revenues. An actuarial study found that the fund will go bankrupt in six to eight years because of increasing payments.

Webb said the fund is paying about 1,400 claims, with another 400-500 claims that could become obligations if claimants reach the wage losses – currently $209,950 – that are first paid by insurance companies. Some claims have been paid since 1970.

Arkansas is the last state that continues to maintain such a fund.

An earlier version of the bill would have closed the fund Jan. 1, 2017, but it drew opposition from the Arkansas State Chamber of Commerce, which wanted measures taken to help businesses adjust to their higher insurance costs.

The bill also had recently been changed to cut the premium tax to no more than 1.5% once the liabilities are paid.

ARKANSAS WORKS, PUBLICITY RIGHTS
Legislators in both House and Senate committees also voted to restore the original sunset date of Dec. 31, 2021, for Arkansas Works, the state program that uses federal Medicaid dollars to purchase private health insurance for adults with incomes up to 138% of the federal poverty level. As of the end of January, 267,590 Arkansans were eligible for coverage.

Under legislation passed during the recent fiscal session, the program was set to expire at the end of this year, but Gov. Asa Hutchinson vetoed that date as part of an arrangement with Republican senators who oppose the program. At the time, Arkansas Works had majority support as a policy but fell just short of the three-fourths majority needed for funding. When the Legislature failed to override the veto, the 2021 ending date stood.

Some questioned if that measure will stand up in court. Changing the date through legislation is meant to address those concerns.

Legislators in House and Senate committees also voted to pass the Frank Broyles Publicity Rights Act of 2016, which is meant to protect likenesses, images and signatures of individuals from unauthorized commercial use. The bill was inspired by attempts to use the likeness of University of Arkansas Athletic Director Frank Broyles.

Among the other bills passed by committees Thursday were those that would require school and general elections held in November to be on the same ballot and in the same polling place; prohibit the Department of Education from declaring any schools to be under academic distress for one year, and to suspend school ratings over that time; and reconstitute levee boards.