23-1065

23-1065. Special fund; purposes; investment
committee

A. The industrial commission may direct the payment into the state treasury of not
to exceed one and one-half per cent of all premiums received by the state compensation
fund and private insurance carriers during the immediately preceding calendar year. The
same percentage shall be assessed against self-insurers based on the total cost to the
self-insured employer as provided in section 23-961, subsection J. Such assessments
shall be computed on the same premium basis as provided for in section 23-961,
subsections J, K, L, M and N and shall be no more than is necessary to keep the special
fund actuarially sound. Such payments shall be placed in a special fund within the
administrative fund to provide, at the discretion of the commission, such additional
awards as may be necessary to enable injured employees to accept the benefits of any law
of the state or of the United States, or both jointly, for promotion of vocational
rehabilitation of persons disabled in industry.

B. In claims involving an employee who has a preexisting industrially-related
permanent physical impairment of the type specified in section 23-1044, subsection B and
who thereafter suffers an additional permanent physical impairment of the type specified
in such subsection, the claim involving the subsequent impairment is eligible for
reimbursement, as provided by subsection D of this section, according to the following:

1. The employer in whose employ the subsequent impairment occurred or its insurance
carrier is solely responsible for all temporary disability compensation to which the
employee is entitled and for an amount equal to the permanent disability compensation
provided by section 23-1044, subsection B for the subsequent impairment. If the employee
is determined to have sustained no loss of earning capacity after the medically
stationary date, the employer or carrier shall pay him as a vocational rehabilitation
bonus the amount calculated under this paragraph as a lump sum, which shall be a credit
against any permanent compensation benefits awarded in any subsequent proceeding. The
amount of the vocational rehabilitation bonus for which the employer or carrier is
responsible under this paragraph shall be calculated solely on physical, medically rated
permanent impairment and not on occupational or other factors.

2. If the commission determines that the employee is entitled to compensation for
loss of earning capacity under section 23-1044, subsection C or permanent total
disability under section 23-1045, subsection B, the total amount of permanent benefits
for which the employer or carrier is solely responsible under paragraph 1 of this
subsection shall be expended first, with monthly payments made according to the loss of
earning capacity or permanent total disability award. The employer or carrier and the
special fund are equally responsible for the remaining amount of compensation for loss of
earning capacity under section 23-1044, subsection C or permanent total disability under
section 23-1045, subsection B. This paragraph shall not be construed as requiring payment
of any benefits under section 23-1044, subsection B in any case in which an employee is
entitled to benefits for loss of earning capacity under section 23-1044, subsection C or
permanent total disability benefits under section 23-1045, subsection B.

C. In claims involving an employee who has a preexisting physical impairment which
is not industrially-related and, whether congenital or due to injury or disease, is of
such seriousness as to constitute a hindrance or obstacle to employment or to obtaining
reemployment if the employee becomes unemployed, and the impairment equals or exceeds a
ten per cent permanent impairment evaluated in accordance with the American medical
association guides to the evaluation of permanent impairment, and the employee thereafter
suffers an additional permanent impairment not of the type specified in section 23-1044,
subsection B, the claim involving the subsequent impairment is eligible for
reimbursement, as provided by subsection D of this section, under the following
conditions:

1. The employer in whose employ the subsequent impairment occurred or its carrier
is solely responsible for all temporary disability compensation to which the employee is
entitled.

2. The employer had knowledge of the permanent impairment at the time the employee
was hired, or that the employee continued in employment after the employer acquired such
knowledge.

3. The employee's preexisting impairment is due to one or more of the following:

(a) Epilepsy.

(b) Diabetes.

(d) Arthritis.

(e) Amputated foot, leg, arm or hand.

(f) Loss of sight of one or both eyes or a partial loss of uncorrected vision of
more than seventy-five per cent bilaterally.

(g) Residual disability from poliomyelitis.

(h) Cerebral palsy.

(i) Multiple sclerosis.

(j) Parkinson's disease.

(k) Cerebral vascular accident.

(l) Tuberculosis.

(m) Silicosis.

(n) Psychoneurotic disability following treatment in a recognized medical or mental
institution.

(o) Hemophilia.

(p) Chronic osteomyelitis.

(q) Hyperinsulinism.

(r) Muscular dystrophies.

(s) Arteriosclerosis.

(t) Thrombophlebitis.

(u) Varicose veins.

(v) Heavy metal poisoning.

(w) Ionizing radiation injury.

(x) Compressed air sequelae.

(y) Ruptured intervertebral disk.

4. The employer or carrier and the special fund are equally responsible for the
amount of compensation for loss of earning capacity under section 23-1044, subsection C
or permanent total disability under section 23-1045, subsection B.

D. The employer or insurance carrier shall notify the commission of its intent to
claim reimbursement for an eligible claim under subsection B or C of this section not
later than the time the employer or insurance carrier notifies the commission pursuant to
section 23-1047, subsection A. Upon receiving notice the commission may expend funds
from the special fund created by this section for travel and discovery procedures and for
the employment of such independent legal, medical, rehabilitation, claims or labor market
consultants or experts as may be deemed necessary by the commission to assist in the
determination of the liability of the special fund, if any, under subsection B or C of
this section. In the event there is any dispute regarding liability to the special fund
pursuant to subsection B or C of this section, the commission shall not delay the
issuance of a permanent award pursuant to section 23-1047, subsection B.

E. If the special fund created by this section is determined to be liable under
either subsection B or C of this section, the employer or insurance carrier which is
primarily liable shall pay the entire amount of the award to the injured employee and the
commission shall by rule provide for the reimbursement of the employer or insurance
carrier on an annual basis. In any case arising out of subsection B or C of this
section, the written approval of the special fund is required for the compromise of any
claim made pursuant to section 23-1023. In any such case, written approval shall not be
unreasonably withheld by the special fund, carrier, self-insured employer or other person
responsible for the payment of compensation. Failure to obtain the written approval of
the special fund shall not cause the injured worker to lose any benefits but ends the
special fund's liability for reimbursement and makes the employer or carrier solely
responsible for the payment of the remaining benefits.

F. The employer or insurance carrier shall make its claim for reimbursement to the
commission no later than November 1 each year, for payments made pursuant to subsection B
or C of this section during the twelve months prior to October 1 each year. Claims shall
be paid before December 31 each year. If the total annual reserved liabilities of the
special fund obligated under subsections B and C of this section exceed six million
dollars, as determined by the annual actuarial study performed pursuant to subsection I
of this section, the commission, after notice and a hearing, may levy an additional
assessment under subsection A of this section of up to one-half per cent to meet such
liabilities. Any insurance carrier or employer who may be adversely affected by the
additional assessment may at any time prior to the sixtieth day after such additional
assessment is ordered file a complaint challenging the validity of the additional
assessment in the superior court in Maricopa county for a judicial review of the
additional assessment. On judicial review the determination of the commission shall be
upheld if supported by substantial evidence in the record considered as a whole.

G. In the event the injured employee is awarded additional compensation, under
subsection A of this section, the commission retains jurisdiction to amend, alter or
change the award upon a change in the physical condition of the injured employee
resulting from the injury.

H. On receiving notice that the special fund may be liable under this chapter, the
commission may spend monies from the special fund established by this section for
expenses that are necessary to assist in the processing, payment or determination of
liability of the fund. These expenses may include travel, discovery procedures and
employing any legal, medical, rehabilitation, claims or labor market consultant, examiner
or expert.

I. The commission shall cause an annual actuarial study of the special award fund
to be made by a qualified actuary who is a member of the society of actuaries. The
actuary shall make specific recommendations for maintaining the fund on a sound actuarial
basis. The actuarial study shall be completed on or before September 1.

J. The special fund of the commission consists of all monies from premiums and
assessments, except penalties assessed pursuant to this chapter, received and paid into
the fund, property and securities acquired by the use of monies in the fund, interest
earned on monies in the fund and other monies derived from the sale, use or lease of
properties belonging to the fund. The special fund created by this section shall be
administered by the director of the industrial commission, subject to the authority of
the industrial commission. The director of the commission with approval of the
investment committee, in the administration of the special fund, may provide loans,
subject to repayment, budgetary review and legislative appropriation, to the
administrative fund for the purposes and subject to section 23-1081, acquire real
property and acquire or construct a building or other improvements on the real property
as may be necessary to house, contain, furnish, equip and maintain offices and space for
departmental and operational facilities of the commission. The commission when using
space constructed pursuant to this section shall make equal payments of rent on a
semiannual basis which shall be deposited in the special fund. The investment committee
shall determine the amount of the rent which must be at least equal to or greater than
that determined by the joint committee on capital review for buildings of similar design
and construction as provided by section 41-792.01.

K. There is established an investment committee consisting of the director and the
chairman of the commission and three persons knowledgeable in investments and economics
appointed by the governor. Of the members appointed by the governor, one shall be a
professional in the investment business, one shall represent workers' compensation
insurers and one shall represent self-insurers. The term of members appointed by the
governor is three years which shall begin on July 1 and end on June 30 three years
later. The committee shall prescribe by rule investment policies and supervise the
investment activities of the special fund.

L. Each member of the investment committee, other than the director of the
commission, is eligible to receive from the special fund:

1. Compensation of fifty dollars for each day while in actual attendance at
meetings of the investment committee.

2. Reimbursement for expenses pursuant to title 38, chapter 4, article 2.

M. The investment committee shall meet at least once every month.

N. The investment committee shall periodically review and assess the investment
strategy.

O. The investment committee, by resolution, may invest and reinvest the surplus or
reserves in the funds established under this chapter in any legal investments authorized
under section 38-719.

P. In addition to the investments authorized under section 38-719, the investment
committee may approve the investment in real property and improvements on real property
to house and maintain offices of the commission, including spaces for its departmental
and operational facilities. Title to the real estate and improvements on the real estate
vests in the special fund of the commission, and the assets become part of the fund as
provided by this section.

Q. The investment committee may appoint a custodian for the safekeeping of all or
any portion of the investments owned by the special fund of the commission and may
register stocks, bonds and other investments in the name of a nominee. Except for
investments held by a custodian or in the name of a nominee, all securities purchased
pursuant to subsection O of this section shall promptly be deposited with the state
treasurer as custodian thereof, who shall collect the dividends, interest and principal
thereof, and pay, when collected, into the special fund. The state treasurer shall pay
all vouchers drawn for the purchase of securities. The director may sell any of the
securities as the director deems appropriate, if authorized by resolution of the
investment committee, and the proceeds therefrom shall be payable to the state treasurer
for the account of the special fund upon delivery of the securities to the purchaser or
the purchaser's agent.