California Insurance Commissioner Steve Poizner is filing a lawsuit challenging a plan to sell part of a state fund that pays claims to injured workers. Gov.Schwarzenegger and lawmakers agreed to the sale to help close the massive hole in the state budget.
Poizner said the billion dollar sale of the State Compensation Insurance Fund would violate the state constitution. The fund is maintained by both the state and private investors. Poizner calls the sale an illegal “accounting gimmick.”
“To pull a billion dollars out of the state fund will weaken the state fund significantly," said Poizner. "And, our experts here at the State Department of Insurance estimate that the state fund may have to raise rates by thousands of dollars per year per policy in order to make up for this billion dollar loss.”
Poizner said most of the fund’s 200,000 policyholders are small businesses that can’t afford a hike in premiums. He said the average small business currently pays about 5,000 dollars in worker’s comp premiums each year. A spokesman for the governor said the sale does not violate the law and is necessary to shrink the state’s multi-billion dollar deficit.
