Feb. 24, 2006 – A discrepancy in the V.I. Code has pushed the Government Insurance Fund – from which workmen's compensation claims are paid – toward insolvency, according to Ira Mills, director of the Office of Management and Budget, who testified at a Labor and Agriculture Committee meeting on St. Croix on Friday.
Mills said that provisions in the law raised the cap on local and off-island benefits for workmen's compensation beneficiaries without adjusting the premium rates. "Since the premiums collected go toward funding the claims, it is impossible for us to pay out increased benefits without raising the insurance premiums," Mills said.
Labor Commissioner Cecil R. Benjamin said the cap on off-island benefits was raised from $75,000 to $200,000, while the cap on local benefits was raised from $25,000 to $75,000. "Because of this, we have had a number of employees traveling off-island for medical care," he said. "As a result, our healthcare system in the territory has also been negatively impacted, since our workers taking business away from the local hospitals."
Mills said that a change in the territory's working class structure has also affected the fund. "A few years ago, we saw that most of individuals paying into the fund were working in service oriented jobs," he said. "What we're seeing now is an increase in construction based jobs, where there are more injuries, and subsequently an increase in injury-related claims."
Finance Commissioner Bernice Turnbull said the V.I. Code has to be streamlined to include more stringent provisions for enforcement. "Sometimes when we visit these construction sites, I have people telling me that they're not employing anyone to help with the building – that they, personally, are simply constructing their own homes," she said.
"What do I do in a situation like that? The law says I have to believe what they're saying. There is no way for me to go and check whether they're telling the truth."
Mills and Turnbull also said that various government departments and agencies have been delinquent in contributing to the fund, which has recently resulted in a $2 million deficit. "That's why we put in a $3 million supplemental budget request," Turnbull said. "And that money should cover us until the end of the fiscal year."
Turnbull said that if the supplemental budget request is approved, Finance would have enough money to fund the government's debt and pay off the $1.2 million worth of claims which have been processed and are pending at the Finance Department.
While senators said the budget request would be approved, they asked Turnbull and Wanda Morris, administrator of the workmen's compensation program under the Labor Department, how they plan to keep the fund solvent after the close of the fiscal year.
Morris said that while Labor is responsible for processing workmen's compensation claims, the department does not have direct access to the fund itself, and cannot tell "at any point in time" how much money is available to pay the claims.
Turnbull, who said she learned the fund's balance earlier this month, said Finance would be conducting an actuarial study of the entire workmen's compensation program.
Present at Friday's meeting were Sens. Barshinger, Juan Figueroa-Serville, Norman Jn Baptiste, Terrence Nelson and Ronald E. Russell.
Senators Pedro "Pete" Encarnacion, Neville James and Celestino A. White Sr. were absent.
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