1. Frank Nerat, Jr. "Precedent Pending, Unless Someone Speaks Up," Michigan Business, January 1987, p. 92.

  2. Harry G. Iwasko, Jr., to Bradley J. Smith in telephone conversation March 24, 1987.

  3. Tim Jones, "Classic Court Fight Pits State, Accident Fund," Detroit Free Press, August 6, 1984, p. A3.

  4. Public Act 245, Section 2, adopted 1911.

  5. Report of the Employers' Liability and Workmen's Compensation Commission, 1911, p. 26.

  6. Ibid.

  7. Public Act 10, Section l, enacted 1912.

  8. Ibid., Section 2.

  9. Ibid., Sections 4 and 5.

  10. Report of the Employers' Liability and Workmen's Compensation Commission, op. cit., p. 26.

  11. Ibid.

  12. Public Act 10, op. cit.

  13. Ibid, pp. 26-27.

  14. Ibid, p. 27.

  15. Public Act 206, Sections 9, 12, and 13, enacted 1917.

  16. Amerisure Insurance Company et al. vs. Coleman, brief filed by Michigan attorney general y Circuit Court, August 29, 1986, pp. 25-26.

  17. The history of Attorneys' General opinions can be found summarized in a number of briefs, memos, and releases of the Michigan Attorney General's office and the Accident Fund of Michigan.

  18. Office of the Attorney General, 1975-1976, No. 5147, p. 695.

  19. John F. Burton, Jr., Allan H. Hunt, and Alan B. Krueger, Interstate Variations in the Employers' Cost of Workers' Compensation, with Particular Reference to Michigan and the Other Great Lakes States (Ithaca, NY: Workers Disability Income Systems, Inc., February 1985), p. 53.

  20. Frank Nerat, Jr. to Bradley Smith in a telephone conversation, April 24, 1987.

  21. It should be pointed out that these three options assume the continued existence of Michigan's current workers' compensation system. Many would prefer some other form of state-provided health or welfare system to aid injured workers; others will argue that the workers' compensation statute should be abolished entirely and the cost for injuries borne by the injured parties, covered by other individual- or employer-provided insurance, or resolved through tort laws. Certainly other options abound. Here, however, we limit ourselves to discussing the Accident Fund under the current workers' compensation system.

  22. The idea that competition consists of the state taking action to decrease insurance company profits has been sharply criticized. In a truly free market, profits are no concern of the state. It is quite possible for competition to increase profits--in a competitive market, insurers have incentives to economize their expenses, improve efficiency, and improve their product through, for example, greater emphasis on safety training. These steps could increase profits even as premiums decrease in a highly competitive market. Furthermore, some level of profit is needed to attract insurers to the market, which increases competition and the availability of coverage for employers.

    Nevertheless, every report on the state of competition in the market under commissioners Baerwaldt and Coleman has included a passage along these lines (quoted here from page 25 of Coleman's January 15, 1987 report): "Higher loss ratios would be the expected result of an increase in competition and lower rates, and lower loss ratios would be the expected result of less competition and higher rates." Generally speaking, all of these reports have emphasized reduced profits as the primary sign of a competitive market.

  23. Jim Berquist to Bradley Smith in a telephone conversation, April 8, 1987.

  24. Gary Raid to Bradley Smith in a telephone conversation, April 9, 1987.

  25. Amerisure Insurance Company et al. vs. Coleman, brief filed by Michigan attorney general in Livingston County Circuit Court, October 6, 1986, p. 24.

  26. Dominic D'Annunzio to Bradley Smith in a telephone conversation, March 12, 1987.

  27. Fritz Lewis to Bradley Smith in a telephone conversation, March 31, 1987.

  28. Public Act 8, Section 1, enacted 1982.

  29. Harry G. Iwasko to Bradley Smith in a telephone conversation, March 24, 1987.

  30. John Lewis to Bradley Smith in a telephone conversation, April 8, 1987.

  31. Oregon Workers' Compensation Premium Summary, Calendar Year 1985, Oregon Workers' Compensation Department, December 1986, p. 5.

  32. This summary of activities in Oregon between 1982 and 1987 is derived from conversations with SAIFCO manager Gary Raid, consultant John Lewis, Milliman & Robertson's Jim Berquist (who performed the independent audit of SAIFCO), and John Burton of Cornell University. Berquist notes, "I would hesitate to draw conclusions about Michigan based on the situation in Oregon." While it is certainly wise to consider differences of time and place, Berquist, who favors the existence of state funds, offered no reason to suggest Oregon's experience would not be relevant to Michigan.

  33. Commissioner of Insurance, "Preliminary Report on the State of Competition in the Workers' Compensation Insurance Market," Executive Summary, January 15, 1987, p. 2.

  34. John Burton to Bradley Smith in a telephone conversation, March 16, 1987.

  35. Allan Hunt to Bradley Smith in a telephone conversation, March 16 1987.

  36. Memo from Michael Shpiece to Elizabeth Howe, September 15, 1983.

  37. How to Cut Workers' Compensation Costs in Michigan, United Auto Workers Community Action Program, 1981.

  38. It is worth noting that all five of these states have significant mining industries. As discussed earlier, mining interests have tended to favor state-run workers' compensation funds. Traditional manufacturing states that have state-run funds, such as Michigan and Ohio, are something of an oddity.

  39. Booz-Allen Consulting Actuaries, An Actuarial Audit for the Industrial Commission of Ohio, January 31, 1977, p. 1.

  40. Ibid. at p. 14.

  41. Arthur Anderson & Co., Bureau of Workers' Compensation, January 1980.

  42. Coopers & Lybrand, Post Review of Actuarial Audit of the Ohio State Insurance Fund as of December 31, 1980, September 1981.

  43. John F. Burton, Jr., Interstate Variations in the Employers' Costs of Workers' Compensation with Particular Reference to Ohio and Pennsylvania, January 1984, pp. 100-101.

  44. John Burton to Bradley Smith in a telephone conversation, March 16, 1987.

  45. In August 1983, the state attorney general ruled that the state does have an equity interest in the Accident Fund's surplus and assets. Tim Jones, in an article headlined "At Work on the State Accident Fund," (Detroit Free Press, September 25, 1983), gleefully discusses state efforts to gain control of the Fund: "Blanchard, recognizing the potential economic impact of its swelling surplus, moved in"; "the governor would like to invest [Accident Fund reserves] in his economic development programs"; and "officials interpret the law to give the state treasurer the authority to invest the funds. '1 convenient receptacle would be the Strategic Fund," Jones also quotes Treasurer Robert Bowman as saying, "If we did take some of the money... it would probably not be until the next calendar year."

  46. Dominic D'Annunzio and Harry G. Iwasko, Jr. to Bradley Smith in telephone conversations. See also Sharon McGrayne, "Multi-Million Dollar Tax Bill for Accident Fund?" Crain's Detroit Business, March 30, 1987, p. 43.

  47. Alternatively, the Fund could be abolished and its assets distributed to policy holders. Such a legislative move would surely be challenged in court, however, and the issue would remain unresolved.