TOPEKA — A lawsuit filed more than seven years ago challenging constitutionality of the Legislature’s habit of seizing mandatory fees paid to state government has been resolved with a settlement triggering $3 million in reimbursements, the plaintiffs’ attorney said Wednesday.
Attorney Mike O’Neal was serving as speaker of the Kansas House when he began the legal odyssey in 2010 by filing suit on behalf of banking, real estate and other regulated industries required to pay fees to finance government oversight. The 2017 Legislature approved repayment of fees swept during a budget crisis in 2009.
A Shawnee County District Court judge accepted the legal settlement.
“Although it has taken the parties 7½ years to obtain justice, the final approval of this significant settlement, plus acknowledgment of wrongdoing with respect to the 2009 sweeps, is very gratifying,” O’Neal said.
O’Neal said the 2017 Legislature embraced a bill declaring “state-sanctioned theft of funds paid in by licensed businesses and private citizens will no longer be tolerated.”
Terms of the settlement called for refunds of $2.3 million to the state’s worker compensation account, $534,000 to the banking commission and $195,000 to the real estate fund.
The 2009 Legislature voted to sweep $22 million from large and tiny fee-funded agencies. That led to an emergency second round of fee assessments in the same year to replenish the accounts.
Seizures included funds collected by the Kansas Department of Insurance from groups paying into the workers’ compensation fund. Numerous group-funded worker compensation pools filed suit. The Kansas Bankers Association and the Kansas Association of Realtors joined the litigation.
The Kansas Court of Appeals and the Kansas Supreme Court agreed with plaintiffs that funds received by the state for a specific purpose cannot be drawn into the state general fund.