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A bill that would prohibit attorney's fees from being paid out of worker's compensation benefits to insured workers has gone to the Senate following a close vote in the Senate Business, Labor and Economic Development Committee.

By a 4-3 vote, the committee voted to send SB147 to the Senate and it also voted against sending SB156, a bill that would allow attorney's fees be paid out of the benefits an injured worker receives.Submission of a bill on the payment of attorney's fees is the result of a State Industrial Commission administrative law judge's decision that such fees not come out of a worker's compensation award. That decision has been appealed to the Utah Court of Appeals.

Generally, SB147 is supported by the Injured Workers Association of Utah, the Utah AFL-CIO and attorneys who represent insured workers before the commission in disputed award cases. Opposing the bill and supporting SB156 are the Utah Mining Association, Utah Manufacturers Association and the Utah Self-Insurers Association.

During Wednesday's hearing on the two bills, those supporting SB147 said the bill will reduce the number of litigated cases before the commission, but those favoring SB156 said SB147 is "strictly for the attorneys" and won't reduce the amount of litigation.

Gina Madsen, whose husband has had three surgeries for a back injury suffered on the job, testified about the problems facing injured workers who find it difficult to exist financially and taking the attorney fees from their compensation awards make it even tougher to survive.

Robert Sykes, a former legislator, said there are incentives in the present system for insurance companies to litigate the cases and State Industrial Commissioner John Florez said the intent of SB147 is to reduce the number of lawsuits and have insurance companies settle on the awards so workers can get their payments quicker. By settling, proponents say, the insurance companies would also avoid paying the attorney's fees in addition to the worker's award.

Testifying in favor of SB156, sponsored by Sen. Haven J. Barlow, R-Layton, was Commissioner Stephen M. Hadley, who said only 2 percent of the cases filed with the commission are litigated, but those cases are the more serious ones and "are falling through the cracks."

Barlow said having insurance companies pay attorney fees won't solve the serious problems outlined by Madsen and suggested the system should be studied at length.

David McConkie, an attorney for the Utah Self-Insurers Association, agreed with Hadley there is a problem with only 2 percent of the disputed cases, but otherwise the system is working. "Employers should not be penalized for denying a claim in good faith," he said.

Larry Bunkall, Utah Manufacturers Association president, said SB147 places a heavy burden on employers and insurance companies. J. Michael Bailey, an attorney for the Utah Mining Association and Utah Manufacturers Association, said SB147 will increase litigation.

Before he voted to report SB147 out favorably, Sen. W. Rex Black, D-Salt Lake, said those opposing the bill are insurance company representatives who don't talk about the workers' needs. His comments were echoed by Sen. Omar B. Bunnell, D-Price.