AUGUSTA – An acceptable compromise in the impasse over Workers’ Compensation continued to elude members of the House and Senate Tuesday, prompting some lawmakers to conclude that both sides may be hopelessly deadlocked on the issue.

Meanwhile, Gov. Angus S. King remained behind closed doors late Tuesday with members of the banking and insurance lobby in a persistent effort to find some new middle ground in the dispute.

At issue is a state supreme court ruling in February involving a Workers’ Compensation claim brought by Arthur Kotch.

Now referred to as the Kotch decision, the court’s ruling said that nonwork-related injuries also must be taken into account when determining disability benefits if a combination of the old injuries and new on-the-job injuries prevents a worker’s return to work.

Maine business owners cried foul and said the court’s decision would impose $45 million in new annual costs.

They also said the decision posed a potential price tag of more than $200 million if the law was applied retroactively to 1992, the last time the state’s workers’ comp laws were revised.

To resolve the business community’s concerns, King offered a bill to repeal the Kotch ruling and permit workers with old injuries to “stack” them on top of any new injuries as long as the new injury involved the same anatomical area that was previously hurt.

The Maine Senate initially passed King’s plan, but House lawmakers, led by the Democratic majority, rejected it and passed their own alternative plan. That amended version of LD 2002 would let 25 percent of the most seriously injured workers have their formerly capped benefits re-evaluated.

In an effort to find some area of compromise, Sen. Marge Kilkelly, D-Wiscasset, attached an amendment to the original bill Monday that she said was “cost-neutral” and that would delay any “stacking” of benefits until after Jan. 1, 2004. The Senate passed that version and sent it back to the House.

On Tuesday, House Democrats rejected the Kilkelly amendment, claiming it was “all but identical to the governor’s proposal.”

House Republicans told their Democratic counterparts that the debate on job injuries more or less implies that there are jobs available in the first place.

“Maine has lost more than 7,000 manufacturing jobs in the last year,” said House GOP Leader Joe Bruno of Raymond. “What do the House Democrats tell these men and women when we cannot attract new businesses to Maine to replace these 7,000 jobs because we have the nation’s highest comp costs?”

Disregarding the GOP pleas, the House voted 75-65, mostly along party lines, in favor of sending the House Democrats’ alternative plan back to the Senate, where the measure remained stalled late Tuesday.

With most of their work completed, members of leadership were acknowledging late Tuesday that the workers’ comp issue has the potential to really complicate and lengthen the session. Lawmakers were hoping to recess Tuesday until either April 24 or 25 when they could act on any outstanding remaining legislation or gubernatorial vetoes.

The two-week recess would give leadership and the administration time to hammer out a compromise, but some lawmakers said that the workers’ comp issue had become so complicated that it might not be possible to resolve differences over the bill by then. Should that occur, King staffers said the governor was prepared to call the Legislature back in a special session to deal with the issue later this year.