Recently in Second Injury Fund Category

Governor Nixon signs legislation to address Missouri's failing Second Injury Fund

wheelchair.jpgRecently, Governor Jay Nixon signed new legislation that works to help fund Missouri's financially struggling Second Injury Fund (SIF). The SIF is designed to cover employees who have pre-existing injuries or disabilities and suffer from additional work-related injuries. It is funded by a surcharge on employers' workers' compensation premiums, which was capped at three percent in 2005. Currently, the SIF owes more than $32 million in initial payments and has an account balance of $9.3 million, and lawmakers say the 2005 cap on the surcharge has contributed to the SIF's insolvency. The new legislation raises the surcharge percentage and increases revenue at a steady rate that can keep up with the fluctuating annual expenses of the program.

The new legislation (Senate Bill 1, sponsored by Sen. Scott Rupp, R-Wentzville) will temporarily raise businesses' SIF surcharge to six percent, starting January 1, 2014 and continuing through 2021. Governor Nixon says the higher surcharge will help increase revenue and allow the state to begin making several initial payments for claims. "I appreciate the bipartisan efforts of lawmakers and stakeholders to craft a fair solution to a difficult, complex and long running-problem," Nixon said in a statement. "Shoring up the Second Injury Fund will provide long-overdue certainty to businesses and security to injured workers."

Critics of the bill fear the three percent increase in surcharge will not be enough to cover all of the fund's expenses. Also, some have expressed concerns that the program will begin to disperse initial payments, but run out of funding too quickly to continue making payments in the long run.

Besides helping disabled workers, this legislation is also aims to help employers. The 2005 changes in workers' compensation law resulted in more court expenses for businesses, causing employers to rely more heavily on the court system instead of resolving claims through a more administrative process.. However, the new legislation redefines what work related injuries and diseases are covered under workers' compensation. The bill reduces court expenses by making it easier for employees to prove that an injury was work-related, which helps reduce legal costs for employers while still providing benefits to injured workers.

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Bill Preventing Co-Worker Lawsuits Passes Missouri General Assembly: Occupational Diseases & Second Injury Fund Left in Limbo

1221952_to_sign_a_contract_3.jpgOn Tuesday afternoon, the Missouri General Assembly passed a bill that will prohibit employees from suing their co-workers for on-the-job injuries. The legislation would only allow employees to sue co-workers when "the accident was the result of gross negligence or an intentional act of harm," says the Springfield News-Leader. The bill was passed in the Missouri House by a vote of 122 - 29, and the Senate unanimously approved it within the same day. Now, it awaits Governor Nixon's approval.

However, the bill does not address two pressing issues that directly affect the Missouri workers' compensation system: (1) the struggling Second Injury Fund; and (2) the process for treating deadly work-related diseases. It appears that these issues will not be addressed until next year.

Earlier this year, Governor Nixon vetoed legislation that addressed all three subjects. In his veto letter, Nixon said his primary concern is connected to occupational diseases, and his worry that the workers' compensation system cannot "adequately compensate workers for debilitating diseases that will eventually take their lives, and [that] such cases should be handled by civil courts, as they now are," according to Columbia Daily Tribune. Occupational diseases are chronic ailments contracted through the workplace, such as mesothelioma and lead poisoning.

After vetoing the proposed bill, however, Nixon sent a letter to Senate Majority Leader Tom Dempsey and Minority Leader Victor Callahan. In the letter, Nixon agreed to sign new workers' comp legislation, provided that those who suffer from occupational diseases would be awarded "enhanced benefits" - meaning they would receive larger weekly payments than injured workers.

In response, Dempsey reportedly proposed that those workers be paid 200% of the state's average weekly wage for 200 weeks, which would equate to a settlement around $300,000. Nixon's offer, according to Dempsey, would have paid closer to $700,000 to employees who suffer from occupational diseases. "The governor's number was too high, so there you are," Dempsey said. Since a compromise couldn't be reached, it's likely that the issue will have to wait until the next legislative session.

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Federal Judge Dismisses Lawsuit Concerning Missouri's Failing Second Injury Fund

file5641297827287.jpgOn April 18, U.S. District Court Judge Nanette Laughrey granted a motion dismissing a lawsuit filed by 4 Missourians: injured workers who are owed awards from the state's failing Second Injury Fund (SIF). Originally, the SIF was created to provide benefits to employees with pre-existing conditions who are re-injured in the workplace. At present, it has 27,000 claims pending, while an additional 700 new claims are being filed every month. The problem? The fund is nearly bankrupt, and claimants are not being paid.

The SIF is subsidized by a surcharge imposed on employers' workers' compensation insurance premiums. Between 1943 and 1984, the SIF paid approximately $40 million in benefits to injured Missouri workers, according to the Columbia Missourian. However, in the 1980s, the Fund began to struggle with an increasing number of claims, and in 2005, a bill capped the surcharge at 3%. Since that time, workers' comp insurance premiums have dropped, but the cap only made a big problem even bigger, decreasing the already limited funds available. Audits performed in 2007 and 2010 offered stringent warnings, clearly indicating that the fund would go bankrupt within a few years if no action was taken.

Consequently, the Fund has presented a major problem for Missouri in recent years. In March 2011, Attorney General Chris Koster announced that the SIF would no longer pay out for new claims, effectively denying 200 injured workers approximately $15 million in funds - which brings us back to the aforementioned lawsuit. The action was filed on behalf of 4 of those injured workers who have not received their SIF awards: the plaintiffs argued that "the denial to pay violated the federal Americans with Disabilities Act, as well as their employment contracts with former employers, right to due process and other laws," reports the Kansas City Business Journal.

Judge Laughrey, however, disagreed. In her ruling [Pettet v. May, No. 2:11-CV-04049-NKL (USDC W.D.Mo)], she granted the defendants' motion to dismiss the case, and denied the remaining motions as moot. Importantly, she found that the plaintiffs were not denied benefits because they were disabled, but because of the SIF's financial crisis: therefore, there was no violation of the Americans with Disabilities Act.

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Missouri Senate Bill No. 572 Aims to Solve Second Injury Fund Issues

January 27, 2012

As Missouri workers' compensation attorneys, we've written at length about the need for reform in terms of Missouri's Second Injury fund. The fund, designed to supply benefits to reinjured workers, is bankrupt: currently, the fund owes over $921 million. There are 27,000 cases still pending, new cases filed every month, and at present, over 170 injured Missouri workers are not receiving their benefits. Now, a new Senate Bill (No. 572) proposes several changes to state workers' compensation laws, several of which are intended to address the fund's numerous issues.

(To read Missouri Senate Bill No. 572, click here. You can also listen to the "Senate Minute" broadcast about the bill.)

533138_law_and_order.jpgThe Second Injury fund is financed by a flat fee assessed to all Missouri employers. This is in contrast to the main worker's compensation fund, which is also funded by employers, but their rates are determined based on the likelihood that an accident will happen in a particular work environment. According to Senator Jason Crowell of Cape Girardeau, this system is causing employers to move as many cases as possible into the scope of the Second Injury fund, so they won't have to pay higher rates to the main fund.

Crowell believes the Second Injury fund should be completely eliminated, arguing that there is no need to continue the program. Part of the fund's purpose is to protect injured Missourians from being turned away by employers simply because they are injured. Crowell says that the Federal Americans with Disabilities Act now prevents employer discrimination against handicapped applicants, so the fund is no longer needed for this protection.

Bill No. 572 would keep the Second Injury fund in operation, but it would modify and/or limit certain of the fund's current functions. Notably, it would place limitations on the types of medical conditions and injuries that would be accepted as pre-existing conditions. Only previous military or work-related injuries would be accepted: permanent partial disability claims would be eliminated from the fund. Also, the bill includes a provision that would block payments to claimants who are incarcerated.

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Continued Second Injury Fund Issues Affecting Missouri Workers' Benefits, Chamber of Commerce Argues

December 21, 2011

As Kansas City workers' compensation attorneys, we have previously reported on the Missouri Chamber of Commerce's efforts to encourage workers' compensation reform. As we draw near the end of 2011, that reform continues to be a top priority for the Chamber: they are currently preparing to lobby for a variety of workforce issues when the state legislature begins its 2012 session on January 4, and Missouri's failing Second Injury Fund is one of the first items on their agenda.

455289_workers.jpgThe Second Injury Fund was created to provide benefits to Missouri workers who are reinjured in the workplace. It offers supplemental insurance to Missouri businesses, giving them an incentive to employ workers with pre-existing injuries or disabilities. If such an employee is reinjured on the job, the supplemental insurance--in theory--covers the injury, and the business is not liable. The fund is also supposed to pay benefits to injured Missouri workers when their employers did not obtain workers' comp insurance.

Unfortunately, things haven't quite worked out that way. At present, the Second Injury Fund is all but bankrupt. In 2009, the Missouri Attorney General's office stopped settling all cases against the fund, leaving more than 30,000 cases pending. And the number of pending cases continues to grow: about 700 more are filed each month. Even excluding these claims, the fund currently owes an estimated $1 billion for claims that have already been awarded to Missouri workers by judges. Back in March, the Second Injury Fund stopped paying out benefits to reinjured workers who had been awarded permanent total disability benefits. Of late, it has also stopping paying claims to workers with uninsured employers.

According to Richard Moore, assistant general counsel and director of regulatory affairs for the Missouri Chamber of Commerce, 170 people will not receive benefits owed to them by the Second Injury Fund by the end of 2011--and these benefits total about $13 million. What's more, the state of Missouri is required to pay an extra 9% interest on those late payments.

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Springfield Missouri Workers' Compensation Lawyers Analyze Case Affirming Second Injury Fund Payments for Medical Bills Paid Directly to Injured Worker

IMGP5405.JPGThe Missouri workers' compensation lawyers review recent Springfield Missouri work comp cases. This Missouri worker's compensation appellate court decision approved payments from the Second Injury Fund directly to an injured worker when the injured workers' employer failed to maintain workers' compensation insurance.

In Skinner v. Morgan, 306 S.W.3d 419 (Mo. App. S.D. 2010), Michael Skinner fell approximately 12 feet to the ground in the course and scope of employment when scaffold he was working on collapsed causing him to strike his head on a concrete slab and suffer serious head and lung injuries. Mr. Skinner was employed by a general contractor who failed to carry workers' compensation insurance. Mr. Skinner filed a Claim for Compensation against the Second Injury Fund alleging his employer was uninsured and seeking payment of his medical expenses by the Fund.

Legal Analysis of a Recent Missouri Worker's Compensation Claim

In Missouri, when an employer fails to provide workers' compensation insurance, the Second Injury Fund can be required to make payments for the injured worker's medical treatment. Mr. Skinner sought $254,708.20 in past medical benefits from the Fund at trial before an Administrative Law Judge. Mr. Skinner's attorney submitted itemized bills for the total amount of his treatment without objection from the Fund. The Administrative Law Judge found Mr. Skinner's employer to be uninsured, and ordered the Fund to pay Mr. Skinner directly for the $254,708.20 in past medical expenses. The Fund appealed the decision to the Missouri Labor and Industrial Relations Commission, whose 3 members unanimously affirmed the Administrative Law Judge's decision. The Fund then appealed the Commission's decision to the Southern District Court of Appeals in Springfield.

On appeal to the Southern District, the Fund argued that the Commission erred in ordering the past medical paid directly to Mr. Skinner rather than to his medical providers. The Fund based its argument on RSMo ยง 287.220.5, which requires that money withdrawn from the Fund be used to cover the "fair, reasonable, and necessary expenses to cure and relieve the effects of the injury or disability of an injured employee" where an employer is uninsured. Essentially the Fund argued that there was no guarantee the worker would use the funds to pay the medical bills and not for other purposes, particularly if the medical providers were willing to accept a lower payment amount than the original bill. Thus, according to the Fund, the only way to ensure that this alleged unauthorized use of its funds could not occur is to require the Commission to order payment to the medical providers directly rather than to the injured worker.

Missouri Southern District Court's Decision
The court noted that the Fund did not actually allege that the award by the Administrative Law Judge did not constitute "fair, reasonable, and necessary" medical expenses, but rather that the Fund was conjuring a speculative scenario on which no evidence was admitted. According to the court, the identical issue had previously been decided in Wilmeth v. TMI, Inc., 26 S.W.3d 476 (Mo. App. 2000), and the Fund offered no compelling reason to distinguish Wilmeth, was not asking the court to overturn it, but rather simply was asking the court to ignore it. The court declined to do so, thus holding that the Commission properly awarded the cost of the Mr. Skinner's medical expenses payable directly to Mr. Skinner rather than requiring payment to the medical providers.

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