Business groups hope for fix of Missouri's Second Injury Fund

If Missouri lawmakers can't fix the state's insolvent Second Injury Fund this session, taxpayers may get the bill.

For the past several sessions legislators failed to pass anything as analysts have warned the fund, which keeps individual businesses from having to pay the injury claims of workers with previous injuries or health conditions who are reinjured on the job, is going broke. Employers in Missouri pay a 3 percent surcharge on their workers' compensation insurance to support the Second Injury Fund, but that isn't generating enough revenue to keep the fund solvent.

The Missouri Chamber of Commerce and Industry and several other state business groups calling themselves the Missouri Business Climate Coalition said during a news conference Tuesday in the State Capitol rotunda that they will work on a fix for Missouri's failing Second Injury Fund this session.

"The problem just keeps getting bigger and bigger," said Richard Moore, assistant general counsel and director of regulatory affairs for the Missouri Chamber of Commerce and Industry. "Until the law changes, we're going to be in this situation."

The fund had expenses of more than $35.5 million in 2011, and its estimated liability for awards already approved by judges is $1 billion.

In April, the Missouri attorney general's office stopped paying new permanent total disability awards to injured workers. Nancy Gonder, spokeswoman for the attorney general's office, said the fund is still not paying any new claims, however, it did recently pay first-time claims for judgments awarded in March and April.

As of December, 159 injured workers hadn't yet seen a cent from the fund, according to the Missouri Department of Labor. They are owed more than $11 million in first-time payments. Injured workers awarded permanent total disability by a workers' compensation judge are entitled to biweekly payments for the remainder of their lives, under Missouri law.

"This does not include the biweekly amounts to bring them to the current pay period or the interest to be included," said Amy Susan, spokeswoman for the Missouri Department of Labor. Missouri statute requires the state to pay 9 percent interest on the unpaid awards.

In an effort to keep the fund from going bankrupt in 2009, Attorney General Chris Koster stopped settling Second Injury Fund cases, forcing claimants to go through expensive, lengthy trials and creating a backlog of 28,792 claims as of December. Another 338 claims are on or awaiting appeal, according to the Missouri Department of Labor.

This session, the Missouri chamber's coalition will support legislation to limit who may file a Second Injury Fund claim and temporarily increase the surcharge rate businesses pay, Moore said.

Under the chamber's proposal, to be eligible for Second Injury Fund compensation, an employee's first injury must have occurred either during active duty military service or be a workplace injury handled through the workers' compensation system.

Even with those limits, additional revenue will be needed to pay new and existing claims, Moore said. He supports increasing the surcharge from 2012 through 2020 from 3 percent to 4.5 percent.

"Raising a surcharge on businesses is nothing the legislature wants to do in an election year, but the Missouri chamber is saying this is an appropriate step," Moore said. "Long term, this is the best approach for us to save money and make Missouri a good business climate."

Cape Girardeau lawyer Matthew Edwards, who specializes in workers' compensation at Burns, Taylor Heckemeyer & Green and has clients awaiting Second Injury Fund payments, said he has low expectations the legislature will fix the problem.

"The Second Injury Fund takes money from the big insurance companies and pools it to spread the risks among all employers," Edwards said. "The insurance companies want to continue to hold onto that money and have the protection of the Second Injury Fund from liability. The insurance lobby and associated industries have a lot of money, and with an election cycle approaching, the Republican General Assembly does not want to sour that revenue stream."

'An artificial barrier'

Sen. Jason Crowell, R-Cape Girardeau, said he supports eliminating all new Second Injury Fund claims but continuing to pay its existing liabilities.

"We need to end it, and then what we will have is a true working marketplace where employers will fix their workplace and stop using workers' compensation through better industrial hygiene, through better processes and safety programs put in place," Crowell said. "Right now the Second Injury Fund stops all that. It's an artificial barrier to a safer workplace."

Many manufacturers want to pay the flat 3 percent rate instead of rates based on their use of the fund, which is how most other insurance works, Crowell said.

"It doesn't matter to an employer's bottom line if they overutilize the Second Injury Fund. It's only going to cost them 3 percent," he said. "They want to drive this thing into bankruptcy so the state bails it out and they won't be responsible for all of those individuals who were hurt on the job at their workplaces."

Crowell said it's unlikely any Second Injury Fund reforms will be passed this session by the House, although they may make it out of the Senate.

In the meantime, Edwards has several clients whose lives are in limbo as they wait to see what becomes of the fund.

"This is a bad deal for our clients when we obtain an award and we have to tell them they will not be paid for the foreseeable future," Edwards said. "For my clients, their only source of income is Social Security Disability and they need the additional money to pay for everyday living expenses such as rent/mortgage, medical expenses and the like."

Suits are pending in both state and federal courts asking a judge to order Missouri to pay the benefits.

mmiller@semissourian.com

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Jefferson City, MO