Little-known state compensation fund has more claims than money

JEFFERSON CITY, Mo. -- More than 400 Missourians are seeking money from a little-known state fund intended to compensate people who have been injured by others but have been unable to cover their bills through lawsuits or insurance.

But those people may be in for another disappointment.

The state fund has a little less than $5 million to divide among them -- enough to cover only a small portion of what each person is seeking.

With barely one-third of the claims reviewed, the approved claims already total $19 million, state officials said Thursday.

To state the obvious: "There's a lot more people requesting money than is in the fund," said Cynthia Quetsch, acting deputy director of the Department of Labor and Industrial Relations, which oversees the fund.

The Tort Victims' Compensation Fund was created under a 1987 law and is supposed to receive half of all punitive damages awarded to victims in state court cases.

But it receives money only after judgments are final -- meaning no appeals are possible -- and only after attorneys have deducted their own fees and expenses.

Quetsch said she believes litigants have found a way to avoid the state payments. If the parties settle a case while appealing a jury verdict for punitive damages, and if that settlement payment is not described as "punitive damages," then there is no final court judgment on punitive damages. So the plaintiffs and their attorneys keep all the money and the state gets none, she said.

"It's been a large motivator for people to settle cases, so nothing has to go to the state," Quetsch said.

Trial attorneys suggest there is another reason for the fund's seemingly low balance.

"Punitive damages are pretty rare," said Sara Schuett, executive director of the Missouri Association of Trial Attorneys. "It's just kind of a myth that punitive damages are awarded regularly and they're high when they're awarded."

Schuett points to a 2001 survey by Jury Verdict Research, a Pennsylvania-based group, which determined that over a six-year period just 4 percent of Missouri's successful personal injury lawsuits resulted in punitive damages, and those averaged $75,000.

Much of the money paid into the fund has come in large chunks.

For example, a 1995 case against a French helicopter manufacturer resulted in a $3.9 million payment to the state fund when all appeals were resolved in 1998, said Anita Robb, a Kansas City attorney involved in the case. That accounted for almost all of the $4.1 million that was deposited into the fund that year.

Although created 16 years ago, the special state fund still has not disbursed any money to people. That's because there was no mechanism to do so until the law was changed two years ago.

The revised law gave the state until June 30, 2003, to determine who was rightfully due money and until Sept. 30 to disburse the money on a prorated basis.

When the law was passed in 2001, the fund held nearly $7.5 million. But the same law also required that 26 percent of the money be transferred to legal services for low-income people. The fund also has paid the salary of a state employee assigned to oversee it.

Consequently, the fund now has about $5 million available to pay to people.

Gov. Bob Holden's proposed budget for next fiscal year includes an appropriation for $3 million for disbursements. But Quetsch said that likely would be presented to lawmakers as an estimate, meaning the full amount in the fund -- whatever that would be at the time -- could be paid to claimants.

Most of the people seeking money from the fund have been involved in car accidents or suffered some other sort of injury, but their medical bills exceeded the payment they received from the other party's insurance. Some also have won personal injury or wrongful death lawsuits, but have not been able to collect their judgments.

The deadline to file claims from the fund was Dec. 31.

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On the Net:

Tort Victims' Compensation: http://www.dolir.state.mo.us/wc/tort