Missouri's Second Injury Fund cuts off some payments

Editor's note: This is the first of two stories examining problems plaguing Missouri's Second Injury Fund. Friday's story will look at options for fixing the fund and a pending court case that may force the state to act.

Gail Luttrull often worked standing atop a motor 20 feet in the air, with her shoes soaking in a pool of hydraulic fluid, engine coolant and water as she replaced a part.

She was proud of the work she did in a position primarily held by men on a small-engine assembly line at Briggs & Stratton in Poplar Bluff, Mo.

In March 2003, when climbing down the machine after finishing a repair, Luttrull slipped on hydraulic fluid and fell forward off the machine platform, crashing into an electrical box.

She needed surgery on her neck to remove disk fragments putting pressure her spinal cord. It was the first of a series of on-the-job injuries that, when coupled with her microcytic anemia, left her unable to work. After a trial in December, an administrative law judge in Butler County determined Luttrull was permanently and totally disabled. In his 28-page order issued in February, he said under Missouri law she is entitled to compensation from the state's Second Injury Fund. She should receive weekly checks equal to two-thirds of her weekly wages, the judge ordered.

But Luttrull and 69 others who were scheduled to receive their first payments after March 7 have not been paid. Luttrull's first payment was to be April 18.

She received a one-paragraph letter in April from Missouri Attorney General Chris Koster's office saying the Second Injury Fund is unable to make payments and that she would be notified if the situation changes.

Analysts have been warning for years the fund is going broke; Missouri legislators have not acted to remedy the situation.

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 fund was created in the late 1940s to keep businesses from having to pay claims of workers with previous injuries or health conditions who are reinjured on the job.

"In the wake of World War II with injured servicemen coming back home, there was a desire by the legislature to create an incentive for employers to hire disabled veterans and disabled workers in general," said Richard Moore, assistant general counsel and director of regulatory affairs with the Missouri Chamber of Commerce and Industry.

The fund allows employers to spread the risk of hiring someone with a pre-existing condition or injury, shielding them from liability.

For years, employers paid a surcharge based on a formula set by the state Department of Labor and Industrial Relations. From 2000 to 2006 the surcharge rate varied from 2.5 percent to 4 percent.

Part of a sweeping workers' compensation reform bill passed in 2005 capped the surcharge at 3 percent. That reduction in combination with a down economy has caused the fund's revenue to decline. In 2010, surcharge collections totaled $40.8 million, down from $53.3 million in 2009, according to the Attorney General's office.

"With high unemployment and the recession, you have fewer employees to pay workers' comp on, so the amount of revenue are drastically lower now," Moore said. "But the claims against the fund keep coming in at about the same rate."

More than 700 claims for compensation from Missouri's Second Injury Fund are filed each month, and 28,159 cases are pending.

In 2010, total expenses for the Second Injury Fund were $40.4 million.

In an effort to keep the fund from going bankrupt in 2009, Koster stopped settling Second Injury Fund cases, forcing claimants, like Luttrull, to go through expensive, lengthy trials.

"Most of these cases were simply resolved by settlement frankly because we never knew if the fund was going to run out of money," said Luttrull's attorney, Matt Edwards of Burns, Taylor, Heckemeyer & Green in Cape Girardeau. Edwards previously worked for the attorney general's office defending the Second Injury Fund.

While settling cases decreases future payouts from the fund, the lump-sum payments were causing a short-term cash-flow problem.

These days, Luttrull starts her mornings with a cup of coffee, two pain pills and a muscle relaxer.

She used to make the coffee, but now her husband, Ted, has to do it. It's one of the many things Gail Luttrull just can't do anymore.

"I can't pick up my youngest grandson without hurting. He's just starting to learn to walk," said Luttrull, who has 19 grandchildren. "I've lost a lot of strength. It's the everyday things you take for granted. I have hurt myself just brushing my hair."

Luttrull said she loved her job at Briggs & Stratton, where she worked for 16 years and was promoted several times. She was proud of the work she did and says that if she were physically able, she'd be working there today.

Luttrull went back to work a few months after her first fall. The next year, 2004, she hurt her neck again and had a more complicated surgery, but she returned to work again later that year and was assigned to lighter duties. That job required her to use more pneumatic tools and the vibrations from them caused her to develop severe carpal tunnel syndrome.

"I loved my job. I would have still been there trying to do the best I could, but I got to the point where I couldn't use my arms anymore," Luttrull said.

When doctors gave her more restrictions, Briggs & Stratton said it couldn't accommodate them and fired her in November 2005.

"I got mad because they took my job away that I had worked for all these years with all these prickly old guys and had to take all the classes they did and to be the only female out of the crew. They hurt your pride, too. I couldn't sleep because it hurt so bad," Luttrull said.

The following year, she had surgeries on her hands to release entrapped nerves.

Her current income comes from Social Security disability, which pays per month what Luttrull used to make in a week. She lost her health insurance when she lost her job, and Medicare covers about half her costs.

Briggs & Stratton, through workers' compensation, paid for all Luttrull's medical treatments from her work injuries, but the Second Injury Fund protects the company from being responsible for her permanent total disability benefits, Edwards said.

She's counting on payments from the Second Injury Fund to cover her mounting medical expenses. She takes 15 medications each day, and she frequently receives blood and iron intravenously for as much as $1,400 each time.

"I need the money bad. I've got bills that I've got to pay that I've had to just give a little bit here and there, and hopefully I can get them paid off. It feels never-ending," she said.

About 1,000 Missourians who are determined to be permanently and totally disabled receive payments from the fund. It also pays claims to people who have permanent partial disabilities or who are injured at a second job that causes them to be unable to work at their primary job, and covers medical expenses for those injured working for employers who did not have insurance.

Attorney General spokeswoman Nanci Gonder said that aside from the new permanent total disability awards, the fund is paying all its current obligations.

New permanent total disability awards that have not been paid add up to $4.9 million, she said.

When asked how the attorney general determined which claims not to pay, Gonder said, "Based on a review of projections, the decision was made to impact the least number of people possible."

mmiller@semissourian.com

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