SECOND INJURY FUND EXPANDS AS AN ISSUE IN GOVERNOR'S RACE

A once-obscure Second Injury Fund for workers compensation has become a dominant issue of the Republican race for governor.

Attorney General William Webster, regarded as the frontrunner for the GOP nomination, has been criticized by both Secretary of State Roy Blunt and State Treasurer Wendell Bailey for the way attorneys hired by Webster's office have handled fund cases.

Blunt has called for a federal grand jury probe into the operations of the Second Injury Fund. Bailey has called it a "clear violation of every principle of good government." And Webster's campaign manager, Tony Feather, has described the attacks as "election year rhetoric."

Accounts in the St. Louis Post-Dispatch, Kansas City Star and other newspapers around the state over the last several weeks have described how about 18 attorneys or law firms hired by Webster to defend the fund for the state had donated $140,000 to his campaign. In addition, it has been reported that 15 lawyers hired to defend the fund have also filed claims against the fund on behalf of clients.

Those newspaper accounts have outlined some apparent abuses in the way money was distributed from the fund in certain cases.

The case which triggered the latest round of attacks was outlined in a Post-Dispatch article Sunday. It reported that Morris B. Kessler, a St. Louis attorney who had contributed $45,000 to Webster's campaigns, had received $65,000 from the fund for two claims for injuries sustained in his law office.

He received $40,000 for knee and back injuries sustained in a fall in his office, and $25,000 for shoulder, neck and arm injuries while closing a file cabinet drawer in his office. A third claim against the fund is pending, attributed to overexertion from handling brief cases.

Kessler continues to represent clients on workers' compensation cases.

Webster's two Republican challengers, and several state legislators, have expressed dismay over the increase in payments made from the fund over the last six years. In 1984, prior to the time Webster took office, the fund had claims of about $3 million; it has grown to an estimated $31 million this year.

But Feather contends it is wrong to blame Webster for the growth in the Second Injury Fund. He points out the role of the attorney general is to defend the fund, however, the fund is administered by the Division of Workers' Compensation within the Department of Labor and Industrial Relations. Administrative law judges who work for the division must give final approval on all claims against the fund.

Feather also pointed out that Webster was the only Republican gubernatorial candidate to suggest reforms in workers' compensation when the General Assembly studied the matter earlier this year.

On Wednesday, Webster said he would return the contributions from Kessler and invited State Auditor Margaret Kelly to audit the fund because of the concerns raised.

Steve Taylor, a Sikeston attorney who is hired by the attorney general to handle Second Injury Fund cases, agrees that it is wrong to blame Webster for the growth in claims against the fund.

"There can be abuses in any system. I'm not saying it's perfect," said Taylor. "But it is not the fault of the attorney general or people working for him that there are more claims."

In 1984, Taylor said most people, including attorneys, had little knowledge of the Second Injury Fund. In recent years, legal advisers in the Division of Workers' Compensation have begun advising employees to file claims against the fund.

"Changes made by the legislature and case law from court decisions have opened the fund up in recent years to claims being filed against it," said Taylor.

Taylor noted that he has between 700 and 1,000 cases pending in the fund at any one time. The area he serves runs south of Cape Girardeau County to the Arkansas line and west to around Howell County.

Taylor said it does not make sense to have members of the attorney general's office in Jefferson City handling all the cases because it would require traveling all over the state. It is much more efficient to contract with attorneys around the state, he observed.

Ninety percent of the cases he deals with, said Taylor, are for permanent partial disability. On those cases, his law firm is paid $30 per case from start to finish. On the cases involving permanent total disability, the firms are paid $70 an hour, however, such cases make up only about 10 percent of his caseload.

Taylor said $70 an hour is low for most attorneys, who generally charge between $85 and $100 an hour.

There are a small number of cases that also pay $70 an hour that involve claims against employers who are uninsured for workers' compensation.

"You can't run it all out of Jefferson City. Can you imagine going from Jefferson City to handle one case on the docket in Caruthersville? It is not cost efficient and just won't work," said Taylor.

Taylor said he understands there is an appearance of impropriety with lawyers both representing the fund and filing against the fund. Earlier this year, the attorney general's office directed attorneys under contract not to do that any longer because of the "appearance of impropriety."

But Taylor explained there is not much leeway is settling claims against the fund because they are carefully outlined in state statutes.

Taylor said the only other person he deals with on Second Injury Fund cases on a regular basis is John Lichtenegger, an attorney from Jackson, who also has a contract with the attorney general's office.

"I don't know what they do in other parts of the state, but I know when I file cases against the fund, Lichtenegger made it harder on me than anyone else to avoid the look of impropriety," said Taylor.

He added that it is also important to remember that all settlements have to be reviewed by an administrative law judge. If there was collusion between attorneys in settling cases, it would likely be turned over to the Missouri Bar Association for unethical conduct, he said.

"Ultimately, every one of these cases has to be approved by an administrative law judge, appointed by the governor," he stressed.

The Second Injury Fund was started at the end of World War II as an incentive for employers to hire veterans who had suffered disabilities in the war.

Explaining the purpose of the fund, Taylor said, "If there is a pre-existing disability by an employee, it is designed to encourage a prospective employer to hire this person. For example, say a person has lost a hand and an employer does not want to hire you because if you are working here and have another hand lost, you will be totally and permanently disabled. A permanently disabled person had lifetime benefits.

"The fund is designed so if the person does have a subsequent injury, it picks up the difference."

Taylor pointed out that the insurance companies send patients to doctors that are conservative in their estimates of the extent of disabilities, while the attorney for employees find doctors who are liberal in their assessments.

Ultimately the attorneys have to resolve differences in the extent of disabilities or find a neutral doctor. Taylor added that all final settlements must be approved the administrative law judge.