SECOND INJURY FUND: SOUND BITES CAN'T DEFINE IT

Modern political campaigns often are criticized for sacrificing thorough analysis of issues in lieu of 10-second "sound bites" and emotionally charged accusations.

But Missouri's gubernatorial race this fall has included both as voters try to make sense of the state's Second Injury Fund and Attorney General William Webster's involvement with it.

Webster, the Republican nominee for governor, has been criticized by his opponent, Lt. Gov. Mel Carn~ahan, for his handling of the workers' compensation fund.

But the fund itself remains a mystery to most voters. And officials who work with workers' compensation law say problems with the system go beyond the scope of the attorney general's office.

The issue surfaced in the campaign because claims against the Second Injury Fund have climbed from $3 million to more than $30 million since 1984. Newspaper reports also have suggested that settlements have been paid on frivolous claims and that law firms hired by the attorney general's office to defend the fund also have sued it.

But Administrative Law Judge Jack Knowlan of Jackson said one of the primary reasons claims have increased is that many more lawyers have become aware of the fund and the money that's available, particularly in the St. Louis area where the lion's share of claims have been filed.

"I think there was a greater awareness up there that there was money to be had if they filed a claim," he said.

Webster has been implicated in the rising Second Injury Fund costs because they began to occur the same year he was elected.

But a 1983 Missouri Supreme Court decision expanded the list of injuries that are considered legitimate Second Injury Fund claims. The decision also increased the amount of reimbursements per~mitted for settlements. The fund now is liable for such conditions as stress, nervousness, headaches and muscle strains suffered while on the job.

Knowlan said that decision has resulted in more employees who are eligible for benefits; the decision has increased the number of lawyers willing to sue the fund on their behalf.

"The attorneys took advantage of it," he said. "It all happened so fast, and there was nobody to complain about it directly because it came out of this fund that's financed by a premium tax.

"Several parties have a role and responsibility in it, and one is the state legislature."

Knowlan said lawmakers need to come up with some new guidelines to determine the types of claims the fund is responsible for paying.

"I think the legislature is probably going to come up with some more definitive terms as far as what the fund should cover," he said.

Knowlan said one of the criticisms directed at Webster is that his office failed to defend the fund vigorously enough and allowed lawyer "friends," hired to defend the fund, to secure easy settlements when those same lawyers sued the fund.

But, Knowlan said, the abuses wouldn't have occurred if the General Assembly had authorized additional staff so that the fund could be defended "in-house" something Webster's repeatedly asked for.

"I don't think there is anything improper about hiring assistant attorneys general," Knowlan added. "The problem is who you hire. In the past, the argument has been that it was part of patronage system, where you hire your friends and campaign contributors."

One case of apparent flagrant abuse is that of Morris Kessler, a St. Louis attorney who defended the fund, but also received $65,000 from it for two claims from injuries sustained in his law office.

He received $40,000 for knee and back injuries sustained in a fall at his office, and $25,000 for shoulder, neck and arm injuries he received while closing a file cabinet drawer in his office. A third claim against the fund involved overexertion from handling briefcases.

Webster subsequently returned $45,000 in contributions Kessler had made to his campaigns, and in June, the attorney general filed a lawsuit alleging that Kessler defrauded Missouri with the $40,000 claim.

Kessler is one of 34 lawyers in the St. Louis area hired to defend the Second Injury Fund as assistant attorneys general.

Knowlan said such apparent abuse of the system is something that's likely confined to the St. Louis area.

"I don't think there is much abuse of it at all in our area," he said. "The attorneys down here that defend the fund John Lichtenegger (of Jackson) and Steve Taylor (of Sikeston) are very frugal and very conservative. They've been relentless in their efforts to defend the fund.

"I think there's shock from St. Louis lawyers who come down here and see what they have to go through to get a settlement."

Knowlan said St. Louis has a many more claims and too few attorneys available to defend the fund.

Because more than 65 departments, divisions, boards and commissions in the state use attorneys from the attorney general's office, they're often forced to use "outside" attorneys because of excessive work loads.

Knowlan said the use of outside lawyers to defend the fund led to a situation where it was "too easy to get a settlement without a strong defense being raised.

"Without any guidance from the legislature, there may have been a lot of cases where money was being paid and there may not have been a basis for the claims," he said.

The Second Injury Fund was established after World War II to encourage employers to hire partially disabled veterans. The fund is designed to pay the claims for injuries suffered on the job that, coupled with the pre-existing disability, result in further, permanent disability.

"It's gone way beyond that original intent," said Knowlan, "It's just become a source for lawyers to get extra money for their clients."

Despite the increase in claims, the fund apparently is not a "get rich quick" scheme for lawyers. Taylor, who has worked as an assistant attorney general in Southeast Missouri, has said that 90 percent of the cases he deals with are for permanent partial disability.

In 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. Most attorneys generally charge between $85 and $100 an hour.

Out of the $30 million in Second Injury Fund settlements, lawyers' expenses total less than $3 million, or about 10 percent of the amount paid out to injured workers.

Last month, Webster announced a package of reforms aimed at streamlining Missouri's workers' compensation system. The reforms are expected to reduce Second Injury Fund claims, but Knowlan said Webster's reforms are more a "temporary stop-gap measure" than a permanent solution.

"Those types of things will need to be enacted into legislation," he said. "They passed an initial bill last year, and it has a few provisions, but I'm almost sure we'll see more legislation next year."