Several bills aimed at Missouri's Second Injury Fund

David Loyd would rather be working.

Instead, the 55-year-old spends his days in constant pain. He takes three pain medications, including Vicodin, just to make it through each day at his Sedgewickville, Mo., home.

"I get up every morning, and it's a blessing ... but life's a challenge," he said.

Despite being blind in one eye and surviving throat cancer, Loyd continued to work as a grave digger at a St. Louis cemetery until he hurt his back lifting a gravestone marker in 2006.

"I grabbed this one, turned the wrong way with it, and there went the back," he said.

It took two metal rods, six screws, six clamps, two cages and a battery-powered bone stimulator inserted in his back to repair it.

After a trial last year, a workers' compensation judge awarded Loyd payments of about $400 a week for the rest of his life from Missouri's Second Injury Fund. The fund covers workplace injuries that in combination with pre-existing conditions render workers unable to continue in their jobs.

But he hasn't yet seen a cent.

Missouri Attorney General Chris Koster, the caretaker of the fund, says it's running out of money. He quit paying new awards a year ago to people who, like Loyd, were left permanently disabled after work injuries. Now, there are 169 people across the state in Loyd's situation owed more than $11.8 million in first-time payments, according to the Missouri Department of Labor. Delinquent payments by statute are subject to 9 percent interest.

Loyd is watching the state legislature closely this session, in hopes they will fix the flailing Second Injury Fund. He and other injured workers are counting on it, he said.

Several bills filed

On Wednesday, lawmakers sent Gov. Jay Nixon a workers' compensation reform bill but stripped out the Second Injury Fund language it originally contained. Now several bills dealing specifically with the Second Injury Fund have been filed.

"It is critically important that the General Assembly address the Second Injury Fund, and we urge immediate attention to this crisis," said Nanci Gonder, spokeswoman for the Missouri attorney general's office. About one-third of the lawyers who defended the Second Injury Fund and were paid out of it have already been laid off, Koster said during a statehouse speech last month.

The fund's expenses are rapidly outpacing its income, which comes from a surcharge on businesses' workers' compensation insurance premiums.

Business groups, including Associated Industries of Missouri, now support Senate Bill 807, which would increase the surcharge cap from its current rate of 3 percent and limit which workers can access the Second Injury Fund.

Under the proposal, sponsored by Sen. Tom Dempsey, R-St. Peters, the surcharge cap would increase to 4.5 percent in 2013 and could go up to a maximum of 6 percent if agreed to by a panel consisting of the governor, attorney general, Senate president pro tem and House speaker. Three of the four would have to agree to the increase before it could go into effect.

Senate Bill 807 would also limit those eligible for payments from the Second Injury Fund to people whose original injuries or pre-existing conditions were covered by workers' comp injury or incurred during military service. Under that proposal, workers like Loyd with non-work-related health conditions would no longer be eligible for Second Injury Fund payments.

The bill would lower the interest rate on delinquent payments from 9 percent to 3 percent, the same interest rate charged on delinquent taxes.

Sen. Jason Crowell, R-Cape Girardeau, said he doesn't believe the Second Injury Fund can be reformed and has filed a bill to do away with the fund altogether.

Crowell said most Missourians' first exposure to the Second Injury Fund was in the early '90s when former attorney general and gubernatorial candidate Bill Webster was the subject of a federal investigation over misuse of the fund.

"The Second Injury Fund has been nothing but a headache and a nightmare ever since," Crowell said. "It's not properly funded, it's not properly defended and it's not properly utilized."

Businesses' workers' comp insurance rates are based on the classification of their workers and their use of the workers' comp system. In an effort to keep these rates from going up, businesses are trying to push cases into the Second Injury Fund where they know their rate won't go up no matter how many cases they have, Crowell said.

"If I'm paying higher premiums, it's an incentive for me to train my workers better and clean up my work environment," Crowell said.

Under Crowell's bill, Senate Bill 829, cases that now go to the Second Injury Fund would be handled through the existing workers' comp system. Awards granted before July 1 would be paid and the surcharge on businesses would be increased to cover the costs until the fund's balance is paid. Then the surcharge would be eliminated.

Crowell said some business groups have called this raising taxes, but he doesn't see it that way.

"You owe this money. All we're doing is making you pay it," he said.

Cap from 2005

Loyd says he's angry at former governor Matt Blunt for "giving into big business" and signing the legislation back in 2005 to cap what businesses are required to pay into the Second Injury Fund.

In 2005, when the fund had $25 million in reserves, the legislature approved a cap of 3 percent of businesses' workers' compensation premiums, instead of allowing the rate to fluctuate based on the fund's expenses.

"That's when it started going bankrupt. They saw it coming and kept shoving it off," Loyd said.

Kansas City lawyer John B. Boyd said the cap has left the fund unable to meet its obligations. He has filed a lawsuit in federal court on behalf of four injured workers asking a judge to remove the surcharge cap or rule the state itself has to pay the fund's liabilities.

The case is set to go to trial in May in the central division of Missouri's Western District court, unless a motion for summary judgment is granted before then.

Loyd said he doesn't believe Missouri's taxpayers should have to pay the fund's debts.

"It's going to be a shame if it comes down to that. It should be up to the employers. The employers should be paying a higher rate," he said.

Boyd said the legislature has had plenty of time to fix the Second Injury Fund and says the fix is obvious and easy -- raise the surcharge rate.

"It's a simple enough question for the legislature," he said. "Do you want to turn your backs on our most vulnerable people or continue to listen to those who are responsible for creating the crisis instead?"

mmiller@semissourian.com

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