Second Injury Fund compromise sent to Gov. Nixon
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Second Injury Fund compromise sent to Gov. Nixon

Date: May 16, 2013
By: Marie French
State Capitol Bureau
Links: SB 1

JEFFERSON CITY - The House approved a fix Thursday that will restore solvency to the troubled Second Injury Fund and move occupational diseases into the workers' compensation system.

House Speaker Tim Jones, R-Eureka, praised lawmakers who worked on the compromise.

“We haven’t run from it, we’ve embraced it and it’s been a heavy lift,” Jones said. “This will be one of the crowning successes of this legislative session.”

The problem of the Second Injury Fund has plagued the state for several years. It began when, in 2005, the General Assembly capped the surcharge on worker’s compensation premiums at 3 percent. At the time, the fund had a surplus. Now, the state’s attorney general said it has a shortfall of $32 million.

The fix allows the surcharge to increase up to 6 percent through 2021.

The fund provides payments to workers with prior disabilities who are injured at work and, because of the combination of injuries or a preexisting condition, become partially or totally permanently disabled.

Since the attorney general’s office stopped making settlements in 2009, there are more than 30,000 pending cases working their way through the courts, with an estimated liability of more than $100 million.

In March, more than 1,000 people who were awarded settlements from the Second Injury Fund had their payments withheld because the fund does not have enough money to meet its commitments.

Rep. Ed Schieffer, D-Troy, said he had a constituent who has been waiting five years to get payment from the fund and desperately needed the money.

“I would consider this a public debt and I’ve been outraged that we couldn’t deal with this more speedily than we have,” Schieffer said.

The increased surcharge to pay the current obligations fund was combined with limits on who the Second Injury Fund will cover in the future. Under the bill, workers with permanent partial disabilities would not be covered and workers with permanent total disabilities would only be covered if the first injury was work-related or from military service.

The bill also reduces the interest rate on delayed payments from the current 9 percent.

Rep. Todd Richardson, R-Poplar Bluff, who shepherded the bill through the House, said the high interest rate and the halting of settlements by the state attorney general, contributed to the high cost of fixing the fund.

“The Second Injury Fund has been taking on water,” Richardson said. “It is now going to cost us twice as much money to dig the SIF out of the hole it’s in than it would’ve taken (three years ago).”

Richardson said not acting to fix the fund would increase the liability to the state. He cited a pending Missouri Supreme Court case in which a lower court indicated the state or businesses could be liable for the unpaid claims against the fund.

“This brings certainty back to the system, brings solvency back to the fund,” Richardson said.

Despite the increased surcharge, business groups have endorsed the solution. Dan Mehan, president and CEO of the Missouri Chamber of Commerce and Industry, said he was happy with the bill.

“We get the trade-off of reform for Second Injury Fund that’s going to reduce the liability going forward,” Mehan said.

Workers' compensation would cover occupational diseases

Mehan also supported the provision of the bill dealing with changes to the state’s workers' compensation system.

The bill places occupational diseases exclusively under the state’s workers’ compensation system, limiting the ability of employees suffering from such diseases to sue employers in civil court. The Missouri Supreme Court has ruled that occupational diseases is not included under the definition of “accident” in worker’s compensation laws, opening businesses up to civil suits from workers.

The bill also provides an enhanced benefit for occupational diseases from toxic exposure, with an even greater remedy for workers exposed to asbestos who contracted mesothelioma as a result. A person getting benefits under these remedies could not sue in court. 

Worker’s diagnosed with the nine specific occupational diseases due to toxic exposure defined by the bill would be entitled to about $157,000 in compensation.

Under the law, businesses would have three options in dealing with potential mesothelioma suits.

The first option would be to join a new fund created by the bill called the “Missouri Mesothelioma Risk Management Fund,” which would be funded by members and pay up to $500,000 to an affected worker or their family. The second is to accept liability for mesothelioma under worker’s compensation or another insurance method, which would again set the amount at $500,000.

If the employer decides not to buy into either option, a worker or worker’s family who is diagnosed with mesothelioma could sue them in civil court.

Richardson said the change was not a cap.

“It’s an additional benefit on top of what a traditional workers’ compensation would pay,” Richardson said.

House Minority Leader Jacob Hummel, D-St. Louis City, argued passionately against the bill, which received some support from his own party. He said he refused to put a price on a human life.

“I don’t believe that someone who is suffering, when someone is suffering a slow, painful death, should have a price tag put on their life,” Hummel said. “Juries look at the human factor and decide what pain and suffering those families have endured.”

Richardson said the enhanced benefit for toxic exposures would be the best in the country.

Rep. Stephen Webber, D-Columbia, said he supported the bill in part because it included post-traumatic stress disorder of police officers under occupational diseases and encouraged members to vote for the bill. Webber is a veteran.

“It’s the right thing to do,” Webber said. “Don’t let one or two things you disagree with get in the way of supporting the bill.”

 The measure passed by bipartisan majorities in both the House and Senate.