Fix for troubled Second Injury Fund sent to Gov. Nixon

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JEFFERSON CITY - 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 workers' 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 of the Missouri Chamber of Commerce, 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.