Business groups disagree on fix for Second Injury Fund

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JEFFERSON CITY - The fate of 30,000 claims filed by re-injured workers hangs in the balance as the Missouri legislature works on a fix to the Second Injury Fund.

The Senate bill to fix the fund, which has more than $28 million in unfunded liabilities, tied together the Second Injury Fund and occupational diseases. Both of these issues are important to businesses.

But members of the business community disagreed on the Senate's compromise on occupational diseases at a House hearing Wednesday.

The bill, already passed by the Senate, moves occupational diseases exclusively under the workers' compensation system. It would mean individuals would not be able to sue their employers for such illnesses.

This is a move that business groups support. It would eliminate the potential for large settlements and awards to workers with occupational diseases, such as carpal tunnel or cancer caused by radiation exposure.

But the bill carves out an exception for 10 toxic-exposure diseases, such as mesothelioma, creating a separate account within the Second Injury Fund to cover those diseases.

Bill sponsor Sen. Scott Rupp, R-St. Charles County, said the compromise was necessary to ensure Gov. Jay Nixon would sign the bill.

“We got to an agreement with the governor’s office,” Rupp said. “In order to get the ball over the goal line, that’s what we had to do.”

However, the compromise to carve out an exception for particular toxic exposure diseases drew concern from business representatives at Wednesday's hearing.

Ray McCarty, president of Associated Industries of Missouri, said while there were many aspects of the bill he supported, he was concerned about the cost of the separate coverage of toxic exposure diseases.

“We don’t know what the impact of advertising that you can get an easy settlement will be,” McCarty said. “We don’t want to set up a baby SIF (Second Injury Fund).”

The Second Injury Fund is separate from the workers' compensation system. It was set up after World War II to encourage businesses to hire veterans with disabilities by reducing the liability if the worker was injured again on the job. It currently covers workers who are injured on the job and, as a result of that and a prior injury, become partially or totally permanently disabled.

The bill, in addition to reducing business liability for occupational disease by including them in workers' compensation, would also reduce eligibility for the Second Injury Fund by excluding permanent partial disabilities. It would also require the prior injury to have been from work, military service or be related to the subsequent injury.

The state attorney general has stopped settling claims against the fund and paying out new settlements awarded by the court. More than 700 payments were withheld in January, according to a report from the Missouri Department of Labor.

Rupp said a court case that will soon be before the Missouri Supreme Court could force the surcharge on workers' compensation premiums that businesses pay into the fund to skyrocket.

His solution would increase the surcharge to 6 percent from its current 3 percent cap, which the legislature set in 2005, and is cited as the cause of the fund's insolvency.

Rupp said he included the occupational disease issue with the Second Injury Fund fix because he didn’t think the two issues - Second Injury Fund and occupational disease - would pass otherwise.

“I tied these two together because separately I don’t think you’d get them done,” Rupp said.

Brad Jones, the state director of the National Federation of Independent Businesses; Jack Atterberry, president of the Associated General Contractors of Missouri; and Mike Winter, executive director of the Missouri Self-Insurers Association, said their members were concerned about the burden of paying for toxic exposure diseases when they did not have the risk of their employees being exposed.

“They had grave concerns with the new carve outs for the toxic exposure cases,” Winter said. “The new SIF raises great concerns among the members who do not have any toxic exposure and how that would be spread among them.”

The separate account for occupational diseases caused by toxic exposure would give an additional award of $600,000 for mesothelioma and an award of $150,000 for the nine other listed diseases. The amount, tied to the state's average wage, would be spread over several weeks and would go to the family of the deceased if the worker who had the disease died.

These awards would be funded by an additional percentage surcharge based on the workers' compensation premiums paid by businesses. The bill would allow the director of the Division of Workers Compensation in the Department of Labor to set the percentage based on the liabilities of the account and previous awards.

Rupp said these toxic exposure disease cases were rare and that he did not think there would be an increase in claims due to the creation of the separate fund with people "coming out of the woodwork" to claim benefits. He also said there was a temptation to address the concerns of each individual interest, but said that trying to satisfy everyone would lead to a failure to pass a remedy to the Second Injury Fund, therefore further delaying the pending claims and owed settlements to injured workers.

The committee took no action on the bill.

Richard AuBuchon, a lobbyist for the Missouri Chamber of Commerce, testified in support of the bill. He said there could be some improvements, but that this version would become law if passed.

“The governor vetoed the bill and said he had to have an enhanced remedy (for toxic exposure diseases),” AuBuchon said. “I’m tired of working on bills that get vetoed.”