No Changes Made for Missouri Injured Worker Fund

By Chris Blank | May 22, 2012

Missouri’s financially troubled fund for injured workers will get no relief from the state Legislature for at least another year.

The state Second Injury Fund takes businesses off the hook for paying the claims of workers who have previous injuries or conditions and are re-injured on the job. Despite analysts’ warnings for years that the fund was heading toward insolvency, lawmakers wrapped up the legislative session Friday without approving changes.

“It’s only getting worse, and at a dangerous rate,” said Dan Mehan, the president and CEO of the Missouri Chamber of Commerce and Industry.

Last year, the fund collected $43 million from businesses while its obligations were $77 million. The fund currently has just more than $9 million — while the unpaid bills top $17 million. In addition, more than 31,000 cases are pending against the Second Injury Fund.

The fund is financed through a surcharge that employers pay on their workers’ compensation insurance. That charge was capped at 3 percent under a 2005 workers’ compensation law. Previously, it increased and decreased based upon a formula created by the state Department of Labor and Industrial Relations.

The collapse of this year’s attempts to overhaul the fund has many looking to try again next year, though others are watching what might happen in the courts.

Attorney General Chris Koster, who was responsible for defending the Second Injury Fund against claims, stopped settling cases in late 2009 and forced them to go through a lengthier hearing process. About one-third of the attorneys defending the fund have been laid off, and the attorney general’s office has stopped paying new awards for permanent, total disability cases.

John Boyd, an attorney from Kansas City, said the situation has become intolerable.

“It’s the equivalent of you or me having a credit card, which was issued back in 2005, and we continue to run up charges on it, and we haven’t made a payment on all those charges,” he said. “There comes a time when you have to pay off all those charges.”

Lawmakers for the past several years have considered changes to the fund. This year, the legislative session started with some business groups throwing support behind a proposal that called for increasing the surcharge that businesses pay and scaling back eligibility for the fund.

However, no idea could win final approval in the Legislature. Although the House approved some changes, senators disagreed about whether to tweak the fund or abolish it.

House Majority Leader Tim Jones said resolving the issues surrounding the fund will require help from others in state government.

“It’s run out of time many years ago,” said Jones, R-Eureka. “We’re going to need some leadership from the executive as well as some assistance form the attorney general’s office. This is going to have to be a group effort to accomplish that.”

About half of U.S. states have similar disabled worker funds, though rising costs have helped lead to the end of many others during the past two decades.

Democratic Gov. Jay Nixon, who oversaw the Second Injury Fund during his tenure as attorney general, has been more demure in delving into the fund. When last year’s efforts to address the fund’s finances faltered, he called it a “two-year bill.” Shortly after lawmakers adjourned this year without making changes, Nixon said the work would continue.

“In the long run, it’s a problem that we’re going to have to deal with,” he said. “I think that it is not a simple problem in many ways, but it’s a solvable problem in a lot of ways.”

For his part, the attorney general has called upon lawmakers to make changes to the fund. For example, this past February, Koster told members of the Missouri Chamber of Commerce and Industry that the fund should be abolished or revamped with a new funding system.

“The (Second Injury Fund) cannot endure another year of inaction, and the longer we wait the more expensive your solution becomes,” Koster said. “We must do one or the other because doing nothing is a breach of the promises we make to our employees, the people of Missouri and to ourselves.”

 

 

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