Employer liability for the Second Injury Fund is growing at an alarming rate

More than 100 injured workers are waiting for benefit payments from Missouri’s Second Injury Fund that have been awarded to them under current law, with no promise of when their benefits will be paid.  More than 30,000 workers are waiting to have their cases heard through SIF, with no idea when their cases will be resolved.  That’s because Missouri’s Second Injury Fund – designed to protect employees who are reinjured on the job – is broke and there is not enough money to pay all benefits.

Revenue flowing into the fund has decreased drastically due to high unemployment and the decline in workers’ compensation premiums, which establishes the base for SIF funding.  In 2007, SIF revenue from the 3-percent surcharge totaled $70 million.  In 2011, SIF revenue from the 3 percent surcharge totaled $40.4 million.  Meanwhile, current expenses are approximately $55 million annually.  As a result, over the course of several years, the fund has been sliding toward insolvency.  In 2009, Attorney General Chris Koster suspended all settlement offers, which has resulted in a backlog of 30,000 cases.

“Right now, Missouri is just sitting back while cases continue to mount and injured workers go without the benefits awarded them,” said Daniel P. Mehan, president and CEO of the Missouri Chamber of Commerce and Industry.  “It’s bad policy and in the end, Missouri employers are going to be holding the bill.  But in the meantime, we have injured workers that have been awarded benefits under the law and they are not getting paid.  No responsible employer wants to see their workers treated that way.”

Liability on Missouri employers, who are ultimately responsible for the fund by law, is growing at an alarming rate.  Two thousand claims were added to the list of pending cases since July, bringing that number to 30,000.  It will cost tens of millions of dollars to adjudicate these cases. The unpaid liability to permanent total disability awardees has grown from $4.9 million in July to $7.1 million as of Sept. 1.  What’s more, interest on that amount continues to accrue at 10 percent.

Because of inaction by the Missouri Legislature to fix the problems with Missouri’s SIF over the years, Missouri is now in a position where reform alone will not resolve the outstanding liability without additional revenue.  The Missouri Chamber has pleaded with lawmakers to address Missouri’s failing Second Injury Fund for several years.  Unable to reach legislative resolution, the issue now lies in the hands of the courts.  At least two lawsuits have been filed against the SIF, and more are expected.

Over the last decade, claims to the Second Injury Fund have expanded greatly – paying general claims against employers who do not carry workers’ compensation coverage and a broad range of pre-existing conditions.

“The Missouri Chamber strongly disagrees with this policy, but the way the law is written, it will continue to be interpreted in this way.  That is why the Missouri Chamber has been so adamant that lawmakers address this issue,” Mehan said.

Section 287.220.1 of the Missouri Revised Statutes states that “If any employee who has a preexisting permanent partial disability whether from compensable injury or otherwise … receives a subsequent compensable injury resulting in additional permanent partial disability … shall be paid out of a special fund known as the second injury fund.”

Legislation to address the fund was blocked in the final days of the 2011 Legislation Session.  Unfortunately, Missouri employers will have to wait until 2012 to take another run at making change.

For more information on SIF, please contact Richard Moore, assistant general counsel/director of regulatory affairs for the Missouri Chamber, at 573.634.3511 or rmoore@mochamber.com.