General Assembly addresses Second Injury Fund insolvency and secures workers’ comp reforms after years of impasse

JEFFERSON CITY – Employers will be facing significantly less financial and legal liability as a result of the Missouri General Assembly’s work and final passage of Senate Bill 1 today.  The Missouri House gave final approval to the hard-won compromise and the legislation is now heading to the governor’s desk for signature.

“This is an important victory for Missouri employers,” said Dan Mehan, Missouri Chamber president and CEO.  “Working through the General Assembly, employers have taken these issues out of the hands of activist courts and the Trial Bar, and we are taking responsible measures to fix them.  Missouri employers and employees will be better off tomorrow than they are today as a result of this hard work.”

SB 1 contains provisions to address the Second Injury Fund and provide benefits for employers.

  • Most important, SB 1 limits the types of claims that can be run through the Second Injury Fund.  The fund had been greatly expanded over the last decade to cover claims that should not have been part of the fund, the main reason the fund became insolvent in the first place.  The bill removes all permanent partial disability from SIF, which is 80 percent of all SIF claims
  • The bill provides a long-term plan to pay off the $1 billion in liability that currently exists within the system.  Currently the Second Injury Fund is $32 million in the red, with more than 1,200 people with outstanding claims.  However, more than 30,000 claims are pending adjudication, saddling Missouri employers with great financial liability.
  • SB 1 also reduces the interest rate from 9 percent to 5 percent that employers are currently paying on outstanding claims.  This will save employers millions of dollars annually.

Years of impasse on this issue has resulted in claimants taking their case to court in order to secure benefits they have been awarded under the law.

“Letting the courts decide this issue likely would have resulted in large rate increases to fund a broken system,” said Dan Mehan, Missouri Chamber president and CEO.  “Employers fund the workers’ compensation system.  Employers are on the hook to pay the existing liability within Second Injury Fund.  It is only fair that employers have a say in how this problem is fixed.  We are grateful that this legislative body listened.”

In addition, the compromise brings all occupational diseases back under the workers’ compensation system.

  • Nine toxic exposure conditions will be eligible for enhanced remedy of up to $150,000 and guaranteed death benefits.
  • The toxic exposure condition of mesothelioma will be eligible for $500,000 in enhanced remedy.
  • An employer can opt to have coverage for toxic exposure under work comp policy, to pay for remedy out of a pool to be administered by the Department of Labor, or address any mesothelioma cases in circuit court.

“This option gives employers the choice on how to handle these risks,” said Mehan.  “Rather than continue to let occupational diseases be a target for trial attorneys, SB 1 provides protections for both employers and employees.  Currently, employees can take common ailments such as carpal tunnel syndrome and repetitive motion injuries to the courts, requiring months and thousands of dollars to resolve.”

The bill brings the system closer to where it had operated for 80 years.

“There is a reason no other state in the nation has occupational diseases outside of the worker’s compensation system,” Mehan said.  “It goes against the very reason workers’ compensation system was created.  We want workers to receive the care they need to be made whole, quickly and efficiently.  We want them to receive all that is coming to them, not have to pay 40 percent back to trial attorneys.  In exchange, employers want the protection from being brought into court for these types of injuries.”

The Missouri Chamber applauds leadership and the bill sponsor, Sen. Scott Rupp and Rep. Todd Richardson for their work on the issue.

The Missouri Chamber of Commerce and Industry (www.mochamber.com) was founded in 1923 and is the largest business association in Missouri, representing almost 3,000 employers providing more than 425,000 jobs for Missourians.

Advertisements

Lawsuit over interpretation of occupational disease further fuels need for legislative fix

Employers were recently dealt a blow by the Western District Court of Appeals in a decision involving the legal issue of whether or not occupational diseases are covered exclusively by Missouri Workers’ Compensation Act.  The Western District Court of Appeals, in a 7-2 decision, ruled that workers’ compensation does not serve as the exclusive remedy for employees who may contract long-term, repeated exposure diseases, not set forth explicitly in statute. 

The Court, in a strange twist, did not address whether an employee was precluded from filing a claim under the Worker’s Compensation Act for repeated exposures of occupational diseases while also filing a simultaneous civil lawsuit for the same issue.  This results in uncertainty for employees and employers alike as to what remedy or forum a claim for compensation should be sought.  Under this decision, it appears an employee could pursue remedy through the workers’ compensation system and the courts.

“The Missouri Chamber of Commerce and Industry warned of this potential problem during the last legislative session, but the issue was left unresolved,” said Richard AuBuchon, Missouri Chamber general counsel.  “This decision brings the issue to a much higher level of concern, and should send an even louder alarm to the Missouri Legislature that the problem needs to be addressed.”

The Missouri Chamber recently warned that 2005 worker’s compensation reforms failed to include the term occupational disease in the exclusive remedy section of the workers’ compensation statute.  Instead, the language of the statute now focuses on the term “accident,” implying that only a single isolated event leading to an employee injury can be eligible for workers’ compensation benefits.  For decades employees who filed a worker’s compensation claim were precluded from filing a civil lawsuit against the employer for the same injury leading to the worker’s compensation claim.  It appears this long-standing rule of law is now gone for long-term, repeat-exposure occupational diseases.

During the 2011 Legislative Session, the Missouri Chamber advocated legislation to include long-term, repeated-exposure claims of occupational diseases in the statute.  The legislation was blocked by the Missouri Legislature, through work of trial attorneys wanting more litigation against Missouri employers to garner more legal fees on this issue.  More litigation on this issue does nothing to protect employees.

“Increasing litigation delays compensation to employees for injuries or occupational diseases and weakens businesses,” said AuBuchon.  “The only people who win by keeping this error in the law are trial attorneys.  As lawsuits over this issue continue to mount, it is hurting employers who are already struggling to protect and create jobs.”

The case can be found at: http://www.courts.mo.gov/file.jsp?id=49158.

For more information on this case, please contact Rich AuBuchon, general counsel/legislative affairs for the Missouri Chamber of Commerce and Industry, at 573.634.3511 or raubuchon@mochamber.com.