Second Injury Fund Has Begun Withholding Payments from Workers

On behalf of Brown & Crouppen, P.C. posted in Workers’ Compensation on Monday, June 13, 2011

Saying that it is quickly running out of money, Missouri Attorney General Chris Koster said that he decided in March to withhold payments to some payments from the state’s Second Injury Fund. The fund is intended for workers who have a preexisting medical condition that is worsened by a workplace injury. Koster’s decision has deprived benefits to 55 permanently injured workers so far, but that number is almost certain to increase in the coming months.

Koster said the non-payments are necessary “just to keep the lights on” for the troubled Second Injury Fund, which has seen its available funds drained away since the state legislature reduced payments into the program in 2005. The fund is paid for by surcharges on business’ workers’ compensation insurance premiums. The 2005 law capped the surcharges at 3 percent. Since then, the program’s annual balance has dropped from $40 million in 2006 to just $7 million this May, half of which was money that was supposed to go to new permanently disabled workers but did not.

In a previous post, we discussed the Missouri Legislature’s attempts to deal with the fund’s impending insolvency. One proposal would have phased out the Send Injury Fund entirely, with all new claims going to the state’s Workers’ Compensation System instead. Existing claims would have been honored, and the 3 percent surcharge cap would have been lifted, with rates set year by year to guarantee that every injured worker got their compensation until they either recovered or passed away.

Though that compromise had support from workers’ compensation attorneys and the Missouri Chamber of Commerce and Industry, other business groups opposed the measure due to its temporary increase in payments. The bill failed to pass before the end of the 2011 session.

While 55 workers have been directly affected so far, more are expected to be denied funds to which they are legally entitled, with 28,000 claims pending and 700 new claims filed per month. A group of four injured workers have filed a lawsuit against the fund in federal court, saying that Koster’s decision to withhold benefits is unconstitutional because it denies the plaintiffs of their property without due process.

Source: St. Louis Post-Dispatch, “Missouri injury fund refusing to pay, heading for insolvency,” Jason Hancock, June 6, 2011

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