Missouri Senate Backs Bill to Replenish Second Injury Fund

Missouri senators have endorsed a two-part plan to replenish an insolvent fund for disabled workers and stop people with job-related diseases from bringing big-dollar lawsuits against their employers.

The legislation attempts to address a pair of consequences resulting from a 2005 overhaul of Missouri’s workers’ compensation system, which resolves claims of job-related injuries through an administrative process instead of circuit court lawsuits.

That 2005 law passed by the Republican-led Legislature capped the fees businesses pay into a special state fund for disabled employees who suffer additional work-related injuries. Partly as a result of that cap, the Second Injury Fund now has a $25 million shortfall. The legislation seeks to replenish the fund by temporarily doubling the fee businesses could be charged and limiting the types of injuries the fund covers.

“We need working capital to get this problem solved,” said sponsoring Sen. Scott Rupp, R-Wentzville.

The 2005 law also made it harder for employees to prove that an injury was work-related, and it required its provisions to be strictly interpreted. As a result, judges have ruled that occupational diseases no longer are covered under the definition of accident,” and thus aren’t required to be handled through the workers’ compensation system. Businesses groups have expressed concerns that employers could get hit with costly lawsuits for work-related illnesses, such as cancer caused by asbestos exposure.

The legislation would clarify that occupational diseases are covered by the workers’ compensation system and create an enhanced benefit for people suffering from certain diseases caused by exposure to toxins.

Senators gave the bill first-round approval by a bipartisan voice vote after an on-again-off-again debate and behind the scenes negotiations that spanned more than a week. Another vote is needed to send the measure to the House.

The pressure to pass the legislation was enhanced last month when State Auditor Tom Schweich released a report showing that the Second Injury Fund had a balance of $3.2 million at the end of 2012 with unpaid obligations of $28.1 million. Unless something is done, that deficit is expected to keep growing.

The fund is financed by businesses through a surcharge on their workers’ compensation insurance premiums that was capped under the 2005 law at 3 percent, instead of being allowed to fluctuate based on the fund’s annual expenses. The legislation would raise that surcharge to 4.5 percent for the remainder of this year and allow the director of the Division of Workers’ Compensation to raise it to 6 percent annually through 2020.

The legislation also seeks to control the costs of the state fund by limiting its future coverage only to people who are permanently and totally disabled. Those with partial disabilities would have to be covered by traditional workers’ compensation insurance policies purchased by employers.

Among other things, the bill also would tap the Second Injury Fund to pay an enhanced workers’ compensation benefit of more than $150,000 to people suffering from certain diseases caused by exposure to toxins. People suffering from mesothelioma as a result of working with asbestos would get an enhanced benefit totaling about $600,000.

Senators rejected an amendment that would have allowed people suffering from asbestos-related cancer to still file lawsuits instead of going through the workers’ compensation system.

The workers’ compensation bill is SB1.