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After years of failure, Missouri General Assembly fixes Second Injury Fund

In Backroom

11:53 am on Thu, 05.16.13

In a move years in the making, the Missouri House has sent to Gov. Jay Nixon a bill to revamp the state’s workers compensation system and repair Missouri’s financially troubled Second Injury Fund.

The House voted 135-23 this morning to pass SB1, which House Speaker Tim Jones, R-Eureka, called “one of the crowning successes of this legislative session,” although he acknowledged that the bill wasn’t perfect.

Tim Jones
Tim Jones
Dan Mehan
Dan Mehan

Also lauding passage was the Missouri Chamber of Commerce, which had sought the changes for years. Chamber president Dan Mehan called the vote "an important victory for Missouri employers."

The bill – which passed the Senate early Wednesday – is aimed primarily at curbing a flood of lawsuits filed by injured Missouri workers who haven’t been able to collect benefits awarded by the Second Injury Fund because of a lack of money to pay for them.

The Second Injury Fund is a 70-year-old program that covers workers with pre-existing injuries, such as wounded veterans.

State Auditor Tom Schweich disclosed in January that the fund owed more than $28 million in awards to more than 1,000 injured workers. The awards are rapidly increasing in cost partly because of the 9 percent annual interest accumulated by the unpaid claims.

During the hour-long debate, House supporters said the state’s liability has doubled in just two years – adding urgency to the bill.

“Failure is not an option at this point,” Jones declared before the vote. “It simply drives the stake deeper.”

Democrats blamed Republicans for creating the problem because a cap was imposed in 2005 on businesses’ annual payments into the Second Injury Fund. Both sides have sparred since then on how to fix the problem, while the fund's liabilities have mounted.

Jay Nixon
Jay Nixon

Jones said today that Nixon, a Democrat, had failed during his 16 years as attorney general to deal with the fund’s financial problems, since the attorney general's office oversees the fund. Nixon has noted that he raised concerns to legislators years ago and opposed the 2005 change to the business payments, which he claimed at the time were too low.

The bill increases the business surcharge temporarily, until the backlog of unpaid awards have been dispatched, and the claims paid.

Occupational diseases moved out of Second Injury Fund

Much of Thursday morning’s debate centered on the bill’s companion issue, which shifts 10 toxic-exposure occupational diseases out of the Second Injury Fund into the state’s regular workers compensation system. The change also sets a maximum benefit of $500,000 for certain toxic exposures, such as lung diseases caused by exposure to asbestos.

Supporters said that shifting the diseases out of the Second Injury Fund would prevent future financial problems.

House Minority Leader Jake Hummel, D-St. Louis, opposed the bill because he objected to “putting a price tag on human life.” Hummel had related several times during the session how he had watched his grandfather slowly die of mesothelioma, a rare cancer caused by exposure to asbestos.

Associated Industries of Missouri and its allies announced Wednesday they opposed shifting the diseases into workers compensation because the change “would be too expensive’’ to businesses.

But others, including the Chamber and the Missouri Association of Trial Lawyers -- usually on opposing sides -- said that the benefit cap was an acceptable compromise and could curb lawsuits.

Missouri Chamber president Dan Mehan said in a statement: “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.”

Legislative backers and opponents agreed that the alternative for such workers suffering from occupational diseases was to go to court, but that could result in higher costs for businesses. Supporters of the change noted that every other state treated such diseases within their workers compensation system.

By Thursday afternoon, Associated Industries appeared to pivot, sending out a new statement in which it lauded portions of the passed legislation. But the group didn't come out and endorse it.

Attorney general, state treasurer, state Chamber pleased

Missouri Attorney General Chris Koster and state Treasurer Clint Zweifel, both Democrats, issued joint statements lauding the General Assembly's action.

So did the Missouri Chamber of Commerce.

Chris Koster
Chris Koster

Koster, whose office oversees the Second Injury Fund, singled out for special praise the bills' chief handlers: state Sen. Scott Rupp, R-Wentzville, and state Rep. Todd Richardson, R-Poplar Bluff.

"Due to the fund’s insolvency, the state is currently withholding payments totaling in excess of $32 million from more than 1,200 injured workers," Koster said, citing the latest figures. "Missouri workers deserve a fiscally sound resolution to this tremendous problem, and I commend the General Assembly for acting today.”

State Treasurer Clint Zweifel, who oversees some of the state's finances, added, "Missourians needed a solution that provided two things, fiscal responsibility and protection for employees who are injured at work through no fault of their own. Senate Bill 1 puts us on a path to achieve this and allows us to begin the work we need to do to protect Missouri’s workers.”

Clint Zweifel
Clint Zweifel

Their statement warned, though, that beneficiaries awaiting payment should expect to wait longer.

"Because the bill’s provisions do not take effect until January 1, 2014, the Second Injury Fund will not see increased revenue from the additional surcharge until the following April--the end of the first quarter of next year," the officials said. "This will require the state to continue to manage withheld awards for some period of time."

Koster, who is running for governor in 2016, added that his office will “immediately begin assessing when back payments could begin to be made to injured workers.”

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