Second Injury Fund expenditures up 340 percent since 1994

The amount of benefits paid from the Second Injury Fund has increased by more than 340 percent in 12 years, climbing from $18,519,292.49 in calendar year 1994 to $63,877,106.64 in calendar year 2006.

In April, Gov. Matt Blunt requested the Division of Workers’ Compensation obtain a complete actuarial study of the Second Injury Fund. Governor Blunt stated the report should include solid facts and numbers to determine what is driving the dramatic growth in expenditures and what can be done to better manage the program. The results of the actuarial study, performed by PricewaterhouseCoopers LLP, were due Aug. 1 (after Springfield Business Journal’s deadline).

The state treasurer has responsibility of the Second Injury Fund as its custodian, and the attorney general is required to provide legal services in all claims made for recovery against the fund. The Missouri Division of Workers’ Compensation is responsible for setting the Second Injury Fund surcharge and processing benefit payments.

What the fund covers

The Second Injury Fund compensates injured employees when a current work-related disability combines with a pre-existing disability to create an overall disability greater than the simple sum.

For example, if a person had a previous disability from an automobile accident that caused a permanent disability to his right arm, but he is still able to work, then should that person have a work-related injury to that same arm that causes the employee to no longer have any use of that arm, the employee becomes more disabled as a result of the combination of the two injuries. The law limits the employer’s liability to the extent of the disability caused by the last injury alone (the second injury). The employee may receive benefits from the Second Injury Fund for the amount of disability over and above the simple sum of his present and pre-existing disabilities.

A historical look at the fund

Benefits of the Second Injury Fund have expanded since it was created in 1943 by the Missouri General Assembly. The original intent of the fund was to assist disabled veterans in obtaining employment, limit the liability of employers only to work-related injuries incurred in the workplace and cover permanent total disability. The fund has been expanded in several ways since its creation:

1951 – Benefits for physical rehabilitation;

1955 – Payments for permanent partial disability;

1980 – Payments for medical bills when the employer has failed to insure its workers’ compensation liability as required by law;

1982 – Payments for death benefits for dependents of a worker killed on the job when the employer is uninsured; and

1993 – Payments for temporary total disability benefits for wages from a second job when the worker is insured on another job. This provision sunset in 1996 and was reestablished in 1998.

The department will continue to work with the Missouri legislature, the governor and other interested parties to identify the root causes of the fund insolvency and assist our statewide elected officials by providing information and analysis of the current system and the impact of any changes.

Rod Chapel is director of the Missouri Department of Labor and Industrial Relations. He can be reached at rod.chapel@dolir.mo.gov.