Session ends in disappointment for business groups

Three key business initiatives outlined at the start of the 2012 legislative session by the Missouri Chamber of Commerce & Industry, the Springfield Area Chamber of Commerce and other business groups saw action, but they failed to survive the political process.

As the session came to an end May 18, employment law and tort reform died on the vine, and workers’ compensation reform claimed a small victory. Missouri chamber officials blamed lobbying by trial attorneys and in-fighting among political parties for what the group sees as disappointing results overall.

Sandy Howard, vice president of public affairs for the Springfield chamber, said the three priorities would remain in 2013.

“There were some limited successes and a step in the right direction with regard to workers’ compensation reform in House Bill 1540, which passed. It clarified that, essentially, employees cannot sue co-workers in addition to receiving workers’ compensation for an injury that occurs on the job,” Howard said. “That was probably the most productive thing, and it certainly has been a priority for the chamber for the last several years.”

She said it was a disappointment that legislators did not bring occupational diseases back under the umbrella of workers’ compensation system or fix the faltering Second Injury Fund.

According to the office of Attorney General Chris Koster, manager of the fund that covers workers with pre-existing conditions who seek disability claims, the fund’s deficit was more than $6 million as of May 1. In 2011, the fund collected $43 million in revenue, though obligations had increased to $77 million. In an effort to extend the life of the fund, Koster stopped paying new claim awards last year, and now the fund has more than 30,000 claims pending.

Missouri chamber Executive Director Daniel Mehan said due to inaction on the ailing Second Injury Fund, employers across the state now face increased costs as the courts would likely decide how to move forward.

“With the decision being left up to the courts, employers likely will be hung with paying for outstanding claimants benefits, interest on the outstanding balances, and a court-imposed surcharge,” Mehan said in a news release following the end of the session.

Lawmakers passed reforms to the system in 2005 that included putting a 3 percent cap on surcharges that feed the fund. Proposed fixes have included increasing the surcharge through 2020 or ending the fund altogether.

Springfield attorney Steve Garner of Strong-Garner-Bauer PC, who is president-elect of the Missouri Association of Trial Attorneys, said the business community ought to care about the Second Injury Fund.

Noting he does not practice in the area of workers’ compensation, Garner said workers with pre-existing conditions might have a harder time finding jobs if the fund is shut down, and employers could be held responsible for injuries that are not totally their fault. “Without a Second Injury Fund, the employer is going to be responsible for everything,” he said.

Mehan said compromise also could not be reached on how to handle occupational diseases within the workers’ compensation system after Gov. Jay Nixon vetoed Senate Bill 572, which would have turned back the clock to how occupational diseases were treated prior to 2005, when they were exclusively under the workers’ compensation system.

Employment law reform and tort reform efforts also fell flat in 2012. In March, Nixon vetoed HB 1219, which would have revised the Human Rights Act to make the state standard in discrimination claims a “motivating factor.” The current standard is a “contributing factor.”

Tort reform was debated in the Senate through SB 626, which was designed to protect employers from product liability beyond the effective life of the product, but the measure was never passed in the House. Also, HB 1326, which was written to protect businesses from the criminal actions of third parties on their property was passed in the House, but never voted on in the Senate.  

Missouri Association of Manufacturers CEO Rita Needham said product liability reform was an issue her organization had followed and lobbied for in 2012. She said it would continue to be a priority next year because she doesn’t want manufacturers in the state to be exposed to unnecessary lawsuits.

Needham said MAM member Danuser Machine Co., a Fulton-based manufacturer of post-hole diggers, brought the issue to the association’s attention. According to a 2006 survey of statutes regarding product liability by Orlando, Fla.-based law firm Wilson Elser Moskowitz Edelman & Dicker LLP, 19 states have legislation in place that limit the time a party can claim a product has become defective, and Needham said Missouri should as well.

To avoid costly trials, Needham said Danuser Machine has often settled out of court. “It has cost them hundreds of thousands of dollars trying to defend these suits,” she said.

In a February testimony before the Senate Judiciary and Civil and Criminal Jurisprudence Committee, Danuser Machine President Jerry Danuser said he was tired of defending his 102-year-old company.

“One of the problems with producing quality products is that a large number of Danuser diggers are still out there working,” he said. “To sue Danuser on an old post hole digger is like suing Ford Motor Co. because their mid-1940s cars didn’t have seat belts, safety glass or air bags.”

On behalf of MATA, Garner said he spoke twice this year to legislative committees in Jefferson City against changes to product liability law.

“In a product liability case, I have to prove that the product was defective and unreasonably dangerous at the time it was manufactured. So, I cannot – and I should not – be allowed to hold a company responsible for a 1980 product under 2012 standards,” Garner said, adding that post-hole diggers can be used infrequently and a 10-year limit on liability encourages engineers to design less quality products. “I just disagree with the fact that any of this is a reform. It is pro-business legislation that harms consumers. That’s all it is. Am I happy that the chamber of commerce and the business community were prevented with taking away employee rights and prevented with taking away consumer rights? The answer to that is, ‘Yes.’”