Workers' comp changes head to Supreme Court

Reforms to Missouri’s workers’ compensation law passed in 2005 have been in effect for about 18 months. As for the results of those changes, opinions vary.

“From the individual companies and HR managers and even employees that I’ve visited with over the past year, it appears that it’s working,” Associated Industries of Missouri President Gary Marble said of the reform.

In January, Judge Byron Kinder of the Cole County Circuit Court ruled against 73 Missouri union groups that alleged in a lawsuit that the changes altered the compensation system in such a way that it is no longer a viable alternative to a lawsuit.

The unions on Feb. 13 announced their intention to appeal to the Missouri Supreme Court.

Marble said his group is not worried about the possibility of having to argue the case in the state’s highest court. While local union representatives – and the attorney representing the 73 union groups statewide – did not return phone calls seeking comments by press time, the coming appeal seems to indicate that the unions are standing firm in their belief that further changes to the law are needed.

“If there are fixes that need to be made, they should be made, but employer and employee rights should be looked at collectively,” local Teamsters Union spokesman Jim Kabell told SBJ in December 2005, when the original lawsuit was filed in response to workers’ comp changes.

“Everything in this bill was an employer-driven issue, and there has to be both sides represented,” he added.

Shari Lockhart, managing partner of Evans and Dixon LLC, said the changes have had the desired effect of reducing claims – claims filed in the first year under the new regulation dropped about 20 percent from the same period the year before.

One of the main changes in the law: injuries sustained on the job must now be the “prevailing” factor in a disability, rather than just a “substantial” factor.

“More injuries are being denied on that basis, especially as people get older,” Lockhart said. “As we age, our bodies break down, and doctors are being forced to look more at it and say, ‘OK, is the need for the surgery because of what happened at work or because they were an injury waiting to happen?’”

Lockhart also said fewer employees are contesting reduction in benefits due to the impact of drugs, alcohol or removed safety features in a workplace injury.

“They know their payments are going to be reduced,” she said.

Second Injury Fund

One aspect of the law that both sides agree needs to be changed is the Second Injury Fund, which pays money to workers who aggravate an existing disability through a workplace injury.

Most states created second injury funds after World War II to encourage companies to hire war veterans who may have been injured in battle.

But fund payouts have more than doubled since 2000, according to state figures, to $62.4 million in fiscal year 2006, and the fund could be unable to cover required payments by late 2008.

That there is a shortage in funds, however, is where the agreement between the two sides ends.

There’s disagreement about to how to fix the problem; businesses want to reduce the amount paid out of the fund, while the unions want to increase payments into the fund. Business contributions are currently capped at 3 percent.

A bill circulating in the state legislature takes a hard-line approach to reducing fund payouts.

State Rep. Steve Hunter, R-Joplin, suggests eliminating the fund altogether in House Bill 685. The bill, which Hunter introduced in January, would eliminate payments from the fund for any injury occurring on or after Jan. 1, 2008. Companies would be assessed for payments into the fund based on a state formula, based on how much is needed to meet already mandated payments.

Lockhart said that while a solution is needed to ensure the fund’s solvency, eliminating it is probably not the best approach – especially without a way for employees to get compensation for legitimate claims that the fund would have paid.

“The fund has been a point of contention over the last five years, because everyone has been concerned about the amount being paid out,” she said. “If someone has prior injuries, do they have no recourse against anyone? Or do they go back to the employer insurer?”

Hunter also introduced HB 629 in January, which would allow workers’ compensation payouts only to injured workers. The bill is a response to the Missouri Supreme Court’s Jan. 9 decision in Schoemehl v. Treasurer of the State of Missouri. In that case, where the spouse of a recently deceased worker sued the state for her husband’s disability payments, the court ruled that because the wife was a dependent of her husband, she was entitled to the payments.

Attorney Lockhart said if such payouts are allowed to continue, it will greatly increase Second Injury Fund payouts.

“The ramifications that decision could have are frightening,” she added.

The changes

Senate Bill 1, passed in 2005, made significant changes to the state workers’ compensation system. Among them:

• A work accident must now be the prevailing factor in an injury to be covered; the previous law only required the accident to be a “substantial” factor.

• Injuries in company-owned automobiles going to or from work are not compensable.

• If a safety violation results in injury, benefits can be reduced by up to 50 percent, even if the violation was not willful.

• If drugs and/or alcohol played a role in the injury, benefits can be reduced by up to 50 percent.