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LABOR NEWS |
| By Rod Chapel, Director Missouri Department of Labor and Industrial Relations |
For release the week of: July 23, 2007
A Short History of the Second Injury Fund
The State Auditor reports that the Second Injury Fund faces insolvency in 2008. The amount of benefits paid from the Second Injury Fund has increased by more than 340 percent, climbing from $18,519,292.49 in calendar year 1994 to $63,877,106.64 in calendar year 2006.
In April, Governor 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 are due by August 1.
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.
The Second Injury Fund compensates injured employees when a current work related disability combines with a preexisting 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 preexisting disabilities.
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 the work related injury incurred in the workplace and cover permanent total disability. Since its creation, the Fund has been expanded to include:
- 1951 – Benefits for physical rehabilitation
- 1955 – Payment 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 – Payment for death benefits for dependents of a worker killed on the job when the employer is uninsured
- 1993 – Payment 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, Governor Blunt 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.
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