A fix for the Injury Fund? Not this year

With just three weeks left in the legislative session, an effort to alter the Second Injury Fund this year appears all but dead.

Nonetheless, those watching the fund still expect it to become insolvent in the near future.

In 2007, state Auditor Susan Montee released an audit showing that the fund would become insolvent without changes to how it operates. Amy Susan, a spokeswoman for the Department of Labor and Industrial Relations, said the fund’s current balance is $1.9 million. In April 2008, there was $21 million in the fund.

Susan said it wasn’t possible to predict the trajectory of that number because the total is dependent on how much money is collected for the fund.

There have been two distinct mind-sets in how to stave off insolvency.

Republicans and some business groups have sought to alter how the fund operates, as seen in legislation introduced this year by Rep. Barney Fisher, R-Richards. Among other things, the bill would have banned claims to be made against the fund for permanent partial disability. That means if an eligible person suffers another injury that does not preclude them from working, then the Second Injury Fund would no longer be used to make payments to that person.

The legislation also would have capped lump-sum payments from the fund at $40,000 – as opposed to the current restriction of $60,000.

House Speaker Ron Richard, R-Joplin, who co-sponsored Fisher’s legislation, said there was not enough consensus to get the bill through the Senate. And while Fisher said he was considering chopping up the bill into smaller pieces to give it a better chance of passing, he expressed serious doubt that his legislation would be able to get traction.

“This is about the fifth try to do something about the Second Injury Fund,” Fisher said. “It’s always very controversial.”

Critics say Fisher failed to target the revenue problem associated with the fund, adding that the bill would have been hurtful to previously injured workers. Montee – as well as a number of Democrats – pointed to a 2005 law that capped the surcharge that businesses pay to fill the fund. That 3 percent cap was made in a bill that overhauled the state’s workers’ compensation system.

Phil Hess, a St. Louis attorney with Larsen, Feist & Hess and a member of the board of the Missouri Association of Trial Attorneys, said the legislation also would have severely limited the ability of workers to receive benefits if they are injured on the job.

The bill, Hess said, is short-sighted because it would shift liability from the Second Injury Fund back to the employer.

“The liability wouldn’t go away,” Hess said.

Rep. Mary Still, D-Columbia, who serves on the committee that heard the bill, said until the Department of the Labor and Industrial Relations receives flexibility to alter the surcharge, the fund will continue to run into problems.

“It didn’t even touch that,” Still said. “The Department of Labor, I believe, is the group that needs to make the determination if we need to raise it or lower it depending on what the needs are at the time. It didn’t deal with that at all, and that is the solution to the situation.”

Richard and Fisher said raising the 3 percent cap is off the table, especially since they say the move would hurt businesses during a weakening economy. It was position echoed by Dan Mehan, the CEO of the Missouri Chamber of Commerce.

“When you’re talking about the economy that we’re having in 2009, you take a cap off or increase the cap and that will be perceived as a tax increase, and it will be met with great opposition,” Mehan said. “The Legislature doesn’t want to do that. We certainly don’t want to do that to employers when they’re going through this slowdown and trying to pull out of it.”

Mehan said the House and Senate have failed to find consensus on basically anything this session. It would be highly unlikely, he said, that they would be able to reach common ground as something as controversial as altering the Second Injury Fund.

In any case, proponents also faced a likely roadblock in Gov. Jay Nixon, the former attorney general who said last week that he was not in favor of any significant changes to how the fund operates. Nixon, of course, has the power to veto any bill he doesn’t like.

Nixon said the last time he checked the fund’s balance, it had resources in it. But he added he’s “not up to minute on what those fund balances are.”
“My meter of things to get done and my priorities to get done doesn’t include that one today,” Nixon added.

Individuals on all sides of the issue say consensus will have to be reached soon to prevent the fund from going broke.

“It would be a good opportunity to get the right players at the table,” Still said. “And let’s talk about what’s the real solution to this. And if we need to work out a different system to where you have some flexibility on the cap or not the cap, let’s do that.”

Richard said part of the discussion will have to include changing the way the fund operates, including getting rid of payments for permanent partial disability and making sure people who are injured in a nonrelated incident can’t get benefits.

Richard noted that the fund, created in 1943, was originally meant to encourage businesses to hire injured war veterans.

“I mean, you try to stay true to that and move it toward business. But it’s gone so far away. We’re just tired of paying for things that aren’t true to the bill.”

About jrosenbaum
Jason Rosenbaum

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