Second Injury Fund: Missouri Auditor Says Fund It, or Shut It Down

"The fund is currently insolvent, with unpaid liabilities totaling over $28.1 million, and no means to pay the benefits required by statute. To remedy this situation, the Governor and legislature need to work together to determine whether the fund's statutory purpose remains the state public policy or the program should be reduced or eliminated. If it is decided the program should be continued, a plan should be adopted to re-capitalize the fund and ensure future revenues are adequate to cover statutorily required benefits in the future."

Thomas A. Schweich, MO State Auditor (Jan. 11, 2013)

Click here to read to report

Read more about "Second Injury Funds" and workers' compensation

Are Second Injury Funds Going to be History Soon? - Workers ...

Mar 20, 2012

Workers' Compensation: Are Second Injury Funds Going to be History Soon? As the Second Injury Fund debate in Missouri becomes more heated, one must consider the underlying issues challenging its existence. Whatever ...

http://workers-compensation.blogspot.com/

Rescue Legislation for Missouri Second Injury Fund Fails - Workers ...

Apr 21, 2010

The Missouri legislature failed to pass legislation that would rescue the state's Second Injury Fund (SIF) from financial collapse. The SIF has been long targeted for extinction by Industry in Missouri. The Attorney General order ...

http://workers-compensation.blogspot.com/

Workers' Compensation: NJ Second Injury Fund Is In Financial Trouble

Jan 25, 2010

NJ Second Injury Fund Is In Financial Trouble. Governor Christie's transition team reported that the NJ Second Injury Fund (SIF) is insolvent. Several options were presented, if the SIF is going continue to operate. The SIF was ...

http://workers-compensation.blogspot.com/

Workers' Compensation: Missouri, The Second Injury Fund and ...

May 09, 2011

In an editorial it declares that injured workers should receive benefits that they have been awarded un the Missouri workers' compensation Second Injury Fund which is now underfunded and unable to meet payment.

http://workers-compensation.blogspot.com/

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A Constitutional Amendment To Stop The Raiding Of The Second Injury Fund For The General Treasury is Proposed in New Jersey

An amendment has been proposed, which has received bipartisan support, to stop the raiding of the second injury trust funds and their diversion to the general treasury. Senate Majority Leader Stephen Sweeney has proposed a constitutional amendment [SCR-60] requiring contributions collected from assessments on wages to be used for employee benefits and prohibiting use of the contributions for any other purpose.

Over the past years he executive branch has raided the second injury fund trust funds and has diverted the money to the general treasury of the State of New Jersey to cover shortfalls. Second injury fund revenues are collected as a line item surcharge on workers' compensation premiums from all employers of the State of New Jersey. The fund not only supports second injury fund beneficiaries, but it also supports general funding of the New Jersey Division Workers Compensation.

Most states in the United States have eliminated the second injury fund concept. The rationale for elimination of benefits is that the insurance carriers want greater control over the revenue to be paid to beneficiaries involving total disability. Additionally, the second injury fund concept was established in order that employers hire handicapped employees. It is now considered that the Americans With Disabilities Act affords protection to injured workers who have disabilities and the second injury funds are no longer required.

The proposed resolution is receiving bipartisan support and should it be adopted the constitutional question will appear on the ballot as a Constitutional amendment to be voted upon by all citizens of the state of New Jersey.

Close Down All Second Injury Funds?

Today's post is shared from reduceyourworkerscomp.com/ Employers get little to no relief from state workers compensation second injury funds.  Many state second injury laws are weak, ill defined, are hard to penetrate, and may lack proper funding. Rules and regulations make it hard for a claim to be  acceptance by a second injury fund. Funding programs for second injury funds vary greatly. Some are funded from insurance carrier premium assessments.  Others are funded from state budgets and legislative action.  Most funding programs may fail to meet the fund exposures or liabilities.  This means that even if a claim is accepted by a fund, the employer may not be able to recover their expended funds. The employer has to handle and pay the claim before seeking reimbursement from the second injury fund. Second Injury Funds and rules became prevalent after World War II as a program to induce employers to hire handicapped veterans.   By then workers compensation law, legal precedent, and regulation had clearly established that the employer took the employee as is.  This meant any employee with an underlying pathology or disability, who sustained a compensable injury which aggravated or increased the overall heath or disability costs had to be borne by the employer. The second injury fund program gave the employer relief from the expense of the aggravation or increased disability. The fund would take over the claim handling and cost after certain set periods of time...

[Click here to see the rest of this post]

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Missouri, The Second Injury Fund and Paying Up

The St. Louis Post Dispatch today called upon the State of Missouri to do the right thing and stop hold injured workers hostage. In an editorial it declares that injured workers should receive benefits that they have been awarded un the Missouri workers' compensation Second Injury Fund which is now underfunded and unable to meet payment.

Citing the flight of an injured iron worker, Harold Frick, it calls for immediate payment now and compromise going forward to resolve the economic issues facing the Missouri workers' compensation system. Like most workers' compensation systems throughout the US, Missouri's system is facing serious economic challenges as it is confronted by a declining economic base upon which to draw premiums to support the system,

In order to insure that workers who have been injured previously can obtain gainful employment, the many legislatures created a second injury fund to insulate subsequent employers from responsibility for prior disability if the employee in question became totally disabled from a compensable accident or event during the last employment. The fund was established to encourage the employment of the handicapped by alleviating the burden placed upon the employer for compensation benefits should the injured worker become totally and permanently disabled. A question now exists on how to finance these funds that have disolved already in many jurisdictions.

For over 3 decades the Law Offices of Jon L. Gelman  1.973.696.7900  jon@gelmans.com have been representing injured workers and their families who have suffered occupational accidents and illnesses.


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US Supreme Court - NY State Permitted to Close State Fund

The US Supreme Court [SCOTUS] has declined to review the challenge by multiple insurance carriers to the closure of the New York State Insurance Fund. Consistent with a national trend to terminate Second Injury Funds as being obsolete, economically impractical, and no longer warranted,  SCOTUS, by declining the Petition for a writ of certiorari, validated the methodology employed by the State of New York to implement the termination of the Fund.

The "New Normal," Special Compensation Funds and Viability

An Arizona Appeals Court has ruled that Special Funds [Second Injury Fund] used to pay workers' compensation benefits and fund the administrative agency, can be transferred to the state’s general treasury and used to fund the state’s general liabilities.

The Court , in allowing $4.7 Million to be transferred by the state Legislature to the general treasury, held that the special fund was funding source subject to legislative review and appropriation.  “….Because the legislature set the  percentage rate of premiums from the  State  Compensation Fund and private carriers to be placed in the Special Fund, the funds are public monies,” and is therefore a public fund.

Second Injury Funds have been phased out throughout the US. Major industrial states have eliminated them over the past several decades, a move historically supported as employers, insurance companies and the American Bar Association.

New Jersey still has such a fund, ie., The Second Injury Fund. It has been decimated economically after the economic downturn and a series of similar repeated raids by the legislature. While a constitutional amendment has been enacted to prohibit raids, the economy has not increased enough to withstand the fiscal challenges.

Other states face similar problems. Missouri’s fund has not been able to pay beneficiaries for decades as it heads for extinction. New York’s fund has been challenged since assessments are soaring beyond what Industry feels are sustainable in the week economy.

The real challenge facing the nation’s patchwork of workers’ compensation programs is how to fund them generally in light of increased medical costs, lack of premiums due to unemployment and the “new normal” now emerging across  the nation.

Read the decision: Industrial Commission of Arizona, et al. v. Janice K. Brewer, Governor, et al. , 1 CA-CV 11-0119 , (AZ App 2012), decided 11/23/2012.

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NJ Second Injury Fund Is In Financial Trouble

Governor Christie's transition team reported that the NJ Second Injury Fund (SIF) is insolvent. Several options were presented, if the SIF is going continue to operate.


The SIF was established to compensate totally disabled workers for their pre-existing disabilities shield the last employer from the total cost of the last compensable injury. The was enacted by NJ prior to the existence of the American With Disabilities Act (ADA) and theoretically was to encourage employers to hire handicapped workers.


Since the enactment of the ADA many states have felt that their was no need to continue the SIFs and the growing trend is to eliminate them. The SIF in NJ currently  supports the operating funds on the NJ Division of Workers' Compensation.


The transition report concludes:


"The SIF has been experiencing cash flow problems recently due to diversions from the fund in 2003 and 2004 and also as a result of legislative changes made in 2000 and 2003. Prior to 2000, the assessment against employers and insurance companies that finance the Division of Workers Compensation was determined by estimating the costs incurred to run all programs (including benefits) and multiplying that by 150%. In 2000, this was changed to 125% of estimated benefits and 100% of estimated administrative costs. These changes initially did not cause any significant cash flow issues; however, when the State began diverting money the combination of these factors resulted in an insufficient amount of cash being collected through assessments.

Solutions: Due to the legislative changes to the assessment calculations, the fund will never be able to restore solvency. The only solution requires legislative approval to phase out the $40 million “add back” and adjust the $5 million fund balance cap to a percentage of the prior years’ benefit payments. The only other option would be to find a supplemental appropriation to replenish the diverted money from FY2010."

Historically, surpluses in the NJ SIF have been raided by the Legislature and Governor and the funds diverted to the general treasury of the State. Like other NJ agencies, the NJ Division of Workers' Compensation has been challenged by mandated furloughs and short staffing issues. The fiscal problems of the SIF have compounded Medicare delays in the workers' compensation program in dealing with catastrophic and serious disability claims.

Click here to read more about The Second Injury Fund.

NJ Supreme Court to Review An Increase of Partial Disability Award in Total Disability Claim

One of the basic tenants of workers' compensation is that awards maybe reviewed and modified where the medical status has changed.1 The NJ Supreme Court on March 14, 2016 granted Certification to review a favorable Appellate Court ruling that permitted a totally and permanently disabled injured worker to receive an increase of a prior (2006 injury) partial disability award, even though the worker had been declared to be totally and permanently disability from a subsequent (2008 injury) injury.

Reorganization of the NJ Division of Workers’ Compensation Announced

The NJ Division of Workers’ Compensation announced a significant reorganization. The changes are to be effective on January 1, 2022.

MIssouri Mulls More Work Comp Reform

Guest Blog by B. Michael Korte

The Missouri legislature is again considering a number of proposals to change its workers’ compensation system. Every year brings various efforts to continue to ratchet down the benefits provided to injured workers, but this year is the first since 2005 that any change is expected. That year, extensive changes were passed, including a requirement that cases be construed "strictly" rather than liberally. 

Strict construction has proven to be a two-edged sword, with courts recently strictly construing Missouri law to allow more civil lawsuits against fellow employees, and perhaps excluding occupational diseases from the workers’ compensation system and allowing them to proceed in the civil court system. 

Legislation will almost certainly pass in the pro-business-dominated legislature to close these loopholes. What remains to be seen is whether the legislature will finally act to save the state’s second injury fund. 

The 2005 legislation placed a hard cap on funding for the fund, which has left it nearly bankrupt. The fund stopped making settlement offers in 2009, but now is finding itself unable to pay arrearages on permanent total disability awards. Although numerous independent audits agree that lifting the cap would solve the problem, legislative proposals are focusing instead on limiting or eliminating the fund.

The legislature will have until its adjournment on May 13 to solve the problem, but will also be consumed with budgetary and other problems in the meantime.

B. Michael Korte practices in Kirkwood, Missouri (The Korte Law Firm). B. Michael Korte is the author of Missouri Practice Vol. 29, Workers Compensation Law and Practice. He previously served as president of the Missouri Association of Trial Attorneys, and  has been awarded its Outstanding Service Award. He previously served as president of the Missouri Association of Trial Attorneys, and has been awarded its Outstanding Service Award. He frequently lectures statewide at seminars sponsored by the Missouri Division of Workers’ Compensation, bar associations, and other groups. He has served as the chair of the Missouri Bar Association Workers’ Compensation Committee and as President of Kids’ Chance, Inc., a workers compensation charity.

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NJ Governor Murphy Concerned About Economically Straining the Second Injury Fund

 NJ Governor Philip D. Murphy signed the COVID supplementary dependency bill (S2476 approved 4/19/2021) for essential workers and expressed concern over funding the benefits directly from the Second Injury Fund. He urged that alternate revenue proposals be considered going forward.

Federal Court Dismisses Lawsuit to Preserve Missouri Second Injury Fund

A Federal Judge in Missouri dismissed a Federal lawsuit that was filed to forced the State of Missouri to fund its Second Injury Fund for workers' compensation beneficiaries.


The Court held:
“'Decisions over what programs to fund or not to fund generally represent a basic right and power possessed by the legislative branch....'  'Plaintiffs have cited no case law, and the Court is not aware of any, which stands for the proposition that a legislative decision to de-fund a program can represent a taking of a plaintiff’s entitlement.'”
Hon. Nanette Kay Laughrey


Click here to read the decision, Pettet v. May, No. 2:11-CV-04049-NKL (USDC W.D.Mo) Decided April 19, 2012


Click here to read the report in The Kansas City Business Journal

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Rescue Legislation for Missouri Second Injury Fund Fails

The Missouri legislature failed to pass legislation that would rescue the state's Second Injury Fund (SIF) from financial collapse. The SIF has been long targeted for extinction by Industry in Missouri. The Attorney General order the SIF to stop making payments in October 2009.


The national trend for decades has been the closing of SIF's throughout the country. That trend has been advocated by those who claim that Federal legislation now supports hiring the handicapped and that the dollars paid into the SIFs are not being utilized to assist the payment of total disability awards as intended by the acts. The State of New Jersey has recently reported that the NJ Fund is also in financial difficulty. 

Click here to read more about The Second Injury Fund.

Bill Proposes to Increase Benefits for Some Injured Workers and Dependents

Assemblywoman Dawn Fantasia filed legislation to institute additional workers' compensation supplemental benefits on June 13, 2024, and Assemblyman Inganamort co-sponsored it. 

NJ COLA Bill - Legislative Hearing Scheduled

The NJ Senate Budget and Appropriations Committee will hold a public hearing on a pending COLA bill S613 to increase benefits on 12/5/2013 1:00:00 PM.

The Senate Labor Committee report

The Senate Labor Committee reports favorably and with

committee amendments Senate Bill No. 613.

As amended by the committee, this bill provides, from July 1, 2013

forward, an annual cost of living adjustment (COLA) in the weekly

workers' compensation benefit rate for any worker who has become

totally and permanently disabled from a workplace injury at any time

after December 31, 1979 and for the surviving dependents of any

worker who died from a workplace injury after December 31, 1979.

The COLA would be an amount such that, when added to the

workers' compensation weekly benefit rate initially awarded, the sum

will bear the same percentage relationship to the maximum benefit rate

at the time of the adjustment that the initial rate bore to the maximum

rate at the time of the initial award, except that:

1. The bill reduces the amount of the adjustment as much as

necessary to ensure that the sum of the adjustment and the amount

initially awarded does not exceed the amount which would cause any

reduction of disability benefits payable under the Federal Old Age,

Survivors and Disability Act; and

2. The bill reduces the supplemental workers’ compensation

benefits (but not regular workers’ compensation) for claimants injured

after 1979 by the amount of any Social Security benefits (other than

Social Security disability benefits and any increases in Social Security

benefits due to federal statutory changes after May 31, 1980), Black

Lung benefits, or the employer’s share of disability pension payments

received from or on account of an employer, except that if the worker's

original workers' compensation award was already reduced under

current law, there would be no further reduction of the supplemental

benefits under the bill.

These reductions parallel the reductions provided under current

law for claimants who were injured before 1980. The bill also

provides that no supplemental benefits would be paid in any case

where they are calculated to be less than $5 per week.

Current law requires such annual adjustments in the rate of

workers' compensation benefits for death and permanent total

disability to be paid from the Second Injury Fund (SIF), but only for

cases of injury or death occurring before January 1, 1980. The bill

extends the adjustments paid from the SIF to claims originating after

December 31, 1979, although the adjustments would apply only to

benefits paid on those claims after July 1, 2013, thus avoiding a

backlog of retroactive benefits.

The bill provides that supplemental payments will commence only

after SIF assessments are sufficient to pay them without using General

Fund money. The supplemental benefit payments would start on July

1, 2013 and the Department of Labor and Workforce Development is

required to take into account the supplemental benefits when

calculating the amount of the Second Injury Fund assessment which

starts on January 1, 2013, thus avoiding the need for any General Fund

appropriation.

To avoid an abrupt fiscal impact on the workers’ compensation

system, the bill provides that one third of the supplemental benefit rate

be paid during the first year, two thirds of the rate be paid during the

second year and the full amount be paid during the third and

subsequent years.

The bill sets time limits for workers’ compensation insurers and

self-insured employers to notify the SIF when supplemental workers’

compensation benefits are required under the bill. An insurer or selfinsured

employer is required to provide the notice not more than 60

days after the supplement is awarded or voluntary payment is to begin.

If a failure to notify results in the payment of an incorrect amount of

benefits, the liability for the payment of the supplemental benefits is

transferred from the SIF to the insurer or employer until the required

notice is provided.

The bill makes no change in the provisions of sections 1 and 9 of

P.L.1980, c.83 (C.34:15-95.4 and 34:15-95.5), which provide for the

reduction of certain portions of workers' compensation benefits by the

amount of Social Security disability benefits paid. In addition, the bill

expressly states that the supplemental benefits shall not be paid in a

manner which in any way changes or modifies the provisions of those

sections. The bill, therefore, will have no effect on existing provisions

of State and federal law regarding offsets between workers'

compensation and federal Social Security disability benefits.

The committee amendments provide that the application of the cost

of living adjustment commence on July 1, 2013, instead of July 1,

2011.

This bill was pre-filed for introduction in the 2012-2013 session

pending technical review. As reported, the bill includes the changes

required by technical review, which has been performed.

….

Jon L. Gelman of Wayne NJ is the author NJ Workers’ Compensation Law (West-Thompson) and co-author of the national treatise, Modern Workers’ Compensation Law (West-Thompson). For over 4 decades the Law Offices of Jon L Gelman  1.973.696.7900  jon@gelmans.com  have been representing injured workers and their families who have suffered occupational accidents and illnesses.

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Too Big To Fail?

Seal of Missouri. (Photo credit: Wikipedia)

Is the  Missouri Second Injury Fund too big to fail? It appears not. Stagnation and indecision has really become a phase-out of the program and that wind-down process was initiated 7 years ago.


Read more: No changes made for Missouri injured worker fund
Southeast Missourian
In addition, more than 31000 cases are pending against the Second Injury Fund. The fund is financed through a surcharge that employers pay on their workers' compensation insurance. That charge was capped at 3 percent under a 2005 workers' compensation ...

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NJ Assembly Passes Bill to Stop Raid on Second Injury Fund

The NJ Assembly approved legislation to halt raids on the NJ workers' compensation Second Injury Fund (SIF). The vote to approve passage of SCR60 was unanimous. In the past $95 million was diverted from the SIF to the State's general treasury.


Click here to read more about the Second Injury Fund.

New Jersey Looking to Hire Attorneys to Work For Free

Relief from the hiring freeze that has stalled some cases before the NJ Division of Workers' Compensation maybe thawing. The Division has been barred from replacing vacancies in the staff of Deputy Attorney Generals who staff the Second Injury Fund.

Recently it was reported in Newark Star Ledger that the freeze has been lifted and the State will hire attorneys who will work for free, About 400 lawyers are registered in the unemployment system.

The Second Injury Fund is represented by the State of NJ. Those cases involve some of the most complicated cases in the state as they all involve allegations total disability matters. The lack of attorneys to represent the Second Injury Fund has resulted in the cancellation of some lists. It is unknown whether paid attorneys could be shifted to this work or whether the State plans to allow the attorneys who are hired for free to to this this assignment.

Dependents of NJ Public Safety Workers May Receive Supplemental Benefits

A new benefit program, providing additional workers’ compensation benefits for some dependents of public safety workers, goes into effect on January 1, 2020.

NJ Workers' Compensation Rates Increase in 2017 - Max $896.00

The NJ Workers' Compensation Rating and Inspection Bureau (NJCRIB) reported today 2017 rates effective January 1, 2017.

The Commissioner of Banking and Insurance (“Commissioner”) has approved a 3.0% decrease in rates and rating values applicable to New Jersey workers compensation and employers liability insurance effective January 1, 2017 on a new and renewal basis. The rating components of the decrease are summarized below.