Show Me The Postmortem Money

Fred Schoemehl's wife can receive his workers' compensation benefits until she dies. As for Schoemehl, he's already dead. His cause of death was unrelated to his total permanent disability--a knee injury suffered in 2001 while working at a marine and yacht club.

This tearjerker scenario for workers' comp insurers is care of a 4-3 opinion of the Missouri Supreme Court handed down in January.

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"Because she was Schoemehl's dependent," the court wrote in its opinion regarding the widow, "she is considered an 'employee' under the workers' compensation law and is, therefore, entitled to permanent total disability benefits for the remainder of her life."

According to wire reports, Schoemehl's widow, Annette, will get her husband's monthly payment of $221.26, every month until she passes away, as well as about $41,000 plus interest for three years' worth of back payments.

Insurers have long underwritten workers' comp with employees' life expectancies and deaths from unrelated causes in mind.

"Every carrier that writes workers' comp has used that as a premise from the beginning," said James Pocius, a shareholder at the Scranton-Pa.-based office of Marshall, Dennehey, Warner, Coleman & Goggin.

In ruling against that practice, the Missouri court "used creative logic," said Pocius, and ignored the fact that TPD payments should only be doled out when a worker is disabled. Fred Schoemehl is no longer disabled; he is deceased.

"If this decision spread, then it's going to drive up rates," Pocius said, though reassuring that there's "no need to panic just yet."

The ruling is restricted to the Show Me State, and is limited to TPD cases. Sure, other states with a workers' comp system that grants TPD awards could use the Schoemehl case as a precedent, said Pocius.

But the Supreme Court's decision isn't even settled in Missouri yet. It was only a slip opinion, explained Pocius, meaning it is still subject to modification.

The Missouri Attorney General has announced he will ask the Supreme Court to reconsider the ruling. And a state senator has sponsored a bill to reverse the decision.

March 1, 2007

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