Missouri: Second Injury Fund running out of funds, stops making settlements

Missouri's Second Injury Fund may be in trouble and could be out of money by the end of the year.

The Attorney General Chris Koster recently announced that Missouri has temporarily stopped entering into new settlement agreements with claimants on the state's Second Injury Fund. Experts said expenditures for the fund, which compensates injured employees when a current work-related injury combines with a previous disability to create an increased combined disability, have increased exponentially over the years, while revenues have not kept pace. Additionally, Koster ordered the withdrawal of all outstanding settlement offers to claimants.

Koster said the decision was made after his office, along with the Missouri State Treasurer's Office, received notification from the state Department of Labor that the solvency of the Second Injury Fund was in question.

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"Given information currently available, our office has determined it is in the best interests of existing claimants and the state that no new settlements be entered into until a greater understanding of the fund's solvency is reached and until further consultations with executive and legislative leaders are completed."

Since 1994, expenditures for the Second Injury Fund have risen an estimated 340 percent. A 2007 report from the state auditor's office predicted that the fund would likely become insolvent by this year. A second report by PricewaterhouseCoopers LLP reached the same conclusion. The auditor's report found that that legislative moves by the Missouri General Assembly and former Gov. Matt Blunt's decision to cap the tax that employers pay into the fund had resulted in a shortfall of money.

In recent years, the American Insurance Association has urged lawmakers to repeal the Second Injury Fund and internalize all benefits to employers and their workers' comp insurers. However, officials have said that discontinuing the fund would still leave the state liable for hundreds of millions of dollars that would need to be paid over decades.

Read more at the WORKERSCOMP Forum^TM homepage.

November 2, 2009

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