Missouri Gov. Signs Work Comp Legislative Fix

The American Insurance Association (AIA) today commended Gov. Matt Blunt (R) for signing a legislative fix to the state’s onerous Supreme Court decision in Schoemehl but called for swift action on the state’s failing Workers’ Compensation Second Injury Fund (SIF).

“Fixing the Schoemehl decision was a priority of the AIA and we’re pleased that the General Assembly and governor worked together to get it done,” said Steve Schneider, AIA vice president, Midwest Region. “We now hope, as we testified last year, that the state will abolish the Second Injury Fund, which has hundreds of millions in projected deficits.”

House Bill 1883 was signed by Gov. Blunt today. The key provision of the legislation overturns the state Supreme Court decision in Schoemehl v. Treasurer of the State of Missouri that extended workers’ compensation benefits to family members of a deceased worker. The new law now says that compensation for the permanent total disability of an injured employee terminates on the date of the injured employee's death.

“We welcome the governor enacting HB 1883, but now the task at hand is to further improve the state’s workers’ compensation insurance market by ending the SIF. Such a move would internalize all the costs to employers and their workers’ compensation insurers, rather than being ‘socialized’ throughout the marketplace via a catch-all pool. Doing so would not impact the amount of benefits that any injured worker will receive in any way,” said Schneider.

Second injury funds have been abolished in 19 states since the early 1990’s, most recently in Arkansas and New York. According to an actuarial study completed in 2007 for the Missouri Department of Labor and Industrial Relations, the Missouri SIF is projected to have a negative balance by 2009, excluding the impact of the Schoemehl decision.

“Unfortunately, repealing a SIF does not mean that its debt is erased. The SIF’s unfunded liability still must be financed, usually in continued existing assessments, until all of its outstanding claims are paid and the deficit is resolved. These assessments are imposed on all employers in Missouri and are tantamount to an additional tax on employment. The sooner the SIF is abolished and its liabilities begin running off, the sooner the assessments can begin to decline. That would be good news to all Missouri employers,” added Schneider.

The following states have repealed their Second Injury Funds:

STATE YEAR

Alabama 1992

Arkansas 2007

Colorado 1993

Connecticut 1995

District of Columbia 1998

Florida 1997

Georgia 2004

Kansas 1993

Kentucky 1996

Maine 1992

Minnesota 1995

Nebraska 1997

New Mexico 1996

New York 2007

Rhode Island 1998

South Dakota 1999

Utah 1994

Vermont 1999

West Virginia 2003