JEFFERSON CITY, Mo. (AP) — Senators unanimously passed legislation Thursday meant to reverse a Missouri Supreme Court decision that could allow millions of dollars to flow to the families of disabled workers after their deaths.
Although a boon to some surviving spouses and children, the workers’ compensation benefits never were intended to last so long, many lawmakers say. And the extended payments could further drain a workplace injury fund that some fear already is headed toward insolvency.
In a January 2007 decision, the state’s highest court reversed the long-held assumption that workers’ compensation payments end when an injured employee dies of an unrelated cause. Instead, the Supreme Court said, surviving dependents are entitled to continue receiving the payments due a deceased worker who had been “permanently and totally disabled.”
Legislation passed by the Senate and sent to the House would end those payments when the injured workers die. The measure states that dependents could not keep cashing the checks. It specifically says the intent is to reverse the Supreme Court’s ruling.
The court ruling “created a new exposure, a new expense to an already troubled fund,” said Sen. John Loudon, R-Ballwin, who is sponsoring the legislation.
What lawmakers are concerned about is the Second Injury Fund, created in 1943 to encourage employers to hire wounded military veterans and other workers who previously had been injured.
Employers pay a surcharge of 3 percent of their workers’ compensation insurance premiums into the fund. The money is used to cover new work injuries that worsen an employees’ existing disabilities.
A state audit and an outside accounting firm both have warned the Second Injury Fund is about to run out of money — the audit projected in 2008; the subsequent accounting study projected by the end 2009.
The financial impact of the court ruling remains unclear.
The accounting firm PricewaterhouseCoopers projected last year that the court ruling would increase payments from the Second Injury Fund by about 1 percent this year, 5 percent by 2012 and ultimately by 24 percent sometime in the future. The report didn’t link those percentages to any actual dollar amounts.
Based on the accounting study, Associated Industries of Missouri projects the court ruling to cost about $4 million over the next five years.
Attorney General Jay Nixon’s office, which handles claims against the fund, believes the cost could be considerably higher.
One calculation, also based off the figures from the accounting firm, puts the cost around $14 million over five years.
Last year, Nixon cited testimony from an expert witness before a legislative committee while warning the court ruling eventually could cost $35 million annually in additional benefit payments.
Senate passage of the legislation Thursday “is an important first step,” said Nixon spokesman Scott Holste. “This is something that needs to be done to ensure that the Second Injury Fund maintains financial stability.”
But others contend much more still needs to be done.
Associated Industries of Missouri, and some Republican lawmakers, believe more comprehensive changes are needed to keep the Second Injury Fund afloat.
“We agree (the court ruling) should be fixed,” said Gary Marble, president of Associated Industries of Missouri, “but that’s just a small part of fixing the entire solvency.”
Workers benefit bill is SB901.
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