February 1, 2008
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MO Work Comp law update: Stakeholders Warily Applaud Bill to Overturn Schoemehl Ruling
A bill to reverse a controversial Missouri Supreme Court ruling that critics charge threatens the stability of the state’s Second Injury Fund appears to have broad-based support from both business and labor groups, but some stakeholders worry the proposal may not do enough to solve the fund’s problems.
Senate Bill 901 by Sen. John Loudon, R-Ballwin, would overturn the Missouri Supreme Court’s decision in the so-called Schoemehl case, which the court released Jan. 9, 2007.
In that case, the court ruled 4-3 that widow Annette
Schoemehl was entitled to the permanent total disability benefits awarded to
her husband, who died one month after benefit payments started for reasons not
related to his industrial injury.
The Supreme Court interpreted Section 287.200.2 of the Missouri statutes to
entitle the dependents of permanently disabled workers to lifetime permanent
disability benefits, because another section of the statute states that the
dependents of employees are considered to be employees under the law.
The court’s decision prompted immediate calls for legislation to overturn the ruling and to head off the possible collapse of the state’s Second Injury Fund.
State Auditor Susan Montee cited the Schoemehl decision as a factor in the projected insolvency of the fund, which she calculated would spend $19 million more than it would take in during the coming three years.
Attorney General Jay Nixon
estimated the decision could cost the fund $35 million a year.
However, PricewaterhouseCoopers issued a report on Aug. 1 concluding that the
short-term impact of the decision would increase fund payouts by 1% beginning
in 2008 and increase them to 4.94% by 2012.
SB 901 would amend the existing
statute regarding workers’ compensation benefits under the Second Injury Fund,
and specifically states that “in applying the provisions of this chapter, it is
the intent of the legislature to reject and abrogate the holding in Schoemehl
v. Treasurer of the State of Missouri, 217 S.W.3d 900 (Mo. 2007), and all
cases citing, interpreting, applying, or following this case.”
Loudon’s chief of staff, Mike Reid, said the legislation likely would not be
heard “for a couple of weeks” and that some other options were being
investigated as possible ways to help stabilize the Second Injury Fund.
SB 901 states that its purpose is to repeal Sections 287.020, 287.200 and
287.230 of the workers’ compensation statute and to enact three new sections.
Under the bill, “the word ‘employee’…shall not include the injured worker's
dependents, estate, or other persons to whom compensation may be payable as
provided in Subsection 1 of Section 287.020.”
The bill further provides that
“permanent total disability benefits that have accrued through the date of the
injured employee's death are the only permanent total disability benefits that
are to be paid in accordance with Section 287.230.”
“The right to unaccrued compensation for permanent total disability of an
injured employee terminates on the date of the injured employee's death …
and does not survive to the injured worker's dependents, estate, or other
persons to whom compensation might otherwise be payable,” SB 901 provides.
The effects of the Schoemehl decision continue to reverberate in the courts.
A Missouri appellate court recently passed on to the Supreme Court two rulings
by the Industrial Relations Commission that appear to conflict with the high
court's decision in Schoemehl.
In the first of those cases, Winberry et al. v. Treasurer of the state of Missouri as custodian of the Second Injury Fund, the Industrial Relations
Commission ruled that it did not have jurisdiction to approve a petition for
substitution of parties filed by the widow and six children of deceased injured
worker James Winberry.
Winberry died Feb. 16, 2006, and
was collecting permanent total disability (PTD) benefits for several injuries
suffered during his 20-year career with Ford Motor Co.
In the second case, Cox v. Treasurer of the state of Missouri as custodian
of the Second Injury Fund, widow Betty Cox petitioned the commission to
resume the permanent total disability benefits that it had been paying to her
husband, who had died for reasons not related to his 2001 industrial accident.
In both cases the commission ruled it lacked jurisdiction to order continued
awards to the deceased workers' dependents.
The Eastern District Court of Appeals passed both cases directly to the state
Supreme Court under Rule of Civil Procedure 83.02, which states that cases may
be transferred to the high court "because of the general interest or
importance of a question involved in the case or for the purpose of reexamining
existing law."
To read more about SB 901 point your browser to: http://www.senate.mo.gov/.
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