May 2, 2008
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MO Legislative Update: Bill on Schoemehl Decision, Second Injury Fund Moves Toward Vote
A House committee expanded
legislation to reverse a controversial Missouri Supreme Court decision by
making numerous changes to the Second Injury Fund and is scheduled for a vote
in the House Wednesday. Senate Bill 901 by Sen. John Loudon, R-Chesterfield,
has already passed the state Senate.
SB 901 would negate the high court's ruling in Schoemehl v. Treasurer of the
State of Missouri, in which the court held that survivors of injured
workers could continue to collect disability benefits after an injured worker
dies of causes not related to the injury. Critics of the decision argued it
has contributed to the potential insolvency of the Second Injury Fund and
should be repealed – with most lawmakers appearing to agree with that position.
SB 901 was approved on the Senate's consent calendar, using a procedure for
measures considered to be noncontroversial.
Added amendments to SB 901 in a House committee that Loudon aide Mike Reid
reports may or may not be accepted by the Senate. The committee substitute to
SB 901 would effectively overturn the Schoemehl ruling.
Language in the substitute provides that all rights to compensation for
permanent total disability “shall cease upon the death of the injured
employee.” Only accrued benefits for permanent total disability would be paid
to dependents upon their death.
If the bill is signed into law, beginning Aug. 28, no claim for permanent
partial disability could be made against the Second Injury Fund. The
substitute provides that permanent total disability payments shall cease when
the employee is able to compete for employment in the open labor market or
returns to work. The Labor and Industrial Relations Commission would retain
jurisdiction in the case during the lifetime of an employee who has received an
award for permanent total disability. Currently, the treasurer, with advice and
consent of the attorney general, may enter into settlement agreements for
claims against the Second Injury Fund.
The substitute would replace the treasurer with the Department of Labor and
Industrial Relations or its director's designee.
Compromise settlements could not be greater than $20,000 instead of the current
$60,000 maximum. Actuarial studies of the fund would be conducted yearly
instead of every three years. Lump-sum settlements paid out of the fund could
not be greater than $10,000 “until the fund becomes solvent” and claimants
could not receive compensation for injuries in which the aggregate total of
disability exceeds 100%. The substitute also limits attorneys' fees to 15% of
any award or settlement paid out of the fund. Currently, the limit is 25%.
Loudon also has introduced SB 1164, which takes a more comprehensive approach
to solving the fund’s problems. That bill has been approved by the Senate Small
Business, Insurance and Industrial Relations Committee but has not been voted
on by the full Senate. Loudon has described SB 1164 as providing an “emergency
remedy” for the Second Injury Fund, where expenditures have risen from $10.6
million in 1993 to $72.7 million in 2007. The measure contains some of the
same provisions as the House committee substitute for SB 901.
A report by PricewaterhouseCoopers in August concluded the short-term impact of
the decision would increase fund payouts by 1% beginning in 2008 and increase
them by 4.94% by 2012.
The Legislature is scheduled to adjourn May 9.
To read more about the bill mentioned above please visit: http://www.moga.state.mo.us/.
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