SPRINGFIELD, Mo. -- The Second Injury Fund is flat broke. That's the word from State Auditor Tom Schweich in a recent report.
The Second Injury Fund was created years ago to encourage employers to hire disabled people. The purpose was to give employers some assurances to hire already partially disabled individuals. If, later on, those folks become more disabled due to a work-related injury, even to the point of total disability, then the employer would not be liable for the new combination of disabilities, which may even include permanently and totally disabled individuals.
KY3 spoke with Allen and Chris Robinette last July. Allen applied for and was approved for payments from Missouri's Second Injury fund in 2006. Soon after that, a letter arrived. It simply said the Second Injury Fund didn't have any money to pay him.
Segue to 2013.
"There are folks that are no longer even applying because the significant insolvency of the Second Injury Fund," said lawyer Joe Easter.
Easter says the problem has only gotten worse. According to a recent report from Missouri Auditor Tom Schweich, as of the end of 2012, the fund had $28.1 million of unpaid obligations.
Schweich conducted the study at the request of Missouri Attorney General Chris Koster. This is
the second report issued by the State Auditor's Office. The first was issued by Schweich's
predecessor, Susan Montee, in April 2007.
The Second Injury Fund gets revenue from a surcharge on Worker's Compensation insurance. In 2005, the legislature capped the surcharge at 3 percent. The auditor's report says it's not enough.
So what's the solution?
The report suggests that a bump up to a 3.5 percent surcharge would generate approximately $48 million and cover ongoing benefit payments in 2013.
Add 1.5 percent on top of that and you get another $22 million. That would allow cash settlements to resume.
Tack on another 2 percent and $28 million is available to pay the fund's unpaid obligations.
So in the end, the 3 percent surcharge would need to jump to 7 percent to get the fund back on track.
"Even the Missouri Chamber of Commerce has suggested that we permanently raise that cap from 3 percent to 4.5 percent," said Easter.
Nothing can happen until lawmakers in Jefferson City make it happen.
"It's squarely on our legislators. It has been for a long time. They are the only ones that can fix this," Easter said.
Bad news still looms: the attorney general says more than 30,000 cases are waiting in limbo that could cost more than $100 million.
If nothing is done, Easter says it could become the state's liability. That means they will have to pay the people that are due money right now. As for the people that are in limbo, that could be a messy court battle as well.
Easter also added that employers will be less willing to hire folks who already have some disadvantages, and those same folks will go from a disadvantaged situation to a dire one quickly without gainful employment.
The result would likely end in partially disabled job seekers being discouraged and applying for Social Security Disability instead of finding gainful employment, thereby removing those who are trying to further themselves career-wise and from being more productive members in our community.