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Missouri fund for injured workers stops paying claims

Monday, June 6, 2011 | 1:02 p.m. CDT

ST. LOUIS  — Fifty-five permanently disabled people have not received payments from a Missouri fund for workplace injuries because of its ongoing financial troubles.

The St. Louis Post-Dispatch reported Monday that financial difficulties plaguing the Second Injury Fund prompted the attorney general's office to begin withholding new permanent total disability awards in March. Attorney General Chris Koster estimates that if all the liabilities against the state fund were paid, the fund would be $20 million in debt by the end of the year. Plus, there are 28,000 pending claims against the fund with about 700 new ones filed each month.

Missouri's Second Injury Fund takes businesses off the hook for paying the claims of workers with previous injuries or conditions who are re-injured on the job. It is financed by a surcharge employers pay on their workers' compensation insurance. That surcharge was capped at 3 percent under a 2005 law. Previously, the fee increased and decreased based on a formula created by the state Department of Labor and Industrial Relations. Analysts have warned for years the fund was running out of money.

Among the Missouri residents who have not received money is Mark Brumfield, who worked as a custodian at St. Catherine Laboure Parish. Brumfield, 56, has diabetes and had toes amputated in 2005 and 2007 after blisters became infected. He was determined by the fund to be permanently and totally disabled after slipping and breaking his hip while preparing to wax the school floor in 2008.

Brumfield began receiving about $800 per month in disability payments and after about three years was awarded $300 per week from the Second Injury Fund. However, instead of a check, he received a letter from the attorney general saying Missouri could not afford to make the payment.

Brumfield tried to return to work but was not physically able, and poor eyesight has prevented him from moving to a desk job. Brumfield lives with his sister and said he tries to "live cheaply."

"Right now, I'm not under financial distress," he said, "but I want to make sure I can provide for myself down the road."

Lawmakers considered legislation aimed at the Second Injury Fund this year but could not come to an agreement before the session ended last month. The measure was backed by the Missouri Association of Trial Attorneys and the Missouri Chamber of Commerce and Industry but opposed by another business group, the Associated Industries of Missouri.

It would have eliminated the Second Injury Fund and moved claims to the workers' compensation system. The 3 percent surcharge cap would have been removed to cover existing claims.

Earlier this year, Koster warned lawmakers about the financial stability of the Second Injury Fund in a memo and in testimony during a public hearing. Besides paying injured workers, Koster said the fund also pays the salaries of nearly 40 attorneys and staff members in the attorney general's office responsible for defending the fund against claims.

Koster said the state likely faces some hard choices in the next several months.

"All options involve some party not being paid what's owed them," he said.

A federal lawsuit already has been filed by three disabled workers who fear they could lose benefits if the fund becomes insolvent. A fourth plaintiff, who was awarded money from the Second Injury Fund but is not getting paid, has joined the suit. An attorney representing the injured workers contends the state is depriving them of their property by enforcing a surcharge cap that is inadequate.

Some say the lawsuit ultimately could lead to the removal of the 3 percent surcharge or a court ordering the state to cover the fund's liabilities.

"I anticipate other people are going to file suit as well," said Richard Moore, the director of regulatory affairs for the Missouri Chamber, "and ultimately, a judge could decide how the state ends up fixing the problem."


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