Missouri's Second Injury Fund ("Fund") is a workers' compensation arrangement that provides state assistance to employers by reducing their liability to employees who have preexisting disabilities and are subsequently injured on the job. (1) Throughout 2007 and 2008, the Fund was the subject of numerous headlines and debates that involved all three branches of the state government.
First, the state's highest court delivered the controversial decision of Schoemehl v. Treasurer of Missouri. (2) Here, the Missouri Supreme Court held that the surviving dependents of a deceased employee were entitled to disability benefits from the Fund under state law. (3) Criticism immediately followed this opinion, as it permitted surviving dependents to step into the shoes of deceased employees and receive benefits for a disability that died with the employee. (4)
Following Schoemehl, the state's executive officer, then-Governor Matt Blunt, alerted state agencies that the Fund was nearing insolvency. (5) The Governor added that the decision in Schoemehl only complicated the solvency issue because it extended the Fund's disability benefits liability beyond the employee to surviving dependents. (6) Audits and actuarial reviews conducted after the Governor's alert confirmed concerns about the Fund's solvency and projected that its resources would be depleted as early as the end of 2008. (7)
In response to growing concerns, the state legislature attempted to address the Schoemehl decision and the Fund's imminent insolvency. Subsequently, the legislature only addressed the Schoemehl decision by instituting a "fix" that abrogated future application of the Schoemehl decision. (8) Despite numerous proposals, no legislation was passed to address the financial distress of the Fund. It is now the onus of the 2009 state legislature to decide what course of action to take regarding the Fund's solvency.
This Law Summary will start by explaining the concepts underlying the Fund within the workers' compensation system. It will then move to an in-depth look at the Fund's recent developments in the judicial, executive, and legislative arenas. Finally, this Law Summary will analyze and attempt to answer the ultimate question facing the 2009 state legislature: what should be done with the Fund? This will include an examination of the Fund's future liability under its current claims and the Schoemehl decision, the need for the Fund in the wake on anti-disability discrimination laws, and adjustments and alternatives for the legislature to consider for increasing the Fund's revenues and decreasing its expenditures.
II. LEGAL BACKGROUND
A. Workers' Compensation Generally
Today's workers' compensation laws originated from an early 1900's movement against job-related injuries and deaths resulting from worker interaction with machinery and the inadequate remedies for injured workers in the common law tort system. (9) As a result, workers' compensation laws were established throughout the country to "provide a limited and exclusive remedy for employees injured in work-related accidents." (10)
In 1927 Missouri established its first set of workers' compensation laws, which provided a no-fault system of compensation for workers. (11) The purpose of workers' compensation laws is to satisfy injured workers' need for financial support that is not always adequately met by private insurance and tort claim awards, and to provide a less costly and more efficient process than such traditional remedies. (12) The workers' compensation system provides an alternative system to ameliorate losses sustained by employees received in the scope of work. (13) In application, the workers' compensation system serves a "dual role"--it protects employers by limiting monetary awards and tortious lawsuits against them, while simultaneously providing employees with medical treatment for work-related injuries, payment of lost wages, additional compensation for permanent disabilities, and physical rehabilitation. …