Missouri stops new settlements with disabled workers

JEFFERSON CITY | Missouri Attorney General Chris Koster said Thursday the state has temporarily stopped settling new cases with some injured workers because the fund used to pay claims is running out of money.

The decision affects already disabled workers who have been re-injured on the job. Missouri's Second Injury Fund covers the claims as an incentive for employers to hire disabled workers by taking them off the hook for employee injuries that worsen existing disabilities.

It's unclear exactly how many cases will be affected, but a spokeswoman for the attorney general's office said Missouri settles about 300 of the cases a month. In the year ending June 30, the attorney general's office settled about 3,750 cases.

Koster, a Democrat, said he ordered all outstanding settlement offers withdrawn. The attorney general's office said there should be enough money in the fund to cover cases already resolved, but there might not be enough for new settlements.

“Given information currently available, our office has determined it is in the best interests of existing claimants and the state that no new settlements be entered into until a greater understanding of the fund's solvency is reached and until further consultations with executive and legislative leaders are completed,” Koster said in a written statement.

The Second Injury Fund currently has $1.34 million, the state labor department said. One year ago, it had $13.6 million. Department spokeswoman Amy Susan said the fund paid out $74 million in 2008 and collected $55 million. The last time collections exceeded what was paid out was in 2005.

The fund's financial woes have been known for several years. Previous studies by the state auditor and the accounting firm PricewaterhouseCoopers concluded the fund would likely run out of money by this year.

The money in the Second Injury Fund comes from a surcharge on businesses' workers compensation insurance premiums. Until a 2005 law, the annual surcharge increased and decreased based on a formula created by the state Department of Labor and Industrial Relations. In 2005, lawmakers overhauled the workers' compensation system and capped the fee at 3 percent.

The fund's problems were a political issue in the Capitol.

Republican legislative leaders complained the attorney general's office — then led by Jay Nixon — was too generous in settling cases. Nixon, now the Democratic governor, questioned claims that the disability fund was headed toward insolvency. Democratic lawmakers said Republicans' decision to cap the business surcharge was to blame for the shortfall.

Koster's decision to stop settling the cases came after the state labor department told the attorney general and state treasurer that there were questions about the solvency of the Second Injury Fund. State Treasurer Clint Zweifel is the fund custodian.

Zweifel spokesman Jon Galloway said the decision to stop the settlements was expected.