Wednesday, March 18, 2009


The Court of Appeals in Banks v Steelman, ED 91699 (Mo. App. 3-17-09)1 concluded the second injury fund is entitled to subrogation rights in a third party net recovery involving a motor vehicle accident, despite the lack of statutory language granting such rights.
Claimant received an award for permanent and total disability benefits, in addition to a $100,000 settlement in a third party case. The Commission denied the second injury fund's claim of subrogation. It does not address the bigger issue when both the employer and the second injury fund may be competing to recover subrogation.

Following Cole v Morrow, 409 S.W.2d 668 (Mo. App. 1966) the Eastern District reversed the Commission and was "constrained" to follow the earlier case that found a right to subrogation arising from common law even though it was not expressly granted in the statute. Judge Mooney in a concurring opinon concluded that the SIF should have pursued any subrogation recovery in a circuit court of equity as the Commission could only exercise authority granted by statute.

1Banks v Steelman, Custodian of SIF


No one disputed that the second injury fund has an equitable right to subrogation that does not exist anywhere in the statute, based on the parties' stipulations. However, claimant in a post hearing argument asserted that the Division had no statutory authority to determine what how much of the third party net recovery of about $54,000 that the Fund could reach to offset an award of permanent total benefits.

The Supreme Court in Banks V Clint Zweifel, SC 90131 (12-1-09) agreed that the circuit court would need to make such a determination, as the Division lacked jurisdiction. The case did not mention the issue discussed by the administrative law judge that after the employer asserts its subrogation rights against the third party settlement no further funds might exist which begs the question why the matter went as far as the Supreme Court.