Tuesday, July 19, 2011

287.220(5) interest: SIF liability

Claimant entitled to pre-judgment interest against second injury fund

A claimant may recover pre-judgment interest against the second injury fund under "liberal" construction for unpaid bills of an uninsured employer, according the western court of appeals, reversing the Commission which found interest owed only after an award.  Eason v Treasurer of Mo., 2012 Mo. App. Lexis 711 (May 22, 2012).

Judge Welsch  noted that 287.220 did not expressly prohibit interest.  The court applied the general interest statute and cases addressing interest against employers.  Claimant must satisfy the three prong test of  McCormack v. Stewart Enterprises, 956 S.W.2d 310 (Mo. App. 1997),  which allowed interest in some cases against employers pursuant to 287.160. The expenses must have been due at the time of the demand, the amount of the expenses must have been readily ascertainable, and payment must have been demanded.In order to prove that expenses were "due" at the time of the demand, Eason must prove that he "paid the expenses, his providers were demanding interest of him, or he suffered a loss by the delay in payment.  The Fund had stipulated or did not dispute claimant had a "loss", which was the first prong.  The court  noted that at oral argument, the parties were unable to explain the loss required to satisfy this element.

The court declined to address whether strict construction mandated by statutory reform would produce a different result. The Court found  interest began to accrue potentially once the claimant added the Fund as a party while the case remained pending.

Claimant fell about 15 feet off of a car carrier and required ORIF for a tibia fracture, resulting in $46,802 in medical bills.  The employer went into bankruptcy.  The employer's Oklahoma  insurance policy did not cover the accident which occurred in Missouri.  The administrative law judge found the second injury fund liable for unpaid bills pursuant to 287.220(5) because the employer was uninsured.  The administrative law judge awarded the medical bills with open medical but denied interest, a decision affirmed unanimously by the Commission.

The claimant asserted that   408.020 required the Fund to pay interest.  The commission denied interest for two reasons:  the Fund was not a "debtor" until after an award, when the administrative law judge found that a debt was owed.  Second, the Fund's obligation to pay medical bills was not mandatory, unlike employers.  The employer "shall" pay the bills under the mandate of 287.140.1.  The second injury fund, however, is not obligated by similar mandatory  language and  287.220.5 indicates that funds "may" be withdrawn.  The commission noted it was well-established that the Fund could owe for interest under certain circumstances.
ALJ:  Fisher
Atty:  Doyle, Hammers
Experts:  Geist