Wednesday, November 21, 2012

Second Injury Fund Benefits and Common Defenses

Second Injury Fund Benefits

Missouri's second injury fund provides benefits for permanent partial and total disability. In addition, the Fund provides second job wage loss, medical bills for uninsured employers, and rehabilitation benefits.

As of January 1, 2012, there were 28,866 open Missouri SIF claims pending before the Division. In 2011, $29,908,031.01 in permanent total (PTD) benefits (lifetime benefits) was paid to 1,076 recipients. In 2011, the new recipients added were closer to the 2002 to the 2009 average of 70 new injured employees receiving benefits annually. In 2011, 775 injured workers received permanent partial disability (PPD) benefits from the SIF. This is more than twice the number of recipients paid in 2010. The total amount of PPD benefits paid in 2011 was $6.4 million at an average of $8,311 per recipient. The SIF paid approximately $42,000 to injured employees for rehabilitation benefits in 2011. This amount covered weekly benefits for 103 injured workers. Seventeen injured employees received second job wage loss benefits from the SIF in 2011 for second job wage loss. The amount paid in 2011, $88,199.48, more than double what was paid in 2010. The average lump sum payment in 2011 was $4,376.92. The average lump sum medical benefit in 2011 was also about 40 percent less than the average payment in 2010 at $24,310.06.

Fund liability may also include interest on unpaid medicals for uninsured employers. Eason v Treasurer of Mo., 2012 Mo. App. Lexis 711 (applying pre-reform liberal construction), 2012 MO WCLR Lexis 188 (awarding $26,384.01 in interest).

Common Second Injury Fund Defenses

Several recent cases address common and unusual arguments asserted by the Fund.

The injured worker has the burden or proof.  The claimant does not automatically win because the Fund fails to prepare a defense. "The Fund need not establish by medical evidence or otherwise that the injury was caused by something other than the employee's job; rather, the employee has the burden to prove a direct causal link between his injury and his employment. Therefore, the Fund was not required to introduce any medical evidence."  Seifner v Treasurer of Mo., 362 S.W.3d 59 (Mo. App 2012)

Is the "injury" compensable?

The claimant failed to prove a primary compensable injury. The Second Injury Fund can assert defenses available to the employer that claimant failed to prove a compensable primary injury.

Same or similar body parts?  One issue is whether subsequent injuries to the same part of the body are to be regarded as separate “accidents” for fund purposes are part of the same injury. Pace v City of St. Joseph, 2012 Mo. App. Lexis 716; Webb v UPS, 2010 MO WCLR Lexis 3. A related issue is determining what is the medical condition and if a subsequent injury is the same diagnosis or condition to show whether a synergistic effect exists.  In Heston v Rock Hill Mechanical, 2009 MO WCLR 113, for example, claimant had a prior settlement for a spinal injury but reports his new injury caused an "increased herniation" and a small annular tear. 

Is the accident idiopathic?  Claimant rose from a squatted position and fell backwards. Woodruff v Health Mgmt. Assoc., 2012 Mo WCLR Lexis 191 (Nov. 9)(awarding benefits and noting the Fund offered no evidence on the defense.)

When did the disability occur? Fund liability may include conditions which become disabling after the date of a pled accident. Cohu v Earth Grain Breads Co., 2011 Mo WCLR Lexis 202 (the Commission considered the date of a subsequent bilateral knee replacement as the date of disability for purposes of 287.220). This conclusion is similar to Garrone v The Treasurer of the State of Mo., 157 S.W.3d 237 (Mo. App. 2004).

Does Fund liability apply to repetitive trauma? The Fund has liability even though a primary injury may arise from a repetitive trauma or occupational disease because it is a subsequent compensable injury. Peters v Treasurer of Mo, 2012 MO App. Lexis 1394, ED 98300 (Nov. 6, 2012); Magouirk v American Family Ins. Co., 2012 Mo WCLR Lexis 180 (Oct 10, 2012), Treasurer of the State of Mo v Stiers, 2012 MO App Lexis 1273 (Mo App WD Oct 9, 2012), Cassell v Dierbergs, 6-27-2013; Allen v Chrysler, 2-4-13, Clifton v Kupferer, (2-1-13) (hearing loss); Mills v MEMC, 2013 MO WCLR Lexis 16 (Jan 29, 2013) (affirming PTD award against the Fund), Burke v City of St. Louis, 2013 MO. WCLR Lexis 2 (Jan 10, 2013)(affirming award of $25,488.00 against Fund for 20% load); Coleman v Jarrell Contracting, 2013 Mo WCLR Lexis 7;  Morris v Air Hydraulics, 2013 Mo WCLR Lexis 3 (Jan. 10, 2013); Harris v Hutkin Development Co., 2012 Mo WCLR Lexis 193 (Nov. 9, 2012); compare Keay v Play Power, 2012 Mo WCLR Lexis 122 (June 19, 2012); Skornia v American Mechanical, 2012 Mo. WCLR Lexis 113 (June 6-2012); Fanny v Ameren, 2012 Mo WCLR Lexis 84 (April 12-2012); Anderson v Anderson, 2012 Mo WCLR Lexis 46 (March 15, 2012), Joplin v Gates Rubber Co., 2012 MO WCLR Lexis 33 (March 8, 2012); Kitson v Verizon Communications, 2012 Mo WCLR Lexis 40 (March 8, 2012).

Disfigurement from injury.  The claimant is not entitled to a double recovery for disfigurement from the employer and the second injury fund.  Woods v Village Green Management, 2012 Mo WCLR Lexis 214 (December 19, 2012) (Modifying award).

Is Claimant PTD from the last accident alone?

Claimant has no compensable claim for SIF benefits when the last accident alone renders claimant unemployable. The Commission has suggested further inquiry about pre-existing conditions after this determination is inappropriate. Wright v Palmentere Bros Cartage Service, 2012 Mo WCLR Lexis 192 (Nov. 9, 2012).  In these circumstances, there is no proof of a synergistic effect required for Fund liability.

This finding may exist in several circumstances: onerous restrictions from the first injury, Smyth v Oscar Wilson Engine and Parts, 2011 MO WCLR Lexis 56, high levels of disability from the first injury, Hill v The Boeing Company, 2010 MO WCLR Lexis 169 (MS). Evidence regarding prior restrictions does not shift liability to the Fund depending on the disabling nature of the primary injury. Carpenter v Trio Masonry, 2009 MO WCLR Lexis 54, affirmed 304 S.W.3d 803 (Mo. App. 2010) (prior career changes and long work medical absences).

Claimant’s prior condition was not “disabling” with or without restrictions

The Commission continues to reject the defense that second injury fund liability does not attach unless there is direct evidence of previous  disability.

In a case involving a claim for pre-existing obesity the commission noted: "We are convinced a cautious employer could reasonably perceive employee's obesity as having the potential to combine with a work related injury so as to produce a greater degree of disability than would occur in the absence of such condition. Accordingly, we conclude employee's obesity was serious enough to constitute a hindrance or obstacle to employment." The commission notes the proper focus is: "not on the extent to which the condition has caused difficulty in the past; it is on the potential that the condition may combine with a work-related injury in the future so as to cause a greater degree of disability than would have resulted in the absence of the condition." Gillham v Clarendon National Ins. Co., 2012 Mo. WCLR Lexis 139.  Similarly, the Commission has  rejected the argument that no SIF liability attaches because claimant worked full duty at the time of the accident.  Reed v Government Employees Hospital Association, 2010 Mo WCLR Lexis 122 (noting previous FMLA leave and accommodations or bathroom breaks).

The Commission rejected an argument that because claimant had not missed time “recently” he did not have a prior disability, even though he had been off work several years and previously on social security due to permanent restrictions Fielder v NBA, 2010 MO WCLR Lexis 199.
The Commission rejected an argument that claimant’s prior heart condition was “asymptomatic”, despite a history of multiple prior heart surgeries. Lichtinger v Swiss Meats, 2011 Mo WCLR Lexis 127.

Is the disabling condition  "measurable"?  Complaints of shortness of breath did not create evidence of a "measurable" disability, even though claimant was subsequently diagnosed after the accident with cardiomyopathy.  Tombaugh v Chux Trux, 2011 Mo WCLR Lexis 252. Similarly, The Commission denied benefits noting that the alleged prior disabilities of AVN and COPD were “undetectable” by multiple doctors. Peck-Miller v UPS, 2010 MO WCLR Lexis 121.

Does claimant have self-imposed hour restrictions?  The part-time or semi-retired worker raises issues whether or not claimant’s self-imposed work restrictions flow from medical conditions or other reasons. In Roberson v Ben Hur Construction, 2010 MO WCLR Lexis 117, a claimant was denied total benefits who did not consider all "gainful" employment but only jobs that paid an "appropriate" salary. This may produce a different result when a claimant is on social security at the time of the accident but limits employment to preserve eligibility for benefits and not for medical reasons. O’Conner v Ozark R-4 School District, 2009 Mo. WCLR Lexis 105; Johnson v Walmart, 2009 Mo WCLR Lexis 46.

Claimant fails to establish a prior disability at certain threshold levels.

The Supreme Court is to address if prior disabilities have to be 12 1/2% BAW or 15% of an extremity but multiple prior conditions or be stacked to reach the threshold even if they do not separately reach statutory thresholds. Treasurer v State of Mo v Witte, 2012 Mo App. Lexis 1093, Salviccio v Western Supplier Co., 2012 Mo. App. Lexis 1098; Dyson v Treasurer of the State of Mo., 2012 MO App Lexis 1205, ED 97865 (Mo. App. 2012) Buhlinger v Treasurer of the State of Mo., 2012 Mo. App. Lexis 1212.
Oral arguments were held before the Mo. Supreme Court on December 11,2012 in Witte (SC92834), Salviccio (SC 92842) and Dyson (SC 92850).

In Manning v Hussmann Corp., 4-11-2013, 2013 MO WCLR Lexis 70; the Commission found that a prior settlement below the 15% threshold did not preclude claimant from pursuing second injury fund benefits when he produced new medical evidence from Dr. Volarich that his condition had worsened between the time of the settlement and the new injury.  The Commission modified the finding that  prior disability represented in the  12 1/2% settlement was now really  17 1/2% resulting in about another $2300 in the award.  The SIF offered no medical evidence to contest the findings. 

In Dixon v Jefferson Asphalt, 2013 Mo WCLR Lexis 17 (Jan 29, 2013) the Commission distinguished Witte and found that a prior cardiac condition and a prior heart condition combined together as both BAW conditions  to reach 20% prior disability to combine with a forearm injury.   ALJ Fischer awarded a de minimus load of 2.75%. 

In Allen v Chrysler (Feb. 4, 2013) the Commission affirmed an award that declined to stack a pre-existing 10% settlement below-threshold to a primary injury involving the same body part.   

Post-Accident Worsening and causation disputes

Claimant's vocational expert fails to differentiate post-accident worsening in a claim of permanent total benefits. Rowe v Barnes Jewish Hospital, 2012 Mo WCLR Lexis 66.

Claimant's need to lie down was a factor in finding him a PTD against the second injury fund, according to the Commission. Hilgart v Kabul Nursing Home, 2012 Mo WCLR Lexis 146 (July 25, 2012). The ALJ found claimant's need to lie down flowed from a post-accident fibromyalgia and had awarded only PPD benefits against the Fund.

“Don’t ask, don’t tell”

The SIF has argued that the employer would not regard claimant as disabled if the claimant concealed any prior disabilities when he was hired.

The Fund offered expert testimony that claimant would not be vocationally impaired if she did not fully disclose her condition regarding her need to sleep due to back pain while applying for a job. Swartz v Nevada Habitation Center, 2012 Mo. WCLR Lexis 140 (July 12, 2012)

The Commission found that claimant was not capable of competing for employment in the open labor market because of his lack of candor, when he did not disclose debilitating back pain for 7 years before he was hired, his previous qualification for social security disability, and his own admission that he knew he would not be hired if he admitted his back pain and daily narcotic use and being “boogered up.” Cook v Buckley Powder Co., 2011 MO WCLR Lexis 52.

Unjust Enrichment

Claimant is unjustly enriched by an award of medical bills. The Fund argued paying claimant about ¼ million in medical bills might be a windfall if claimant didn’t pay the bills back to the medical providers. Skinner v. Donna Morgan, 306 S.W.3d 146 (Mo. App. 2010) finding strict construction and prior case law of Wilmeth v TMI Inc., 26 S.W.3d 476 (Mo.App. 2000), reject such a defense as unfounded and "conjuring a speculative scenario."


Claimant waived any Fund claims by settlement. The Second Injury Fund denied liability for a SIF claim made about a year after claimant settled with the employer and the settlement language of the original contract indicated claimant released the second injury fund from all liability. Noting the Fund was not a party to the contract, the court of appeals found the Fund lacked standing to enforce the waiver in Grubbs v Treasurer, 298 S.W.3d 907 (Mo. App. 2009).

 Section 287.220 describes the Fund's liability.

287.220. 1. All cases of permanent disability where there has been previous disability shall be compensated as herein provided. Compensation shall be computed on the basis of the average earnings at the time of the last injury. If any employee who has a preexisting permanent partial disability whether from compensable injury or otherwise, of such seriousness as to constitute a hindrance or obstacle to employment or to obtaining reemployment if the employee becomes unemployed, and the preexisting permanent partial disability, if a body as a whole injury, equals a minimum of fifty weeks of compensation or, if a major extremity injury only, equals a minimum of fifteen percent permanent partial disability, according to the medical standards that are used in determining such compensation, receives a subsequent compensable injury resulting in additional permanent partial disability so that the degree or percentage of disability, in an amount equal to a minimum of fifty weeks compensation, if a body as a whole injury or, if a major extremity injury only, equals a minimum of fifteen percent permanent partial disability, caused by the combined disabilities is substantially greater than that which would have resulted from the last injury, considered alone and of itself, and if the employee is entitled to receive compensation on the basis of the combined disabilities, the employer at the time of the last injury shall be liable only for the degree or percentage of disability which would have resulted from the last injury had there been no preexisting disability. After the compensation liability of the employer for the last injury, considered alone, has been determined by an administrative law judge or the commission, the degree or percentage of employee's disability that is attributable to all injuries or conditions existing at the time the last injury was sustained shall then be determined by that administrative law judge or by the commission and the degree or percentage of disability which existed prior to the last injury plus the disability resulting from the last injury, if any, considered alone, shall be deducted from the combined disability, and compensation for the balance, if any, shall be paid out of a special fund known as the second injury fund, hereinafter provided for. If the previous disability or disabilities, whether from compensable injury or otherwise, and the last injury together result in total and permanent disability, the minimum standards under this subsection for a body as a whole injury or a major extremity injury shall not apply and the employer at the time of the last injury shall be liable only for the disability resulting from the last injury considered alone and of itself; except that if the compensation for which the employer at the time of the last injury is liable is less than the compensation provided in this chapter for permanent total disability, then in addition to the compensation for which the employer is liable and after the completion of payment of the compensation by the employer, the employee shall be paid the remainder of the compensation that would be due for permanent total disability under section 287.200 out of a special fund known as the "Second Injury Fund" hereby created exclusively for the purposes as in this section provided and for special weekly benefits in rehabilitation cases as provided in section 287.141. Maintenance of the second injury fund shall be as provided by section 287.710. The state treasurer shall be the custodian of the second injury fund which shall be deposited the same as are state funds and any interest accruing thereon shall be added thereto. The fund shall be subject to audit the same as state funds and accounts and shall be protected by the general bond given by the state treasurer. Upon the requisition of the director of the division of workers' compensation, warrants on the state treasurer for the payment of all amounts payable for compensation and benefits out of the second injury fund shall be issued.

2. In all cases in which a recovery against the second injury fund is sought for permanent partial disability, permanent total disability, or death, the state treasurer as custodian thereof shall be named as a party, and shall be entitled to defend against the claim. The state treasurer, with the advice and consent of the attorney general of Missouri, may enter into compromise settlements as contemplated by section 287.390, or agreed statements of fact that would affect the second injury fund. All awards for permanent partial disability, permanent total disability, or death affecting the second injury fund shall be subject to the provisions of this chapter governing review and appeal. For all claims filed against the second injury fund on or after July 1, 1994, the attorney general shall use assistant attorneys general except in circumstances where an actual or potential conflict of interest exists, to provide legal services as may be required in all claims made for recovery against the fund. Any legal expenses incurred by the attorney general's office in the handling of such claims, including, but not limited to, medical examination fees, expert witness fees, court reporter expenses, travel costs, and related legal expenses shall be paid by the fund. Effective July 1, 1993, the payment of such legal expenses shall be contingent upon annual appropriations made by the general assembly, from the fund, to the attorney general's office for this specific purpose.

3. If more than one injury in the same employment causes concurrent temporary disabilities, compensation shall be payable only for the longest and largest paying disability.

4. If more than one injury in the same employment causes concurrent and consecutive permanent partial disability, compensation payments for each subsequent disability shall not begin until the end of the compensation period of the prior disability.

5. If an employer fails to insure or self-insure as required in section 287.280, funds from the second injury fund may be withdrawn to cover the fair, reasonable, and necessary expenses to cure and relieve the effects of the injury or disability of an injured employee in the employ of an uninsured employer, or in the case of death of an employee in the employ of an uninsured employer, funds from the second injury fund may be withdrawn to cover fair, reasonable, and necessary expenses in the manner required in sections 287.240 and 287.241. In defense of claims arising under this subsection, the treasurer of the state of Missouri, as custodian of the second injury fund, shall have the same defenses to such claims as would the uninsured employer. Any funds received by the employee or the employee's dependents, through civil or other action, must go towards reimbursement of the second injury fund, for all payments made to the employee, the employee's dependents, or paid on the employee's behalf, from the second injury fund pursuant to this subsection. The office of the attorney general of the state of Missouri shall bring suit in the circuit court of the county in which the accident occurred against any employer not covered by this chapter as required in section 287.280.