The Missouri Senate passed legislation early Wednesday that could clear the way for more than a thousand disabled workers to finally begin receiving payments from a special state fund that has essentially run out of money.
The measure, which now heads to the House for a final vote, also would change the way people who suffer job-related illnesses receive compensation. The two-part legislation is intended to reverse some of the consequences stemming from a 2005 state law that overhauled Missouri's workers' compensation system.
Among other provisions, that law capped the fees businesses pay into a special state fund for disabled employees who suffer additional work-related injuries. Partly as a result of that cap, the Second Injury Fund has run up a deficit that has led the attorney general to halt payments to 1,262 people who have been awarded benefits since November 2011.
Although it has a balance of $9.3 million, the Second Injury Fund owes more than $32 million in initial payments to people, not counting the interest that has been accruing, according to figures from the attorney general's office. It also has more than 30,000 pending claims that remain to be decided or settled.
Put bluntly: "The fund is broke," said Sen. Scot Rupp, R-Wentzville.
The fund currently is financed by businesses through a surcharge on their workers' compensation insurance premiums that was capped under the 2005 law at 3 percent, instead of being allowed to fluctuate based on the fund's annual expenses. The legislation sponsored by Rupp would allow state Division of Workers' Compensation to raise that surcharge to 6 percent, beginning in 2014 and continuing through 2021.
The increased revenues would allow the state to pay off the backlog of claims, and future costs would be held down by new wording limiting the fund's coverage to only the most serious work-related disabilities.
Another aspect of the legislation seeks to reverse the way courts have interpreted the 2005 workers' compensation law. In general, the workers' compensation system is meant to allow injury claims to be resolved through an administrative process instead of the courts - thus guaranteeing a benefit for injured workers and holding down legal costs for businesses. The 2005 law made it harder for employees to prove that an injury was work-related, and it required its provisions to be strictly interpreted.
As a result, judges have ruled that occupational diseases no longer are covered under the definition of "accident," and thus aren't required to be handled through Missouri's workers' compensation system. That has raised concerns among businesses groups that employers could get hit with costly lawsuits for work-related illnesses, such as cancer caused by asbestos exposure.
The legislation passed by the Senate would again place most job-related illnesses under the umbrella of the workers' compensation system. But it would give businesses the choice of how to handle potentially costly cases of an asbestos-related cancer called mesothelioma. Employers could elect to cover it through the workers' compensation system, which would pay an enhanced benefit of $500,000; they could choose to pay into a newly created mesothelioma fund; or businesses could take their chances in the courts.
The Missouri Chamber of Commerce and Industry, which was involved in the negotiations for the final version of the bill, said employees would have a remedy for their illnesses under any of the options.
"This is fair. If you have a claim, you're going to get taken care of," said Dan Mehan, the chamber's president and CEO.
Rupp said he was told by staff for Democratic Gov. Jay Nixon that the governor would sign the legislation. Nixon vetoed a bill last year that would have restored coverage of occupational diseases to the workers' compensation system, because he said it didn't provide an adequate remedy for people to recover money for serious diseases such as mesothelioma.
Rupp said this year's bill is "good for businesses, injured employees and the taxpayers of the state."