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Supreme Court says claims barred against Second Injury Fund

Scott Lauck//June 28, 2019//

Supreme Court says claims barred against Second Injury Fund

Scott Lauck//June 28, 2019//

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A split Missouri Supreme Court ruled June 25 that permanent partial disability claims no longer can be brought against the Second Injury Fund following a 2014 change to the law, even if some of the claimant’s injuries predate the change.

The ruling upholds a key reform lawmakers enacted to keep the fund solvent, a motivation the court’s majority said was “not wholly irrational.”

Missouri Supreme Court
Missouri Supreme Court

The Supreme Court’s opinion doesn’t say what would happen to workers whose claims are denied. But Marshall Edelman of the Edelman Law Office in St. Louis, an attorney for the unsuccessful claimant in the case, said it’s likely that employers would be on the hook for the full value of injuries that otherwise would have been covered by the Second Injury Fund. Such a possibility was raised throughout the case, including in the briefing and arguments before the Supreme Court.

“We need to ask ourselves, do Missourians no longer have the ‘bargain’ that is workers’ compensation which was made in the 1920s?” Edelman said in an email. “And if it is not covered in workers’ compensation then can Missourians now sue Employers in civil court with uncapped damages for their work injuries?”

The Missouri Attorney General’s Office didn’t return a request for comment.

The Second Injury Fund covers claims by workers whose preexisting conditions are made worse by an on-the-job injury.  The fund’s money comes from a surcharge on the workers’ compensation insurance premiums that businesses pay.

In 2005, Missouri lawmakers capped the surcharge at 3 percent, causing a shortfall that nearly caused the fund to become insolvent and forcing the state delaying payment of awards to thousands of people. In 2013, lawmakers passed a law that, as of Jan. 1, 2014, temporarily increased the surcharge but barred claims for permanent partial disability, or PPD, occurring after the law’s effective date.

Shortly after the law went into effect, Douglas Cosby suffered a knee injury at work that worsened several prior injuries he’d suffered before the law changed. He sought PPD benefits from the Second Injury Fund, in addition to the workers’ compensation award he received through his employer for the knee injury itself. His claim was denied.

Cosby argued that the new law unconstitutionally bars his client from filing a claim for benefits. But the Supreme Court unanimously rejected arguments that, among other things, the law violated the equal protection clause of Missouri’s constitution by treating workers differently based on the date of their injury. That, Judge Patricia Breckenridge, “ignores the fact that, at the time [the statute] was amended, the fund was insolvent.”

“Under such circumstances, the legislature justifiably sought to limit the number of workers eligible for fund benefits,” she wrote.

The court split, however, not on constitutional issues but on the clarity of the statute. The majority said the law barred claims for “injuries” occurring in 2014 —a term statutorily defined as having “arisen out of and in the course of employment.”

Focusing on that definition, the majority said the revised law doesn’t “explicitly or implicitly provide an exception” for employees whose previous injuries occurred before the effective date.

“The plain and ordinary meaning of the language in section 287.220.3(2) precludes the filing of claims arising from injuries occurring after January 1, 2014, without regard to when any previous disability occurred,” Breckenridge wrote.

But Judge Laura Denvir Stith, joined by Judge George W. Draper III, reached the opposite interpretation. In a dissent, Stith argued that the law’s sections “are confusing if read in isolation” but could be harmonized by barring claims for employees who first suffered a permanent disability after the law went into effect but allowing them for those, like Cosby, whose injuries straddle the law’s effective date.

The court’s ruling overturned a 2017 Court of Appeals Western District opinion, Gattenby v. Treasurer, which had held that the new law restricts filings of permanent total disability, or PTD, claims only if both the preexisting and primary injuries occur after Jan. 1, 2014. Although the Supreme Court declined a request to review the case at the time, Tuesday’s opinion said in a footnote that Gattenby should no longer be followed.

The case is Cosby v. Treasurer of the State of Missouri, SC97317.

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