"Truly Agreed To And Finally Passed" by the Missouri State Legislature on May 16 and delivered to the governor's desk May 30, Senate Bill 1 has been the subject of many prayers for one lake area couple.
Allen and Chris Robinette say they are continuing to pray that the bill will become law now that it is before the governor.
Among other reforms to state workers' compensation laws, SB 1 would create a supplemental funding mechanism for the Second Injury Fund as well as make changes to try to make the fund more sustainable.
The SIF compensates injured employees when a current work-related injury combines with a prior disability to create an increased combined disability with the concept that the whole is greater than the sum of the parts.
Allen Robinette is currently one of hundreds of citizens around the state who was awarded disability payments from the SIF but has yet to receive any money.
The Sunrise Beach area resident is seeking to receive payments for the 100 percent permanent disability he was awarded in court in Nov. 2011 after suffering an injury on the job in addition to a prior disability from loss of hearing.
According to the court order, Robinette is supposed to be receiving $256 per week, dating back to the time of his injury in 2007. But on Dec. 23, 2011, he received a letter from the Missouri Attorney General's Office stating that while his claim was scheduled for payment from the fund on Dec. 26, the SIF was "unable to make that payment."
Since then, they have been in limbo, living on a limited income with bills from medications, rent and other living expenses.
After getting an attorney to find out why he wasn't getting the payment, the Robinettes learned of the financial troubles of the SIF.
While the fund is administered by the state treasurer and defended by the state attorney general, Missouri businesses fund the SIF through a surcharge on all workers' compensation and self-insurance policies.
Until eight years ago, the surcharge was an adjustable percentage of their premium determined through an actuarial study conducted every three years. The percentage ranged from 1 to nearly 5 percent over the years.
In 2005, the SIF had $25 million in reserves and had netted a $9 million surplus that year.
While the upcoming actuarial study would likely have reduced the surcharge to compensate for the surplus, the state legislature permanently capped the surcharge at 3 percent though a fiscal note attached to the bill noted that it would eventually lead to insolvency.
By 2008, the foretold insolvency was starting to come true. According to the attorney general's office, the SIF's annual expenditures had increased to $74 million while its revenue dropped to $56 million, eating quickly into the large reserve that had existed.
Page 2 of 3 - To stave off complete collapse, the settlement authority for meritorious claims was lowered from $60,000 to $40,000. Despite this effort, the SIF's balance fell to $4 million by the end of 2009.
At that point, the attorney general's office stopped all settlement negotiations and required every claimant to prove their case in court. Approximately one-third of the staff and attorney defending the SIF were later laid off as well.
The state stopped paying new permanent total disability awards in March 2011 so that the SIF could build up enough revenue to pay its ongoing, pre-existing obligations. While the pay out side may have stopped, the claimant entry process continued.
As of Feb. 1, 2012, the SIF had unpaid bills of more than $14 million that had mounted up since the prior May due to the cost of judgements to 184 claimants who received total disability awards in the 10 months since March 2011 and who were owed regular payments, according to the attorney general's office. By not making the payments, the state was also accruing additional debt at a rate of 9 percent.
By fall 2012, the number of claimants going unpaid had grown to close to 400.
In 2012, the attorney general's office reported that SIF revenues totaled $43 million a year with expenses of $77 million a year and had $160 million in unrealized liabilities and only $9 million in the bank.
With SB 1, bill sponsor Senator Scott T. Rupp, R-Wentzville, said in a May 17 press release that the legislature is moving forward to revitalize the SIF while protecting Missouri businesses.
“I know many citizens and their families have been struggling as they await their settlement from the Second Injury Fund and have been frustrated with the insolvent system. This bill is a helpful tool to make life better for those families," Rupp said.
If SB 1 becomes law, the Division of Workers' Compensation would impose an additional supplemental surcharge not to exceed 3 percent of net premiums from 2014-2021.
To make the surcharge more sensitive to the fluctuations of business, SB 1 requires the actuarial study to be conducted every year beginning in 2014 rather than every three years.
In addition to providing additional funding for the next eight years, the bill looks to reduce the SIF's obligations over time.
According to the bill summary, claims for permanent partial disability would not be allowed against the SIF upon its effective date as law. Claims for permanent total disability would only be allowed going forward when there exists a medically documented preexisting permanent partial disability that meets certain standards.
Currently, the SIF covers necessary expenses relating to the death and injury of employees of uninsured employers. Under SB 1, the fund would no longer cover those costs going forward.
Compensation would not be payable from the SIF when employees elect to pursue workers' compensation outside of the state, and life payments paid out of the fund would be suspended for all injured employees when the employee is able to obtain suitable gainful employment or be self-employed in view of the nature and severity of the injury.
Page 3 of 3 - With the back log of payments, SB 1 also outlines the priority for funding liabilities: Expenses relating to legal defense of the fund, permanent total disability awards in the order in which they are settled or finally adjudicated, permanent partial disability awards in the order in which they are settled or finally adjudicated, medical expenses incurred prior to July 1, 2012 and interest on unpaid awards.
Under the Missouri Constitution, the governor has until July 14 to either sign or veto legislation. If a bill is not signed or vetoed by then, it automatically becomes law. The effective date of SB 1 is Jan. 1, 2014.