By J. Bradley Young, Harris Dowell Fisher & Young L.C.
(Read Time – approximately 4 minutes)
On June 25, 2021, the Missouri Court of Appeals rendered a decision in the case of Phelps v. Mo. State Treasurer as Custodian of Second Injury Fund, No. SD36998 (Mo. Ct. App. June 25, 2021). While the Court of Appeals denied the permanent total disability (PTD) claim against the SIF, this case demonstrates how employers may have enhanced liability for permanent total disability unless statutory changes are made in the near future.
THE COURT'S HOLDING
In this case, the Court of Appeals found that the claimant was permanently and totally disabled. However, his pre-existing disabilities that were medically-causally related to a prior work injury did not amount to 50 weeks of disability as required for SIF liability for PTD under Section 287.220.3(2)(a)a.
The Court of Appeals relied heavily on the recent decision from the Missouri Supreme Court in Treasurer of Mo. v. Parker, No. SC98704 (Mo. Apr. 20, 2021). In the Parker case, the MO Supreme Court laid out the following test for PTD against the fund:
To qualify under the first condition, the preexisting disability must be medically documented [("the first requirement")], equal at least 50 weeks of permanent partial disability [("the second requirement")], and meet one of the following criteria [("the third requirement")]:
(i) A direct result of active military duty in any branch of the United States Armed Forces [("the first criteria")]; or
(ii) A direct result of a compensable injury as defined in section 287.020 [("the second criteria")]; or
(iii) Not a compensable injury, but such preexisting disability directly and significantly aggravates or accelerates the subsequent work-related injury and shall not include unrelated preexisting injuries or conditions that do not aggravate or accelerate the subsequent work-related injury [("the third criteria")]; or
(iv) A preexisting permanent partial disability of an extremity, loss of eyesight in one eye, or loss of hearing in one ear, when there is a subsequent compensable work-related injury as set forth in subparagraph b of the opposite extremity, loss of eyesight in the other eye, or loss of hearing in the other ear [("the fourth criteria")].
A preexisting disability must meet ALL three requirements ( (1) be medically documented, (2) equal at least 50 weeks of permanent partial disability, and (3) meet one of the four listed criteria, in order to qualify for PTD against the SIF, and the failure to meet any one requirement disqualifies the claimant from obtaining PTD against the SIF.
WHY THIS CASE IS IMPORTANT TO EMPLOYERS AND INSURANCE CARRIERS
The Court of Appeals in Phelps found that the claimant was PTD, but the SIF was NOT liable for PTD because the claimant did not meet the statutory criteria. If the employer in Phelps had not settled its claim with the claimant prior to proceeding to trial, I believe the Court of Appeals would have held the employer liable for PTD even though the primary claim with the employer did not, in and of itself, cause the claimant’s PTD.
The Eastern District Court of Appeals recently decided the case of Klecka v. Treasurer of Mo., No. ED108721 (Mo. Ct. App. June 22, 2021), where the Court of Appeals made it clear that in any case where the claimant is PTD and the SIF is not liable, the employer should be liable for the PTD regardless of the seriousness of the injury against the primary employer:
"Because if an employee establishes he or she is PTD as a result of a work related injury, either the employer or the fund is liable, not neither.”
"Again, it is about who pays when a claimant is PTD following a primary injury and the tighter the restrictions on Fund liability, the more PTD liability falls back on employer.” (Emphasis added)
“In the absence of a special statute in some manner, for some specific reason, limiting or cutting down his liability the employer and his insurer are obligated by law to pay the totally and permanently injured employee the full compensation benefits..."for life"…and this entire liability and this general rule is not affected by the fact that the employee may have had some physical handicap or the fact that he may have sustained a previous loss or permanent mutilation in some other employment resulting in partial disability."
Obviously, it is only a matter of time before the Court of Appeals hold an employer liable for PTD even if the claim against the employer is only a small or minor claim. That is why I will be working closely with Associated Industries of Missouri to push for legislation to ensure that employers and insurers are only held liable for PTD in cases where the last accident, alone, results in PTD. An employer/insurer should not be held responsible for PTD in situations where the last accident combines with prior injuries or conditions which then prevents the claimant from obtaining work in the open labor market.
We will keep you updated as this process unfolds. If you have any questions or wish to discuss this further, please contact Brad Young at firstname.lastname@example.org or (636) 532-0300.