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  • AIM Team

Second Injury Fund supplemental surcharge receives Senate hearing

April 13, 2021 - HB 384, sponsored by Rep. Rudy Veit, was heard today in the Senate Insurance and Banking Committee, chaired by Sen. Paul Wieland.

The bill would extend the current Second Injury Fund Supplemental Surcharge at a maximum of 3% for three years. The Surcharge will sunset in December 2021 without legislative action.

Associated Industries of Missouri testified against the bill, noting the Second Injury Fund Supplemental Surcharge need only be set at 2% according to a required independent actuarial study of the health of the Second Injury Fund. AIM and other business groups have called for extending the supplemental surcharge at a maximum of 2% and setting the expiration date at two years to allow a review of the health of the Fund at that time and make any necessary corrections. The Missouri Department of Labor has disagreed, asking for a maximum surcharge of 3% for the first year due to COVID. Negotiations with the DOL continue.

In a message to Chairman Wieland, Ray McCarty, president and CEO of Associated Industries of Missouri said, "We continue to argue a maximum supplemental SIF surcharge of 2% should be sufficient, according to the actuarial report, but understand the DOL believes 3% will be necessary next year due to COVID. We are willing to support up to 3% the first year, up to 2% the second year and sunset the surcharge after two years to allow us to examine the health of the Second Injury Fund and make any necessary adjustments."

McCarty asked Sen. Wieland to consider this position as he negotiated the bill and asked that legislators remember this discussion is about employers' money - not state funds.

"Employers fund the Second Injury Fund. The last thing we want is a Second Injury Fund that is flush with excess cash to be preyed upon by trial attorneys - the original reason the Second Injury Fund went broke in the first place," he said.

The Second Injury Fund Supplemental Surcharge was originally enacted to pay down a large backlog of claims against the Second Injury Fund that had built up as the Fund went broke at the hands of plaintiffs' attorneys that regularly sued the Fund and received compensation for their clients for injuries that were not related to work or service in the military - the original reason for the Second Injury Fund. The abuse was so bad, political TV commercials mocked the Fund and its management by some in the Attorney General's Office at the time.

"We watched as plaintiffs' attorneys bled the Second Injury Fund dry - a fund that was set up to provide employment opportunities for returning war veterans with a service injury, but became a source of payment for injuries sustained at home or play rather than work," said Ray McCarty, president and CEO of Associated Industries of Missouri. "Plaintiffs' attorneys love the Second Injury Fund. While we want to meet employers' obligations in paying proper work-related claims, we do not want the Fund to receive more employer money than is absolutely necessary for the proper operation of the Fund. The actuarial study says they need 2% and that should be the maximum amount of the surcharge, period," said McCarty.

Rep. Veit, the sponsor of the proposal, is a prominent practicing attorney with the Carson and Coil Law Firm in Jefferson City, according to his official biography. Mr. Veit’s litigation practice is primarily devoted to representing personal injury plaintiffs, employees, workers’ compensation claims and condemnation cases for landowners whose property is being condemned for eminent domain purposes, according to the law firm website.

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