Work Comp Update: If Second Injury Fund isn't liable, is employer?

By Brad Young of Harris, Dowell, Fisher & Young, L.C.; and Ray McCarty, Associated Industries of Missouri

Brad Young

April 10, 2025 - What happens when a worker claims the Second Injury Fund (SIF) is liable for permanent total disability (PTD) benefits, but the SIF is determined to NOT be liable? Is the employer (or the employer's insurer) liable instead?

The Second Injury Fund was originally established to prevent discrimination against injured veterans returning from WWII.  Modern discrimination laws protect veterans and prohibit employers from discriminating against a potential worker because of any disability. But before these laws were passed, the SIF allowed employers to hire these veterans without risking increases in their workers' compensation rates should those workers become injured on the job and the resulting injury was worse because of their previous injury. 

Over time, the purpose of the SIF was expanded to cover injuries that were not work-related or service-related through liberal interpretation of the law by administrative law judges in suits brought by plaintiffs' attorneys.  As a result of this expansion, payouts rapidly bankrupted the SIF and employers were asked to pay more to support the SIF.

In 2013, Missouri employers, through the efforts of Associated Industries of Missouri and other employer advocates, responded by passing legislation that stopped payments from the SIF for permanent partial disability and limited permanent total disability (PTD) benefits to only second injuries following an injury due to military service or prior work comp injuries, or to situations where previous injuries aggravated or accelerated a subsequent work-related injury (Sec. 287.220, RSMo). This reduction of liability for the SIF was coupled with a temporary increase in the SIF surcharge paid by employers and the SIF became solvent again in the years following these changes.

However, in reducing this liability, an enormous question was raised: “What happens when a claimant has a work injury that combines with non-qualifying prior injuries, creating permanent total disability?  Is the employer liable when the SIF is not liable?”

The Plaintiffs' Bar has been arguing since 2013 that in the absence of SIF liability for PTD, the employer is liable for the PTD when the work injury combines with non-qualifying pre-existing injuries to create permanent total disability.  The Plaintiffs' Bar cites a case issued 50 years before the legislation shoring up the SIF was enacted. Federal Mutual Company v. Carpenter, 371 S.W.2d 955 (Mo. 1963) states:

“In the absence of an apportionment statute or … [F]und legislation, the employer is liable for the entire disability resulting from a compensable injury and this of course may include lifelong medical payments.”

My response to this argument is always this – the Workers' Compensation Law protects employers from liability unless the work injury, in and of itself, results in the PTD.  Section 287.220 (2) states:

“In all cases of permanent disability…. if the employee is entitled to receive compensation on the basis of the combined disabilities, the employer at the time of the last injury shall be liable only for the degree or percentage of disability which would have resulted from the last injury had there been no preexisting disability.”

For more than a decade, the Workers' Compensation Bar has been waiting for the Court of Appeals to resolve this issue, and the Plaintiffs' Bar has been expecting the courts to find employers liable for PTD in cases where the work injury itself does not result in PTD, but the claimant cannot work due to a combination of the work injury and pre-existing disabilities (like diabetes, obesity, depression, etc.).

One recent case the Plaintiffs' Bar hoped would answer this question is Thomas v. Collins and Herman, case No. ED112795 .  In that case, claimant was PTD but there was a question as to whether the SIF would have PTD liability or whether the employer bear that responsibility.  As the Court notes in the decision:

“Because the Commission found the Fund was not liable for PTD benefits, Claimant asserts Employer is liable under Federal Mutual…Claimant asserts when the employee is not entitled to compensation from the Fund under this section, the employer is responsible for the disability from the primary injury in combination with the prior disabilities.”

THE COURT REFUSED TO RULE DUE TO A TECHNICALITY

The Court of Appeals refused to decide the question of whether an employer can be held liable for PTD when the work injury combines with prior injuries and disabilities because the claimant’s attorney did not first raise this issue with the Labor and Industrial Relations Commission.  Because the issue was first raised at the Court of Appeals, and the Court of Appeals will not decide a legal issue unless that legal issue is raised first at the Industrial Commission level, the Court did not answer this question...yet.

WHAT’S NEXT

Since the Court of Appeals punted on reaching a decision here, it is only a matter of time before the Plaintiff’s Bar preserves this legal point and properly brings this issue to the Court of Appeals for a decision.  This is an enormous issue, because a bad ruling from the Court of Appeals could make Missouri more like Illinois regarding liability for PTD.  In Illinois, employers always have the potential for PTD liability for almost any injury (even minor injuries) when claimants are over 55 years old or have significant prior disabilities.

When the Missouri Court of Appeals eventually answers this question, we will write another article. If you have any questions or if you want to discuss this issue further, you may contact:

Brad Young

Harris Dowell Fisher & Young L.C.

15400 South Outer 40, Suite 202

Chesterfield, MO 63017

Office: (636) 532-0300

Cell: (314) 406-3095

Email:  byoung@harrisdowell.com