House Committee Substitute

HCS/SS#2/SCS/SB 1 - This act modifies the law relating to the Second Injury Fund, occupational disease within the workers' compensation system, and workers' compensation insurer experience rating plans.

The act affirmatively states that occupational diseases are exclusively covered under workers' compensation laws.

The act defines "occupational diseases due to toxic exposure" and creates an expanded benefit for occupational diseases due to toxic exposure equal to 200% of the State's average weekly wage for 100 weeks. For mesothelioma cases when the employer is an asbestos manufacturer, an additional amount of 300% of the state's average weekly wage for 191 weeks shall be paid. Upon death, such payments shall be provided to the employee's spouse or children or to the employee's estate if no spouse or children exist. Such amounts are to be paid by the employer with 50% contribution from the toxic disease fund if the employer seeks such contribution.

The act requires medical providers to apply for reimbursement within 2 years from the date services are rendered for those rendered before July 1, 2013, and within one year if they are rendered after that date.

Where third persons are liable to the employee for injury or death, the Attorney General, on behalf of the Toxic Disease fund, shall be subrogated to the rights of the employee. Any recovery shall be apportioned between the Attorney General and the employee of the employee's dependents.

Currently, in workers' compensation cases an employee shall submit to reasonable medical examination at the request of the employer, the employer's insurer, the commission, the division, or an administrative law judge. This act requires the same treatment in claims against the Second Injury Fund at the request of the Attorney General, on behalf of the fund if the employer has not obtained a medical examination report.

The Toxic Disease Fund is established for employers with 15 or more employees for the purposes of paying the expanded benefits for occupational diseases due to toxic exposure. The Director of the Division of Workers' Compensation shall establish and assess a surcharge for each year based on certain criteria. The Attorney General is charged with defending the fund.

Claims filed after the effective date of the act against the fund involving subsequent compensable injuries that are occupational diseases are to be compensated as other second injury fund claims are compensated.

Claims for permanent partial disability shall not be allowed against the Second Injury Fund after the effective date of the act. Claims for permanent total disability shall only be allowed going forward for instances when there exists a medically documented preexisting permanent disability caused by military duty or a preexisting permanent partial disability equaling a minimum of 50 weeks of compensation according to the medical standards that are used in determining compensation which is:

1. A direct result of active military duty;

2. A direct result of a compensable injury;

3. Not compensable but aggravates the subsequent injury; or

4. A preexisting permanent partial disability of an extremity, loss of eyesight in one eye, or loss of hearing in one ear and there is subsequent work-related injury to the opposite extremity, loss of eyesight or hearing in the other eye or ear.

There must then be a subsequent work-related compensable injury that, in combination, creates a permanent total disability.

Employers at the time of the last injury are only liable for the disability resulting from the subsequent injury.

The act places limitations on when the Treasurer may enter agreed statements of fact and compromise settlements. Settlements are capped at $60,000 for claims other than permanent total disability claims filed prior to the effective date of the act and capped at 200 times the employee's permanent total disability rate for all permanent total disability claims. Settlements may be made in any amount with the advice and consent of the Attorney General.

The Treasurer, with the advice and consent of the Attorney General, may enter into compromise settlements with dependents of claimants arising from the Schoemehl v. Treasurer decision.

Currently, the Second Injury Fund covers the fair, reasonable, and necessary expenses relating to the death and injury of employees of uninsured employers. The fund will no longer cover those costs going forward.

Currently, an actuarial study of the fund is conducted ever 3 years. This act requires a yearly study beginning in 2014.

Compensation shall not be payable from the Second Injury Fund when employees elect to pursue workers' compensation outside of the state.

Life payments paid out of the Second Injury Fund shall 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.

The act establishes a priority for paying fund liabilities as follows:

1. Expenses relating to legal defense of the fund.

2. Permanent total disability awards in the order in which they are settled or finally adjudicated.

3. Permanent partial disability awards in the order in which they are settled or finally adjudicated.

4. Medical expenses incurred prior to July 1, 2012.

5. Interest on unpaid awards.

This act allows the Director of Revenue to set the post award interest, with respect to the Second Injury Fund, to equal the adjusted prime rate charged by banks in certain instances or 5%, whichever is greater.

The act requires 3 or more no confidence votes under 2 successive performance audits for removal of an ALJ instead of 2 or more such votes under any audit.

Currently, a 2% tax is levied on insurance carriers when the balance of the workers' compensation fund estimated to be on hand on December 31 is less than 110% of the previous year's expenses. This act requires that amount to actually be on hand on July 1 of the year of the determination which shall be made on October 31.

The act repeals a provision allowing loans to be made to the Missouri Employers Mutual Insurance Company.

The act institutes a funding mechanism to bolster the Second Injury Fund when usual collections are inadequate. If funds fall short, the Director of the Division of Workers' Compensation shall determine the shortfall which shall be collected with a supplemental surcharge not to exceed 1 1/2% for 2013 and 3% for subsequent years. The provisions containing the authorization of additional surcharges expire on December 31, 2020.

Sections 287.220 and 287.715 that establish the type of claims to be paid out of the fund, limitations on settlement agreements, and funding mechanisms for the Second Injury Fund carry an emergency clause.

Currently, tax overpayments are credited against the tax for the following year. Under the act, the taxpayer may elect to receive a refund in lieu of a credit.

Currently, insurers are required to adhere to a uniform classification system and experience rating plan filed with the Director of the Division. This act allows insurers the option of submitting rating methodologies that further refine the uniform rating process. Insurers are also allowed to develop, submit, and use other rating mechanisms if approved by the Director.

This act is similar to SB 430 (2011), SB 8 (2011), SB 807 (2012), SB 878 (2012), HCS/HB 1403 (2012), HB 1881 (2012), and SCS/SB 572 (2012).


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