Problem
Employers get little to no relief from state workers compensation second injury funds. Many state second injury laws are weak, ill defined, are hard to penetrate, and may lack proper funding. Rules and regulations make it hard for a claim to be acceptance by a second injury fund.
Funding programs for second injury funds vary greatly. Some are funded from insurance carrier premium assessments. Others are funded from state budgets and legislative action. Most funding programs may fail to meet the fund exposures or liabilities. This means that even if a claim is accepted by a fund, the employer may not be able to recover their expended funds. The employer has to handle and pay the claim before seeking reimbursement from the second injury fund.
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Background and Liability
Second Injury Funds and rules became prevalent after World War II as a program to induce employers to hire handicapped veterans. By then workers compensation law, legal precedent, and regulation had clearly established that the employer took the employee as is. This meant any employee with an underlying pathology or disability, who sustained a compensable injury which aggravated or increased the overall heath or disability costs had to be borne by the employer.
The second injury fund program gave the employer relief from the expense of the aggravation or increased disability. The fund would take over the claim handling and cost after certain set periods of time or at the end of normal work injury recovery periods.
Despite the current calls for employers to hire veterans, states have done little to nothing to bring second injury funds up to standard to ease the employer’s burden for military injuries. As a result all veterans, especially Iraq and Afghanistan veterans are meeting hiring resistance.
More states are moving to legalize marijuana for recreational purposes. The user’s health consequences will present great challenges to the employer. Unlike tobacco and alcohol, marijuana effects can remain in the body for several days. The dangers for permanent injury by marijuana are not being publically exposed like tobacco and alcohol.
A Strong Policy is Mandatory
Most second injury funds require that the employer has knowledge of the employee’s pre-existing condition prior to the compensable injury that invokes increased disability. Employer knowledge can be established through: pre-employment physical examinations, prior compensable claims where the condition became known, accident and health claims (care needs to be invoked due to privacy law and rules), employees volunteering information on job applications, or in the course of employment. A private investigator might also be of assistance to review the employees’ disability background.
When the employer learns of the pre-existing condition the personnel file needs to be documented.
It is strongly recommended that the policy be well written, cover all know current contingencies, and be firmly adhered to. It is best to have professional assistance from legal counsel, or organizations specializing in developing such programs.
When an injury occurs that might cause exposure for aggravation and increased disability, it is suggested that the file be given strong medical management by professional medical managers. They will know the basics as to how to develop information for submission to the second injury fund.
Get Involved Legislatively
There needs to be pressure put on legislative bodies to fund and revamp second injury funds. Explore what groups or organizations might be actively working for legislative action in the second injury fund legislation. Determine which groups might be advantageous to support. Then move forward to add assistance.
Summary
The financial exposure is growing for pre-existing aggravation and increased disability for workers compensation claims. It is becoming harder for employers to recover claim costs from state second injury funds. Strong policies must be developed and adhered to for pre-existing conditions exposure. Use professional help to develop and implement policies, and keep them current with annual reviews. Finally, join effort groups working to accomplish legislative funding and reform.
Author Michael Stack, Principal of Amaxx Risk Solutions, Inc. He is an expert in employer communication systems and helps employers reduce their workers comp costs by 20% to 50%. He resides in the Boston area and works as a Qualified Loss Management Program provider working with high experience modification factor companies in the Massachusetts State Risk Pool. As the senior editor of Amaxx’s publishing division, Michael is on the cutting edge of innovation and thought leadership in workers compensation cost containment. http://reduceyourworkerscomp.com/about/. Contact: mstack@reduceyourworkerscomp.com.
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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.
