The Louisiana legislature recently enacted changes to the Second Injury Fund statute. The prior statute stated that the thresholds from July 1, 2004 through July 1, 2007 would be $25,000 medical and 130 weeks indemnity. At the end of this period, thresholds were scheduled to decrease to $5,000 medical and 104 weeks indemnity. However, the legislature recently postponed the decrease for two more years, leaving the current thresholds in place for dates of injury between July 1, 2004 and July 1, 2009.
Effective July 1, 2007, the South Carolina Legislature made important changes to the Second Injury Fund statutes, as part of the reform of its worker’s compensation system. Included in the legislation are guidelines for the sunsetting of the South Carolina Second Injury Fund (SIF) as of July 1, 2013.
The major Second Injury Fund changes are as follows:
1. The Fund shall not consider a claim for reimbursement for an injury that occurs on or after July 1, 2008.
Comment: The impact on employer premiums may ultimately be an increase, estimated at anywhere from 3% to 17%, to account for the cost of disability that was previously born through the second injury fund assessments. Assessments are unlikely to go down, however, for years to come.
2. An employer, self-insurer, or insurance carrier must notify the SIF of a potential claim by December 31, 2010.
Comment: The notice period for preservation of a claim is still within 78 weeks of compensation having been paid, but this is an outside date even if 78 weeks has not been paid. The Fund now requires additional information to be submitted with any notice form, including:
• Employer’s name and address;
• Insurance carrier’s name, address and the NCCI code; and
• Insurance carrier’s claim number, policy number, and policy effective dates.
Failure to provide this documentation with notice to the Fund after 7/1/07 will bar any future recovery efforts. Furthermore, for claims where notice was filed prior to 7/1/07 without this information, the Fund is requiring the additional information be submitted prior to the Fund’s final determination.
3. The new law eliminates arthritis and “catch-all” claims from the presumptive list for dates of injury on or after July 1, 2007.
Comment: While this appears to be significant, in reality it should have little effect on your rights to recovery for so-called arthritis claims since only the “presumption”, not the right to recovery, has been eliminated. If the Fund continues to view the list of medical conditions in the statute an exclusive list, then many claims will need to be litigated. There is an Appellate Panel Opinion which IRG championed, ruling that the list in the statute is not exclusive. The Fund chose not to appeal this decision. Therefore, it is now the standing law and they are obligated to follow it. Yet, they may not, thus requiring unnecessary litigation.
4. The new law creates Fund liability only when the disability is substantially greater and is caused by an aggravation of the pre-existing impairment for dates of injury on or after July 1, 2007.
Comment: The new law eliminates the right to file a claim where the prior impairment and subsequent injury involve two different body parts for dates of injury after July 1, 2007. The wording, however, is very confusing and could be subject to other interpretation. We will still look closely at so called “two body part” claims. Also, it is important to note that the “but for” language remains in the statute, meaning that if the second injury would not have occurred “but for” the existence of the prior impairment, even if two different body parts are involved, you can still file the claim.
5. An employer, self-insurer, or insurance carrier must submit all required information for consideration of accepting of a claim to the SIF by June 30, 2011.
Comment: Failure to submit all required information will bar recovery from the Fund. We anticipate that there will be litigation on this issue because parties often disagree on the definition of “required information” to prove an element of a claim. It may put some pressure on the Fund administrators towards the end of the period and result in unreasonable denials that will have to be litigated.
6. After December 31, 2011 the SIF shall not accept a claim for reimbursement.
Comment: This gives the SIF only six months to accept, deny, or compromise all submitted claims. If the Fund cannot accept a claim after this date, then it will have to deny the claim even if it may have otherwise accepted the claim. This may again create some needless litigation of claims that should have otherwise been accepted.
7. SIF terminates on July 1, 2013.
Comment: This in no way affects a carrier’s future rights to recovery on established claims which remain enforceable against the State. At this point in time, there has not been a definitive answer as to which department will assume reimbursement payments. However the Fund has stated that this information will become available at a later date.
Due to ambiguities in statute and its tight time restrictions, the passage of this legislation will most likely contribute to increased litigation to perfect second injury fund recovery.
Effective July 1, 2007, South Carolina has made important changes to the Second Injury Fund reform legislation, which includes the termination of the Second Injury Fund on July 1, 2013. The latest workers’ compensation reform legislation in South Carolina creates the following revisions to the Second Injury Fund:
• Limits recovery to greater disabilities created by aggravation of the prior injury and eliminates merger from combined effects.
• Eliminates arthritis and “catch-all” claims from the presumptive list for dates of injury on or after July 1, 2007.
• Closes the Fund to claims with dates of injury after June 30, 2008.
• SIF must receive notice of all claims by December 31, 2010.
• SIF must receive all documentation for consideration of reimbursement by June 30, 2011.
• The fund must make a final determination on all claims by December 31 2011.
• SIF terminates on July 1, 2013
The changes create fewer opportunities for SIF reimbursement on claims with dates of injury after July 1, 2007. Although the changes do not create any expedited filing issues for a few years, you should review all claims with dates of injuries prior to July 1, 2007 to ensure that notice is filed by the December 31, 2010 deadline.
The Senate Workers’ Compensation Task Force Sub Committee and executives of the Second Injury Fund have worked out a timetable for shutting down the fund by 2013. The programs and appropriations of the fund are anticipated to be terminated effective July 1, 2013.
It is proposed that the fund will not accept claims for reimbursement from carriers or employers after Dec. 31, 2011 and would not consider claims for reimbursement for injuries occurring on or after July 1, 2008. It is proposed that all notices on any and all claims be filed before Dec. 31, 2010.
Planned changes to the statute itself that would take effect for dates of injury on or after 7/1/07 are:
1) Limit claims where the second injury aggravated a prior condition as opposed to prior conditions that combined with second injury to created a greater indemnity exposure
2) Eliminate arthritis as one of the presumptive prior conditions
3) Eliminate the catch all presumptive paragraphs regarding prior conditions
New York is phasing out the Special Disability Fund (Second Injury Fund) and this means fast action is needed to ensure maximum recoveries.
Both houses of the NY legislature recently passed identical versions of an extensive workers’ compensation reform bill that includes, as one of its major components, the phasing out of the Special Disability Fund (Second Injury Fund). The reform package is expected to be signed into law very soon.
The impact of this new legislation on the Special Disability Fund means that there is a much shortened window of opportunity to get claims accepted for Second Injury Fund reimbursement and that reimbursement requests for already accepted claims need to be brought up to date as soon as possible.
The bill includes the following provisions:
– No claims for reimbursement (i.e., C-250 notice forms) may be filed on claims with dates of injury on or after July 1, 2007. (The Fund is therefore closed to new claims with dates of injury on or after July 1, 2007)
– No new claims for reimbursement (i.e., C-250 notice forms) may be filed for any claims (regardless of the date of injury) after July 1, 2010.
– No written submissions or evidence may be submitted in support of a claim for reimbursement after July 1, 2010.
(Previously there was no time limitation on submitting evidence to the Fund once a C-250 had been filed. The bill does not provide any exceptions for claims in litigation, claims denied by the Fund and adjourned for the carrier/self-insured to provide additional evidence, or for claims where the claimant has not cooperated with the carrier’s second injury fund (“Section 15-8”) investigation. )
– For claims where the Special Disability Fund has been found liable (i.e., the provisions of Section 15-8 apply), reimbursement monies must be requested within 1) one year of the date of the reimbursable expense or 2) one year from the effective date of legislation, whichever is later.
(This provision precludes recovery of all accrued reimbursement value on even newly accepted claims beyond the previous one year’s worth. Therefore, a review of all accepted claims is critical to ensure no old expenses are left un-requested. Equally or more important is a thorough review of all non-accepted claims with C-250s filed that have already reached the threshold for reimbursement, or are within a year of reaching it, to ensure timely acceptance from the Fund so that retroactive reimbursement may be requested before this provision bars recovery.)
– A $250 filing fee is imposed, effective immediately for filing Forms C-250, with $200 reimbursable on accepted claims.
– A Waiver Agreement Management Office will be established to negotiate settlements on behalf of the Fund directly with claimants on claims where Section 15-8 has been found to apply. These settlement agreements will not require carrier or employer approval. The Waiver Agreement Management Office and the carrier/self-insured may also enter into joint settlement agreements where liability for payments to the claimant is apportioned.
Given the deadlines established by this legislation, it is imperative that all potential claims are uncovered as soon as possible and that work begin immediately on perfecting these claims and catching up on overdue reimbursement requests for already accepted claims.
Although the Georgia Subsequent Injury Trust Fund no longer accepts claims with dates of injury after June 30, 2006, there is still plenty of opportunity for recovery with that second injury fund.
It is important to note that in order to have preserved a claim for potential reimbursement, notice did NOT have to be filed with the Fund before June 30, 2006. The “78 week rule” for notice is still in effect. However, any claim where proper notice was filed BEFORE June 30, 2006 needs to be accepted by June 30, 2009. For any claim where proper notice is filed AFTER June 30, 2006, the claim must be accepted within three years of the notice being filed.
The requirement for acceptance will make for an interesting issue when the deadline comes. Will the Fund be able to review and accept all viable claims before the deadline? What will happen if a claim is disputed?
Insurance Recovery Group, Inc. has achieved another notable victory using its focused second injury fund appellate practice. This victory has a value to our clients alone in excess of $600,000 for existing claims, but will impact companies and employers in the state by driving more timely settlements.
In June, based on IRG’s appeal, the Massachusetts Reviewing Board took the exceptional step of overruling a previous decision and ordering the payment of interest on second injury fund claims. The Reviewing Board’s original decision that interest did not apply was based on the application of the doctrine of sovereign immunity- that is, the government is not subject to interest assessment because the sovereign can not be sued.
In IRG’s appeal, we vigorously dissented to the application of this doctrine saying we were not dealing with the state acting as the state but rather as a trustee of moneys paid by employers upon the hiring an impaired worker who later becomes disabled. This time, the Reviewing Board agreed with us, and further, acknowledged that the reasoning for its previous decision was “flawed”.
There were two key quotes in the decision:
“The imposition of Sec. 50 interest serves the policy of encouraging early resolution and settlement”.
“It only makes sense that there should be financial motivation for the Trust Fund to promptly pay meritorious Section 37 petitions”.
The court went on to note that “The benefits to employers from the Section 37 reimbursement- the appropriate downward adjustment to experience modification – can be entirely lost when petitions languish in the system for years.”
We look forward to using this development on behalf of all our clients as a financial incentive to the Fund to adopt the practice of responsible and timely adjustment of Section 37 claims.
Insurance Recovery Group, Inc. published an article in The Subrogator, a publication for the National Association of Subrogation Professionals (NASP). The article, titled “Found Money: The Benefits of an Aggressive Approach to Second Injury Funds” was written by David A. Jollin, IRG’s President & CEO; Dorothy Linsner, Manager of Massachusetts Litigation; and W. Fred Uehlein, Founder & Chairman. The article discusses how a comprehensive program for second injury fund recoveries can be essential for recovering millions of unclaimed dollars every year. Qualified claims are often long-term and can average as much as $300,000 in some jurisdictions. Missing these recovery opportunities can be very costly if not handled properly. The possible solutions offered by the article include utilizing the right expert medical help, conducting regular audits, treating recovery as a commodity, and establishing a goals and metrics system. The article states, “For most organizations, a small amount of planning effort could result in millions of extra dollars hitting the bottom line”.
An article written by W. Frederick Uehlein and David A. Jollin has recently been published in Public Risk Magazine, a publication of the Public Risk Management Association (PRIMA). The article, titled Leaving Money On The Table: Obstacles To Second Injury Fund Recovery explains that second injury funds are one of the more esoteric niches in the workers’ compensation field, and because of that, claims staff are either not trained or don’t understand what to look for. The article points out that even companies with an “active” recovery program can have 15-25% of uncollected second injury potential, which is between $19.5million and $32.5million. The article suggests that a factory-like process is necessary for maximum recovery, as well as a knowledge-management system that has many attributes of a law firm. This enables the recovery process to be standardized, which will eliminate error and support efficiency. For most organizations, a small amount of management effort could result in millions of extra dollars.
The South Carolina Workers’ Compensation Reform Bill, HB 4427, recently advanced through the Business and Commerce subcommittee with much of the discussion focused on the South Carolina Second Injury Fund. The bill was supported by Governor Mark Sanford who stated that workers’ compensation reform would be one of his priorities for this year’s legislative session. Initially, the bill called for a repeal of the South Carolina Second Injury Fund, but that provision was revised calling instead for a sunset in 2012.
The elimination of the Second Injury Fund was one of several proposed changes that were intended to cut the costs of workers’ compensation in the state. Business groups disagreed as to whether the elimination of the fund would save money or not. Last week, a House Committee stripped the bill of most of its provisions, including a decision to keep the Second Injury Fund with some restrictions.
According to a news story in the Island Packet:
“This legislation scales the Second Injury Fund back to handle only the most severe types of injuries and disabilities. If the losses- $253 million was assessed last year- don’t fall to $8 million by 2012, the program would be eliminated.”
According to Associated Press reports, the legislation will not be enacted unless it will generate 10 percent or higher savings over the first five years. The recommended changes will now be studied by an independent consultant.