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November 27, 2001
States Are Dropping Second-Injury Funds
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Similar funds across the nation have faced the same financial problems as Oklahoma's and are being dropped as well, according to the Associated Press.
For years, Oklahoma's Multiple Injury Trust Fund has had trouble making its weekly payments. It owes an estimated $80 million, and most of that will now end up being paid by taxpayers under legislation passed last month to phase out the entire fund.
In the meantime, a quasi-state agency has agreed to lend the fund $11.3 million for the next few months, to the relief of injured workers still relying on the money. Scores of injured workers, some in wheelchairs, had lobbied for some sort of safety net, saying the stipends were their only means of buying groceries and paying bills.
The Oklahoma fund has its genesis in a 1925 state Supreme Court case in which an employer protested being held liable for the blinding of one of his workers in an explosion. The employer argued the worker already was blind in one eye when the blast put out the second eye.
The court rejected the argument, prompting the layoffs of "7,000 to 8,000 one-eyed, one-legged, one-handed men," as employers sought to reduce liability for workplace injuries, according to a U.S. Labor Department report.
Then came World War II, and the worker pool quickly shrunk. Employers were reluctant to hire people who already had one injury out of fear that a second injury would leave them disabled and cause their workers' compensation rates to climb, so in 1943 the state established the second-injury fund, with the goals of providing a labor pool while protecting employers against high costs.
Lawmakers, however, sought to keep employer fees as low as possible, and as a consequence, the fund barely had enough to pay workers was often in debt.
Oklahoma's experience is not unique. In 1995, Connecticut issued $100 million in special obligation bonds to settle second-injury claims with one-time payments.
Last year, Ed Reinfurt of the Business Council of New York State told a governor's commission that New York's second-injury fund had outlived its intent and was driving up employer costs. The fund was modified after World War II to encourage the hiring of veterans, most of whom are now beyond retirement age, he observed.
He said 16 states have either eliminated or reformed their second-injury funds.
"There's clearly a trend," said Greg Kroehm, executive director of the International Association of Industrial Accident Boards and Commissions in Lawrence, Kan. "They're considered obsolete."
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