Oklahoma has abandoned its Multiple Injury Trust Fund. The fund was set up during WWII to help workers who have more than one debilitating injury while taking some of the burden of workers' compensation off employers.
The roots for the fund, known as a "second injury" fund, took root in a 1925 Oklahoma Supreme Court case. In that case, an employer argued that he should not be held liable when one of his employees became blinded in an explosion. According to the employer, the worker was already blind in one eye before the explosion.
The court rejected that argument, ruling that the employer was liable for compensation for the worker. What followed, according to a U.S. Labor Department report, was a mass layoff of "7,000 to 8,000 one-eyed, one-legged, one-handed men," as Oklahoma employers scrambled to limit their liability.
Even when the pool of eligible workers shrunk dramatically as the result of WWII, employers hesitated to hire workers who already had a major injury, claiming that a second injury could disable the worker and raise their workers' compensation rates. In 1943, the state established the Multiple Injury Trust Fund to help employers pay compensation to workers who suffered a second, debilitating, work-related injury.
Since the goal was to help protect employers, the fees were kept low, causing the fund to fall into debt. Workers, complaining that their claims were not being paid on time, joined a class action lawsuit in 1987. The workers offered to settle for $1.5 million, but the fund did not have the money. The case went to court, and the state lost. The judgment was $44 million, which again, the fund could not pay. That amount nearly doubled this year when a state court added $26 million in compound interest.
Oklahoma lawmakers voted last month to temporarily increase employer workers' compensation premiums from 4 percent to 6 percent, to be offset by a tax credit.
Another state agency offered to lend the Multiple Injury Trust Fund over $11 million so it could keep operating for the next several months.
A number of states with similar funds are facing similar problems. Connecticut issued $100 million in special obligation bonds in 1995 to settle second-injury claims with one-time payments. Some 16 states have either eliminated or reformed their second-injury funds.
"There's clearly a trend [toward eliminating the state funds]," said Greg Kroehm, executive director of the International Association of Industrial Accident Boards and Commissions in Lawrence, Kan. "They're considered obsolete."
by Sandy Smith ([email protected])