News

June 02, 2022

The Supreme Court of Missouri handed down their decision in the case of Klecka v. Treasurer of Missouri as Custodian of the Second Injury Fund.  This decision has been monitored due to its potential implications for permanent total disability (PTD) liability for both Employers/Insurers and the Second Injury Fund (SIF).

BACKGROUND

In Missouri, the SIF is a state organization that provides benefits for employees who sustain a compensable workers’ compensation injury that combines with a prior injury, or prior injuries, to create a greater overall disability.  For workers’ compensation injuries occurring after January 1, 2014, the SIF is only liable in cases where the primary workers’ compensation injury combines with prior injury or injuries to render the claimant permanently and totally disabled.

Also, the 2014 amendments to the statute limit the pre-existing injuries that can be considered when determining whether the SIF is liable for PTD benefits.  Section 287.220.3 RSMo. Provides the SIF is only liable for PTD benefits if the following conditions are met:

1. 1. The employee has a pre-existing disability that equal 50 weeks of PPD benefits or greater; and
   2. The pre-existing disability is the result of active military service, is a compensable work-related injury, is an injury that “directly and significantly aggravates or accelerates” the primary work injury, or involves an opposite extremity as the primary work injury.

THE KLECKA DECISION

In Klecka, the claimant suffered a work-related injury to his left shoulder in 2014.  He settled his claim against the employer and then pursued a claim against the SIF, alleging his primary work injury combined with a number of pre-existing conditions to render him permanently and totally disabled.  The claimant’s pre-existing conditions included:

• • A non-work-related traumatic brain injury in 1981;
  • A non-work-related left knee injury in 1982;
  • A work-related right thumb injury in 2005 that settled for 9 weeks of permanent partial disability (PPD) benefits;
  • A work-related hernia in 2006 that settled for 30 weeks of PPD benefits; and
  • A work-related right shoulder injury in 2007 that settled for 81.2 weeks of PPD benefits.

In May 2019, the Administrative Law Judge (ALJ) awarded benefits against the SIF, finding the claimant was permanently and totally disabled due to his primary work injury combined with his pre-existing conditions.  The Fund appealed this decision to the Labor and Industrial Relations Commission (LIRC), arguing the ALJ misapplied Section 287.220.3 RSMo.

The LIRC reversed the decision of the ALJ, but the Eastern District (ED) remanded the case to the LIRC with instructions to enter an award of PTD benefits against the SIF.  In support of that decision, the ED pointed to the fact the LIRC only considered the sole qualifying pre-existing injury when making its determination, but not claimant’s other relevant non-medical factors, such as age, education, work experience, training, and physical condition.

SUPREME COURT’S HOLDING

The Court did agree that Section 287.220.3 RSMo. does not prohibit the considerations of other “life factors,” including, but not limited to, age, education, transferable skills, and physical appearance.  However, the Court held the claimant failed to meet his burden of proving SIF liability for PTD benefits because his vocational experts considered non-qualifying pre-existing disabilities (namely, his non-qualifying head injury, thumb injury, and hernia) in their analyses.  The Court noted claimant did not submit any evidence that he was permanently and totally disabled due to the combination of the primary work injury and the sole qualifying pre-existing condition (the 2007 right shoulder injury).  Therefore, the Court affirmed the LIRC’s reversal of the ALJ’s award.

EFFECT ON EMPLOYERS/INSURERS

The decision in Klecka confirms that the only medical factors that can be considered when determining SIF liability for PTD benefits are qualifying pre-existing disabilities under Section 287.220.3 RSMo.  However, the Court confirmed that other non-medical factors can also be considered, including age, education, transferable skills, and physical appearance.  This expands somewhat the ability of Employers/Insurers to point towards the SIF when arguing which party is responsible for PTD benefits.

However, the Court did not address the ED’s dicta, in which the ED suggested “if an employee establishes he or she is PTD as a result of a work-related injury, either the employer or the Fund is liable, not neither.”  That dicta would suggest that, in cases where it is determined an employee is PTD, but there is insufficient evidence to suggest the SIF is liable for benefits under Section 287.220.3 RSMo., liability would automatically shift to the employer.

This could conceivably create a situation where an employee is clearly permanently and totally disabled due to a combination of their work injury and pre-existing medical conditions but, because none of the pre-existing conditions qualify under Section 287.220.3 RSMo., the Employer/Insurer is found liable for PTD benefits.  This may also create an unintended consequence for employers to avoid hiring employees with significant pre-existing medication conditions which would seem to run counter to the purpose behind the Second Injury Fund.

It is important for Employers/Insurers to be aware of the increased exposure for PTD benefits, even in cases where the primary injury does not seem to be significant enough to render the employee permanently and totally disabled if the employee has a number of pre-existing medical conditions that do not qualify under Section 287.220.3 RSMo.  This decision will likely also make it more difficult for Employers/Insurers to settle cases involving potential PTD liability.

If you have any questions on this decision, or any of your claims in the State of Missouri, please contact Wiedner and McAuliffe by email or phone at 312-855-1105.