Second Injury Fund not liable for post-death benefits

Second Injury Fund not liable for post-death benefits

Donna Walter

Missouri’s Second Injury Fund is not liable for post-death benefits for the dependents of permanently totally disabled individuals, said a state appeals court in a decision that could save the state millions in benefits.

The issue arose when a widow, represented by attorney Dean Christianson of Schuchat, Cook & Werner, said she should receive her husband’s benefits for the rest of her life. Although Christianson estimated it would cost Missouri millions of dollars if this precedent were set, he said it’s the job of the General Assembly to say the law doesn’t include post-death benefits for dependents of those with permanent total disabilities.

Lee Schaefer, chief counsel of the labor division of the attorney general’s office, said in the last two months there have been roughly 15 cases in which benefits terminated due to the death of the claimant. If the Second Injury Fund had to pay continued benefits for even half of those cases, that would be a significant amount of money, she said.

Permanent total disability benefits as defined by the statute are payable for the lifetime of the claimant, and that’s specifically what it says in the statute, and an attempt to have them paid to the beneficiaries or the surviving spouse of the claimant would extend those benefits further than intended by the statute and would greatly increase the liability of the Second Injury Fund, she said.

Christianson said he planned to ask the Missouri Court of Appeals, Southern District, to rehear the appeal.

The case is Schoemehl v. Treasurer.

Background

Fred Schoemehl, an employee for Cruiser Country Inc., injured his left knee in a work-related accident, which left him unable to return to work. He filed claims against Cruiser and against the Second Injury Fund. Cruiser and its insurer paid him $20,661.65 in temporary total disability benefits and $9,477.08 in medical benefits.

He died on Jan. 2, 2004, from causes unrelated to the May 11, 2001, injury. His widow, Annette Schoemehl, then filed amended claims against Cruiser and the Second Injury Fund. Cruiser settled Schoemehl’s claim by paying her full weekly benefits of $261.26 through Dec. 2, 2003.

Administrative Law Judge Robert J. Dierkes determined the Second Injury Fund was liable for $1,157.01, which are the payments from Dec. 3, 2003, through Jan. 2, 2004.

But Schoemehl argued she deserved to be compensated by the state with weekly benefits of $261.26 for the rest of her life.

In a divided opinion, the three-member Labor and Industrial Relations Commission affirmed Dierkes’ decision.

Statutory construction

The administrative law judge determined Schoemehl was not entitled to a lifetime of benefits by relying strictly on Section 287.200.1 RSMo., which states: Compensation for permanent total disability shall be paid during the continuance of such disability for the lifetime of the employee at the weekly rate of compensation in effect under this subsection on the date of the injury for which compensation is being made.

When Fred Schoemehl died, reasoned Dierkes, he lost the right to receive permanent total disability compensation.

But Annette Schoemehl said Section 287.200.1 must be interpreted in conjunction with Section 287.020.1, which, she argued, gives her employee status. That section states in part: The word ’employee’ as used in this chapter shall be construed to mean every person in the service of any employer, as defined in this chapter, under any contract of hire, express or implied, oral or written, or under any appointment or election, including executive officers of corporations. Any reference to any employee who has been injured shall, when the employee is dead, also include his dependents, and other persons to whom compensation may be payable.

Finally, the claimant relied on Section 287.230.2: Where an employee is entitled to compensation under this chapter for an injury received and death ensues for any cause not resulting from the injury for which he was entitled to compensation, payments of the unpaid accrued compensation shall be paid, but payments of the unpaid unaccrued balance for the injury shall cease and all liability therefor shall terminate unless there are surviving dependents at the time of death.

When all of these sections are read together, Schoemehl is entitled to receive her husband’s permanent total disability benefits for the remainder of her lifetime, she argued.

Noting that precedent for this interpretation exists in the area of permanent partial disability, Christianson said the statute does not limit continuing benefits to claimants for permanent partial disability.

The same law and same theory should apply to total disability, he said.

It’s like taking one statute in a book or the Bible and reading that one statement alone. It allows extremism. The statute was written to be read in its entirety, he said.

Court decision

But workers’ compensation attorney Bob Keefe of the St. Louis firm of Keefe & Griffiths disagrees with Christianson’s reading of the law.

Christianson did a great job of creatively pursuing a wrinkle in the law, or at least a wrinkle in the wording of the law, … but he was taking a position which was contrary to the general understanding among the workers’ compensation community as to what that law said, Keefe said.

Schoemehl’s position leads to a logical absurdity where the Second Injury Fund’s obligation would never end, said Keefe.

The Southern District made that point in its opinion.

Under Appellant’s construction of the law, any dependents she may have at the time of her death would then be considered ’employees’ as well because she considers herself to be an injured ’employee’ under section 287.020.1, Judge Nancy Steffen Rahmeyer wrote for the unanimous panel. If the dependents of Appellant are considered ’employees,’ then the dependents’ dependents, two generations removed from Appellant, would have to be considered ’employees’ at the time of Appellant’s dependents’ deaths.

There would be a seemingly endless cycle of dependents turning into employees, and Respondent’s obligations to compensate for the permanent total disability of the first employee, Fred in the case at bar, would never end. That is not a logical interpretation of section 287.200.1, she wrote.

The court distinguished the cases relied on by Schoemehl from her own case because the other cases all involved benefits for permanent partial disability.

The distinction is important because (1) section 287.200.1 does not apply to compensation for permanent partial disabilities, but instead only applies to cases of permanent total disabilities, and (2) compensation for permanent partial disabilities involves a pre- determined finite amount to be paid, thus not resulting in the endless obligation of Respondent to pay, Rahmeyer wrote.

Thus, Nations v. Barr, Henderson v. Nat’l Bearing Div. of Am. Brake Shoe Co. and Bone v. Daniel mean only that the right to compensation for permanent partial disability of an injured employee, who dies from causes unrelated to the work-injury, survives to the dependents of that injured employee, said the court.

Although Keefe said the court’s decision was the right one, he noted the court chose to proceed as if the workers’ compensation statutes did not contain contradictory sections rather than admit the contradictions and choose the section that made the most sense.

But Nancy Mogab, who practices workers’ compensation law at Mogab & Hughes, rejected the court’s example of never-ending payments.

There seems to be a misunderstanding by the court as to when benefits end to dependents, she said. Payment is made to a dependent who is alive and a dependent at the time of the employee’s death. … When a dependent dies, … that’s the end of the payment.

Constitutional argument

Schoemehl further argued the commission’s decision violated the equal protection clauses of both the U.S. Constitution and the Missouri Constitution because it treats dependents of permanently totally disabled employees worse than it treats those of permanently partially disabled employees.

But the court said Schoemehl is not a member of a suspect class – which is generally a class of people on the receiving end of disparate or discriminatory practices – nor had she lost a fundamental right when she was denied continuing disability benefits for the rest of her life.

The court then found the commission’s interpretation of the statute was rationally related to a legitimate state interest – that of the different compensation of totally disabled persons and partially disabled persons.

This article was originally published in Missouri Lawyers Weekly, another Dolan Media publication.

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