State Second Injury Funding

State Second Injury Funding

Because of ADA discrimination laws, we often hire employees with known and unknown disabilities, therefore many states offer what is termed ‘Second Injury Funding’ that reimburses part of a claim when an employee with a permanent, pre-existing condition is subsequently injured on the job.

A state second-injury fund is a dedicated fund for the purpose of reimbursing compensation payments made by employers, or their insurers or adjusters, to certain injured employees for the purpose of encouraging the hiring of employees with disabilities—especially disabled veterans—who might be rejected because of their pre-existing conditions.

Quoting the Louisiana Workers’ Compensation Corporation since Louisiana is one of the states that has this program, “The fund encourages employers to hire people with disabilities by reducing financial liability if these employees get hurt on the job. Because the Second Injury Fund reimburses part of your claims costs, it can help reduce your experience modifier (E-mod) leading to lower workers' compensation premiums.
To be eligible for reimbursement

•  the injury must result from a qualifying permanent partial pre-existing disability

•  the employer must have proof he knowingly hired or retained an employee with a permanent partial disability

•  the injury must result in liability for workers' compensation benefits, the pre-existing condition must merge with the resulting injury in such a way that the injury would not have occurred but for the pre-existing condition OR the resulting disability is materially greater because of the pre-existing condition

•  the claim for reimbursement must be made within 52 weeks of the first medical or lost-time benefit payment.

Post-offer written questionnaires and screenings are the best ways to obtain information about employees' health to prove prior knowledge for the Second Injury Fund (SIF) reimbursements. Such screenings should be a business necessity and should be consistently required of all applicants in the hiring process to comply with the ADA.”

Refer to the LA state second injury fund Q/A pamphlet for more information.

This question-answer pamphlet for a state workers’ compensation second injury fund along with a sample of a second injury questionnaire (Louisiana) are also located in your Web links.

If an employee is injured on the job, determine if they meet ‘Second Injury Fund’ eligibility. To help reduce the risk of fraud, once an employee completes a second injury questionnaire, request the workers’ comp history for that individual from the state. Compare information from each.

According to David Tobenkin who wrote an article Don’t Overlook Second-Injury Funds,

“these state legal provisions are under fire, challenged by what critics allege is a system with a faulty premise, fiscal and bureaucratic shortcomings and an overlap with the Americans with Disabilities Act (ADA)”.

According to the American Insurance Association (AIA), since 1992, 19 states and the District of Columbia have passed legislation to abolish or phase out second-injury funds, including Alabama, Colorado, Connecticut, Florida, Georgia, Kansas, Kentucky, Maine, Minnesota, Nebraska, New Mexico, Rhode Island, South Dakota, Utah, Vermont, West Virginia and, most recently, in 2007, Arkansas, New York and South Carolina.