Articles & Updates

ALERT! MO Court of Appeals Extends SIF PTD Liability under the 2013 Amendments

by James B. Kennedy and Christina A. Peters
Strict construction strikes again! On February 28, 2017, the Missouri Court of Appeals, Western District, applied strict statutory interpretation to the 2013 legislative changes to the Second Injury Fund’s (“SIF”) liability for permanent total disability (“PTD”) benefits. These statutory amendments became effective on January 1, 2014 and appeared to intend to limit SIF liability in significant ways.

In Gattenby v. Stanger Industries, the claimant was a career plumber with four prior work and non-work related injuries before his primary (last) injury occurred in March 2014. The claimant’s prior injuries included the fusion of toes on left foot and left ankle in 1977, shoulder injuries in 2007 and 2009, and in 2010 a non-work related injury that resulted in several surgeries. Finally on March 5, 2014, the claimant suffered a knee injury at work from pivoting while carrying a 12-inch pipe causing an oblique tear of the posterior horn of the medial meniscus. After retiring in April 2014, the claimant settled with the employer for 15% PTD. The claim against SIF went to hearing, and the Administrative Law Judge (“ALJ) awarded PTD benefits against the SIF. 

On review by the Labor and Industrial Relations Commission (“Commission”), the award of the ALJ was affirmed in a 2-1 decision. In their decision, the majority of the Commission drew a distinction between claims based on the language in §287.220.2 and those based upon the new provisions of §287.220.3. These two sections provide in part:  
All cases of permanent disability where there has been previous disability due to injuries occurring prior to January 1, 2014, shall be compensated as provided in this subsection. §287.220.2 (emphasis added).
All claims against the second injury fund for injuries occurring after January 1, 2014, and all claims against the second injury fund involving a subsequent compensable injury which is an occupational disease filed after January 1, 2014 shall be compensated as provided in this subsection. §287.220.3 (emphasis added).

The Commission acknowledged that: (1) §287.220.2 restates the requirements of SIF liability prior to the 2013 amendments; and, (2) §287.220.3 provides a more restrictive set of requirements for SIF liability. The claimant argued that §287.220.2 applied because his claim involved a preexisting disability due to injuries occurring prior to January 1, 2014. The SIF argued that §287.220.3 applied because the claimant’s primary injury occurred after January 1, 2014. The Commission affirmed the ALJ’s award of PTD but in doing so adopted a very convoluted interpretation of §287.220.3 in concluding that the new language applies when the primary injury occurs after the effective date so long as there was a preexisting compensable injury.

The third Commission Member concurred in the result but argued that §287.220.2 clearly applied to these facts and that was not necessary to struggle with the application of §287.220.3. The Member pointed out that the parties agreed that there were several injuries prior to the primary injury which could be considered “previous disabilities” under §287.220.2, namely in 1977, 2007, 2009, and 2010. The Member declined to use §287.220.3 under the belief that the legislature specifically mentioned “previous disability” in §287.220.2 while writing “subsequent compensable injuries” in §287.220.3 to infer that the “injuries” in §287.220.3 are injuries only for which there are claims made against the SIF (i.e., both and preexisting and primary injuries).

The SIF appealed to the Missouri Court of Appeals, Western District, arguing that the Commission erred in its application of §287.220.3 However, the Court of Appeals affirmed the decision using similar reasoning to that of the concurring Commission Member. That is, the Court found that §287.220.3 applies, when read in conjunction with the plain language of §287.220.2, only where both the preexisting and primary injuries occur after January 1, 2014. Therefore, the Court found SIF liability for PTD under §287.220.2 because claimant’s injuries involved a preexisting injury or injuries that resulted in disability before January 1, 2014.  

Note: Counsel for the SIF agreed during the appeal that if §287.220.2 applied, that the SIF is liable for PTD, an admission which made a second point on appeal moot.
Caveat: This is the opinion of a three-judge appellate panel and as such is subject to a motion for re-hearing, re-hearing by the Court en banc or transfer to the Missouri Supreme Court. As of this writing a motion for rehearing or transfer is pending.

The Takeaway: Since the passage of the 2013 amendments to the SIF provisions the claimants bar has sought to limit the impact of those amendments to prolong the availability of PTD benefits and to that extent, they were successful here. However, there is an advantage to industry also since whenever the SIF remains liable for PTD there is less pressure applied to the ALJ and Commission to find PTD against the employer, in the absence of SIF liability due to the more restrictive language of the new §287.220.3, due to the primary injury alone. 

Question or comments? If so, contact Jim Kennedy at jkennedy@evans-dixon.com, 314-552-4020 (Ph.); or Christina Peters at cpeters@evans-dixon.com, 314-522-4007 (Ph.). 
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