An Employee Does, But Benefits Persist

Saturday, April 21, 2007 | 0

By James B. Kennedy

When the Missouri Supreme Court denied the Second Injury Fund's motion for rehearing on March 20 in the recent Schoemehl case, it caused the Missouri workers' compensation law to take a step backward.

The implications of this case on the future interpretation of workers' compensation law are frightening. It is hard to believe the recent decision was made after we came so far and worked so hard for Missouri employers.

When it comes to workers' compensation law, Missouri businesses should be proud of our state's accomplishments in the last few years. The sweeping reform to workers' compensation law passed in August 2005 was the first significant changes to the statute covering Missouri workers' compensation since 1993.

Changes in this law require strict construction of the legal language of the statute. Before the changes, the courts had liberally applied or interpreted the Missouri workers' compensation laws, finding in favor of employees and granting compensation accordingly. Now an impartial standard of review has been inserted into the statute.

In the last five years, the total number of claims and injury reports has decreased. While the numbers are subject to several variables, they do suggest an upward focus on safety and a downward trend in injuries, which are positive trends for employers and insurers in the state of Missouri.

Then came Schoemehl.

To summarize, Schoemehl v. Treasurer of the State of Missouri ruled that the surviving spouse (and dependent) of a permanently and totally disabled employee, who died of causes unrelated to his work injury, could recover the unpaid, unaccrued balance of the employee's permanent total disability benefits upon his death.

The Court of Appeals ruled that Fred Schoemehl was not entitled to compensation for permanent total disability after his death, and therefore his wife, as his dependent, was likewise not entitled to compensation for the employee's permanent total disability after the date of the employee's death.

Before the Missouri Supreme Court, the wife argued that because she was Fred Schoemehl's dependent, she should be considered an "employee" under the Workers' Compensation Act and thus was entitled to permanent total disability benefits for the remainder of her lifetime.

The Missouri Supreme Court held Fred Schoemehl's right to compensation for both accrued and unaccrued permanent total disability benefits survived to his wife because she was the employee's dependent.

The Second Injury Fund filed a motion for rehearing with the Missouri Supreme Court. The fund argued that the Supreme Court's opinion was contrary to decades of application of the workers' compensation law and significantly expanded workers' compensation liability for the Fund. On March 20, the court denied the fund's motion for rehearing. Thus, the decision is final, and payments to the wife of the deceased will continue.

The Supreme Court's decision will have a far-reaching impact. Schoemehl has, in effect, created an entirely new category of workers' compensation beneficiaries.

The decision in Schoemehl will have a great impact not only on employers and insurers but also on the Second Injury Fund, because it is more often found liable for permanent total disability benefits than are employers and insurers. Also, the decision will affect insurance pools and self-insurance guaranty funds.

The Missouri Legislature is expected to take action. There are bills pending in both the Missouri Senate and House of Representatives.

Evans & Dixon would like to see Missouri's pro-business trend continue, a trend that took a great step forward in August 2005 with the reform to workers' compensation law. Evans & Dixon attorneys assisted legislators in rewriting the law by providing research and recommendations on appropriate legal language. Evans & Dixon provided a friend of the court brief to the Missouri Supreme Court to advise it on the implications of Schoemehl, and will continue to support changes in the law to help Missouri's businesses.

The effect Schoemehl has on workers' compensation law in Missouri is clearly a new challenge for us to overcome in maintaining Missouri's pro-business trend.

James B. Kennedy is a partner at Evans & Dixon LLC, a law firm based in St. Louis. he is a member of its workers' compensation practice. The column first appeared in St. Louis Post-Dispatch.

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