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Three states have done away with their workers compensation second-injury funds so far this year, leaving about 30 states that still have such a program.
While some of the funds predate World War II, many U.S. states implemented them after the war to help returning veterans. The second-injury funds are designed to encourage hiring of disabled workers and those with injuries from previous employment. By covering costs for the aggravation of a prior condition, the programs are intended to limit employers' liability and expense.
Insurance companieswhich lobbied South Carolina lawmakers to dissolve that state's fund and now have their sights on Missourisay the concept is outdated.
Anti-discrimination laws, such as the Americans with Disabilities Act, make the funds increasingly unnecessary, said Ray Farmer, assistant vp in Atlanta for the American Insurance Assn.
There are no studies showing that the funds significantly increase hiring of the disabled, said Keith Bateman, vp of workers compensation for the Property Casualty Insurers Assn. of America in Des Plaines, Ill.
But Frank Knapp, president of the South Carolina Small Business Chamber of Commerce, countered that insurers oppose the funds mainly because they don't like paying assessments that they can't control.
The South Carolina Second Injury Fund accepted 1,184 claims during the 2005-2006 fiscal year.
In that fiscal year, the fund initially assessed insurers and self-insured employers $253 million but then lowered that to $177 million due to employer objections.
Self-insured employers and insurers have argued that the fund's assessments have been too high relative to the benefits paid out. South Carolina legislators last week agreed to repeal the fund as part of a broad workers comp reform bill.
Arkansas and New York also repealed their funds this year as part of a "slow movement" among states to dissolve their funds, Mr. Bateman said.
In all, 19 funds have been dissolved since 1992, according to the AIA.
Mr. Bateman noted that states generally end the funds either because assessments have grown too large or the funds are underutilized.