January 1, 1900

by Kenneth W. Thayer

The Second Injury Fund was created in 1923 in order to provide total and permanent disability benefits to injured workers in cases where the cause of the disability is due both to a prior disability and a subsequent compensable accident. Fund eligibility is predicated upon the prior disability plus the last compensable injury must render the injured worker one hundred percent disabled. The reason behind the creation of the Second Injury Fund was to allow injured workers who were not one hundred percent disabled the ability to find subsequent employment and encourage employers to hire injured workers. The employers were given an incentive to hire the injured worker by limiting the exposure the employer would face if a subsequent injury were to occur. The subsequent employer would only be responsible for their share of any injury and/or occupational exposure that occurred during their employment.

Calculation of Benefits

The Second Injury Fund bases total permanent disability awards upon a calculation of 450 weeks of disability. The employee is paid based on a calculation of 70% of the employee’s wages, up to a maximum amount for the year of the injury as determined by the New Jersey Department of Labor. Questions must be addressed when a matter is presented before the Second Injury Fund: 1) Is the employee totally and permanently disabled?; 2) If so, is the total disability due to the last compensable accident combined with all prior disabilities or due to the last compensable accident only?; 3) If due to the former, then an allocation must be made as to the percentage of the 450 week award that will be paid by the employer and the Second Injury Fund. The payments are usually split based on the allocated percentage of the entire award. For example, if the matter were to resolve by way of a 70/30% split between the employer and the Second Injury Fund, the employer would be responsible for 70% of the total disability award of 450 weeks or 315 weeks. The Second Injury Fund would pay 135 weeks. The weekly payments are also subject to any offsets from Social Security Disability payments.

Fund Participation Benefits

The Second Injury Fund gives employers a significant incentive to settle total disability matters in which the Fund will participate. In such situations, payment of total disability benefits could be substantially less than if a partial permanent disability award was paid. The advantage comes when a Social Security Disability offset for total disability reduces the amount of the weekly payment. The offset only remains until the employee reaches the age of sixty-two. An additional benefit is that the payment of compensation benefits is for a finite period of time.

The employer knows the extent of their liability at the time of settlement of the claim. The court sets a date of totality. The date of totality is the date on which it is determined that the employee can no longer operate as a working unit. This is the date upon which the employer will begin to make total disability payments. Therefore the employer knows the exact date on which their liability for compensation payment will begin. The employer also knows the end date of payment of benefits based upon prior settlement discussions with the representative of the Second Injury Fund. Whether the time period is 315 weeks or 150 weeks, the employer will know to the exact date what the extent of their liability will be.

Responsibility for Future Medical Treatment

The employer is however responsible for medical care for the remainder of the employee’s life. The medical benefits to be provided are specific to the body part that was the basis for the last compensable accident. All other future medical benefits will be the responsibility of either Medicare or a private third party insurance carrier.

Fund Payments

The Second Injury Fund will begin payments at the completion of the employer’s responsibility and will continue to make payments until the conclusion of 450 weeks. At this point the Second Injury Fund can request the employee to undergo a physical examination to determine if the medical condition remains permanent. If so, compensation benefits will continue for the life of the employee.

The only time the employer will be required to provide future benefi ts would be if the compensable medical condition required additional treatment. All employer based compensation benefits end at the time of Second Injury Fund involvement. Employers should be aware of the existence of the Second Injury Fund based on the fact that a total disability case with Fund participation could mean considerable savings when compared to a large partial permanent payment.

The attorneys of Hill Wallack LLP stand ready to assist any employer or insurer faced with issues of Workers Compensation insurance coverage. Kenneth W. Thayer

Kenneth W. Thayer is an associate of Hill Wallack LLP in the Princeton office where he is a member of the Workers’ Compensation Practice Group.