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.
