Summary: Most states provide second or subsequent injury funds to encourage employers to hire disabled workers. These second injury funds may respond when an employee, who already is partially disabled, is injured on the job and becomes totally disabled because of the combination of his prior condition and the occupational injury. Without a second injury fund, an employer—or its workers compensation insurance carrier—could be liable for the cost of total disability when, in fact, the occupational accident individually would not result in disability.

This article offers general information on the second injury fund concept and presents a state-by-state comparison of individual state's second injury fund provisions. This comparison is based on information compiled and provided by the U.S. Chamber of Commerce.

Topics covered:

General information

State-by-state comparison

General Information

The second or subsequent injury fund pays the difference in benefits between the combined disability and what the employer would have to pay if only the one occupational injury had occurred. As an example, an individual who lost a hand in an accident at a previous workplace may be hired by a new employer. If that employee then lost his other hand in an occupational accident at his new workplace, the current employer would be responsible to pay disability benefits based on the combined loss of two hands. These benefits are much higher than for the loss of one hand.

Even when second injury funds are not involved, disagreements commonly arise over which employer is responsible when an employee, who was previously injured by an occupational disease or accident, is injured in a subsequent occupational accident or by a subsequent occupational disease. These situations often result in litigation over whether the second injury is an aggravation of a preexisting condition or the recurrence of the old injury.

Such disagreements are common when there are different employers or different workers compensation insurance carriers during the two incidents, as well as when second injury payments are being considered. There must be a decision as to which employer, which insurance carrier, or what combination of payers must respond.

An aggravation of a preexisting condition usually is considered to be a new injury. The employer of record at the time of the aggravating injury usually is held responsible for workers compensation benefits arising from it. A recurrence of an old injury usually is the responsibility of the employer of record at the time of the first injury.

These situations require careful review of medical testimony, with some jurisdictions prorating benefits between the different employers or insurance carriers. Questions that frequently are used to determine whether there is an aggravation or a recurrence include:

1. How was the employee feeling between the two occurrences?

2. Was the employee back to his regular job between the occurrences?

3. Was there a second, clearly definable incident?

In Kidder v. Coastal Construction Co., Inc., 342 A.2d 729 (Me. 1975), the Maine Supreme Court was asked to consider a situation in which an employee was temporarily disabled by two successive injuries occurring in two separate employment situations. The two injuries combined to produce a single indivisible disabling case. The court listed the following three possible resolutions as to who was responsible:

1. To apply the Massachusetts-Michigan rule and place full liability on the carrier on the risk at the time of the most recent injury that contributed to the disability

2. To tap the second injury fund to pay the difference between permanent total disability and temporary partial disability

3. To apportion the loss between the two insurance carriers that were being used at the time of each injury

The Massachusetts-Michigan rule places liability on the carrier covering the risk at the time of the most recent injury that causally relates to the disability. According to this rule, when the second injury is merely a recurrence of the first injury, and if the second injury does not contribute at all to the disabling condition, the insurer of record at the time of the original injury is liable for the total disability. Conversely, if the second incident contributed independently to the disabling condition, the second insurer is solely liable–even if the injury would have been much less severe without the prior condition and even if the prior injury contributed the major part to the final condition. (3 Larson's Workmen's Compensation Law, 95.12.)

In deciding the case, the Kidder court ruled that the second injury fund was not available because Kidder's first injury did not result in a permanent disability. The purpose of second injury funds is to relieve employers of potential undue financial burdens when hiring disabled workers and, consequently, to minimize the denial of employment because of physical disabilities. The funds, therefore, apply only in cases where employees are permanently disabled prior to the second injury. The court ruled that each employer and the respective carriers should pay equal portions of the disability benefits since each accident contributed to the disabling condition.

State-by-State Comparison

A state-by-state listing of second injury funds follows, which addresses the following issues:

1. Statutory reference:

2. What injuries are covered?

3. What must the employer pay?

4. What does the fund pay?

5. How is the fund subsidized?

6. Other provisions:

Alabama

Alabama eliminated its second injury fund.

Alaska

1. Statutory reference: Alaska Stat. Ann. §§23.30.040, 23.30.205

2. What injuries are covered? Second injury, when added to preexisting permanent physical impairment, results in substantially greater disability than from second injury alone.

3. What must the employer pay? Disability caused by second injury for up to 104 weeks.

4. What does the fund pay? In excess of 104 weeks.

5. How is the fund subsidized? Up to 6 percent of compensation paid to fund; $10,000 in no-dependents death cases; civil penalties.

6. Other provisions: “Physical impairment” as listed or would support an award of 200 weeks or more.

Arizona

1. Statutory reference: Ariz. Rev. Stat. Ann. §23-1065

2. What injuries are covered? Second injury, when added to preexisting work-related disability or physical impairment not industrially related, results in disability of work.

3. What must the employer pay? Disability caused by second injury.

4. What does the fund pay? Special fund and employer are equally liable for remaining difference between compensation payable for second injury and compensation for combined disability.

5. How is the fund subsidized? 1.5 percent of all premiums and costs of self-insurance. Commission may allocate up to 0.5 percent of yearly premiums to special fund to keep fund actuarially sound.

6. Other provisions: Employer must have knowledge of nonindustrial physical impairment.

Arkansas

1. Statutory reference: Ark. Code Ann. §11-9-525

2. What injuries are covered? Second injury, when added to preexisting partial disability or physical impairment, results in greater disability or impairment than from the second injury alone.

3. What must the employer pay? Compensation for second injury.

4. What does the fund pay? The difference between compensation payable for second injury and previous permanent disability.

5. How is the fund subsidized? A portion of the premium tax is allocated to the fund, and $500 from all no-dependency death cases.

California

1. Statutory reference: Cal. Lab. Code §4751

2. What injuries are covered? Second permanent partial injury, when added to preexisting permanent partial disability results in 70 percent or more permanent disability. Second injury must account for 35 percent, unless prior disability involved a major member and second injury was to opposite and corresponding member and accounts for at least 5 percent. No benefits are payable for subsequent unrelated compensable injury.

3. What must the employer pay? Disability caused by second injury.

4. What does the fund pay? The difference between compensation payable for most recent injury and permanent total disability.

5. How is the fund subsidized? Legislative appropriations and $125,000 in each no-dependency case or unpaid balance.

Colorado

Colorado's second injury fund is closed.

Connecticut

Connecticut's second injury fund is closed.

Delaware

1. Statutory reference: Del. Code Ann. tit. 19, §2327

2. What injuries are covered? Second injury or disease, when added to preexisting permanent injury from any cause results in permanent total disability.

3. What must the employer pay? Disability caused by second injury.

4. What does the fund pay? Difference between compensation payable for second injury and permanent disability.

5. How is the fund subsidized? Tax of 2 percent of premiums received by insurance carriers.

District of Columbia

The District of Columbia's second injury fund is closed.

Florida

Florida's second injury fund is closed.

Georgia

1. Statutory reference: Ga. Code Ann. §§34-9-358, 34-9-360

2. What injuries are covered? Second injury or disease, when merged with prior permanent physical impairment, and results in greater disability than from second injury alone.

3. What must the employer pay? Disability caused by second injury for first 104 weeks.

4. What does the fund pay? Employer is reimbursed for 50 percent of medical and rehabilitation expenses in excess of $5,000 and up to $10,000, as well as 100 percent of medical and rehabilitation expenses above $10,000; income benefits beyond 104 weeks.

5. How is the fund subsidized? Assessments on carriers and self-insurers proportionate to 175 percent of disbursements from fund to annual compensation benefits paid, less net assets in fund.

6. Other provisions: Employer must have prior knowledge of impairment.

Hawaii

1. Statutory reference: Haw. Rev. Stat. §§386-33, 386-34, 386-151

2. What injuries are covered? Second injury, when combined with previous permanent partial disability, causes permanent total disability.

3. What must the employer pay? Disability benefits for first 104 weeks.

4. What does the fund pay? Compensation beyond first 104 weeks.

5. How is the fund subsidized? Assessments on insurers and self-insurers, plus a percentage of maximum weekly benefit rate in no-dependency death cases and the unpaid balance of compensation due in permanent total and permanent partial disability cases with no dependents.

Idaho

1. Statutory reference: Idaho Code Ann. §§72-327, 72-332

2. What injuries are covered? Second injury, when combined with prior permanent physical impairment, causes permanent total disability.

3. What must the employer pay? Disability caused by second injury.

4. What does the fund pay? Difference between compensation payable for second injury and permanent disability.

5. How is the fund subsidized? Assessments based on semi-annual reporting of indemnity payments paid, not less than $200.

Illinois

1. Statutory reference: 820 ILCS 305/7 and 305/8

2. What injuries are covered? Second injury involving loss or loss of use of major members or eye, when added to preexisting loss of member, causes permanent total disability.

3. What must the employer pay? Disability caused by second injury.

4. What does the fund pay? Difference between compensation payable for second injury and permanent total disability.

5. How is the fund subsidized? Employers contribute a percentage of compensation payments.

6. Other provisions: Payments are not required when the fund reaches $600,000; reduced by half when the fund is at $500,000. The payments increase or are reinstated when the fund reaches $300,000 or $400,000.

Indiana

1. Statutory reference: Ind. Code Ann. §22-3-3-13

2. What injuries are covered? Second injury involving loss or loss of use of hand, arm, foot, leg, eye, or damage to prosthetic device, when added to preexisting loss or loss of use of a member, causes a permanent total disability.

3. What must the employer pay? Disability caused by second injury.

4. What does the fund pay? Difference between compensation payable for second injury and permanent total disability.

5. How is the fund subsidized? An assessment when the fund drops below $1,000,000 on or before October 1.

Iowa

1. Statutory reference: Iowa Code Ann. §§85.64, 85.65

2. What injuries are covered? Second injury involving loss or loss of use of member or eye, when added to a preexisting loss of use of member, causes permanent disability.

3. What must the employer pay? Disability caused by second injury.

4. What does the fund pay? Difference between compensation payable for second injury and permanent disability, minus the value of previous loss of member or organ.

5. How is the fund subsidized? $12,000 in dependent death cases; $45,000 in no-dependent death cases; and payments due but not paid to nonresident alien dependents.

Kansas

Kansas's second injury fund is closed.

Kentucky

Kentucky's second injury fund was eliminated.

Louisiana

1. Statutory reference: La. Rev. Stat. Ann. §23-1371 et seq.

2. What injuries are covered? Second injury, when merged with known prior permanent partial disability, results in disability substantially greater than from second injury alone, or in death.

3. What must the employer pay? Total disability payments for first 104 weeks; 175 weeks for death.

4. What does the fund pay? For injuries occurring before 7/1/04, and on or after 7/1/09, but before 7/1/10, no more than $7,500, and the weekly disability benefits reserve does not exceed 104 weeks of indemnity.  In the event of a death claim, the weekly benefits reserve will be no more than 175 weeks. For injuries occurring on or after 7/1/04 and before 7/1/09, no more than $25,000, and the weekly disability benefits reserve does not exceed 130 weeks of indemnity.  In the event of a death claim, the weekly benefits reserve will be no more than 130 weeks. For injuries occurring on or after 7/1/10 and before 7/1/15, no more than $25,000, and the weekly disability benefits reserve does not exceed 104 weeks of indemnity.

5. How is the fund subsidized? Assessments on carriers and self-insurers.

6. Other provisions: No reimbursement is made if no assessment payment is made.

Maine

Maine's second injury fund was eliminated.

Maryland

1. Statutory reference: Md. Code Ann., Lab. & Empl. §§9-801 through 9-808, 10-204

2. What injuries are covered? The preexisting conditions and the total disability must exceed, not equal, 50 percent of the body as a whole or the equivalent.

3. What must the employer pay? Disability caused by second injury.

4. What does the fund pay? Additional compensation to employee if permanent disability exceeds 50 percent of the body as a whole. Prior and second injuries must each be compensable for at least 125 weeks.

5. How is the fund subsidized? A percentage of compensation on all awards of permanent disability or death and settlement agreements approved by the WCC.

Massachusetts

1. Statutory reference: Mass. Gen. Laws Ann. ch. 152, §§37, 65

2. What injuries are covered? Second injury, when combined with preexisting physical impairment, results in substantially greater disability or death.

3. What must the employer pay? Benefits for the first 104 weeks.

4. What does the fund pay? Employer is reimbursed for up to 75 percent of benefits after first 104 weeks.

5. How is the fund subsidized? Assessment on employers.

Michigan

1. Statutory reference: Mich. Comp. Laws Ann. §418.521

2. What injuries are covered? Second injury involving loss of eye or member, when added to preexisting loss of eye or member, results in permanent total disability.

3. What must the employer pay? Disability caused by second injury.

4. What does the fund pay? Difference between compensation for second injury and permanent total disability.

5. How is the fund subsidized? Assessment on carriers and self-insurers.

6. Other provisions: Fund is credited with balance in excess of $200,000.

Minnesota

Minnesota's second injury fund was eliminated.

Mississippi

1. Statutory reference: Miss. Code Ann. §71-3-73

2. What injuries are covered? Second injury involving loss or loss of use of member or eye, when added to preexisting loss or loss of use, causes permanent total disability.

3. What must the employer pay? Disability caused by second injury.

4. What does the fund pay? Difference between compensation for second injury and permanent disability.

5. How is the fund subsidized? $500 in no-dependency death cases; $300 in dependency cases; up to $200,000 may be transferred from the Administrative Expenses Fund.

6. Other provisions: Payments are suspended when fund reaches $350,000 and reinstated when fund reaches $150,000.

Missouri

1. Statutory reference: Mo. Ann. Stat. §§287.220, 287.715

2. What injuries are covered? No claims for permanent partial disability occurring after January 1, 2014 shall be filed against the second injury fund. Claims for permanent total disability are compensable only when an employee has a medically documented preexisting disability equaling a minimum of fifty weeks of permanent partial disability compensation and such employee thereafter sustains a subsequent compensable work-related injury that, when combined with the preexisting disability, results in a permanent total disability.

3. What must the employer pay? Disability caused by second injury.

4. What does the fund pay? Difference between compensation payable for second injury and compounded disability.

5. How is the fund subsidized? Surcharge set annually as a percentage of premiums paid by all insured and self-insured premium equivalent.

6. Other provisions: Surcharge rate is capped at 3 percent and can be suspended when fund exceeds certain amounts.

Montana

1. Statutory reference: Mont. Code Ann. §39-71-907

2. What injuries are covered? Any new compensable injury following certification.

3. What must the employer pay? Medical benefits for 104 weeks following the injury and the first 104 weeks of indemnity benefits.

4. What does the fund pay? Reimbursement of employer after first 104 weeks.

5. How is the fund subsidized? Surcharge on employers.

6. Other provisions: The worker must be certified as vocationally handicapped by the department.

Nebraska

Nebraska's second injury fund is closed.

Nevada

Nevada administers four separate subsequent injury funds: a state fund, a self-insured fund, a fund for self-insured associations, and a fund for private carriers. Each has different qualifications and requirements.

New Hampshire

1. Statutory reference: N.H. Rev. Stat. Ann. §§281-A:54, 281-A:55

2. What injuries are covered? Second injury, when combined with any preexisting disability, causes greater disability.

3. What must the employer pay? Benefits for the first 104 weeks.

4. What does the fund pay? Reimbursement for employers after the first 104 weeks, plus 50 percent of anything over $10,000 during the first 104 weeks.

5. How is the fund subsidized? Assessment against insurers and self-insurers.

6. Other provisions: An employer is reimbursed 50 percent of cost of modification if it makes modification to retain an injured worker, not to exceed $5,000 yearly per employee.

New Jersey

1. Statutory reference: N.J. Stat. Ann. §§34:15-94 and 34:15-95

2. What injuries are covered? Second injury, when combined with preexisting partial disability, results in total disability.

3. What must the employer pay? Disability caused by compensable injury.

4. What does the fund pay? Difference between compensation payable for second injury and preexisting disability.

5. How is the fund subsidized? Annual surcharge on policyholders and assessment of self-insurers.

6. Other provisions: Up to $12,500 per year may be transferred to the fund for administrative expenses.

New Mexico

New Mexico's second injury fund was eliminated.

New York

New York's Second Injury Fund was eliminated.

North Carolina

1. Statutory reference: N.C. Gen. Stat. Ann. §97-40.1

2. What injuries are covered? Second injury involving loss of member or eye, when combined with preexisting injury results in permanent total disability, provided the original and increased disability were each 20 percent of the entire member.

3. What must the employer pay? Payment not to exceed $250 for the loss, or loss of use, of each minor member in every case of a permanent partial disability where there is such loss, and shall assess no more than $750 for 50 percent or more loss or loss of use of each major member, defined as back, foot, leg, hand, arm, eye, or hearing.

4. What does the fund pay? Difference between compensation payable for second injury and permanent total disability.

5. How is the fund subsidized? Assessments against employers or insurers.

North Dakota

North Dakota utilizes a monopolistic state fund.

Ohio

1. Statutory reference: Ohio Rev. Code Ann. §4123.343

2. What injuries are covered? Second injury that aggravates preexisting disease or condition and causes death, temporary or permanent total disability, and disability compensable under a special schedule.

3. What must the employer pay? Disability attributable to injury or occupational disease sustained in employment.

4. What does the fund pay? Determined by the Bureau.

5. How is the fund subsidized? Statutory surplus funds.

Oklahoma

1. Statutory reference: Okla. Stat. Ann. tit. 85A, §§28, 31

2. What injuries are covered? Anyone who has lost or lost the use of an eye, or whole, or part of a member of the body either by amputation, or such loss is observable, or has been previously ruled disabled and is subsequently permanently disabled.

3. What must the employer pay? Disability from the second injury.

4. What does the fund pay? Liability for the combined disabilities, either permanent total or permanent partial.

5. How is the fund subsidized? Workers compensation insurers pay 1 percent of premiums quarterly, and self-insurers pay 2 percent of the total awards paid out.

6. Other provisions: Fund is now called Multiple Injury Trust Fund.

Oregon

1. Statutory reference: Or. Rev. Stat. Ann. §656.628

2. What injuries are covered? Any new compensable injury sustained by an injured worker within three years from hire date as a Preferred Worker through the Workers' Benefit Fund.

3. What must the employer pay? First $1,000.

4. What does the fund pay? Offers various benefits through the employer at Injury Program.

5. How is the fund subsidized? Percentage of hourly wages paid by the worker and the employer.

6. Other provisions: Reimbursement from fund requires approval from department.

Pennsylvania

1. Statutory reference: 77 Pa. Stat. Ann. §§516, 517

2. What injuries are covered? Second injury involving loss or loss of use, when added to a preexisting loss or loss of use of a hand, arm, foot, leg, or eye, causes total disability.

3. What must the employer pay? Scheduled benefits as a result of second injury.

4. What does the fund pay? Remaining compensation due to total disability.

5. How is the fund subsidized? Assessment against carriers and self-insurers.

Rhode Island

Rhode Island's second injury fund is closed.

South Carolina

1. Statutory reference: S.C. Code Ann. §§42-7-200, 42-7-310, 42-9-400

SC Second Injury Fund is dissolving. Under 2007 WC Reform Act (S.332), no claims with date of injury on or after 7/1/08 will be accepted; last day to submit notice of a new claim is 12/31/10; any data regarding claims must be submitted by 6/30/11; last day for claims to accept a claim for reimbursement is 12/31/11. Fund is to be terminated 7/1/13.

South Dakota

South Dakota's second injury fund was eliminated.

Tennessee

1. Statutory reference: Tenn. Code Ann. §50-6-208

2. What injuries are covered? Second injury, when added to preexisting impairment or disability, results in permanent total disability.

3. What must the employer pay? Disability caused by second injury.

4. What does the fund pay? Benefits exceeding those for the second injury.

5. How is the fund subsidized? Premium tax on insurers and self-insurers.

Texas

1. Statutory reference: Tex. Labor Code Ann. §§403.006, 403.007, 408.162

2. What injuries are covered? Subsequent compensable injury combined with the effects of a previous injury.

3. What must the employer pay? Benefits that would have accrued in only the subsequent injury had occurred and not the previous injury.

4. What does the fund pay? Balance of lifetime income benefits.

5. How is the fund subsidized? Up to 364 times the maximum weekly benefits payable to fund for each no-dependency death case.

6. Other provisions: Workers Compensation Commission has right of subrogation to recover claims and attorney fees paid from Second Injury Fund.

Utah

Utah's second injury fund is closed.

Vermont

Vermont's second injury fund was eliminated.

Virginia

1. Statutory reference: Va. Code Ann. §§65.2-1100 through 65.2-1105

2. What injuries are covered? Second injury involving 20 percent loss or loss of use of member or eye, when added to preexisting disability of 20 percent or more, causes total or partial disability.

3. What must the employer pay? Disability caused by second injury.

4. What does the fund pay? Reimbursement to employer for compensation has expired plus up to $7,500 each for medical and vocational rehabilitation expenses.

5. How is the fund subsidized? Premium tax on carriers and self-insurers.

6. Other provisions: Payments are suspended when the fund reaches $250,000 and reinstated when the fund drops to $125,000.

Washington

1. Statutory reference: Wash. Rev. Code Ann. §51.16.120

2. What injuries are covered? Second injury or disease, when added to preexisting injury or disease, causes permanent total disability or death.

3. What must the employer pay? Disability caused by second injury.

4. What does the fund pay? Difference between charge assessed against employer at time of second injury and total pension reserve.

5. How is the fund subsidized? Transfer from accident fund and self-insurers assessments.

6. Other provisions: Covers Preferred Workers for claims arising within three years of new employment and job modification costs resulting from injuries on the job.

West Virginia

West Virginia's second injury fund was eliminated.

Wisconsin

1. Statutory reference: Wis. Stat. Ann. §102.59

2. What injuries are covered? Second injury with permanent disability for 200 weeks or more with a preexisting disability of equal or greater degree.

3. What must the employer pay? Disability caused by second injury.

4. What does the fund pay? Disability caused by lesser of two injuries. If the combined disabilities cause permanent total disability, the fund pays the difference between compensation payable for second injury an permanent total disability.

5. How is the fund subsidized? $5,000 in death cases, $20,000 for loss of hand, arm, foot, leg, or eye; 100 percent of death benefit in no-dependency cases.

Wyoming

Wyoming has no statutory provision for a second injury fund.