Ga. Set to Repeal Workers’ Comp Subsequent Injury Trust Fund

April 2, 2004

The Georgia Senate on Thursday passed and sent to the governor legislation eliminating the reported outdated and costly state-sponsored workers’ compensation Subsequent Injury Trust Fund (SITF). H.B. 1579, introduced at the request of the American Insurance Association (AIA), reportedly represents long overdue reform that will benefit employers, carriers and employees.

The Georgia SITF, similar to funds in other states, was designed to reduce the impact of large workers’ comp claims in the event a worker with a disability, injured on the job, aggravates a pre-existing impairment. Insurers and self-insured employers receive reimbursements from the Fund to cover eligible claims costs. The costs sustained as a result of these second injuries to workers are then distributed among all employers in the state through annual assessments.

“While originally a laudable concept – encouraging the employment of disabled employees – there never has been any demonstrable evidence that Georgia’s SITF – or any other state’s – ever met its intended goal,” said Raymond Farmer, AIA assistant vice president, Southeast Region. “The fund serves no purpose other than allowing some employers to shift their losses to other employers, through broad assessments on all employers. And now that the more direct – and modern – remedy for protecting disabled workers is available through the Americans with Disabilities Act (ADA), it’s clear that the Georgia SITF has become a dinosaur.”

In addition, the unprecedented growth of the Georgia SITF over the past few years reportedly indicates growth of a substantial unfunded liability. “These ever-rising liabilities, coupled with incentives to dump cases into the Fund and increasing assessments, were a recipe for financial disaster that the Georgia Legislature has now addressed,” said Farmer.

Under H.B. 1579 subsequent injury claims will be eligible for reimbursement if they occur before June 30, 2008. Carriers and self-insureds will continue to pay required assessments to the SITF to fund those claims until that date. Once all claims are resolved, the SITF will return any leftover funds to those assessed and complete the process of dissolving the Fund.

AIA is also sponsoring legislation in South Carolina to eliminate that state’s Second Injury Fund.

In recent years almost 20 states have eliminated their funds.

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