As decadesrolled past, those in the insurance industry in Missouri becameincreasingly frustrated by the continuing liberalization in theinterpretation and application of the state's workers' compensationlaw. Many in the industry thought the law had evolved to a pointwhere the distinction between a work-related injury and a personalinjury, and an occupational disease or a disease of everyday life,had become very blurred.

In 1983, matters took a turn for the worse when the stateSupreme Court decided two cases in rapid succession in which thecourt adopted an interpretation of the law that only required anemployee to prove that the injury was “work-related,” even if therelationship was only that the employee injured his or her backwhile merely bending down to pick up a pencil from the floor atwork.

The Goal: Restoring Balance
Industry mounted efforts on several occasions to reverse thisstartling trend, but those efforts were met with only limitedsuccess. However, in 2004 the general election changed the balanceof power when the Republicans gained a majority in both houses ofthe Missouri General Assembly. During the 2005 legislative session,the industry was able to bring about sweeping changes to the workers' compensation law.

Going into the process, the industry's goalswere to restore the balance between work-related andnon-work-related injuries and diseases, and to build a levelplaying field by abrogating Missouri's so-called “rule of liberalconstruction” which had, in the industry's view, skewed the outcomeof numerous cases in the employees' favor.

The principle behind these efforts is a belief that the industryin Missouri shares with the industry everywhere — that the creationof an environment in which business can prosper, and can thereby maintain existing jobs,and create new jobs, benefits both employers and workers alike.

The 2005 amendments contain four provisionsthat are significant in the ensuing discussion:

• An employee is required to prove that the work was the“prevailing factor” in causing his or her need for medicaltreatment and disability.
• All prior case law dealing with the interpretation of whatconstitutes an “accident,” “occupational disease,” “arising outof,” and “in the course of” employment is abrogated.
• The party either claiming an entitlement to compensation, orthe party who seeks to establish a defense to that claim, has theburden of proof and must establish that any proposition upon whicha claim or defense is based must be more likely to be true than nottrue.
• The administrative bodies and appellate courts which construeand apply the law must follow a new “rule of strictconstruction.”

This poses many questions. Have workers' compensation claimsbeen reduced? If they have been reduced, then is this because ofthe statutory amendments or some other cause(s)? Has the state'sexperience shown that workers' compensation reform can be atwo-edged sword because of the operation of the “law of unintendedconsequences”?

The Good
Let's begin with an explanation of terms: In Missouri, employersmust report all injuries to the Missouri Division of Workers'Compensation, except those involving first aid only and no losttime. However, an injured employee—or a dependent in the case of afatality—may also file a “Claim for Compensation,” which is thedocument that initiates workers' compensation litigation. Thus, thenumber of injuries reported is a measure of the frequency ofinjuries; the filing of claims tracks the frequency oflitigation.

In terms of injury frequency, from 2004 to2010, reported injuries fell from a high of 140,972 to a low of108,596, representing a decrease of 23 percent. However, the onlyway that the legislative changes could have affected the reportingprocess would be if an employer chose not to report an injury onthe belief that the injury would not fall under the jurisdiction ofthe worker's compensation law because of the newly adoptedlimitations.

During that same period, formal claims filings decreased from21,510 to 13,932, or just over 35 percent. Virtually all of thatdecrease occurred between 2006 and 2010. Even more notable is thatof the total claims, those that could be identified as occupationaldisease cases decreased through 2009, the most current year forwhich data is available, by 39 percent. Certainly the generaleconomic downturn in the more recent years of this study periodaccounts for some decrease in both injuries and claims frequency.The actual loss of jobs, however, is also often associated with aspike in claim filings, which could, over the short-term, negate adecrease attributable to the loss of jobs.

For data related to premium reductions and case successes, referto the sidebar, “One State's Successes,” at end of the article.

The Bad
There have been some challenges along the way. For instance, labor'sfirst reaction to the 2005 amendments was to attack theirconstitutionality. Although the industry survived this challenge,the Missouri Supreme Court (in that same case) reiterated thatinjuries that no longer fall under workers' compensation maysupport a civil action against the employer since Missouri'srelatively broad “doctrine of exclusivity” would no longer insulatethe employer from civil liability.

Another issue is that of loss of appeal rights. Under case law,an aggrieved party could appeal a Temporary Award issued by theDivision of Workers' Compensation or the Missouri Labor andIndustrial Relations Commission to the Court of Appeals. In lightof strict construction, however, the appellate courts have now heldthat such an award could not be appealed because of the lack ofstatutory authority.

Questions about the status of occupational disease law linger,as well. At least one circuit court judge has ruled that understrict construction, an employee who contracts an occupationaldisease as a result of prolonged exposure can maintain a common lawaction and is not limited to seeking compensation under theworkers' compensation law. 

The Ugly
One must also consider the abrogation of prior case law. The newstatutory provisions not only abrogated a number of cases by name,but the statute also abrogated all prior cases interpreting whatconstitutes an injury by accident, or occupational disease, arisingout of and in the course of employment. Thus, that provisionprevents the appellate courts from relying on any prior legalprecedent — even those where the prior decision was favorable tothe defense. In many cases then, the courts must be guided only bythe exact wording of the workers' compensation statutes, for betteror for worse.

An employer's immunity from civil liability, which is quitebroad in Missouri, was previously extended to insulate co-employeeswhose negligence caused an injury to a co-worker, as long as theiractions involved the discharge of the employer's non-delegable dutyto provide a safe workplace. However, since the 2005 amendments,the appellate courts have held that co-employee immunity no longerexists, as it is not granted by statute and the prior cases thatestablished the immunity can no longer be followed.

As a result, this opens the door for civil suits againstco-employees, including supervisors and managers, and implicates anemployer's general liability coverage and even the co-worker'spersonal coverage and assets (It should be noted that efforts arecurrently being made to make co-employee immunity statutory. In themeantime, a Pandora's Box has been opened from which many “evils”will undoubtedly emerge.).

Walking Tall
Workers' compensation claim filings have clearly decreased sincethe 2005 reforms were enacted. The decrease is greater than whatcan be explained by an overall decrease in reported injuries, whichsuggests that some cases that may have been filed prior to 2005 areno longer being considered viable.

Since the unfavorable case law has been slow to develop, it istoo early to assess whether strict construction has significantlyincreased civil suits against employers. This statistic would beproblematic to track under even the best of circumstances, butcertainly an increase in civil filings will occur.

Workers' compensation premiums have clearly declined over the last 5to 6 years, and insurers are viewing Missouri as a more favorableplace to do business than they did previously. In fact, severallessons can be learned from the Missouri experience since 2005:

• Even the most skillful legislative drafting may not survive allattacks by the claimant's bar and the scrutiny of the appellatecourts.
• The courts abhor denying an injured party (in this case aninjured worker) a remedy if the injury appears to have resultedfrom the fault of another. If access to workers' compensationbenefits is denied as a result of workers' compensation reform,then the courts may expand the availability of other remedies andforums. This can result in an employer being subjected to greaterexposure than would have been the case if the matter had remainedexclusively under the coverage of the workers' compensationlaw.

Thus, when workers' compensation laws arerewritten, the full consequences of that action must be anticipatedif the overall goal of creating a proper balance between workers'compensation coverage, group health coverage, and liabilityexposure is to be achieved.