Missouri Gov. Signs Work Comp Reform Legislation

JEFFERSON CITY, MO - Missouri Gov. Matt Blunt signed two major bills this week that improve the business climate by reforming the state's tort laws and workers compensation system.

"The enactment of tort and workers compensation reform was a high priority for Gov. Blunt, legislative leaders and a broad coalition of business groups and insurers," said Joe Woods, assistant vice president and regional manager for the Property Casualty Insurers Association of America (PCI). "Both tort and workers compensation reform had been an uphill battle in Missouri under Gov. Bob Holden. With the enactment of these reforms, Missouri has taken an important step forward in developing a more favorable business environment."

Business groups and insurers' efforts to reform the workers compensation system had been thwarted by former Gov. Holden and the trial bar over the past few years. "Gov. Blunt made workers compensation reform a significant plank in his election campaign platform and provided the political boost necessary to get this reform legislation passed. These changes to the workers compensation system are a necessary preventative step to keep the state from experiencing a crisis in the market," said Woods.

Highlights of the workers compensation reform bills (SB1/SB130) include:

• Changed the standard from "substantial factor" to "prevailing factor" in the definition of compensable injury.
  
• Gives preference to objective medical findings over subjective complaints of pain.
  
• The statue will now be "impartially construed" rather than "liberally construed."
  
• Travel to and from work in a company owned or leased car is no longer covered by workers compensation.
  
• Death benefits would be reduced from 25 percent to 50 percent when the injured employee fails to wear safety equipment provided by employer.
  
• Administrative law judges will be subject to performance audits every two years and could be removed by a review committee.

Gov. Holden twice vetoed tort reform legislation. Last year the veto override fell short in the House of Representatives, which allowed medical liability crisis to linger yet another year. "Placing a cap on damages and putting a stop to venue shopping are essential in gaining control of medical liability costs. Ensuring greater fairness in the court system, and gaining certainty regarding the potential pay out in medical liability case will help bring stability and more competition to medical liability marketplace," said Woods.

Major provisions of the tort reform bill (HB 393) include:

• Non-economic damages capped at $350,000. The prior cap had risen to over $579,000 as a result of an inflation index. The current cap is not indexed. The bill also overturns the Scott decision, which allowed multiple caps.
  
• Punitive damages are capped at $500,000 or five times actual damages, whichever is greater.
  
• A defendant must be at least 51 percent at fault before being held jointly and severally liable.
  
• The venue statute was tightened dramatically. Generally, venue will be in the county in which the injury occurred.
  
• Appeal bonds are limited to a maximum of $50 million.

PCI is composed of more than 1,000 member companies, representing the broadest cross-section of insurers of any national trade association. PCI members write $173.6 billion in annual premium, 39.1 percent of the nation's property/casualty insurance. Member companies write 49.1 percent of the U.S. automobile insurance market, 37.8 percent of the homeowners market, 31.8 percent of the commercial property and liability market, and 38.5 percent of the private workers compensation market.

Source: PCI