Subrogation of Occupational Disease Claims Eliminated
“Just when I thought I was out, they pull me back in.” – Al Pacino, Godfather III.
In 2005, Missouri amended its statutes and divorced the compensability of occupational disease claims from its statutory workers’ compensation definitions of “accident” and “injury.” A few years later, in the case of State Ex Rel. KCP&L Greater Missouri Operations Co. v. Cook, 353 S.W.3d 14 (Mo. App. 2011), the Court announced that occupational diseases were no longer exclusively covered by the Missouri Workers’ Compensation Act, and employers could be sued in tort for such a disease. The decision opened the floodgates to employer liability on a much larger scale and, in two simultaneous venues, created issues regarding an employer’s insurance coverage under the compensation policy and general liability policy. The exclusive remedy of the Workers’ Compensation Act no longer applied to occupational disease cases. On May 16, 2013, the Missouri General Assembly passed, and Governor Nixon signed, Senate Bill 1, which accomplished, among things, the following:
- Creates a new category of occupational diseases known as “occupational diseases due to toxic exposure” limited to mesothelioma, asbestosis, beryllosis, coal worker’s pneumoconiosis, bronchiolitis obliterans, silicosis, silicotuberculosis, manganism, acute myelogenous leukemia and myelodysplastic syndrome.
- The phrase “occupational disease” has been added to § 287.120 to make it clear that occupational disease is indeed part of Chapter 287 and that the workers’ compensation law is intended to be the employee’s exclusive remedy against an employer in the case of an occupational disease.
- The employer/workers’ compensation carrier will no longer have a right of subrogation in any third-party injury or wrongful death case resulting from a toxic exposure occupational disease.
In Cook, Monroe Gunter was exposed to asbestos while working for Kansas City Power & Light (“KCP&L”) and over the years, developed mesothelioma. Gunter worked 34 years for KCP&L and retired in 1998. He was diagnosed with mesothelioma in February 2010. In April 2010, he filed suit against KCP&L, 16 manufacturers of asbestos products, as well as other design and manufacturing companies. KCP&L asserted affirmative defenses which included the exclusivity provision of § 287.120 of the Workers’ Compensation Act. The 16 other employers and associated design and manufacturing companies either settled or were subsequently dismissed from the suit. KCP&L filed a motion for summary judgment based on the Exclusive Remedy Rule. The Court held that the Exclusive Remedy Rule did not apply because Gunter’s claims did not arise out of an “accident” as the term is defined under Chapter 287 after the 2005 amendments.
On July 10, 2013, the Missouri legislature responded by enacting Senate Bill 1, which brought occupational diseases back into the workers’ compensation fold, and specifically amended § 287.150, adding a new subsection (7) which now reads as follows:
7. Notwithstanding any other provision of this section, when a third person or party is liable to the employee, to the dependents of an employee, or to any person eligible to sue for the employer’s wrongful death as provided in section 537.080 in a case where the employee suffers or suffered from an occupational disease due to toxic exposure and the employee, dependents, or persons eligible to sue for wrongful death are compensated under this chapter, in no case shall the employer then be subrogated to the rights of an employee, dependents, or persons eligible to sue for wrongful death against such third person or party when the occupational disease due to toxic exposure arose from the employee’s work for employer. 2013 Mo. Legis. Serv. S.B. 1 (2013) (eff. 1/1/14).
As a result, subrogation has been eliminated for any claims resulting from a toxic exposure occupational disease. Once again, subrogation has become the whipping boy – the easy target to bite the bullet when dollars are short. Not only will carriers and employers bear the burden of this legislative effort to save money for the floundering Second Injury Fund, but the new Act also provides for a supplemental surcharge (against employers) not to exceed 3%, to be added to the existing 3% surcharge to finance the Fund beginning in 2014 to run through 2021. The new law is effective on January 1, 2014.
If you have any questions regarding this article or subrogation in general, please contact Ryan Woody at [email protected].