LEGISLATORS CONCERNED OVER WORKERS COMP

Revelations about potential abuses in the workers compensation Second Injury Fund and a decision last week by Gov. John Ashcroft to fire Richard Rousselot as director of the Missouri Division of Workers' Comp, have some legislators concerned.

In the last legislative session, huge premium hikes for many employers, without a claims history to justify the increases, had made reform of the state's workers compensation laws a top priority of the 1992 session.

Legislators passed a bill that will not completely solve the problem, but was widely viewed as a good first step toward resolving a complex issue.

The Second Injury Fund has been in the news lately because claims against the fund have climbed from $3 million to over $31 million since 1984. Newspaper reports have also suggested that some of the claims paid have not been legitimate, and have suggested abuses in the system from law firms hired by the attorney general's office who have been both defending and suing the fund.

Ashcroft, in firing Rousselot, declared that the Second Injury Fund charges had nothing to do with his decision, but rather he was concerned about getting a system in place to ease a backlog of paying claims. He also suggested new leadership was needed to enact legislation passed this year reforming workers comp.

Rep. Dennis Ziegenhorn, D-Sikeston, chairman of the House Insurance Committee, said he thinks the governor fired Rousselot because of problems with workers comp.

"I think the governor is finally receiving so much heat on workers comp that he had to make a statement," declared Ziegenhorn. "Rousselot is not totally the problem.

"I think it's a statement that Ashcroft is making. I don't know if the firing is justifiable. Maybe he's got a lot more proof of something he's done."

But Ziegenhorn noted that Rousselot worked very closely with a committee he co-chaired last year studying problems with workers comp and attended all hearings to assist where he could.

Rep. Joe Driskill, D-Poplar Bluff, who is chairman of the House Commerce Committee, said Rousselot's firing "came out of the blue. It is rather interesting that this very high publicity scandal would build at a time we are trying to fix the workers comp law. It is very, very intersting with all the coincidences."

Driskill said he had talked with Rousselot earlier this year and the director had no idea his job might be in jeopardy. "What has transpired since then, I don't know?" said Driskill.

The legislator said he had not been able to get a clear answer from the governor's office as to exactly what led to the firing.

Ziegenhorn said Ashcroft could have done more for workers comp reform in the state by supporting a freeze in rates. A rate freeze was included in House legislation, but did not come out of the Senate after Ashcroft and some senators lobbied hard against a one year freeze.

But Ziegenhorn said a one year freeze would have given them time to identify potential solutions to problems with the system that are causing rates to climb.

"I wish Gov. Ashcroft would have listened to me and let us have some kind of freeze on rates. But Ashcroft was absolutely opposed to a freeze because he was concerned it would drive insurance companies out of the state," said Ziegenhorn.

But freezing rates for one year, "I don't think would have run anyone out of the state. I think the governor should have shown his concern by supporting a rate freeze."

Because Attorney General William Webster is a Republican candidate for governor, the Second Injury Fund has emerged as the major issue of the GOP primary. Both State Treasurer Wendell Bailey and Secretary of State Roy Blunt have accused Webster of wrongdoing in the fund.

Webster has responded that the fund is supervised by the Division of Workers Comp and that all settlements agreed to by attorneys hired by his office must be approved by administrative law judges.

Sen. Jay Nixon, D-Hillsboro, chairman of the Senate Insurance Committee, said he is quite concerned about alleged abuses in the Second Injury Fund.

"You are dealing with tax dollars here. When you have people both suing and defending the fund, it strikes a chord that something is wrong and should not happen," said Nixon. "A lot of people are looking at this very, very seriously.

"The great increase in fees and costs in the fund strikes at the sensibilities of the people out there."

Nixon noted that he sponsored legislation this year that passed, making the records public on fees and expenses paid out to lawyers involved with the fund.

Driskill said if the allegations that have been made about the fund are true, "it's a very big deal. If the allegations are true, I would think some closer looks and better investigation needs to be done to see what is going on."

Rep. Mark Richardson, R-Poplar Bluff, an attorney, said he would like to see the Second Injury Fund investigated to get some answers. In particular, Richardson said he was concerned about a St. Louis Post Dispatch article last week, outlining how an attorney who had sued the fund had also collected from the fund twice for injuries in his office. A third fund was pending because of strain from handling his briefcase.

The attorney had also contributed over $50,000 to Webster's campaigns the last few years.

"If the facts are accurate as they printed it, I think it raises some serious questions about the attorney general's administration of that Second Injury Fund," said Richardson.

"I am concerned, if the allegations are true, it would seem to reveal that he's (Webster) involved in something the Republican Party - ever since I've been involved with it - has stood against. It is contradictory to the goals and principles of the Republican Party in Missouri."

Richardson said the way Webster has handled the fund as attorney general could have an impact in the way voters view him as a candidate for governor. "How he runs his attorney general's office is indicative of how he will run the governor's office," observed Richardson.

On the other hand, the representative stressed, "before anyone finds him guilty, the entire story needs to be told."

Ziegenhorn admitted the revelations about the Second Injury Fund look bad and that some abuses are clear, but feels it is unfair to put all lawyers hired to deal with the fund in the same category as the attorney in St. Louis featured by the Post.

"I certainly don't think this is indicative of all lawyers in the Second Injury Fund," said Ziegenhorn. "The thing is, it looks bad, but the state is going to have to have lawyers to represent it in the Second Injury Fund. It doesn't matter whether it is Webster, or someone else in the office, you have got to hire someone."

Concerning the fact that many of the law firms who have contracts with the attorney general's office to defend the fund have contributed to Webster's campaigns, Ziegenhorn said it does not appear to be improper.

"If I'm in charge of hiring lawyers for the Second Injury Fund, I'm going to hire my friends if they can do the job," said Ziegenhorn.

But Nixon, who is also a Democratic candidate for attorney general this year, contends there is no way to justify having lawyers both defending and suing the fund.

"You can't tell me that with thousands and thousands of lawyers in this state, you can't find enough to defend the fund who will not also be suing it," declared Nixon. "It is a major issue that has to be dealt with in a big way."

In Southeast Missouri, John Lichtengger, of Jackson, and Steve Taylor, of Sikeston, have contracts to defend the Second Injury Fund with Webster's office.

But Nixon acknowledged the kind of abuses being reported in St. Louis and Kansas City newspapers are not occurring in Southeast Missouri.

"If you look at some of the verdicts and settlements in the state, it is clear that they (Lichtegnegger and Taylor) are tight with taxpayers money," said Nixon.