A Second look at the Second Injury Fund

By Brittany E. January, Attorney at Law

The Second Injury Fund (Fund) is a collection of assessments paid by participating self-insured employers, creating a nest egg controlled by the Washington state treasurer^[1]. However, the Department of Labor and Industries’ Director can, via written order, allow the Fund to be accessed in cases of a worker’s total permanent disability or death resulting from the combined effects of pre-existing disabling condition(s) and a Washington workers’ compensation claim’s permanent injury^[2]. If the Department agrees to a Second Injury Fund pension, a self-insured employer pays only the permanent partial disability from its claim(s) and three years of premiums to access the Fund, while the remaining pension costs are paid to the worker through the Fund^[3].  However, until recently, Second Injury Fund Pension access premiums were often so high that a Second Injury Fund pension could cost more than a direct pension under the claim.

But, that appears to be changing. In 2023, SB 5084 created a Self-Insurance Reserve Fund, per RCW 51.44.155, and allowed this new fund to be added to a list of other state funds that get to receive their proportionate share of their earnings. Practically, this allows the generated interest from the Second Injury Fund to be re-invested back into that Fund, creating a larger cash balance. This move was expected to decrease the employer’s premiums without affecting the worker, but did it work?

The answer is probably yes. According to the Department’s Self-Insurance Certification Services, SB 5084 is estimated to have dropped the employer premiums 25 percent this fiscal year alone. More promising, this rate is expected to stay low for a few years creating longer lasting effects, including offsetting additional and unexpected costs. Accordingly (and as long as employers do not flood the Fund with requests), the Second Injury Fund access premiums should reflect a noticeable decrease, making Second Injury Fund pensions a more viable resolution option for applicable cases.

In summary, SB 5084 should be reducing Second Injury Fund premiums because it allows the Fund to collect interest. If you have a case where a Second Injury Fund pension may be appropriate, and need additional information and guidance, please feel free to reach out to our firm. Our Washington practice group would be happy to provide assistance navigating this evolving area of law.

^[1] See RCW 51.44.040.

^[2] See RCW 51.16.120.

^[3] See RCW 51.44.040.