By: Whitney James
Before May of 2016, Arkansas workers’ compensation attorneys long wondered about the future of the state’s Death and Permanent Total Disability Trust Fund. I can recall numerous conversations regarding how the Fund would be able to continue to pay claims. Now that 2017 is coming to a close, it seems like a good time to review some changes in the law that will begin to affect businesses in the future.
In May of 2016, Arkansas passed a law that lists an end date for filing claims with the Death and Permanent Total Disability Trust Fund. For what I view as such a significant change in Arkansas workers’ compensation law, there was not much media attention.
The Death and Permanent Total Disability Trust Fund assume payments of benefits to workers who have sustained an injury that results in permanent disability or death. In the case of employees who are permanently disabled, the Fund takes over permanent disability payments after the workers’ compensation carrier pays a certain amount. For injuries prior to January 1, 2008, the cap for the workers’ compensation carrier is $75,000.00. For injuries on or after January 1, 2008, the cap is 325 times the maximum total disability rate established for the date of the injury.
The funds in the Death and Permanent Total Disability Trust Fund come from a tax placed on workers’ compensation insurance carriers and self-insured employers. Proponents of closing the Fund cited the concern for its growing unfunded liability versus the amount of money contributed.
Although other dates were proposed and discussed, the law passed in May of 2016, which amended Arkansas Code Annotated §11-9-502, mandates an official deadline of June 30, 2019, for an employee or dependent of an employee to file a claim with the Fund for death or permanent total disability benefits. If a death or permanent total disability claim is filed before that date, the Fund will still assume benefits after the employer has breached the cap; however, if a claim is filed after that date, the liability for permanent and total disability benefits remains with the employer. The Death and Permanent Total Disability Threshold no longer matters.
What do these changes mean? Even though the amount of the tax will eventually decrease, in the meantime, costs for employers could rise. It is certain that with the deadline looming, permanent and total disability claims will increase. Employers will have to evaluate how to account for added expenses since the state will no longer take over payments on permanent and total disability claims. There are many variables and potential outcomes to consider. Although the Death and Permanent Total Disability Trust Fund is far from closed and will be paying out benefits for quite some time in the future, as we reach the end of 2017, we need to remain aware of this significant change in Arkansas workers’ compensation law.
Whitney James focuses on Workers’ Compensation, Personal Injury Litigation, and Business and Commercial Litigation in the Little Rock office.
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