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The Attorney General of Texas
June 23, 1978
JOHN L. HILL
Attorney General
Honorable Cue D. Boykin, Chairman Opinion No. H- 1193
Texas Industrial Accident Board
Lyndon Baines Johnson Building Re: Payments to the Second
Austin, Texas 78’711 Injury Fund after it exceeds
$250,000.
Dear Mr. Boykin:
You inquire about the liability of insurance carriers for payment to the
Second Injury Fund after it equals $250,000 in excess of existing liabilities.
The fund was established to help provide compensation to employees when the
combined effects of a first and second injury produce a greater incapacity
than the second injury alone would have caused. Texas Employers’ Ins. Ass’n
v. Haunschild, 527 S.W.2d 270 (Tex. Civ. App. - Amarillo 1975, writ ref’d
n.r.e.); Attorney General Opinion H-902 (1976); see Houston General Ins. Co.
v. Teague, 531 S.W.2d 457 (Tex. Civ. App. - Wazl975, writ ref’d n.r.e.). Its
purpose is to encourage the employment of persons handicapped by a previous
injury by limiting the insurer’s liability to the disabili,ty caused by the second
injury only. Second Injury Fund v. Keaton, 337 S.W.2d 841 (Tex. Civ. App. -
1960) rev’d on other grounds 345 S.W.2d 711(Tex. 1961).
The fund is created in accordance with section 12c-2 of article 8306,
V.T.C.S:
(a) In every case of the death of an employee under
this Act where there is no person entitled to compen-
sation surviving said employee, the association shall
@ to the Industrial Accident Board the full death
benefits . . . for the benefit of said Fund. . . .
(Emphasis added). ~When it reaches $250,000 in excess of existing liabilities,
payments into the fund cease until it is reduced below $125,000, as follows:
(b) When the total amount of all such payments into
the Fund, together with the accumulated interest
thereon, equals or exceeds Two Hundred Fifty
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Honorable Cue D. Boykin - Page 2 (H-1193)
Thousand Dollars ($250,000.00) in excess of existing liabil-
ities, no further payments shall be required to be paid to
said Fund; but whenever thereafter the amount of such Fund
shall be reduced below One Hundred Twenty-Five Thousand
Dollars ($125,000.00) by reason of payments from such Fund,
the payments to such Fund shall be resumed forthwith, and
shall continue until such Fund again amounts to Two
Hundred Fifty Thousand Dollars ($250,000.00) including
accumulated interest thereon.
V.T.C.S. art. 8306, S 12c-2.
You inform us that a payment into the fund on March 1, 1978, caused it to
exceed $250,000 in excess of existing liabilities. You inquire about the liability of
insurance carriers during the interval before the fund is reduced below $125,000;
whether they have no liability for claims arising during this period, or whether they
remain liable for such claims, payments merely being deferred until the fund is
reduced below $125,000. You also ask whether the fund may now receive payment
of death benefits for deaths which occurred before March 1,1978.
Article 8306, section 12c-2 states that “the association shall pay” certain
death benefits to the board. It thus creates a statutory liability to make payments
to the fund under certain circumstances. See Industrial Accident Board v. Texas
Employers’ Insurance Association, 345 S.Wm 718 (Tex. 1961). Section 12c-2fbj
states that when the fund exceeds a certain sum, “no further payments shall be
required to be paid to said Fund.” We interpret this language to mean that no
statutory liability will come into existence after the fund exceeds the stated
amount. Thus, carriers will have no liability to the fund for deaths occurring after
March 1, 1978, and prior to a future date when the “Fund shall be reduced below . . .
$125,000. . . .I’
Our interpretation of section 12c-2 is based in part on our observation that it
speaks solely in terms of the carrier’s obligation to pay without referring to the
board’s action to collect the money. We believe that the statutory references to
‘pay” and “payment” denote the carrier’s legal duty to make payments, and not its
actual tendering of money to the fund. When the statute ends the required
payments, it thus prevents statutory liability from arising, rather than merely
inhibiting the flow of money into the fund.
The courts have required that the board claim death benefits from the carrier
and prove that no one entitled to compensation survived the employee. Industrial
Accident Board v. Texas Employers’ Insurance Association, w; Industrial
Accident Board v. Miears, 227 S.W.2d 571 (Tex. Civ. App. - Galveston), aff’d in
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Honorable Cue D. Boykin - Page 3 ( H- 119 3 1
part, rev’d in part, 232 S.W.2d 671 (Tex. 1950). The carrier usually does not tender
payment until some time after the death. Nevertheless, the existence of survivors,
and consequently the carrier’s statutory liability, is determined by the facts as of
the time of the employee’s death. V.T.C.S. art. 8306, S 8a. We believe that section
12c-2 makes the carrier’s statutory liability depend on the size of the fund at the
time of the employee’s death. Therefore the board may collect death benefits
attributable to deaths prior to March 1, 1978.
It has been suggested that the fund’s value at various other dates should
control the carrier’s liability to it. These dates include the date of the board’s
award, the date of final adjudication, and the date that payment is tendered. We
do not believe any of these dates reflect a correct interpretation of the language of
section 12c-2. Moreover, the selection of one of these dates would introduce
unnecessary complications into the administration of the fund. When a proceeding
to claim death benefits begins, the date of death is the only certain date. The
other three events are uncertain future events, and their timing is subject to
control by the board or the carrier. The factfinders would have to look to the
death date on the survivorship question and to an uncertain future date with
respect to the fund’s~value. We recognize that our conclusion that the death date
controls liability may result in further payment being made into the fund after it
has reached the $250,000 mark. We do not believe that section 12c-2 prohibits the
tender of payment after this event, but only the creation of new obligations to pay.
See Pennsylvania Mfrs. Assn. Ins. Co. v. Sheppard, 373 A.2d 760 (Pa. Commw. Ct.)
Griers must pay full assessment, even though Workmen’s Compensation Security
Fund will as a result exceed statutory amount).
SUMMARY
Workmen’s Compensation carriers have no liability to the
Second Injury Fund for death benefits attributable to deaths
occurring after the fund exceeds $250,000 in excess of
existing liabilities and before it is reduced below $125,000.
The fund may continue to receive payment of death benefits
derived from deaths occurring before the fund exceeded the
statutory amount.
Very truly yours,
ttorney General of Texas
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Honorable Cue D. Boykin - Page 4 (H-1193)
APPROVED:
Opinion Committee”
jsn
p. 4801