The statutory precursor of the Subsequent Injury Fund, the Second Injury Fund, was created by Chapter 637 of the Acts of 1945.
By Chapter 809 of the Acts of 1963, Section 66 of Article 101 was repealed and re-enacted with amendments. One of the amendments to Section 66 abolished the Second Injury Fund and created in its place the Subsequent Injury Fund.
In analyzing the Subsequent Injury Fund, the Court of Appeals in Subsequent Injury Fund v. Pack, 250 Md. 206, 308, 342 A.2d, 506, 508 said that its purpose was to persuade the employer to employ the handicapped individual, by limiting the liability, which the employer may otherwise have incurred. The Subsequent Injury Fund, funded by assessments imposed upon employers and insurers, by statute, would contribute the balance of the total award, so that the sum of the two payments would equal the compensation provided by statute for the combined effects of both the previous disability and the subsequent injury.
In Pack, Judge Finan, speaking for the Court made an extensive analysis of the status of the Fund. The Court said:
The narrow question, therefore, is whether the Fund is a "person". It is actually nothing more than a glomerate of money, to be disbursed by the State Treasurer on written orders of the Commission. It is not supervised, maintained or protected by a governing board, which is given the authority to appeal, as is the Unsatisfied Claim and Judgment Fund. Nor is it an agency of the State, created and designated as such by the Legislature, as is the State Accident Fund. It is not a commission, corporation, trustee or other artificially created 'person'.The Fund had no legal standing as a party until the Legislature passed Acts of 1969, Chapter 394:
In the event of any award against the Subsequent Injury Fund, there shall be a right of appeal by the Subsequent Injury Fund, as provided in Section 56 (a) of Article 101.Apparently seeking to give the Fund the validity of a party after Pack made clear that it had none, the legislature passed Acts of 1969, Chapter 394.
No administrative direction was given the Subsequent Injury Fund until the Legislature passed Acts of 1975, Chapter 398, thus creating the now defunct Workers' Compensation Fund Board. This law provided in part:
The Board shall supervise, operate and administer the Subsequent Injury Fund, the Uninsured Employers' Fund and other funds created from time to time under this article.Acts of 1982, Chapter 142, added subsections 7 and 8 to Article 101, Section 66. The provisions, among others, were as follows:
(7) Staff; budget; appropriations.This legislation provided the first significant step toward resolving the administrative problems of the Subsequent Injury Fund. The Workers' Compensation Fund Board was abolished and the Subsequent Injury Fund Board created. The Subsequent Injury Fund became recognized for the first time by the Legislature as a separate agency and thus independent of the Workers' Compensation Commission.(a) The Fund shall have the staff and employees which are authorized in the annual State budget.(8) Subsequent Injury Fund Board.
(b) The Fund annually shall submit its budget to the Governor for inclusion in the next State budget submitted to the General Assembly.(a) There is a Subsequent Injury Fund Board.
(b) The Board is composed of 3 members, one member each shall represent labor, management and the public.
(c) The Board shall supervise the operation, and administration of the Subsequent Injury Fund.
(f) The Board shall submit an annual report to the Governor on or before October 1. The report shall include a statement in detail of the expenses and balances of the Fund.
The legal conflict of interests existing under the law prior to 1982 among the Subsequent Injury Fund, Uninsured Employers' Fund and Workers' Compensation Commission and the Workers' Compensation Fund Board were resolved.
The practical benefit to the Subsequent Injury Fund was the creation of a budget requirement whereby the Subsequent Injury Fund was accountable to the Governor for its budget submission, independent of the Workers' Compensation Commission. Until 1982, the Fund, despite the presence of the Workers' Compensation Fund Board, had no direct pipeline to the Department of Budget and Fiscal Planning and relied on the Workers' Compensation Commission as its agent in budget matters. As part of the overall Commission budget, the Fund's needs often were deemed relatively unimportant when compared with the needs of the Workers' Compensation Commission.
Acts of 1982, Chapter 142, did not clarify the Funding for the operating costs of the Subsequent Injury Fund. To eliminate the question of whether general or special funding applied, Acts of 1983, Chapter 326, was legislated into law whereby subsection (7) (c) was added to Section to Section 66 of Article 101 as follows:
Appropriation of funding for the budget of the Subsequent Injury Fund shall be made from the Fund created under subsection (2) of Section 66....Thus, the source of funding for the Subsequent Injury Fund (the 5% assessment on all permanency awards, settlements and death claims paid by employers participating in the Workers' Compensation process) was for the first time allocated to the operational costs of the Subsequent Injury Fund as well as to the formerly exclusive application of paying benefits pursuant to awards of the Workers' Compensation Commission. Other significant changes in the 1983 statute clarified responsibility for the handling of all Subsequent Injury Fund monies and placed that responsibility in the hands of the Subsequent Injury Fund Board and its Director rather than with the Workers' Compensation Commission.
Of significance and unrelated to the Subsequent Injury Fund, Acts of 1983, Chapter 576, created the separate Uninsured Employers' Fund Board and provided for a Director of Administration for that Fund with budget requirements similar to those previously affecting the Subsequent Injury Fund in 1982. This finally resolved the obvious conflict of interest problems existing among the Subsequent Injury Fund, Uninsured Employers' Fund and Workers' Compensation Commission, and the old Workers' Compensation Fund Board.
The schematic before these significant changes placed the Uninsured Employers' Fund and the Subsequent Injury Fund, two Funds with conflicting interests, under the administration of one Board (Workers' Compensation Fund Board). Further complicating this situation was the fact that operational costs, including salaries for employees of both the Subsequent Injury Fund and Uninsured Employers' Fund were paid from the budget of the Workers' Compensation Commission, the agency which mediated claims involving both the Subsequent Injury Fund and Uninsured Employers' Fund as parties.
The 1982 and 1983 legislation resolved these conflicts as follows:
(1) The Workers' Compensation Commission no longer provides the budget funding for the Subsequent Injury Fund or Uninsured Employers' Fund.
(2) Both the Subsequent Injury Fund and the Uninsured Employers' Fund are independent agencies, both independent of each other and the Workers' Compensation Commission with separate Boards at the helm of each Fund.
(3) Both the Subsequent Injury Fund and Uninsured Employers' Fund, via different mechanisms, have separate budgets and sources of funding not tied to the Workers' Compensation Commission.