What is the Second Injury Fund? back to home

By Bill Calhoun
Director – Legal Services

The Tennessee Second Injury Fund (“the Fund”) pays benefits to injured workers with pre-existing disabilities. It is funded by an assessment on workers’ compensation premiums. The Fund makes it easier for individuals with previous disabilities to be hired initially and to keep their employment following workplace injuries. The Fund was initially conceived following World War II to assist returning Tennessee war veterans, injured during their military service, with finding employment upon their return home. Although the disability benefits from the Fund are paid directly to the injured employee, the secondary benefit is to the employer/insurer because the Fund takes over once they have satisfied their portion of the workers’ compensation award.  The employer is still liable for the amount of disability from the workplace injury, but the Fund could have the liability for the pre-existing disability.

Over the years, the laws for workers’ compensation have changed dramatically in Tennessee. Prior to 1992, the maximum award an injured worker could receive for a career ending injury was 400 weeks. The law changed in 1992 where today permanent total disability benefits are paid until the injured worker is eligible to receive Social Security retirement benefits. This change dramatically increased the potential liability of the employer/insurer, but also dramatically increased the potential liability of the Fund. 

To benefit from the Second Injury Fund, the employer must be aware of the pre-existing disabilities and hire or retain the worker in spite of those disabilities. Those pre-existing disabilities could be anything from a congenital defect to prior workplace injuries.

If an employee has an on-the-job injury and becomes permanently and totally disabled by that injury, the employer is liable only for that part of the employee’s disability arising out of that injury without regard to the employee’s prior disability, and the Fund is then liable for the remaining percentage of permanent total disability.  In addition, following the Tennessee Workers’ Compensation Reform Act of 2004, if a workers’ compensation specialist in the Benefit Review Program orders an employer to pay temporary total disability benefits for an employee with a denied claim, should that claim ultimately be adjudicated not to be compensable by a court, the employer may seek reimbursement from the Second Injury Fund for the disability benefits that had been ordered by the specialist.