JEFFERSON CITY — Citing concern over the solvency of a fund that pays out certain worker’s compensation claims in Missouri, Attorney General Chris Koster has temporarily decided against entering into any more settlement agreements and has suspended those agreements that were under negotiation.

“Our office, along with the State Treasurer’s Office, received notification Tuesday from the Missouri Department of Labor that the solvency of the Missouri Second Injury Fund is in question,” Koster said. “It was represented to us that current fund revenues may be adequate to meet current obligations upon the fund until the end of the year. However, we were informed that new obligations upon the fund could potentially push the fund past solvency. Therefore, given information currently available, our office has determined it is in the best interests of existing claimants and the state that no new settlements be entered into until a greater understanding of the fund’s solvency is reached and until further consultations with executive and legislative leaders are completed,” he said.

The Second Injury Fund has been a hot topic in political circles ever since former Attorney General Bill Webster and a group of St. Louis attorneys were caught up in a federal investigation over misuse of the fund in the early ’90s. The fund was established after World War II to encourage businesses to hire veterans who returned from the war with some disability but could still work. The fund pays out settlements if workers get hurt on the job, and the injury aggravates a previous disability.

Under current Missouri law, the attorney general’s office negotiates settlements with cases, often paying out up to $40,000 in lump sums to injured workers instead of higher amounts that would be paid out over many years. Some Republican lawmakers have been critical of that practice, saying that the fund could not afford the increase in short-term payouts.

In 2007, Gov. Matt Blunt was critical of the increase in those payouts when Jay Nixon, now the governor, was attorney general. Nixon’s staff argued that the payouts would save the state money in the long run.

During the 2008 legislative session, Republicans led by Sen. Gary Nodler, R-Joplin, and former state Rep. Steve Hunter argued that the fund would soon be insolvent and they tried unsuccessfully to reduce the $40,000 cap on settlement payments.