Historical Overview

The Industrial Special Indemnity Fund (ISIF), commonly referred to as the Second Injury Fund, was adopted in 1927 by Idaho’s state legislature as part of the state’s workers’ compensation system. The Fund’s purpose is to encourage employers to hire impaired workers by offering the employer relief from total and permanent disability liability if the impaired worker is subsequently injured and becomes totally and permanently disabled.

The ISIF is codified as to its purpose and management in Idaho Code §72-323, §72-324, §72-330, §72-331, and §72-334.

Funding for the ISIF is provided through annual assessment. The assessment is calculated as two times the amount of the Fund’s expenses incurred during the previous fiscal year, minus the existing cash balance. The assessment is pro-rated semi-annually between the State Insurance Fund, self-insured companies, and sureties based on each entity’s proportionate share of total indemnity benefits paid on open workers’ compensation claims during each reporting period. The Industrial Commission notifies each responsible entity regarding their assessment share.

The funding assessment formula replaced the levy system on July 1, 1997 with the repeal of Idaho Code §72-327 and §72-328 and the addition of §72-327 and §72-328.

Claimants, self-insured companies, sureties, and the State Insurance Fund may access the ISIF for potential liability relief by submitting a claim under a “60 day” rule, as defined in §72-334. Within 60 days of a claim submission, the Fund undertakes an in-house review of the claim for liability and, if appropriate, engages in settlement or denies liability. After the 60-day period has ended, the party that filed the claim may file a Complaint Against the Industrial Special Indemnity Fund (IC Form 1002). Upon receipt of a Complaint Against the Industrial Special Indemnity Fund, the Fund will refer the claim to outside legal counsel and commence formal litigation.

Claim settlement may be concluded by lump sum, periodic monthly payments, or a combination of the two. While settlement may relieve sureties and self-insured employers of liability, benefit payments are only made to claimants. ISIF is liable for lifetime total and permanent disability benefits, excluding all medical benefits, if the Fund’s liability is reached, as defined in Idaho Code §72-332. Allocation of total and permanent disability liability between the employer/surety and the ISIF is made under the Carey apportionment formula, established by Carey v. Clearwater.

Benefit rates for total and permanent disability, and hence ISIF liability, are defined in Idaho Code §72-408 and §72-409. In general, total and permanent disability is based at 45% or 67% of the average state weekly wage. The minimum or maximum benefit percentage is determined by the injured worker’s average weekly wage. Benefits are paid at the determined percentage of the average state weekly wage for the benefit year.