(a)

(1) If an employee has previously sustained a permanent physical disability from any cause or origin and becomes permanently and totally disabled through a subsequent injury, the employee shall be entitled to compensation from the employee's employer or the employer's insurance company only for the disability that would have resulted from the subsequent injury, and the previous injury shall not be considered in estimating the compensation to which the employee may be entitled under this chapter from the employer or the employer's insurance company; provided, that in addition to the compensation for a subsequent injury, and after completion of the payments for the subsequent injury, then the employee shall be paid the remainder of the compensation that would be due for the permanent total disability out of a special fund to be known as the second injury fund.

(2) To receive benefits from the second injury fund, the injured employee must be the employee of an employer who has properly insured the employer's workers' compensation liability or has qualified to operate under this chapter as a self-insurer, and the employer must establish that the employer had actual knowledge of the permanent and preexisting disability at the time that the employee was hired or at the time that the employee was retained in employment after the employer acquired knowledge, but in all cases prior to the subsequent injury.

(3) In determining the percentage of disability for which the second injury fund shall be liable, no previous physical impairment shall be considered unless the impairment was within the knowledge of the employer as prescribed in subdivision (a)(2).

(4) Nothing in this section shall be construed to limit the employer's liability as provided by law for aggravation of preexisting conditions or disabilities in cases where recovery against the second injury fund is not applicable.

(b)

(1)

(A) In cases where the injured employee has received or will receive a workers' compensation award or awards for permanent disability to the body as a whole, and the combination of the awards equals or exceeds one hundred percent (100%) permanent disability to the body as a whole, the employee shall not be entitled to receive from the employer or its insurance carrier any compensation for permanent disability to the body as a whole that would be in excess of one hundred percent (100%) permanent disability to the body as a whole, after combining awards.

(B) Benefits that may be due the employee for permanent disability to the body as a whole in excess of one hundred percent (100%) permanent disability to the body as a whole, after combining awards, shall be paid by the second injury fund.

(C) It is the intention of the general assembly that once an employee receives an award or awards for permanent disability to the body as a whole, and the awards total one hundred percent (100%) permanent disability, any permanent disability compensation due for subsequent compensable injuries to the body as a whole shall be paid by the second injury fund, instead of by the employer.

(D) This subdivision (b)(1) shall apply only to injuries that arise on or before June 30, 2006, and shall have no applicability to injuries that arise on or after July 1, 2006.

(2)

(A) The burden of proving the existence of previous awards for permanent disability specific to the body as a whole shall be on the party claiming compensation against the second injury fund. This subdivision (b)(2)(A) shall apply only to injuries that arise on or before June 30, 2006, and shall have no applicability to injuries that arise on or after July 1, 2006.

(B) Claims against the fund shall be made by either the injured employee or the employer in the manner prescribed in § 50-6-206.

(C) Nothing in this section shall relieve the employer or its insurance company of liability for other benefits that may be due the injured employee, including temporary benefits, medical expenses and permanent benefits for injuries other than to the body as a whole, regardless of whether the combination of workers' compensation awards exceeds one hundred percent (100%) permanent disability.

(c) A sum sufficient to provide the benefits of this section shall be allocated from the four percent (4%) premium tax imposed in § 50-6-401(b), subject to a maximum allocation of fifty percent (50%) of the premium tax collected. The sums shall be deposited in the second injury fund for distribution by the administrator of the division of workers' compensation.

(d) There is appropriated a sum sufficient to the second injury fund for payment of benefits provided in this section, pursuant to this section. The appropriation shall be allocated from and equal to an amount not greater than fifty percent (50%) of the revenues derived from the premium tax levied pursuant to § 50-6-401.

(e) The sums collected by the administrator as provided in this section shall be deposited by the administrator in a special fund, which shall be termed the second injury fund, to be disbursed by the administrator only for the purposes stated in this section and shall not at any time be appropriated or diverted to any other purpose. The administrator shall not invest any moneys in the second injury fund in any other manner than is provided by the general laws of the state for investments of funds in the hands of the state treasurer. Disbursements from the fund shall be made by the administrator only after receipt by the administrator of a certified copy of the court decree awarding compensation as provided in this section. Disbursements shall be made only in accordance with the decree. A copy of the decree awarding compensation from the second injury fund shall in all cases be filed with the division.

(f) The commissioner, in consultation with the attorney general and reporter, shall prepare a plan for a pilot project using private legal counsel to defend the administrator in actions claiming compensation from the second injury fund pursuant to § 50-6-206. The plan shall include types of cases, approximate numbers of cases, proposed method of selection and other relevant matters. Any private legal counsel retained for these purposes shall be retained pursuant to § 8-6-106. Expenses relating to private legal counsel retained pursuant to this subsection (f) shall be paid from the second injury fund.

(g)

(1) Before any proposed settlement is considered final in cases involving benefits from the second injury fund under this section, it shall either:

(A) Have the written approval of the commissioner or the commissioner's designee, in accordance with subdivision (g)(2); or

(B) Have been approved in accordance with § 20-13-103.

(2) The commissioner is authorized to settle certain second injury fund claims without the necessity of complying with § 20-13-103; provided, that the attorney general and reporter, with the written approval of the governor and the comptroller of the treasury, shall set specific limits and conditions on the settlement authority.

(h) In order to require the second injury fund to participate in the benefit review conference, a party shall serve notice of potential liability on the fund.

(i) “Party” or “parties,” as referenced in § 50-6-204(d)(5), shall include the second injury fund.