S.C. Panel Proposes Workers’ Compensation Changes

December 13, 2005

A South Carolina workers’ compensation panel has reported to Gov. Mark Sanford that changing the workers’ compensation system is the key to making the state a better place to grow business and create jobs.

In June, the National Council on Compensation Insurance said that a key part of workers’ compensation rates should rise by nearly 33 percent. A few weeks later, the South Carolina Second Injury fund said workers’ comp insurers and self-insured employers would see assessment rise by 38 percent.

Sanford said the rising trend in workers’ comp costs “is simply not sustainable for South Carolina’s businesses, and especially our small businesses.”

Sanford spokesman Joel Sawyer said the governor will review the report’s contents and is interested in “enacting some reform that will have some immediate impact on rates.”

That includes dissolving the Second Injury Fund, restricting repetitive injury claims and eliminating a presumption that someone is disabled when they’ve lost just over 50 percent of the use of their back.
The report’s recommendations include:

* Increasing fraud penalties for employers who lie about what type of work their employers do and benefit through lower workers’ comp premiums. Employers that save $10,000 through fraud could be sent to prison for three years and fined $10,000.

* Eliminating the Second Injury Fund, which was set up to help workers with previous workplace injuries return to payrolls.

* Developing guidelines to limit how much employers would have to pay for injuries tied to previous injuries.

* Barring employees from receiving reimbursements for using doctors who are not approved by their employer to treat workers’ comp injuries.

* Limiting awards for mental stress disabilities by requiring people to prove that more than half of that disability came from a workplace injury.

* Using American Medical Association guidelines to determine how much disability a person has.

* Limiting claims for repetitive trauma. The panel said injuries would have to be tied to a specific event that occurs during a single day’s work and can’t be tied to aging or other “normal activities of day-to-day living.”

* Changing the way the South Carolina Workers’ Compensation operates, including who serves on the board and how claim appeals are handled.

Workers’ Compensation Commission executive director Gary Thibault said the commission received a copy of the report Monday and is reviewing the recommendations before offering a response.

Clif Scott, a member of Sanford’s panel and board member at the South Carolina Self Insurers Association Inc., said the report contains good ideas. Workers’ compensation, he said, “has been entirely too generous” and court cases have tended to broaden the definition of workplace injuries.

Changes are needed with the state Workers’ Compensation Commission, Scott said. There have been concerns about commissioners’ expertise and that “they’ve been allowed to operate too long with too much discretion,” he said.

Preston McDaniel, a Columbia lawyer who also was on the governor’s panel, says the recommendations do little to address insurance company excesses and broadly ignore available data while relying too heavily on anecdotal reports.

For instance, the report decries lawyer involvement in workers’ comp cases even after the panel was told that lawyers are involved in 4 percent of the claims, McDaniel said.

The final report was not voted on, McDaniel said. Scott could not recall taking a final vote on the report, but said panelists voted on individual elements of the report and were given a chance to review the final document.

McDaniel asked to attach a dissenting statement to report, but in an e-mail McDaniel provided to The Associated Press, the panel’s chairman, Lewis Creel, told him that wouldn’t be included.

Creel said McDaniel’s opinions were aired during meetings and influenced the final report.

He says one of the report’s most important suggestions was on repetitive injuries. For instance, Creel said, employers shouldn’t face workers’ comp claims from workers near retirement with 30 years on the job who report back or hearing problems that are more tied to age than their jobs.

McDaniel said the report amounts to “another attempt by the insurance industry to balance the books on the backs of injured workers.”

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