S.C. Gov. and Insurers Call Senate Workers’ Comp Bill ‘Weak’

April 9, 2007

The South Carolina Senate has passed workers’ compensation reform legisaltion but many observers are not impressed and hope the House will do a better job.

The bill, S. 332, moves to the House this week.

Backers hope it will hep employers save on premiums.

“The bill will lead to stability in premiums over time, said Sen. Brad Hutto, D-Orangeburg. “But none of this is going to happen on anybody’s next month’s premium,” he said.

The bill calls for businesses that understate how much they pay workers or classify workers improperly face felony charges.

The legislation also would eliminate the Second Injury Fund, a program intended to cover future injuries of workers with past workplace injuries and illnesses. Problems with payments for arthritis and a surge of claims have made payments to that fund skyrocket in recent years, costing state businesses hundreds of millions of dollars.

“It’s a beginning,” said Sen. Larry Martin, a Pickens Republican who is the bill’s chief sponsor.

Also, the South Carolina Department of Insurance would be required to more closely monitor workers’ compensation insurers’ rates.

“It removes the lack of confidence in the rates,” said Senate President Pro Tem Glenn McConnell, R-Charleston.

But the changes fall short of what Gov. Mark Sanford and business leaders wanted. Last year, both were left empty handed when the House passed a package of workers’ comp law changes that pleased few and died in the Senate.

While thanking the Senate for the push to eliminate the second injury fund, Gov. Mark Sanford lambasted legislators for not pushing for clarity in establishing more objective standards for determining injury awards.

“[T]his bill overall is a weak one that doesn’t go far enough in addressing what in our view is the most important part of workers’ comp reform, and that’s having clear, objective standards for making awards,” Sanford said. “Our workers’ comp system continues to be too subjective, it hurts our small businesses’ ability to compete, and it drives up costs for the average South Carolinian in a way that benefits a select group of people who in many cases happen to be lawyer-legislators.”

Sanford didn’t stop there as he continued to express his concern by naming names: “It’s particularly disconcerting that some of the people who led the floor fight against more substantive reforms – like Sens. Land, Rankin and Hutto – are the ones reaping some of the greatest financial benefit from the current system, to the tune of hundreds of thousands of dollars for themselves and their law partners,” he said. “That kind of conflict of interest highlights everything that’s wrong with Columbia politics, and it’s something that needs to change.”

The bill only allows state Workers’ Compensation Commission members to consider American Medical Association guidelines when determining the degree of an injury, but it doesn’t require them to do so.

Sanford and others, including the South Carolina Civil Justice Coalition, wanted standards put in place to determine the extent of a workers’ injuries, long-term disabilities or impairments and how much they should be compensated.

“It doesn’t go far enough for the business community,” said Cam Crawford, the justice coalition’s executive director.

The legislation could cost businesses more, Crawford said. For instance, while the bill removes a legal presumption that someone is fully disabled when they lose half of the use of their back, it raises the maximum disability award for people with more than half the use of their back to compensation of 500 weeks instead of 300 weeks, he noted.

The American Insurance Association was also disappointed in the bill that passed.

“This measure falls far short of our objective, which is a substantive overhaul of the state’s workers’ compensation system,” said Raymond G. Farmer, AIA assistant vice president, Southeast Region. “But we have taken a major step forward by getting a bill approved by the Senate, and look forward to working with House leadership to add significant, system-changing reforms.”

Many of the major provisions of S. 332 only partially address the uncontrolled medical costs, increased litigation and premiums that have risen almost 50 percent in the past three years, acording to the insurers’ association.

For example, although eliminating the presumption that a 50 percent disability to the back entitles a claimant to 100 percent disability, the bill would add costs back to the system by making employers liable for 500 weeks instead of 300 weeks for back injuries receiving a 50 percent or more impairment rating.

Insurers also criticized lawmakers for not requiring the use of AMA guidelines.

“South Carolina needs major, system-changing reforms to put the workers’ compensation market back on a sound footing for both employers and insurers,” said Farmer. “The current unfavorable climate serves no one’s best interests, with the exception of the state’s trial bar.”

On the positive side in insurers’ view, the bill includes a phase-out of the Second Injury Fund reform and corrects several court decisions that have added unnecessary costs to the system.

The interest now turns to making the bill tougher in the House, Crawford said. “We’re going to fight for the things we did not get in the Senate,” Crawford said.

Sources: American Insurance Association
Office of the Governor of South Carolina
The Associated Press

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