South Carolina’s Workers’ Compensation Laws Have Changed to Benefit the Injured and their Employers

Employers who evade their responsibilities to purchase workers’ compensation insurance or who intentionally misclassify employees create a premium shortfall. When an insufficient amount of premium is collected to pay claims, rate increases are triggered and inequities rise among subcontractors. Some contractors who falsify their information are able to underbid competitors who are paying fair market rates for workers’ compensation insurance. Bringing these employers into compliance with the act should lower the cost of workers’ compensation insurance in South Carolina.

Recent Changes

The last time the South Carolina legislature spent substantial time reforming South Carolina’s workers’ compensation law was 2007. When the 2007 Workers’ Compensation Reform Act was passed, it called for the closure of the Second Injury Fund (SIF), which was originally designed to help pay for benefits for those who came to the job with preexisting injuries. Employers have paid into this fund for decades. When previously injured employees were subsequently injured, benefits for the new injury would be paid from the SIF. As a result, employers would no longer be deterred to hire those who had previously been injured because benefits for the second injury would not come directly from employers’ policies.

Because the Americans with Disabilities Act outlawed disability discrimination, use of the fund as an incentive for employers to hire previously disabled employees was considered unnecessary. SIF was phased out in July 2013 and no longer accepts reimbursement claims for injuries that occurred after July 1, 2008.

According to the LAC, the phasing out of the SIF provides savings through the gradual elimination of administrative costs. These costs include the SIF’s operating costs, which average $1.6 million annually, and costs to handle SIF claims. Recovery agencies charge fees ranging from 7 to 15 percent of reimbursements to assist in identifying and submitting claims to the SIF. According to some estimates, South Carolina insurance carriers and self-insurers spent between $7 million and $11 million in fiscal year 2005-06 for recovery agency fees.

The South Carolina Uninsured Employers’ Fund (UEF) was phased out along with the SIF. This fund existed to pay the medical bills and claims of injured workers whose employers did not carry the requisite workers’ compensation coverage. The 2007 reform legislation provides for the transfer of the UEF’s obligations to the State Accident Fund on July 1, 2013. The LAC audit shows phasing out the SIF and the UEF programs should lead to long-term savings.

Furthermore, the commission recently implemented new requirements for workers’ compensation cases. Effective June 28, 2013, new mediation regulations were published in the South Carolina State Register. These mediation regulations require certain cases to go to a mediator for dispute resolution without a hearing. According to the commission, the new requirement gives parties an opportunity to resolve disputes in a timely and cost-effective manner.

Although compliance with workers’ compensation laws continues to be a major concern, particularly in the construction industry, South Carolina has addressed many issues in an attempt to benefit employees injured on the job and employers who carry the requisite insurance. South Carolina businesses and employees should stay tuned to see how the recent changes in the law unfold.

Stay Up to Date about South Carolina’s Workers’ Comp Laws.

About the Author

Julia Saikali and Brianna Nolan
Julia Saikali and Brianna Nolan are summer associates at Anderson Jones PLLC, Raleigh, N.C. They are students at Campbell Law School, Raleigh.

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