NCCI Report Criticizes S.C. Workers’ Compensation Plan

The National Council on Compensation Insurance has issued an independent evaluation of South Carolina Gov. Mark Sanford’s workers’ compensation overhaul proposal and says the governor’s top recommendations would yield little savings and prompt higher premiums.

NCCI compiles information on workers’ compensation for the purpose of making rate recommendations to state regulators. Earlier this year, the group sparked a furor when it urged the South Carolina Department of Insurance to boost workers’ comp premiums here by about one-third. That request is still pending.

Joel Sawyer, a spokesman for the governor, told the Charleston Post and Courier that Sanford is responding to calls for changes in the worker’s compensation system. “What the business community has told us is they believe dissolving the Second Injury Fund, as well as other reforms, would have an impact on rates,” Sawyer said.

The Post and Courier published key details about the report, which says, for instance, that plans to get rid of the South Carolina Second Injury Fund, a program intended to make it easier for workers with previous injuries to return to payrolls, could cause higher rates for some time.

“In the short term, NCCI estimates that loss costs will need to increase approximately 25 percent” to cover the expense tied to eliminating the Second Injury Fund, the report said. Loss costs are a key part of setting premiums.

The report also notes that employers and insurers would continue to cover payments to the Second Injury Fund until all old claims are paid. Insurers and employers eventually will save the $1.6 million annually spent on the agency overseeing the fund, the report said, but that will come only after the Second Injury Fund is closed.

Insurers and employers would save some cash as they “shift their emphasis from maneuvering through” the Second Injury Fund to handle claims, the report said.

The ultimate savings on handling claims would be about $200,000, or about 0.03 percent of the overall costs of the worker’s compensation system, the report said.

Another key proposal dealt with how the state handles repetitive trauma injuries. Those are physical problems that develop over a long period. But some say it is difficult to tell whether they are work- or age-related problems. Sanford’s task force proposed that compensation for injuries be tied to something that happened during a single day at work.

But NCCI said that type of change would mean little in the way of savings. It is estimated that about 3 percent of the overall workers’ compensation system’s costs are linked with that type of injury and a smaller share of that group would be affected by the law change. That means the “effect of these changes are estimated to be minor,” the report said.

But savings may be offset by with “an anticipated increase in the number of contested cases with attorney representation,” the report said.

Despite that, changes handling those cases is “something the business community has identified that will have an impact on rates,” Sawyer told the Post and Courier.

The task force report also said a 90-day limit should be set on reporting repetitive-trauma injuries. But the NCCI report said only about 1 percent of those injuries are reported late. “This results in a negligible decrease in overall system costs due to the small number of claims affected,” the report said.

The governor’s task force also said employers shouldn’t have to pay for doctors’ visits to care providers other than those it has approved. But the NCCI report says that may yield savings, but they “will be offset by an anticipated increase in the number of contested cases with legal representation.” Ultimately, NCCI said, that could show up in rates.