S.C. Passes Workers’ Comp Anti-Fraud, Injury Reporting Bill

Employers who lie about what their workers do to save money on insurance premiums would face fines and prison time under an agreement South Carolina legislators reached to overhaul the state’s workers’ compensation system.

In addition to toughening fraud penalties, the legislation calls for new standards on how injuries are reported and what is covered.

The agreement reached on June 7, which needs approval from the House and Senate when they return for a special session June 19, also requires workers and their physicians to provide more specific information about their injuries.

House and Senate negotiators agreed to the overhaul about 30 minutes before the Legislature adjourned.

“I think this is a fair bill that takes a first step toward improving our business climate in South Carolina,” said Cam Crawford, executive director of the South Carolina Civil Justice Coalition, a group that mostly looks out for business owner interests.

The legislation can be particularly harsh on employers and insurers who lie and commit fraud. For example, if an employer lies about employees’ work and saves more than $10,000 on premiums, the employer could be fined up to $50,000 and face five years in prison. Insurance companies that don’t provide accurate information are subject to similar penalties.

Employers who don’t provide workers’ compensation insurance would face fines of $1 for each worker, each day instead of the 10 cents under the current law. The fine would be capped daily at $100.

The legislation also makes it clear that employees and their physicians are required to provide information to employers and insurers handling the workers’ compensation claim.

It also:

– Defines repetitive trauma as an injury that happens at work and is the result of doing the same motion as a regular part of the job.

– Clarifies how much can be paid for shoulder or hip injuries.

– Allows employers more broadly to challenge back injury claims. In the past, a person was deemed permanently disabled if they lost 50 percent of the use of their back. Now employers can challenge that presumed disability.

The legislation also phases out the South Carolina Second Injury Fund. The fund was set up to help injured workers rejoin the work force. But changes in the law during the past few years caused its losses to balloon, and employers and insurers this year faced assessments of nearly $200 million.

The fund will be phased out by 2013 and won’t consider claims from injuries that happen after next June.