South Carolina Lawyer
SC Lawyer, January 2008, #4.
The 2007 South Carolina Workers' Compensation Reform Act: An Overview
South Carolina LawyerJanuary 2008The 2007 South Carolina Workers' Compensation Reform Act: An OverviewFollowing months of spirited debate and consideration of numerous proposed bills introduced in both the House and Senate, the 117th Session of the S.C. General Assembly passed Senate Bill 332 on June 20, 2007. Act 111, as it would be designated, was signed into law by Gov. Sanford on June 25, 2007, and the law went into effect on July 1, 2007. To some, the new legislation is a welcome response to a call for sweeping reform of a system perceived to be out of control; to others, it has been mockingly coined the "Defense Lawyers' Relief Act of 2007," in anticipation of a likely increase in litigated issues. To be fair, this body of work represents a workable compromise achieved by the legislature despite widely competing and passionate interests held by its collective constituency, as well as its own members.
As with any comprehensive legislation, for every problem resolved, there are inevitably new questions and issues that have been raised, as well as some perhaps unintended consequences. Nonetheless, the statute is now in effect and has an immediate impact on anyone and everyone involved in the area of workers' compensation law, particularly practicing attorneys. The following article is written as a starting point and overview to expose the workers' compensation practitioner to changes contained in the new Act.
Application of new legislation
The most immediate concern is determining to what claims the legislation will apply. The bill contains a "Severability and Time Effective" clause that expressly states "this act takes effect July 1, 2007 or, if ratified after July 1, 2007 and except otherwise stated, upon approval by the Governor and applies to injuries that occur on or after this date [emphasis added]." At least initially, this language allowed room for some question as to whether the date of accident or date of filing the claim would control. Furthermore, because some portions of the legislation could be interpreted as remedial and/or procedural in nature, there was uncertainty as to whether some, if not all, of the provisions might be considered retroactive in scope.
The Supreme Court of South Carolina quickly and summarily addressed all of these questions in Pee Dee Regional Transportation v. South Carolina Second Injury Fund (August 24, 2007). The Court found the language of the statute clear and unambiguous and determined that all provisions of the Act will apply only to injuries that occur on or after July 1, 2007. Accordingly, in the absence of any further legislation or judicial decisions, for any accidents occurring before July 1, 2007, the prior statutory and judicial authority will control.
A notable exception to this date of effectiveness pertains to filings with the Second Injury Fund, which is taking the position that all new legislation is immediately effective regardless of the date of accident.
Under Section 42-1-700, claimants are no longer permitted to ask for "everything and the kitchen sink" in filing a claim and/or requesting a hearing by Form 50. On the flip side, defendants are prohibited from including a laundry list of defenses potentially applicable to any and all possible and perceivable claims.
Claimants are to plead on Form 50 injured or affected body parts and conditions "with as much specificity possible." Claimants may not describe injured body parts or conditions as "whole person" or "whole body" or "all body parts." A hearing shall not be held on a Form 50 that is found not to conform. However, the Commissioner is given some discretion in determining the compensability of body parts or conditions not listed or described in the Form 50. Specifically, the additional body part may be considered if the body part or condition is proven by a preponderance of evidence to have arisen out of and in the course of employment as described on a Form 50; if it is proven to the satisfaction of the Commissioner that the employee had no knowledge of the injury or condition on the date the Form 50 was completed (claimant is required to amend the Form 50 upon discovery of the injury or condition within a reasonable time period pursuant to the Regulations); or if the claimant is represented, then if the body part or condition is listed on the claimant's timely filed and served Pre-Hearing Brief (Form 58). The Form 50 must be signed by the claimant's attorney (or by the claimant if unrepresented) and serves as verification that the contents are accurate and true to the best of the preparer's knowledge.
The employer's Form 51 must not state that "all defenses apply" or contain other similar language. This would presumably also apply to affirmative defenses that cannot reasonably be considered to have application to the claim. A Form 51 found not to conform shall not be considered at the hearing. However, if a defense is not listed, it may still be considered by the Commissioner if it is proven to the Commissioner's satisfaction that the defendant had no knowledge of the facts supporting the defense at the time the Form 51 was completed and, in cases involving represented defendants, if the omitted defense is set forth on the defendant's timely filed and served Pre-Hearing Brief. Under existing Regulation 67-603 (C), the failure to timely file a Form 51 is deemed a general denial of liability for the benefits claimed; however, each special and affirmative defense allowed by the Act is forfeited, including the defenses available in Sections 42-9-60 (intoxication; willful intent), 42-15-20 (notice of accident), 42-15-40 (statute of limitations) and 42-17-90 (change of condition). The new legislation would tend to support the possibility of revival of affirmative defenses not included in the original Form 51. The attorney for a represented employer or an employer that is not represented must sign the Form 51 to verify that the contents are accurate and true to the preparer's best knowledge.
The Workers' Compensation Commission is currently drafting a revised version of Form 50 and Form 51, which will include a certification of accuracy to be signed by the preparer. In the meantime, the Commission is requesting that a temporary form be included with any Forms 50 and 51 filed for accidents occurring on or after July 1, 2007. The one-page form can be obtained from the Judicial Department of the Commission.
Workers' Compensation Commission awards
Section 42-9-5 specifies that any award made pursuant to the Workers' Compensation Act must be based upon specific and written detailed findings of fact substantiating the award. This is consistent with the decision Nettles v. Spartanburg School Dist., 341 S.C. 580, 535 S.E.2d 146 (Ct. App. 2000).
Failure to provide medical treatment and pay benefits under award
There is currently no recognized cause of action for bad faith in the context of workers' compensation in South Carolina. However, a new provision allows potentially substantial penalties to be assessed for a defendant's refusal to provide medical treatment or benefits ordered by the Commission. If a claimant brings an action to enforce an order authorizing medical treatment or payment of benefits and the Commission determines that an insurer, self-insured employer, self-insured fund or adjuster has acted without good cause in failing to authorize the same, then the claimant's attorney's fees and costs in enforcing the order will be assessed. The Commission may also impose sanctions for willful disobedience of an order, including, but limited to, a fine of up to $500 for each day of violation.
Furthermore, the Commission must then notify the Department of Insurance of such failure to authorize medical treatment or pay benefits. If the director of the Department of Insurance determines there has been a violation of Title 38, then further penalties may be imposed for each violation. If the Commission...