S.C. audit calls for closing of 2nd injury fund

Part of South Carolina’s workers’ compensation system should be phased out because it fails to lower businesses’ insurance costs, according to a state audit.

The Legislative Audit Council report found that a program, known as the Second Injury Fund, does not protect employers from higher insurance costs if they hire the disabled and those with previous workplace injuries.

The audit’s release comes amid legislators’ attempt to overhaul the workers’ compensation system. Business leaders and lawmakers say South Carolina’s high workers’ compensation premiums make the state less attractive to companies and hurt job recruitment.

Sen. Larry Martin said the audit reiterates the need to eliminate the fund, and a bill headed to the Senate floor would do just that. “The cost savings will be experienced by businesses large and small,” said Martin, R-Pickens.

Businesses’ contributions to the fund have skyrocketed over the past decade, from a statewide total of $57.8 million in 1997 to $253 million in 2005, said Marcia Purday of the South Carolina Chamber of Commerce, which also supports eliminating the fund.

“It’s had a huge negative impact on small businesses,” she said. Businesses could use that money to hire more employees, she added.

According to the audit, 24 states have second injury funds, though South Carolina’s is larger than others. Also, more than a dozen states have eliminated their funds since 1992.