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Gov. Sanford, employers disappointed in S.C. reform

The South Carolina Senate has passed workers’ compensation reform legislation but many observers are not impressed and hope the House will do a better job.

The bill, S. 332, is now in the House.

Backers hope it will help employers save on premiums, while detractors argue it falls short of what is needed.

“The bill will lead to stability in premiums over time,” maintained Sen. Brad Hutto, D-Orangeburg. “But none of this is going to happen on anybody’s next month’s premium.”

The bill calls for businesses that understate how much they pay workers or classify workers improperly to face felony charges.

The legislation also seeks to eliminate the Second Injury Fund, a program intended to cover future injuries of workers with past workplace injuries and illnesses. Payments for arthritis and a surge of claims have raised the cost of that fund in recent years to employers by millions of dollars.

“It’s a beginning,” said Sen. Larry Martin, a Pickens Republican who is the bill’s chief sponsor.

Also, the state’s insurance department would be required to more closely monitor workers’ compensation rates if the bill is enacted.

“It removes the lack of confidence in the rates,” claims Senate President Pro Tem Glenn McConnell, R-Charleston.

But Gov. Mark Sanford and business leaders say they want more from legislators. Last year, both were left empty handed when the House passed a package of workers’ comp law changes that pleased few and died in the Senate.

While thanking the Senate for the push to eliminate the second injury fund, Sanford lambasted legislators for not pushing for more objective standards for determining injury awards.

“[T]his bill overall is a weak one that doesn’t go far enough in addressing what in our view is the most important part of workers’ comp reform, and that’s having clear, objective standards for making awards,” Sanford said. “Our workers’ comp system continues to be too subjective, it hurts our small businesses’ ability to compete, and it drives up costs for the average South Carolinian in a way that benefits a select group of people who in many cases happen to be lawyer-legislators.”

Sanford didn’t stop there as he continued to express his concern by naming names: “It’s particularly disconcerting that some of the people who led the floor fight against more substantive reforms like Sens. Land, Rankin and Hutto are the ones reaping some of the greatest financial benefit from the current system, to the tune of hundreds of thousands of dollars for themselves and their law partners,” he said. “That kind of conflict of interest highlights everything that’s wrong with Columbia politics, and it’s something that needs to change.”

The bill allows Workers’ Compensation Commission members to consider American Medical Association guidelines when determining the degree of an injury, but it doesn’t require them to do so.

Sanford and others, including the South Carolina Civil Justice Coalition, wanted standards put in place to determine the extent of a workers’ injuries, long-term disabilities and how much they should be compensated.

“It doesn’t go far enough for the business community,” said Cam Crawford, the justice coalition’s executive director.

The legislation could actually hike costs for businesses, Crawford said. For instance, while the bill removes a legal presumption that a worker is fully disabled when they lose half of the use of their back, it raises the maximum disability award for people with more than half the use of their back to compensation of 500 weeks instead of 300 weeks, he noted.

Insurers were also disappointed in the bill that passed. “This measure falls far short of our objective, which is a substantive overhaul of the state’s workers’ compensation system,” said Raymond G. Farmer, American Insurance Association assistant vice president, Southeast Region. “But we have taken a major step forward by getting a bill approved by the Senate, and look forward to working with House leadership to add significant, system-changing reforms.”

The Senate measure only partially addresses the uncontrolled medical costs, increased litigation and premiums that have risen almost 50 percent in the past three years, according to the insurers.

Insurers agreed with Sanford’s criticism of lawmakers for not requiring the use of AMA guidelines.

“The current unfavorable climate serves no one’s best interests, with the exception of the state’s trial bar,” according to Farmer.

On the positive side, insurers’ praised the bill’s phase-out of the Second Injury Fund and the fact it corrects several court decisions that have added costs to the system.

The interest now turns to making the bill tougher in the House, Crawford said. “We’re going to fight for the things we did not get in the Senate,” Crawford said.