What's your view? Click here to add your comment to this story.

The Senate Judiciary Committee on Wednesday will ponder a bill that would change the state's workers' compensation system.

The bill, S332, sets penalties for employees who file fraudulent claims as well as employers who misrepresent or underreport their workers, said its sponsor Sen. Larry Martin, R-Pickens.

The bill also redefines the types of conditions that are eligible for second injury fund reimbursement and places more of the premium burden on companies with the biggest claims, he said. Insurers pay assessments into the second injury fund to repay claims to insurance companies when the cost of those claims is compounded by a previous injury.

Jay W. Ragley, state director of the National Federation of Independent Business, called the bill a good start because it sets standards for awards and contains stronger fraud provisions. But while the bill restricts some uses of the second injury fund and reduces the amount of assessments that carriers pay, it doesn't eliminate the fund, a move that NFIB favored.

Advertisement

"We'd like to get rid of it, because while it taxes all employers in the state, only 2 percent, really big employers, benefit," he said. "It's a good starting point, but by no means a finished product."

Frank Knapp, president of the South Carolina Small Business Chamber, said he supports the fraud aspects of the bill as well as reducing second injury fund assessments. And he's glad the bill didn't call for eliminating the second injury fund.

"We're pleased it didn't call for dissolution of the fund because of the negative consequences there would be for small businesses in terms of higher premiums," he said.

But David Pearlman, a lawyer with the Association of South Carolina Claimant Attorneys for Workers' Compensation, said the bill "attacks injured workers, reduces their rights and prevents (them) from receiving medical treatment and compensation benefits without dealing with the root causes of the increased premiums."

Martin said the bill is not intended to deny legitimate claims, but to reduce fraud and lower premiums.

Charley Potok, president of Companion Property and Casualty, a Blue Cross Blue Shield of South Carolina subsidiary that handles workers' comp, said the insurance industry favors the bill.

"We're concerned the system has become unpredictable and prices cannot be established," he said. "We think it will address some issues that will give some predictability to the system."

A second bill also introduced last week, S344, would require insurers to disclose to the state Department of Insurance accounting factors, known as loss cost multipliers, that they use to determine workers' comp premium rates, said Phil Lenski, staff attorney with the Senate Judiciary Committee.

"Loss cost multipliers have been increasing over the years and rates have been going up. The question is why," he said, adding that the committee, chaired by Sen. Glenn McConnell, R-Charleston, has been studying the system. "Sen. McConnell and others were concerned about lack of knowledge state regulators have."

NFIB has no position on that bill. But Potok said that while Companion has no problem filing the information, he sees the bill as an attempt to impose some regulation on a system that had been deregulated.

Knapp said the bill makes sense.

"Lack of regulation has contributed to the increase in premiums because insurance companies can raise premiums as they see fit," he said. "What good is regulating half the equation and not the other half?"

Pearlman supports the bill too, saying, "We're very much in favor of requiring insurance companies to justify any amounts they request to raise rates."

That bill has been sent to the Senate Committee on Banking and Insurance.