A state lawmaker is proposing to eliminate the agency that helps resolve claims for people hurt on the job and put that task in the hands of the state Department of Insurance.

Critics of the plan, including plaintiffs' lawyers, say merging the Workers' Compensation Commission into the insurance department would jumble functions, create administrative chaos and make it harder for injured workers to get assistance.

If passed, the bill crafted by Rep. Bob Leach, R-Greenville, would transfer all duties of the commission, including dispute resolution, to the Department of Insurance and an administrative law judge.

Leach, who believes it's too late in this session for the bill to pass but is hoping for action in the next session, said he believes the insurance department is better fitted to oversee workers' compensation.

He said he believes the seven-person commission has been too generous in awarding workers' claims and not scrupulous enough in trying to detect fraud, adding that "familiarity" between commissioners and plaintiffs' attorneys has biased awards judgments.

The insurance department, he said, would do a better job of rooting out workers who abuse the system through false and exaggerated claims that drive up premiums for employers.

"The way it is now isn't working," said Leach. "I'm not trying to eliminate workers' comp. ... I'm just trying to get rid of the fraud."

The Department of Insurance declined to comment.

Leach said his proposal, filed in December, was the culmination of two years of talks with business chambers, business owners, lawyers and insurance companies.

"They all agreed we need to reform the system so it's fair to people who are legitimately hurt on the job and fair to employers that have to pay the workers' comp premiums," he said.

State Rep. Bobby Harrell, R-Charleston, supports the effort, saying it would streamline administrative processes and reduce the duplication of tasks that mires state government.

Mike Kelly, a Columbia-based attorney with nearly three decades of experience handling claims on behalf of workers, said he believes Leach's proposal is ill-advised.

"I think it's an awful idea," he said. "The state workers' compensation system is a well-thought-out compromise between industry and employee. It isn't broke, so don't fix it."

Kelly, like a lot of lawyers who represent injured workers, believes workers injured in South Carolina are inadequately compensated and that rolling the commission into another agency would further hurt their chances of recovering damages.

He cited the case of a Midlands client, Beverly Burns of Lugoff, as an example.

The 27-year-old mother of two said she had to have the bottom half of her leg amputated after the forklift she operated at a division of Kord Products Inc. malfunctioned and crushed her leg.

"I had toes cut off, then half of my foot ... and finally they cut my leg off right below knee," she said, adding that her award of $42,000 was paltry and the subsequent assistance has been spotty.

She said she wouldn't trust officials with ties to the insurance industry to settle claims fairly for victims.

Kelly agreed.

"The commission is a quasi-judicial agency with many years experience in settling worker claims. The Department of Insurance has no such track record. It has close ties to the insurance industry and injured workers would not be given a fair shake," he said.

While not opposed to the idea of consolidation, Alicia Clawson, executive director of the commission, said the agency has a history of settling claims disputes fairly and accurately for both workers and employees.

A 2002 study by the state of Oregon estimated that South Carolina employers pay the ninth-lowest workers' comp premiums in the country and the second-lowest in the Southeast.

Clawson said she doesn't believe the commission is redundant to the insurance department, or that commissioner-attorney relationships have biased the awards process.

"Commissioners' relationships with attorneys are no different than judges' relationships with attorneys," she said.

Frank Norton covers banking and legislative issues. He can be reached at 937-5594 or fnorton@postandcourier.com.