Download Workers` Compensation Reform in South Carolina

Workers’ Compensation Reform
in South Carolina
Stanford E. Lacy
Samuel F. Painter
David T. Pearlman
The Workers’ Compensation
Reform Act of 2007
A/K/A
The Defense Attorneys’ Full
Employment Bill of 2007
A walk through the new
compensation reform bill
Effective Date of Reform Bill
• July 1, 2007
• “…[A]pplies to injuries that occur on or
after that date.”
Changes in the Appeals Process
• Old system went from hearing
commissioner to full commission to Circuit
Court to Court of Appeals to Supreme
Court.
• Clogged Circuit Court dockets.
• Circuit Courts not familiar with comp law.
Simplifying the Process
• Eliminate Circuit Courts from the process.
• Under new law, appeals will go from the
Commission directly to the Court of
Appeals.
• BUT…if the employer appeals to the Court
of Appeals on question of law, employee is
entitled to TTD AND medical treatment.
(§42-17-60) This is new.
• Interest accrues a legal rate during appeal.
Employer/Carrier Fraud
• §38-55-530 makes criminal false statements to
gain an economic advantage in an insurance
transaction.
• The reform bill amended this statute to include
the following as false statements:
–
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Intentional false report of business activities;
Misclassification by employer of employees;
Failure to timely reduce reserves;
Failure to account for SIF reimbursement or
subrogation.
– Failure to provide verifiable information to rating
Employer/Carrier Fraud
• Economic benefit or advantage includes:
– A favorable insurance premium;
– Payment schedule;
– Insurance award; or
– Insurance settlement.
• S.C. Attorney General is authorized to hire
a forensic accountant.
Sanctions
• First offense, economic advantage less
than $1000: Misdemeanor, fine $100 to
$500, and/or imprisonment not more than
30 days.
• First offense, economic advantage $1000
to $10,000: Misdemeanor, fine $2,000 to
$10,000, and/or imprisonment not to
exceed three years
Sanctions
• First offense, economic advantage $10,000 to
$50,000: Felony, fine $10,000 to $50,000 and/or
up to five years in prison
• First offense, economic advantage is $50,000 or
more: Felony, fine $20,000 to $100,000 and or
ten years in prison
• Second or subsequent offense, regardless of
economic advantage: Felony, fined $20,000 to
$100,000 and/or ten years in prison.
• Mandatory full restitution.
Revisit the Medically Complex
Case
• Tiller v. National Health Care Center of
Sumter
• Supreme Court overruled previous Court
of Appeals decisions requiring medical
evidence of causation in medically
complex cases.
• Held Commission as fact finder could find
compensability with or without medical
evidence if supported by the record.
Set Proof Standard in Medically
Complex Cases
• Codify the old rule.
• “Medically complex” means “sophisticated cases
requiring highly scientific procedures or
techniques for diagnosis or treatment, excluding
MRIs, CAT scans, x-rays or other similar
diagnostic techniques.”
• Requires employee to establish by medical
evidence injury is job-related.
• Medical evidence means expert opinion to a
reasonable degree of medical certainty.
Legislatively Define or Limit Terms
• Courts liberally applied terms.
• Reform Act amends §42-1-160 to clarify
many of these terms.
• This code section is the heart of the Act. It
is the section that proclaims “‘Injury’ and
‘personal injury’ mean only injury by
accident arising out of and in the course of
employment…”
Changes to §42-1-160
• Stress, mental injury and mental illness
• Not considered a personal injury unless
Claimant proves by a preponderance of
evidence:
– Conditions of employment extraordinary and
unusual in comparison to the normal
conditions of the particular employment; and
– causation by medical evidence.
Changes to §42-1-160
• Stress, mental injuries, heart attacks,
strokes, embolisms or aneurisms not
compensable if they result from events
incidental to normal employee/employer
relations including, but not limited to,
personnel actions such as disciplinary
actions, work evaluations, transfers, etc.
except when these actions are taken in an
extraordinary and unusual manner.
Changes to §42-1-160
• Mental injuries, illness or stress allegedly
aggravated by physical injury NOT
compensable unless the aggravation is:
– Admitted by employer/carrier;
– Authorized doctor opines in his notes
condition is at least partially causally related;
– Authorized psychologist or psychiatrist finds it
causally related; OR
– Employee’s doctor notes as causally-related.
Latest in Cat Scans
Changes in §42-1-160
• “Medical evidence” means expert opinion
or testimony stated to a reasonable
degree of medical certainty, documents,
records or other material that is offered by
a “licensed health care provider.”
Changes in §42-1-160
• “Accident” as used in §42-1-160 does
NOT mean “a series of events in
employment, of a similar or like nature,
occurring regularly, continuously, or at
frequent intervals in the course of such
employment, over extended periods of
time.”
• Repetitive trauma now governed by §42-1172.
The new §42-1-172
• “Repetitive trauma injury” means an injury
which is gradual in onset and caused by
the cumulative effects of repetitive
traumatic events.
• Causation must be supported by medical
evidence.
• Medical evidence means expert opinion to
a reasonable medical certainty by a
“licensed and qualified medical physician.”
The new §42-1-172
• When claimant reaches MMI, he may be
entitled to benefits under §42-9-10, §42-920 OR §42-9-30.
Before, Truckers Who Were
Owners/Operators Were
Employees
• Courts held truckers who are
owner/operators of their rigs were deemed
employees of the motor carriers with
whom they contracted in South Carolina.
• Much confusion.
Extreme Owner-Operator
Solution: Bright Line Test for
Independent Contractor Status
• Amend §42-1-360 to exempt
owner/operators as independent
contractors.
• Must own or holds under a bona fide
lease-purchase or installment-purchase
agreement a tractor-trailer, tractor or other
vehicle.
• Must provide the vehicle and individual
services to a motor carrier under a valid
independent contractor agreement.
New rules for Forms 50 and 51
• Form 50: Must plead body parts and
conditions with specificity. “Whole body”
not allowed except in death cases.
• Body part not listed can be compensable if
– Proven by greater weight of evidence it is
causally related to the accident;
– No knowledge of injury when Form 50
prepared; OR
– Condition is listed on the PHB.
New rules for Forms 50 and 51
• Form 51: Defenses must be described
with specificity. No longer accept “all
defenses apply.”
• Defense not listed in Form 51 can be
considered if:
– Defendants had no knowledge of fact
supporting the defense when Form 51
prepared, AND
– Defense is set forth in PHB.
More Housecleaning: Some
Administrative Amendments
• If there is a vacancy on the Commission, the
majority of the Commission can deputize
someone to take testimony and recommend an
award. (Crocker’s old job.) (§42-3-20(A))
• Chairman serves two years. If governor does
not appoint a successor, Commission may elect
interim chairman. (§42-3-20(B))
• Each commissioner may employ an AA. (§42-360)
• Commission maintain files for 15 years instead
of 5. (§42-3-230)
Penalties for Failure to Provide
Medical Treatment
• Adjuster who fails to provide medical
treatment when ordered must pay the
claimant’s attorneys’ fees and cost of
enforcing the order.
• Commission may impose sanctions for
willful disobedience of an order, including,
but not limited to, a fine of up to $500 for
each day of the violation.
• The rules for
refusing medical
care have not
significantly
changed.
Penalties for Failure to Pay
Benefits
• Commission must notify Dept. of Ins. of an
insurer’s or an adjuster’s failure to
authorize and pay benefits for medical
treatment.
• If Dept. of Ins. finds violation of Title 38, it
may impose penalties per §38-2-10.
– Fine up to $15,000 ($30,000 if willful).
– Suspend or revoke authority to do business.
Penalties for Failure to Pay
Benefits
• If the commission finds a “pattern” of
failure to pay benefits pursuant to an
award, the chairman must report to the
Dept. of Ins.
• Pattern means failure to pay award at
least 3 times within a 2 year period.
• After a hearing, if nonpayment was
intentional, insurer’s license may be
revoked.
Changes to Scheduled Member
Statute
• Loss of shoulder, 300 weeks. (§42-930(14))
• Loss of hip, 280 weeks. (§42-9-30(17))
• 50% of the back is presumed perm total
(500 weeks), but the presumption is
rebuttable.
The 600 week shoulders
Ellison case
• Supreme Court in Ellison v. Frigidaire
Home Products held claimant with broken
leg was perm total under §42-9-400
because the injury combined with preexisting conditions unaffected by the
accident.
New Law Requires Aggravation
• Add new §42-9-35
• Require employee prove “by preponderance of
the evidence, including medical evidence” that
subsequent injury “aggravated the preexisting
condition” or the preexisting condition
“aggravates the injury.”
• Award limited to single scheduled member
unless the subsequent injury affects another
body part or system.
• “Medical evidence” means opinion of “licensed
health care provider.”
• Knowledge of the preexisting condition is not a
requirement.
Apportionment (different
employers)
• Old law: If claimant has permanent
disability from previous injury in a different
employment and further injures that body
part in subsequent accident, claimant was
only entitled to the degree of disability that
resulted from the later accident UNLESS
the claim qualified for SIF at which time
claimant received the combination of
disabilities.
Apportionment (different
employers)
• New law: the same except claimant can
receive additional benefits if the
subsequent injury qualifies under §42-935.
• Subsequent injury aggravates preexisting
condition or visa versa.
Apportionment (same employer)
• Until June 30, 2008, if employee sustains
injury after previous injury, he is paid for
both by extending the period and not by
increasing the weekly compensation.
Limit 500 weeks.
• If injury to another member, employee is
entitled only to disability caused by
subsequent injury UNLESS it qualifies for
SIF.
Apportionment (same employer)
• After July 1, 2008, the law is the same
except claimant my be entitled to
additional benefits under §42-9-95.
• SIF not available for accidents after July 1,
2008.
New Rules on Clinchers
• If both parties are
represented by an
attorney, clincher
need only be filed
with the commission.
No commissioner
approval is required.
New Rules on Clinchers
• If Claimant is not
represented by an
attorney, approval by
one commissioner is
still required..
New Standards of Proof in
Occupational Disease Claims
• Employee must prove continuous
exposure to the normal working conditions
“of that particular trade, process,
occupation, or employment.”
• Employee must establish disease “arose
directly and naturally from exposure in this
State”…by a preponderance of the
evidence.
• Medical evidence means opinion of
licensed health care provider.
Notice for Repetitive Trauma Cases
• Notice must be given to the employer
within 90 days of the date the employee
discovered, or could have discovered by
exercising reasonable diligence, that his
condition is compensable.
• Reasonable excuse for failure to give
notice and no prejudice to the employer.
Statute of Limitations for Repetitive
Trauma Cases
• Must file with the commission within two
years “after employee knew or should
have known that his injury is
compensable…”
• No more than seven years after last
injurious exposure.
• Seven year limitation applies regardless of
whether employee was aware of his
condition.
Clarification of Availability of
Medical Benefits.
• Requires medical treatment that “tends to
lessen the period of disability” be
supported by “expert medical evidence to
a reasonable degree of medical certainty.”
• Settlement on Form 16
– Provide meds for one year after full payment
– No meds after one year.
– Form 16 can provide for more meds.
It’s Never Too Early for Rehab.
Clarification of Availability of
Medical Benefits
• All orders awarding permanency must
contain a finding as to whether or not
further medical treatment must be
provided to the employee.
• If so, order must be as specific as possible
what treatment or modalities are to be
provided.
Clarification of Availability of
Medical Benefits
• Employer is NOT required to provide
medical treatment where there has been a
lapse in treatment with an authorized
treating physician in excess of one year
unless:
– Settlement agreement or commission order
provides otherwise; OR
– Employee made a reasonable attempt to
obtain treatment from the authorized doctor
but, thorough no fault of his own, was unable
to obtain such treatment.
Regulations for Rehab
Professionals
• §42-15-80 was amended to require the
commission to promulgate regulations
“establishing the role of rehabilitation
professionals and other similarly situated
professionals” in comp.
Rehab at its best.
Brown v. Bi-Lo, Inc.
• Access to doctors by employers and
carriers was severely limited.
Revise Code to Allow Access
• §42-15-95 amended to allow access.
• When an employee seeks treatment under
the Act, he is considered to have given his
consent to release of medical records.
• Requests for medical files must still be in
writing.
• Commission is to promulgate regulations.
Revise Code to Allow Access
• Doctors may now discuss an employee’s
medical history, diagnosis, causation, etc., with
carrier, employer, etc, BUT
– Claimant must told of the meeting and have the
opportunity to be present;
– Claimant must be advised of the nature of the
meeting; AND
– Claimant must be given a copy of any written
questions prior to the meeting.
Caveats
• If you stay within the statute, the doctor
does not breach his duty of confidentiality.
• BUT, if you go outside of the statute, not
only does the doctor have a problem, any
information obtained from the doctor will
be excluded for the proceedings.
Change of Condition changes
• Change of condition must be established
by a preponderance of the evidence that
“there has been a change of condition
caused by the original injury, after the last
payment of compensation.”
• For repetitive trauma, must file within one
year of last compensation payment.
• Same for occupational disease.
Bye, bye Second Injury Fund
• §42-7-320 is added to the Act to provide for the
orderly dissolution of the SIF.
– June 30, 2008 The last date of accident to be
considered by the SIF.
– December 31, 2010 The last day the SIF will accept
notice of a potential claim.
– June 30, 2011 The last day the SIF will accept
information for consideration.
– December 31, 2011 The last day the SIF will accept
a claim for reimbursement.
– July 1, 2013 Programs and appropriations of the SIF
are terminated.
Crossman and his faithful dog Fido
ride off into the sunset.
Changes to §42-9-400
• After July 1, 2007
– Arthritis no longer on the list of presumed conditions
– Paragraph 34 abrogated
• Notice of a claim to SIF must include:
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Date of accident
Employee’s name
Employer’s name and address
Insurance carrier’s name, address and NCCI code
Insurance carrier’s claim number, policy number, and
policy effective date.
Effective Date of Reform Bill
• July 1, 2007
• “…[A]pplies to injuries that occur on or
after that date.”
Governor’s Executive Order 200716
• “I do hereby direct the Commission and
each of its individual commissioners in all
contested cases to strictly apply the AMA
Guides or any other accepted medical
treatise or authority in making their injury
compensation determinations…”
Governor’s Executive Order 200716
• “…and for the Commission and each of its
individual commissioners, on a quarterly
basis beginning January 1, 2008, to
provide written confirmation to the Office
of the Governor that they have used, for
the immediately preceding quarter, such
objective standards in making such
compensation awards.”
Questions?