Effective July 1, 2007, the South Carolina Legislature made important changes to the Second Injury Fund statutes, as part of the reform of its worker’s compensation system. Included in the legislation are guidelines for the sunsetting of the South Carolina Second Injury Fund (SIF) as of July 1, 2013.
The major Second Injury Fund changes are as follows:
1. The Fund shall not consider a claim for reimbursement for an injury that occurs on or after July 1, 2008.
Comment: The impact on employer premiums may ultimately be an increase, estimated at anywhere from 3% to 17%, to account for the cost of disability that was previously born through the second injury fund assessments. Assessments are unlikely to go down, however, for years to come.
2. An employer, self-insurer, or insurance carrier must notify the SIF of a potential claim by December 31, 2010.
Comment: The notice period for preservation of a claim is still within 78 weeks of compensation having been paid, but this is an outside date even if 78 weeks has not been paid. The Fund now requires additional information to be submitted with any notice form, including:
• Employer’s name and address;
• Insurance carrier’s name, address and the NCCI code; and
• Insurance carrier’s claim number, policy number, and policy effective dates.
Failure to provide this documentation with notice to the Fund after 7/1/07 will bar any future recovery efforts. Furthermore, for claims where notice was filed prior to 7/1/07 without this information, the Fund is requiring the additional information be submitted prior to the Fund’s final determination.
3. The new law eliminates arthritis and “catch-all” claims from the presumptive list for dates of injury on or after July 1, 2007.
Comment: While this appears to be significant, in reality it should have little effect on your rights to recovery for so-called arthritis claims since only the “presumption”, not the right to recovery, has been eliminated. If the Fund continues to view the list of medical conditions in the statute an exclusive list, then many claims will need to be litigated. There is an Appellate Panel Opinion which IRG championed, ruling that the list in the statute is not exclusive. The Fund chose not to appeal this decision. Therefore, it is now the standing law and they are obligated to follow it. Yet, they may not, thus requiring unnecessary litigation.
4. The new law creates Fund liability only when the disability is substantially greater and is caused by an aggravation of the pre-existing impairment for dates of injury on or after July 1, 2007.
Comment: The new law eliminates the right to file a claim where the prior impairment and subsequent injury involve two different body parts for dates of injury after July 1, 2007. The wording, however, is very confusing and could be subject to other interpretation. We will still look closely at so called “two body part” claims. Also, it is important to note that the “but for” language remains in the statute, meaning that if the second injury would not have occurred “but for” the existence of the prior impairment, even if two different body parts are involved, you can still file the claim.
5. An employer, self-insurer, or insurance carrier must submit all required information for consideration of accepting of a claim to the SIF by June 30, 2011.
Comment: Failure to submit all required information will bar recovery from the Fund. We anticipate that there will be litigation on this issue because parties often disagree on the definition of “required information” to prove an element of a claim. It may put some pressure on the Fund administrators towards the end of the period and result in unreasonable denials that will have to be litigated.
6. After December 31, 2011 the SIF shall not accept a claim for reimbursement.
Comment: This gives the SIF only six months to accept, deny, or compromise all submitted claims. If the Fund cannot accept a claim after this date, then it will have to deny the claim even if it may have otherwise accepted the claim. This may again create some needless litigation of claims that should have otherwise been accepted.
7. SIF terminates on July 1, 2013.
Comment: This in no way affects a carrier’s future rights to recovery on established claims which remain enforceable against the State. At this point in time, there has not been a definitive answer as to which department will assume reimbursement payments. However the Fund has stated that this information will become available at a later date.
Due to ambiguities in statute and its tight time restrictions, the passage of this legislation will most likely contribute to increased litigation to perfect second injury fund recovery.