S 540 Session 110 (1993-1994)
S 0540 General Bill, By Saleeby, Courtney, Land, McConnell and Rankin
Similar(H 3709)
A Bill to amend Section 42-1-40, Code of Laws of South Carolina, 1976,
relating to the definition of "average weekly wages" under the Workers'
Compensation Law, so as to delete certain language and provisions and provide
that average weekly wage is calculated by taking the total wages paid for the
last four quarters immediately preceding the quarter in which the injury
occurred divided by fifty-two or by the actual number of weeks for which wages
were paid, whichever is less; to amend Section 42-1-160, relating to the
definitions of "injury" and "personal injury" for purposes of the Workers'
Compensation Law, so as to add provisions relating to work-related stress; to
amend Section 42-1-310, relating to the presumption of acceptance of the
provisions of Title 42 (Workers' Compensation), so as to delete certain
language and to define "employment" and "improvement or modification of real
property"; to amend the 1976 Code by adding Section 42-1-315 so as to provide
that officers of a corporation are employees under Title 42 and may reject
coverage by giving certain notice; to amend Section 42-1-320, relating to the
provision that public entities and their employees cannot exempt themselves
from Title 42 (Workers' Compensation), so as to delete provisions and provide
that the State, its municipal corporations and political subdivisions thereof,
and such employees, are subject to Title 42; to amend Section 42-1-330,
relating to waiver of exemption under the Workers' Compensation Law, so as to,
among other things, include officer of a corporation under the provisions of
this Section; to amend the 1976 Code by adding Section 42-1-335 so as to
provide, among other things, that an employer who is exempt from Title 42
elects to adopt the Title by obtaining Workers' Compensation insurance or by
operating under an approved self-insurance program; to amend Section 42-1-340,
relating to the effective date of and the manner of giving notice of
nonacceptance or waiver with respect to Title 42 (Workers' Compensation), so
as to delete certain language and to reference Section 42-1-315; to amend
Section 42-1-510, relating to defenses which are not available to an employer
who is not under Title 42 (Workers' Compensation), so as to provide that
comparative negligence does not apply, and further define "employer" for
purposes of defending an action at law; to amend Section 42-1-520, relating to
defenses which are available to an employer operating under Title 42 (Workers'
Compensation) when the employee is not so operating, so as to delete
references to "employee" and substitute therefor "officer of a corporation";
to amend the 1976 Code by adding Section 42-3-195 so as to provide, among
other things, that the Workers' Compensation Commission shall cooperate with
and provide information and statistics to any agency of the State or of the
United States charged with the duty of enforcing any law securing safety
against injury in any employment covered by Title 42 or with any state or
federal agency engaged in enforcing any laws to assure safety for employees;
to amend Section 42-5-40, relating to the penalty for failure to secure
payment of Workers' Compensation, so as to delete certain language and provide
a separate penalty for wilful or repeated violations; to amend Section
42-7-200, as amended, relating to the Workers' Compensation Uninsured
Employers' Fund, so as to provide that the remedy provided in this Section
shall not apply until all available administrative remedies under Title 42
against any insured statutory employer have been exhausted; to amend Section
42-9-220, relating to the manner in which Workers' Compensation shall be paid,
so as to provide that compensation must be paid by check and not a draft; to
amend Section 42-9-360, relating to assignments of Workers' Compensation and
exemptions from claims of creditors and taxes, so as to add certain
provisions, including a provision that it shall be unlawful for an authorized
health care provider to demand of or cause a demand to be made on a Workers'
Compensation claimant prior to the final adjudication of his claim, and
provide for certain monetary penalties to be paid to the Workers' Compensation
claimant; to amend the 1976 Code by adding Section 42-9-395 so as to add
provisions relating to settlement agreements providing for structured
settlements in Workers' Compensation cases; to amend Section 42-17-90,
relating to review of a Workers' Compensation award on a change of condition,
so as to provide for the entering of an order rather than the making of an
award, and add certain provisions, including a provision that the Workers'
Compensation Commission shall provide by regulation the method and procedure
by which an award or order commencing temporary compensation and entered
without an evidentiary hearing may be set aside for fraud; to amend Section
42-19-10, as amended, relating to employers' records and reports of injuries
under the Workers' Compensation Law, so as to delete the provisions of the
Section and add provisions, including a provision detailing the circumstances
under which an employer is not required to make a written report; to amend
Chapter 55 of Title 38, relating to conduct of insurance business, by adding
Article 5 so as to enact the "Omnibus Insurance Fraud and Reporting Immunity
Act", including provisions for, among other things, the establishment in the
Office of the Attorney General of an Insurance Fraud Division and the creation
of a felony offense and the provision of penalties therefor; to amend the 1976
Code by adding Section 42-9-440 so as to provide that the Workers'
Compensation Commission may refer all cases of suspected fraud to the
Insurance Fraud Division of the Office of the Attorney General for
investigation and prosecution, if warranted, pursuant to the Omnibus Insurance
Fraud and Reporting Immunity Act; to amend Section 16-1-10, as amended,
relating to crimes classified as felonies, so as to include the offense in
Section 38-55-540; and to repeal Section 42-1-380, relating to the waiver of
exemption by employer with respect to the mandatory provisions of Title 42
(Workers' Compensation) and Section 42-1-530, relating to defenses which are
not available to an employer when neither he not the employee is under Title
42.
03/11/93 Senate Introduced and read first time SJ-7
03/11/93 Senate Referred to Committee on Judiciary SJ-7
03/24/93 Senate Committee report: Favorable with amendment
Judiciary SJ-8
03/30/93 Senate Retaining place on calendar recommitted to
Committee on Judiciary SJ-50
04/07/93 Senate Committee report: Favorable with amendment
Judiciary SJ-21
04/15/93 Senate Special order SJ-29
04/20/93 Senate Debate interrupted SJ-54
04/21/93 Senate Amended SJ-18
04/21/93 Senate Debate interrupted SJ-28
04/22/93 Senate Read second time SJ-16
04/22/93 Senate Unanimous consent for third reading on next
legislative day SJ-28
04/23/93 Senate Read third time and sent to House SJ-1
04/27/93 House Introduced and read first time HJ-12
04/27/93 House Referred to Committee on Labor, Commerce and
Industry HJ-15
02/02/94 House Committee report: Favorable with amendment Labor,
Commerce and Industry HJ-7
02/03/94 House Debate adjourned until Thursday, February 10,
1994 HJ-32
02/10/94 House Objection by Rep. Cato, Vaughn, R. Smith,
Trotter, McLeod & Simrill HJ-516
02/24/94 House Objection withdrawn by Rep. Simrill HJ-415
Indicates Matter Stricken
Indicates New Matter
COMMITTEE REPORT
February 2, 1994
S. 540
Introduced by SENATORS Saleeby, Land, McConnell, Courtney and
Rankin
S. Printed 2/2/94--H.
Read the first time April 27, 1993.
THE COMMITTEE ON
LABOR, COMMERCE AND INDUSTRY
To whom was referred a Bill (S. 540), to amend Section 42-1-40,
Code of Laws of South Carolina, 1976, relating to the definition of
"average weekly wages", etc., respectfully
REPORT:
That they have duly and carefully considered the same, and
recommend that the same do pass with amendment:
Amend the bill, as and if amended, by striking SECTION 2, and
inserting the following:
/SECTION 2. The 1976 Code of Law is amended by adding:
"Section 42-9-45. (A) Mental illness resulting from
work-related stress is not an accidental injury arising out of and in the
course of employment unless it is established by clear and convincing
evidence that:
(1) The stressful employment conditions causing the mental
injury were extraordinary and unusual in comparison to the pressures
and tensions experienced by individuals performing similar work;
(2) The stressful employment conditions were the predominant
cause of the mental injury;
(3) The mental injury was caused by stressful employment
conditions that exist in a real and objective sense.
(B) A determination of mental injury, its cause and resulting
disability or need or medical treatment must be supported by clear and
convincing psychiatric evidence.
(C) A mental injury is not considered compensable if it results from
a verbal disagreement with an employer or a co-employee, or results
from a personnel decision by the employer including, but not limited to,
any disciplinary action, work evaluation, job transfer, demotion,
promotion, salary review, or voluntary or involuntary termination of
employment."
Amend further, by striking SECTION 3, and inserting the following:
SECTION 3. Section 42-1-310 of the 1976 Code is amended to
read:
"Section 42-1-310. (A) Every employer and
employee, except as stated in this chapter, shall be presumed to have
accepted the provisions of this title respectively to pay and accept
compensation for personal injury or death by accident arising out of and
in the course of the employment and shall be bound thereby, unless
he shall have given the employer gives, prior to any
accident resulting in injury or death, notice to the contrary of
the employer's rejection of this Title in the manner provided in
Section 42-1-340.
(B) Employers who reject the provisions of this title must
comply with the provisions of Section 42-1-311 or 42-1-312.
(C) When giving notice of rejection as required by this section, the
employer must provide whether complying with Section 42-1-311 or
42-1-312.
(D)The following persons shall not be deemed
"workers" or "employees": An owner-operator
who, as an individual or partner, or shareholder of a corporate
owner-operator, owns a vehicle licensed and registered as a truck, road
tractor, or truck tractor by a governmental agency, is an independent
contractor while performing services in the operation of the
owner-operator's vehicle if all of the following conditions are
substantially present:
(1) the owner-operator is responsible for the maintenance of the
vehicle;
(2) the owner-operator bears the principal burden of the vehicle's
operating costs, including fuel, repairs, supplies, collision insurance, and
personal expenses for the operator while on the road;
(3) the owner-operator is responsible for supplying the necessary
personnel to operate the vehicle, and the personnel are considered the
owner-operator's employees;
(4) the owner-operator's compensation is based on factors related
to the work performed, including a percentage of any schedule of rates
or lawfully published tariff, and not on the basis of the hours or time
expended.
(5) the owner-operator determines the details and means of
performing the services, in conformance with regulatory requirements,
operating procedures of the carrier, and specifications of the shipper.
(6) the owner-operator enters into a contract which specifies the
relationship to be that of an independent contractor and not that of an
employee. An owner-operator, as an independent contractor, may elect
to participate in this state's workers' compensation act as a sole
proprietor. Alternatively, an owner-operator and the motor carrier to
whom the owner-operator's vehicle is leased may mutually agree that the
owner-operator and the owner-operator's drivers will be covered under
the motor carrier's workers' compensation insurance policy or authorized
self-insurance, if the owner-operator agrees to pay the premiums
requested by the motor carrier. An agreement by an owner-operator and
a motor carrier to include the owner-operator under the motor carrier's
workers' compensation coverage does not affect the independent
contractor status of the owner-operator."/
Amend further, by striking SECTION 4, and inserting the following:
SECTION 4. The 1976 Code is amended by adding:
"Section 42-1-315. Officers of a corporation are employees
under this title and may reject coverage under this title by giving notice
as prescribed by the commission. An employee who has rejected
coverage under this title or whose employer (1) has been exempted by
proper notice from the operation of this title or (2) is a sole proprietor or
a partner who has not elected to be covered may not claim to be a
statutory employee of another employer as described in Sections
42-1-400, 42-1-410, 42-1-420, 42-1-430, 42-1-440, and 42-1-450 herein,
but such employee is subject to the limitations of Section 42-1-540
against employers who have accepted the provisions of this title."/
Amend further, by striking SECTION 8, and inserting the following:
SECTION 8. Section 42-1-340 of the 1976 Code is amended to
read:
"Section 42-1-340. The notices referred to in Sections
42-1-310, 42-1-315 and 42-1-330 shall not be effective as to
any accident resulting in injury or death that occurs within thirty days
after the giving of any such notice; provided, that if any such accident
occurs less than thirty days after the date of employment, notice of such
exemption given at the time of employment shall be effective as to such
accident. Any such notice shall be in writing or print, in substantially
the form prescribed by the commission. Notice of rejection of this
Title by an employer pursuant to Section 42-1-310(A), and
shall be given by the employer by posting it in a conspicuous place in
the shop, plant, office, room or place in which the employee is employed
or by serving it personally upon him and. Notice shall
be given by the employee by sending it in registered letter, addressed to
the employer at his last-known residence or place of business, or by
giving it personally to the employer or any of his agents upon whom
summons in a civil action may be served under the laws of the State.
A copy of the notice in the prescribed form shall be filed with the
commission. In any suit by an employer or an employee who has
exempted himself by proper notice from the application of this title a
copy of such notice duly certified by the commission shall be admissible
in evidence as proof of such exemption."/
Amend further, by striking SECTION 9, and inserting the following:
SECTION 9. Section 42-1-510 of the 1976 Code is amended to
read:
"Section 42-1-510. An employer who elects not to operate
under this title shall not, in any suit at law instituted by an employee
subject to this title to recover damages for personal injury or death by
accident, be permitted to defend any such suit at law upon any or all of
the following grounds:
(1) that the employee was negligent or comparatively
negligent;
(2) that the injury was caused by the negligence of a fellow employee;
or
(3) that the employee had assumed the risk of the injury."/
Amend further, by striking SECTION 17, and inserting the following:
SECTION 17. Section 42-9-260 of the 1976 Code, as last amended
by Act 410 of 1988, is further amended to read:
"Section 42-9-260. (A) When an employee has been
out of work due to a reported work related injury or occupational disease
for eight days, an employer may start temporary total disability
payments immediately and may continue such payments for up to one
hundred twenty days without waiver of any grounds for denial of a claim
as may appear following a good faith investigation. Upon making
the first payment, the employer shall immediately shall
notify the commission, in accordance with a form prescribed by the
commission, that payment of compensation has begun.
The commission shall provide by rule the method and procedure
by which benefits may be suspended or terminated for any cause, but
such rule must provide for an evidentiary hearing and Commission
approval prior to termination or suspension unless such prior hearing is
expressly waived in writing by the recipient. Further, the Commission
may not entertain any application to terminate or suspend benefits unless
and until the employer or carrier is current with all payments due.
(B) Once payment of temporary disability compensation has
been commenced, it may be terminated or suspended immediately if the
employee:
(1) has returned to work; or
(2) agrees that he is able to return to work and executes the proper
commission form indicating that he is able to return to work; or
(3) at any time within one hundred twenty days of the date that
payments are commenced if a good faith investigation has revealed
grounds for denial of the claim.
(C) If the employee has been released by the treating physician to
work or to limited duty work and the employer provides work consistent
with the terms upon which the employee has been released,
compensation may be terminated or suspended if the employee refuses
to return to work.
(D) If the employee refuses medical treatment under Section
42-15-60 or an examination or evaluation under Section 42-15-80, the
employee is not entitled to compensation benefits during the period of
the refusal. Upon the submission of documentation of the refusal of the
employee of this medical treatment, examination, or evaluation to the
commission and notice to the employee, compensation may be
terminated unless the employee requests a hearing within ten days of
receiving the notice.
(E) An employee may request a hearing to have temporary
compensation reinstituted after termination.
(F) Failure to comply with such rule as to termination or
suspension of benefits must this section may result in a
twenty-five percent penalty of not more than twenty-five
percent imposed upon the carrier or employer computed on the
amount of benefits withheld without prior Commission approval
in violation of this section, and the amount of the penalty must
be paid to the employee in addition to the amount of benefits withheld.
However, the penalty does not apply if the employer or carrier has
terminated or suspended benefits when the employee has returned to any
employment at the same or similar wage."
Amend further, by striking SECTION 19, and inserting the following:
SECTION 19. A. Chapter 55 of Title 38 of the 1976 Code is
amended by adding:
"Article 5
Insurance Fraud and
Reporting Immunity
Section 38-55-510. This article is known and may be cited as the
`Omnibus Insurance Fraud and Reporting Immunity Act'.
Section 38-55-520. The purpose of this article is to confront
aggressively the problem of insurance fraud in South Carolina by
facilitating the detection of insurance fraud; to allow reporting of
suspected insurance fraud; to grant immunity for reporting suspected
insurance fraud; to prescribe penalties for insurance fraud; to require
restitution for victims of insurance fraud; to establish a division within
the Office of the Attorney General to prosecute insurance fraud; and to
require the investigation of alleged insurance fraud by State Law
Enforcement Division.
Section 38-55-530. As used in this article:
(a) `Authorized agency' means any duly constituted criminal
investigative department or agency of the United States or of this State;
the Department of Insurance; the Department of Revenue and Taxation,
Division of Motor Vehicles; the Workers' Compensation Commission;
the Office of the Attorney General of this State; or the prosecuting
attorney of any judicial circuit, county, municipality, or political
subdivision of this State or of the United States, and their respective
employees or personnel acting in their official capacity.
(b) `Insurer' shall have the meaning set forth in Section 38-1-20(25)
and includes any authorized insurer, self-insurer, reinsurer, broker,
producer, or any agent thereof.
(c) `Person' means any natural person, company, corporation,
unincorporated association, partnership, professional corporation, or
other legal entity and includes any applicant, policyholder, claimant,
medical provider, vocational rehabilitation provider, attorney, agent,
insurer, fund, or advisory organization.
(d) `False statement and misrepresentation' means a statement or
representation made by a person that is false, material, made with the
person's knowledge of the falsity of the statement and made for the
purpose of obtaining or denying or causing another to obtain or deny any
benefit or payment in connection with an insurance transaction and such
shall constitute fraud.
(e) `Immune' means that neither a civil action nor a criminal
prosecution may arise from any action taken pursuant to this article
unless actual malice on the part of the insurer or authorized agency
against the insured or gross negligence or reckless disregard for his
rights is present.
Section 38-55-540. Any person or insurer who makes a false
statement or misrepresentation, and any other person knowingly, with
an intent to injure, defraud or deceive, who assists, abets, solicits, or
conspires with such person or insurer to make a false statement or
misrepresentation, is be guilty of a:
(1) misdemeanor, for a first offense violation, if the amount of the
benefit received is less than one thousand dollars. Upon conviction, the
person must be punished by a fine not to exceed five hundred dollars or
by imprisonment not to exceed thirty days;
(2) felony, for a first offense violation, if the amount of the benefit
received is one thousand dollars or more. Upon conviction, the person
must be punished by a fine not to exceed fifty thousand dollars or by
imprisonment for a term not to exceed five years, or by both such fine
and imprisonment;
(3) felony, for a second or subsequent violation, regardless of the
amount of the benefit received. Upon conviction, the person must be
punished by a fine not to exceed fifty thousand dollars or by
imprisonment for a term not to exceed five years, or by both such fine
and imprisonment.
Any person or insurer convicted under this section must be ordered to
make full restitution to the victim or victims for any economic benefit
or advantage which has been obtained by the person or insurer as a result
of that violation.
Section 38-55-550. (A) In addition to any criminal liability, any
person who is found by a court of competent jurisdiction to have
violated any provision of this act, including Section 38-55-170, must be
subject to a civil penalty for each violation as follows:
(1) for a first offense, a fine not to exceed five thousand dollars;
(2) for a second offense, a fine not less than five thousand dollars
but not to exceed ten thousand dollars;
(3) for a third and subsequent offense, a fine not less than ten
thousand dollars but not to exceed fifteen thousand dollars.
(B) The civil penalty shall be paid to the director of the Insurance
Fraud Division to be used in accordance with subsection (D) of this
section. The court may also award court costs and reasonable attorneys
fees to the director. When requested by the director, the Attorney
General may assign one or more deputy attorney generals to assist the
bureau in any civil court proceedings against the person.
(C) Nothing in subsections (A) and (B) shall be construed to prohibit
the director of the Insurance Fraud Division and the person alleged to be
guilty of a violation of this act from entering into a written agreement in
which the person does not admit or deny the charges but consents to
payment of the civil penalty. A consent agreement may not be used in
a subsequent civil or criminal proceeding relating to any violation of this
act.
(D) All revenues from the civil penalties imposed pursuant to this
section shall be used to provide funds for the costs of enforcing and
administering the provisions of this act.
Section 38-55-560. (a) There is established in the Office of the
Attorney General a division to be known as the Insurance Fraud
Division, which must prosecute violations of Sections 38-55-170 and
38-55-540 of the 1976 Code and related criminal insurance activity.
Upon receipt of any claims or allegations of violations of Sections
38-55-170 and 38-55-540 of the 1976 Code and related criminal
insurance activity, the Attorney General shall forward the information
to the State Law Enforcement Division for investigation.
(b) The Attorney General, upon receipt of any claims or allegations
of violations of Sections 38-55-170 and 38-55-540 of the 1976 Code and
related criminal insurance activity, is empowered to:
(1) refer the matter for investigation to the State Law
Enforcement Division;
(2) prosecute persons determined to be in violation of Sections
38-55-170 and 38-55-540 of the 1976 Code and related criminal
insurance activity in a court of appropriate jurisdiction; and
(3) collect fines and restitution ordered by such courts. Where
deemed appropriate, the Attorney General may use the Setoff Debt
Collection Act to collect fines and restitution ordered as a result of
actions brought pursuant to Sections 38-55-170 and 38-55-540.
(c) The State Law Enforcement Division shall investigate
thoroughly all claims or allegations of violations of Sections 38-55-170
and 38-55-540 of the 1976 Code and related criminal insurance activity
received from the Attorney General pursuant to this section.
(d) The Insurance Fraud Division of the Office of Attorney General
and the investigative services of the State Law Enforcement Division as
provided by this section must be funded by an appropriation of not less
than two hundred thousand dollars annually from the general revenues
of the State derived from the insurance premium taxes collected by the
Department of Insurance and/or from fines assessed under Sections
38-55-170 and 38-55-540 which shall be deposited in the general
revenue fund to the credit of the Office of the Attorney General and the
State Law Enforcement Division to offset the costs of this program.
These monies shall be shared equally on a fifty-fifty basis by the Office
of the Attorney General and the State Law Enforcement Division.
Section 38-55-570. (a) Any person, insurer, or authorized agency
having reason to believe that another has made a false statement or
misrepresentation or has knowledge of a suspected false statement or
misrepresentation shall, for purposes of reporting and investigation,
notify the Insurance Fraud Division of the Office of the Attorney
General of the knowledge or belief and provide any additional
information within his possession relative thereto.
(b) Upon request by the Insurance Fraud Division, any person ,
insurer, or authorized agency shall release to Insurance Fraud Division
any or all information relating to any suspected false statement or
misrepresentation, including, but not limited to:
(1) insurance policy information relevant to the investigation,
including any application for such a policy;
(2) policy premium payment records, audits, or other documents
which are available;
(3) history of previous claims, payments, fees, commissions,
service bills, or other documents which are available; and
(4) other information relating to the investigation of the suspected
false statement or misrepresentation.
(c) Any authorized agency provided with or obtaining information
relating to a suspected false statement or misrepresentation as provided
for above may release or provide the information to any other authorized
agency. The Department of Insurance, the Department of Revenue and
Taxation, Division of Motor Vehicles, and the Workers' Compensation
Commission shall refer, but not adjudicate, all cases of suspected or
reported false statement or misrepresentation to the Insurance Fraud
Division of the Office of Attorney General for appropriate investigation
or prosecution, or both.
(d) Except as otherwise provided by law, any information furnished
pursuant to this section shall be privileged and shall not be part of any
public record. Any information or evidence furnished to an authorized
agency pursuant to this section shall not be subject to subpoena or
subpoena duces tecum in any civil or criminal proceeding unless, after
reasonable notice to any person, insurer, or authorized agency which has
an interest in the information and after a subsequent hearing, a court of
competent jurisdiction determines that the public interest and any
ongoing investigation will not be jeopardized by obeyance of the
subpoena or subpoena duces tecum.
Section 38-55-580. (a) A person, insurer, or authorized agency,
when acting without malice or in good faith, is immune from any
liability arising out of filing reports, cooperating with investigations by
any authorized agency, or furnishing other information, whether written
or oral, and whether in response to a request by an authorized agency or
upon their own initiative, concerning any suspected, anticipated, or
completed insurance fraud, when such reports or information are
provided to or received by any authorized agency.
(b) Nothing herein abrogates or modifies in any way common law
or statutory privilege or immunity heretofore enjoyed by any person,
insurer, or authorized agency.
(c) Nothing herein limits the liability of any person or insurer who,
with malice or in bad faith, makes a report of suspected fraud under the
provisions of this article.
Section 38-55-590. The director of the Insurance Fraud Division in
the Office of the Attorney General shall annually report to the General
Assembly regarding (a) the status of matters reported to the division, if
not privileged information by law; (b) the number of allegations or
reports received; (c) the number of matters referred to SLED for
investigation; (d) the outcome of all investigations and prosecutions
under this act, if not privileged by law; (e) the total amount of fines
levied by the court and paid to or deposited by the division; and (f)
patterns and practices of fraudulent insurance transactions identified in
the course of performing its duties. The director shall also periodically
report this information to insurers transacting business in this State,
health maintenance organizations transacting business in this State, and
other persons, including the State of South Carolina, which provide
benefits for health care in this State, whether these benefits are
administered directly or through a third person."
B. The 1976 Code is amended by adding:
"Section 42-9-440. The commission shall refer all cases of
suspected false statement or misrepresentation to the Insurance Fraud
Division of the Office of the Attorney General for investigation and
prosecution, if warranted, pursuant to the Omnibus Insurance Fraud and
Reporting Immunity Act.
For the purposes of this section, `false statement and
misrepresentation' means a statement or representation made by a person
that is false, material, made with the person's knowledge of the falsity of
the statement and made for the purpose of obtaining or denying or
causing another to obtain or deny any benefit or payment in connection
with an insurance transaction and such shall constitute fraud."
Amend further, by striking SECTION 20.
Amend further, by striking SECTION 21, and inserting the following:
SECTION 21. Section 42-1-380 of the 1976 Code is repealed./
Amend further, by adding an appropriately numbered SECTION to
read as follows:
SECTION ___. Section 38-55-170 of the 1976 Code, as last
amended by Section 121 of Act 184 of 1993, is amended to read:
"Section 38-55-170. (A) A person who knowingly
causes to be presented a false claim for payment to an insurer transacting
business in this State, to a health maintenance organization transacting
business in this State, or to any person, including the State of South
Carolina, providing benefits for health care in this State, whether these
benefits are administered directly or through a third person, or who
knowingly assists, solicits, or conspires with another to present a false
claim for payment as described above, is guilty of a:
(1) felony if the amount of the claim is five thousand dollars or
more. Upon conviction, the person must be imprisoned not more than
ten years or fined not more than five thousand dollars, or
both.misdemeanor, for a first offense violation, if the amount of
the benefit received is less than one thousand dollars. Upon conviction,
the person must be punished by a fine not to exceed five hundred dollars
or by imprisonment not to exceed thirty days;
(2) felony if the amount of the claim is more than one thousand
dollars but less than five thousand dollars. Upon conviction, the person
must be fined in the discretion of the court or imprisoned not more than
five years, or both., for a first offense violation, if the amount of
the benefit received is one thousand dollars or more. Upon conviction,
the person must be punished by a fine not to exceed fifty thousand
dollars or by imprisonment for a term not to exceed five years, or by
both such fine and imprisonment;
(3) misdemeanor triable in magistrate's court if the amount of the
claim is one thousand dollars or less. Upon conviction, the person must
be fined or imprisoned not more than is permitted by law without
presentment or indictment by the grand jury.felony, for a second
or subsequent violation, regardless of the amount of the benefit received.
Upon conviction, the person must be punished by a fine not to exceed
fifty thousand dollars or by imprisonment for a term not to exceed five
years, or by both such fine and imprisonment.
(B) A person convicted for a violation of the law concerning a false
claim under subsection (A) of this section must be ordered to make
restitution to the victim or victims of such criminal act for any financial
loss sustained as a result of that violation.
(C) The fines imposed pursuant to subsection (A) shall, upon
collection, be used to fund "
Amend further, by adding an appropriately numbered SECTION to
read as follows:
SECTION ___. Section 41-1-80 of the 1976 Code is amended to
read:
"Section 41-1-80. No employer may discharge or demote
any an employee because the employee has instituted
or caused to be instituted, in good faith, any proceeding under the South
Carolina Workers' Compensation Law (Title 42 of the 1976 Code), or
has testified or is about to testify in any such proceeding, or has filed
a claim for benefits under an insurance plan maintained by the employer
pursuant to Section 42-1-330(B).
Any An employer who violates any a
provision of this section is liable in a civil action for lost wages suffered
by an employee as a result of the violation, and an employee discharged
or demoted in violation of this section is entitled to be reinstated to his
former position. The burden of proof is upon the employee.
Any An employer shall have as an affirmative
defense to this section the following: wilful or habitual tardiness or
absence from work; being disorderly or intoxicated under the
influence of intoxicating alcohol or drugs while at work; destruction
of any of the employer's property; failure to meet established
employer work standards; malingering; embezzlement or larceny of the
employer's property; violating specific written company policy for which
the action is a stated remedy of the violation.
The failure of an employer to continue to employ, either in
employment or at the employee's previous level of employment, an
employee who receives compensation for total permanent disability, is
in no manner to be considered a violation of this section.
The statute of limitations for actions under this section is one year.
For purposes of this section `drugs' mean an illicit or licit drug, a
combination of licit or illicit drugs, a combination of alcohol and illicit
drugs, or a combination of alcohol and a licit drug."/
Amend further, by adding an appropriately numbered SECTION to
read as follows:
SECTION ___. Section 42-1-150 of the 1976 Code is amended to
read:
"Section 42-1-150. (A) `Employment' subject to the
provisions of this title means any service performed by an employee for
the person employing him.
(1) Employment includes all employments in which four or more
employees are employed by the same employer or, with respect to
improvement or modification of real property, all employment in which
one or more direct or indirect employees are employed by the same
employer.
(2) `Improvement or modification of real property' means
for-profit activities involved in the carrying out of any construction,
building, renovation, alteration, moving, clearing, filling, excavation, or
substantial improvement in the size or use of any structure or the
appearance of any land. When appropriate to the context, `improvement
or modification of real property' refers to the act of construction or the
result of construction. However `improvement or modification of real
property' shall not mean a landowner's act of construction or the result
of construction upon his own premises, provided that he or she is not an
owner as provided in Section 42-1-400.
(3) With respect to employment as referenced in subsection
(B)(2), the employer shall maintain proof of workers' compensation
coverage for its direct and indirect employees. Proof of coverage is a
contract of workers' compensation insurance issued to the employer for
coverage for the employer's direct and indirect employees.
(B) The term "employment" includes
employment by the State, all political subdivisions thereof, all public
and quasi-public corporations therein and all public employments in
which four or more employees are regularly employed in the same
business or establishment."
Amend further, by adding an appropriately numbered SECTION to
read as follows:
SECTION . The 1976 Code is amended by adding:
"Section 42-1-311. (A) When an employer rejects this title
pursuant to Section 42-1-310, the employer must provide evidence that
the employer has, at a minimum, the insurance coverages required by
this subsection for the benefit of the employer's employees. The
employer must provide proof of minimum insurance coverage to the
Chief Insurance Commissioner within thirty days of the notice of
rejection; thereafter, the employer must annually provide proof of
insurance to the Chief Insurance Commissioner. The employer's
insurance company must be (i) a licensed and admitted carrier
participating in the Guarantee Association Fund; or (ii) a carrier
authorized to do business in the state by the South Carolina Department
of Insurance. The employer's rejection of this Title continues only so
long as the minimum level of insurance coverages required by this
section are maintained and if the minimum coverages are not
maintained, then the employer is subject to this Title. An employer who
rejects the provisions of this Title and who maintains the minimal
insurance coverage pursuant to this section may at any time adopt the
provisions of this Title by procuring worker's compensation insurance
or operating under an approved workers' compensation self-insurance
plan as provided in this Title.
(1) The required minimum insurance coverages are:
Benefit CategoryMinimum Benefit Amounts
(a) accidental medical expense (per person) -- $750,000
(b) policy aggregate limit (per accident) -- $1,500,000
(c) accidental death other than death caused by or associated
with an occupational disease as defined by Section 42-11-10 -- $200,000
(d) Dismemberment Benefits:
(i) Loss of both hands or both feet or sight of both eyes$200,000
(ii) Loss of one hand $100,000
(iii) Loss of one foot $100,000
(iv) Loss of one eye $100,000
(v) Loss of thumb and index finger of same hand$50,000
(e) Disability Income:
(i) Permanent partial disability benefits payable to
employees act rejecting employers shall be in an amount commensurate
with or greater than that provided by Section 42-9-30 for employers in
the Workers' Compensation system.
(ii) Temporary total disability benefits payable as follows:
a. Temporary total disability means a non-permanent
physical impairment resulting from a work-related injury and
substantiated by a diagnosis from a physician which prevents an
employee of the insured from performing the duties for which he is
employed by the insured.
b. The weekly temporary total disability benefit under this
item shall be paid at the rate of not less than seventy percent of the
employee's gross average weekly earnings. The temporary total
disability benefit period shall not exceed one hundred and four weeks or
the period of total incapacity from work, whichever is less. For purposes
of this subsection and the insurance policy, Section 42-1-40 will govern
the determination of average weekly wage and Section 42-9-10 will
determine the compensation rate notwithstanding the five hundred week
limitation expressed therein.
(iii) Continuous total disability benefits payable as follows:
a. For the purposes of subitem (iii) regarding continuous
total disability benefits, the disability must be due to a work-related
injury and may result from but is not limited to:
i. Brain damage (severe neurological damage due to
external trauma resulting in complete and irrecoverable loss of brain
function);
ii. Coma (a profound state of unconsciousness from
which the employee cannot be aroused even by powerful stimulation);
iii. Paralysis (the complete and total inability of the
employee to move an entire extremity as the result of neurological
damage, as determined by a licensed physician);
b. Continuous total disability means the complete,
permanent, and absolute inability of the employee to:
i. perform all duties of his or her regular occupation until
the weekly benefit has been paid for 104 weeks during the same period
of continuous total disability, and thereafter;
ii. engage in any gainful occupation for which he or
she is or can be reasonably fitted by training, education or experience.
c. The weekly total disability benefit under subitem (iii)
shall be paid at a rate of no less than seventy percent of the employee's
gross average weekly earnings. The weekly total disability benefit
amount shall not exceed five hundred dollars for a benefit period not to
exceed five hundred twenty weeks.
(B) The insurance policy required by this section must include
coverage for risk pursuant to Section 42-1-440. The policy must contain
provisions for indemnification of a third party when a principal
contractor is liable to pay compensation under any of the Sections
42-1-400 to 42-1-450 of the 1976 Code as provided by Section
42-1-440.
(C) A declaratory judgment action in circuit court for benefits under
an insurance policy maintained by an employer pursuant to this section
has priority on the circuit court non-jury calendar in the same manner as
condemnation cases are given priority in circuit court."/
Amend further, by adding an appropriately numbered SECTION to
read as follows:
SECTION . The 1976 Code is amended by adding:
"Section 42-1-312. (A) When an employer rejects the
provisions of this title pursuant to Section 42-1-310 and the employer
has chosen to operate under the provisions of this section, the employer
must file and maintain with the Chief Insurance Commissioner a surety
bond in favor of the State executed by a surety company authorized to
transact business in this state. In lieu of a bond, the employer may file
with the Commissioner letters of credit; certificates of deposit held by
(i) building and loan associations chartered by South Carolina, or federal
savings and loan associations located within the state, in which deposits
are guaranteed by the Federal Deposit Insurance Corporation, or (ii)
national banks located within the state, or banks chartered by South
Carolina, in which deposits are guaranteed by the Federal Deposit
Insurance Corporation; or other securities which qualify as legal
investments under the laws of this state for public funds and are not in
default as to principal or interest.
The Commissioner may, in his sole discretion, accept a corporate
guaranty in lieu of a bond, letter of credit, certificate of deposit, or other
security. The corporate guaranty must meet any requirements the
Commissioner imposes.
The surety bond, letter of credit, certificate of deposit, corporate
guaranty, or other security must be in the amount of $500,000.
The surety bond, letter of credit, certificate of deposit, corporate
guaranty, or other security must be held as security for the payment of
any liability against the employer arising our of the failure of the
employer to meet any liability incurred by the employer for work-related
injuries sustained by an employee of the employer.
(B) The surety bond, letter of credit, certificate of deposit, corporate
guaranty, or other security must be filed with the Chief Insurance
Commissioner within thirty days of the notice of the employer's rejection
of this title pursuant to Section 42-1-310.
(C) Any aggrieved person may institute an action in the county of
the person's residence against the employer or the employer's surety, or
both, to recover on the bond or to recover from the certificate of deposit,
corporate guaranty, letter of credit, or other security held as security
under Section 42-1-312(A)."/
Amend further, by adding an appropriately numbered SECTION to
read as follows:
SECTION . Section 42-5-20 of the 1976 Code is
amended to read:
"Section 42-5-20. Every employer who accepts the provisions
of this Title relative to the payment of compensation shall insure and
keep insured his liability thereunder in any authorized corporation,
association, organization or mutual insurance association formed by a
group of employers so authorized or shall furnish to the Commission
satisfactory proof of his financial ability to pay directly the
compensation in the amount and manner and when due as provided for
in this Title. The Commission may, under such rules and regulations as
it may prescribe, permit two or more employers in businesses of a
similar nature to enter into agreements to pool their liabilities under the
Workers' Compensation Law for the purpose of qualifying as
self-insurers. In the case of self-insurers the Commission shall require
the deposit of an acceptable security, indemnity or bond to secure the
payment of the compensation liabilities as they are incurred. The
Industrial Commission shall have exclusive jurisdiction of group
self-insurers under this section, and such group self-insurers shall not be
deemed to be insurance companies and shall not be regulated by the
Department of Insurance. Provided, further, that if any provision is made
for the recognition of reinsurance of the self-insured fund, such
provision shall expressly provide that the reinsurance agreement or
treaty must recognize the right of the claimant to recover directly from
the reinsurer and that such agreement shall provide for privity between
the reinsurer and the workers' compensation claimant.
In lieu of submitting audited financial statements when an
employer makes an application to self-insure with the Commission, the
Commission shall accept the sworn statement or affidavit of an
independent auditor verifying the financial condition of the employer
according to the required financial ratios and guidelines established by
regulation of the Commission. The independent auditor must be a
certified public accountant using generally acceptable accounting
principles in the preparation of the financial statements of the
employer."
Amend further, by adding an appropriately numbered SECTION to
read as follows:
SECTION ____. Section 42-9-10 of the 1976 Code, as last amended
by Act 389 of 1986, is amended to read:
"Section 42-9-10. When the incapacity for work resulting from
an injury is total, the employer shall pay, or cause to be paid, as provided
in this chapter, to the injured employee during the total disability a
weekly compensation equal to sixty-six and two-thirds percent of his
average weekly wages, but not less than seventy-five dollars a week so
long as this amount does not exceed his average weekly salary; if this
amount does exceed his average weekly salary, the injured employee
may not be paid, each week, less than his average weekly salary. The
injured employee may not be paid more each week than the average
weekly wage in this State for the preceding fiscal year. In no case may
the period covered by the compensation exceed five hundred weeks
except as hereinafter provided.
The loss of both hands, arms, feet, legs, or vision in both eyes, or any
two thereof, constitutes total and permanent disability to be compensated
according to the provisions of this section.
In no case shall the total compensation received by an employee
for successive injuries to the same body part exceed five hundred weeks.
For the purpose of this section, `successive' means an injury following
after a previous injury to the same body part sustained in the same
employment or in another employment other than that in which he
receives a subsequent injury.
Notwithstanding the five hundred week limitation prescribed in this
section or elsewhere in this title, any person determined to be totally and
permanently disabled who as a result of a compensable injury is a
paraplegic, a quadriplegic, or who has suffered physical brain damage
is not subject to the five hundred week limitation and shall receive the
benefits for life.
Notwithstanding the provisions of Section42-9-301, no total lump
sum payment may be ordered by the commission in any case under this
section where the injured person is entitled to lifetime benefits."
Amend further, by adding an appropriately numbered SECTION to
read as follows:
SECTION ____. Section 42-9-150 of the 1976 Code is amended to
read:
"Section 42-9-150. If an employee has a permanent disability
or has sustained a permanent injury in service in the Army or Navy of
the United States or in another employment other than that in which he
receives a subsequent permanent injury by accident, such as specified in
Section42-9-30 or the second paragraph of Section42-9-10, he
shall be entitled to compensation only for the degree of disability which
would have resulted from the later accident if the earlier disability or
injury had not existed, except that such employee may receive further
benefits as provided by Sections42-7-310, 42-9-400 and 42-9-410 Title
if his subsequent injury qualifies for additional benefits provided therein.
However, in no case shall the total compensation received by an
employee for successive injuries to the same body part exceed five
hundred weeks. For the purpose of this section, `successive' means an
injury following after a previous injury to the same body part sustained
in the same employment or in another employment other than that in
which he receives a subsequent injury."/
Amend further, by adding an appropriately numbered SECTION to
read as follows:
SECTION ____. Section 42-9-170 of the 1976 Code is amended to
read:
"Section 42-9-170. If an employee receives a permanent
injury as specified in Section42-9-30 or the second paragraph of
Section42-9-10 after having sustained another permanent injury in the
same employment or in another employment other than that in which
he receives a subsequent injury, he shall be entitled to
compensation for both injuries, but the total compensation shall be paid
by extending the period and not by increasing the amount of weekly
compensation, and in no case exceeding five hundred weeks.
If an employee has previously incurred permanent partial disability
through the loss of a hand, arm, foot, leg or eye and by subsequent
accident incurs total permanent disability through the loss of another
member, the employer's liability is for the subsequent injury only, except
that such employee may receive further benefits as provided by Sections
42-7-310, 42-9-400 and 42-9-410 if his subsequent injury qualifies for
additional benefits provided therein."/
Amend further, by adding an appropriately numbered SECTION to
read as follows:
SECTION ____. Section 42-15-40 of the 1976 Code, as last amended
by Act 612 of 1990, is amended to read:
"Section 42-15-40. The right to compensation under this title is
barred unless a claim is filed with the commission (1) within
two years after from the date of an accident, not the
date the employee discovered the injury except as otherwise specified by
this section; or (2) if death resulted from accident, within
two years of the date of death. However, for occupational disease claims
the two-year period does not begin to run until the employee concerned
has been diagnosed definitively as having an occupational disease and
has been notified of the diagnosis. For the death or injury of a member
of the South Carolina National Guard, as provided for in Section
42-7-67, the time for filing a claim is two years after the accident or one
year after the federal claim is finalized, whichever is later. For a
medical misdiagnosis, the two-year period does not begin to run until the
date the employee concerned has been notified of a misdiagnosis
regarding the injury resulting from an accident. The filing required
by this section may be made by registered mail, and the registry within
the time periods set forth in this section constitutes timely filing."/
Amend further, by striking SECTION 22, and inserting the following:
SECTION 22. Except as may otherwise be provided in this act, this
act takes effect upon approval by the Governor. Employers who have
filed with the Workers' Compensation Commission a notice to reject the
provisions of Title 42 before the effective date of this act will have until
six months after the effective date of this act to comply with the
provisions of this act relating to the rejection of Title 42. Any employer
who has rejected the terms of this title prior to approval of this act and
has procured another form of employee benefits insurance shall comply,
not later than six months after the effective date of this act, with the
provisions of this act relating to the rejection of Title 42./
Renumber sections to conform.
Amend title to conform.
THOMAS C. ALEXANDER, for Committee.
STATEMENT OF ESTIMATED FISCAL
IMPACT
1. Estimated Cost to State-First Year$see below
2. Estimated Cost to State-Annually
Thereafter$see below
Senate Bill 540, as amended by the House Labor and Commerce
Subcommittee, amends Title 42 of the South Carolina Code of Laws,
1976, by changing and adding several sections to the Workers
Compensation Law; amends Chapter 55 of Title 38 of the Code by
adding Article 5, Insurance Fraud and Reporting Immunity Act; amends
Section 42-1-311 and 42-1-312 by providing stipulations for those who
want to opt-out of the Workers' Compensation System.
Senate Bill 540, as amended, would not affect the collection of
revenues from the workers' compensation premium or self-insurance
taxes. The Workers' Compensation Commission states that passage of
this bill would have a positive impact on the administration and
operation of the Workers' Compensation System.
Adding Article 5 to Chapter 55 of Title 38 will create the
"Insurance Fraud and Reporting Immunity Act" thereby
establishing an insurance fraud unit within the Attorney General's Office
to prosecute insurance fraud in South Carolina. Section 38-55-560
requires investigations of alleged insurance fraud to be handled by the
State Law Enforcement Division (SLED). Funding for the insurance
fraud unit within the Attorney General's Office and the investigative unit
at SLED will come from: (1) $200,000 appropriated from general
revenues, derived from insurance premium taxes; and, (2) fines assessed
and collected in successful prosecution of insurance fraud cases.
Sections 38-55-540 and 38-55-550 establish fines and civil penalties
for violating this Act. Fines are not to exceed $50,000 upon conviction
of insurance fraud.
The Attorney General's Office estimates a cost of $373,210 with 7
positions will be required to establish the Insurance Fraud Division with
$326,000 in recurring costs. Revenue estimates generated by
convictions cannot be determined by the Attorney General's Office since
authority regarding penalties does not reside with them.
ATTORNEY GENERAL'S COST
Personal Service $196,000
(3 attorneys; 3 clerical;
1 paralegal)
Employer Contributions (25%) 49,000
Operating - Recurring 81,000
TOTAL RECURRING $326,000
Operating - Non-Recurring 47,210
TOTAL COST - ATTY. GEN. OFFC. $373,210
Section 38-55-560 requires SLED to investigate all claims or
allegations of violations of Sections 38-55-170 and 38-55-540 of the
Code of Laws, 1976, and related criminal insurance activity received
from the Attorney General pursuant to this section. Funding for
investigative services by SLED must be provided by appropriated funds
derived from the insurance premium taxes and/or fines assessed under
Sections 38-55-170 and 38-55-540 and shared equally on a fifty-fifty
basis with the Office of Attorney General.
SLED estimates the proposed legislation will cost between
$400,000-$500,000 which includes 5 positions. Identified below are
SLED's approximate costs required to implement Senate Bill 540. First
year costs are estimated at $469,716 with recurring costs of $276,337.
STATE LAW ENFORCEMENT DIVISION'S COST
Personal Service $155,163
(4 special agents III;
1 adm asst II)
Employer Contributions 45,059
Operating - Recurring 76,115
TOTAL RECURRING $276,337
Operating - Non-Recurring 193,379
TOTAL COST - SLED $469,716
Sections 42-1-311 and 42-1-312 require the Department of Insurance
to assume new functions and responsibilities. The Department of
Insurance would assume oversight and regulatory responsibility for the
operation of the workers' compensation opt-out program. This bill
provides that each employer who opts out of the protection of the
workers' compensation system must provide notification of this decision
to the Chief Insurance Commissioner. The employer is required to
purchase and maintain specified statutory insurance coverage in lieu of
workers' compensation coverage and must annually provide proof of
such insurance to the Chief Insurance Commissioner. Any employer
who rejects workers' compensation coverage must additionally file and
maintain with the Chief Insurance Commissioner some form of financial
guaranty to be held as security for the payment of any liability incurred
by the employer for work-related injuries sustained by an employee.
The Department of Insurance estimates that to effectively administer
this program would require the creation of a new division with first year
costs of $209,394 and 4 positions with recurring costs of $169,704.
DEPARTMENT OF INSURANCE'S COST
Personal Service $125,762
(1 supv; 2 policy analysts;
1 clerical)
Employer Contributions (25%) 31,442
Operating - Recurring 12,500
TOTAL RECURRING $169,704
Operating - Non-Recurring 39,690
TOTAL COST - DEPART. OF INSUR. $209,394
Undeterminable variables affecting ultimate costs to the General Fund
are: (1) estimate of actual fraud fines collected; (2) estimate of actual
costs incurred by the Attorney General, SLED, and Department of
Insurance in the operation of these new duties; and, (3) the current use
of insurance premium taxes directed to the General Fund.
Senate Bill 540, as amended by subcommittee, designates $200,000
currently utilized by the General Fund and redirects it to the Insurance
Fraud Division in the Attorney General's Office and to investigative
services of the State Law Enforcement Division.
Prepared By: Approved By:
Cheryl H. Morris George N. Dorn, Jr.
State Budget Analyst State Budget Division
Kenneth Brown
State Budget Analyst
A BILL
TO AMEND SECTION 42-1-40, CODE OF LAWS OF SOUTH
CAROLINA, 1976, RELATING TO THE DEFINITION OF
"AVERAGE WEEKLY WAGES" UNDER THE
WORKERS' COMPENSATION LAW, SO AS TO DELETE CERTAIN
LANGUAGE AND PROVISIONS AND PROVIDE THAT AVERAGE
WEEKLY WAGE IS CALCULATED BY TAKING THE TOTAL
WAGES PAID FOR THE LAST FOUR QUARTERS IMMEDIATELY
PRECEDING THE QUARTER IN WHICH THE INJURY
OCCURRED DIVIDED BY FIFTY-TWO OR BY THE ACTUAL
NUMBER OF WEEKS FOR WHICH WAGES WERE PAID,
WHICHEVER IS LESS; TO AMEND SECTION 42-1-160,
RELATING TO THE DEFINITIONS OF "INJURY" AND
"PERSONAL INJURY" FOR PURPOSES OF THE
WORKERS' COMPENSATION LAW, SO AS TO ADD PROVISIONS
RELATING TO WORK-RELATED STRESS; TO AMEND SECTION
42-1-310, RELATING TO THE PRESUMPTION OF ACCEPTANCE
OF THE PROVISIONS OF TITLE 42 (WORKERS'
COMPENSATION), SO AS TO DELETE CERTAIN LANGUAGE
AND TO DEFINE "EMPLOYMENT" AND
"IMPROVEMENT OR MODIFICATION OF REAL
PROPERTY"; TO AMEND THE 1976 CODE BY ADDING
SECTION 42-1-315 SO AS TO PROVIDE THAT OFFICERS OF A
CORPORATION ARE EMPLOYEES UNDER TITLE 42 AND MAY
REJECT COVERAGE BY GIVING CERTAIN NOTICE; TO AMEND
SECTION 42-1-320, RELATING TO THE PROVISION THAT
PUBLIC ENTITIES AND THEIR EMPLOYEES CANNOT EXEMPT
THEMSELVES FROM TITLE 42 (WORKERS' COMPENSATION),
SO AS TO DELETE PROVISIONS AND PROVIDE THAT THE
STATE, ITS MUNICIPAL CORPORATIONS AND POLITICAL
SUBDIVISIONS THEREOF, AND SUCH EMPLOYEES, ARE
SUBJECT TO TITLE 42; TO AMEND SECTION 42-1-330,
RELATING TO WAIVER OF EXEMPTION UNDER THE
WORKERS' COMPENSATION LAW, SO AS TO, AMONG OTHER
THINGS, INCLUDE OFFICER OF A CORPORATION UNDER THE
PROVISIONS OF THIS SECTION; TO AMEND THE 1976 CODE BY
ADDING SECTION 42-1-335 SO AS TO PROVIDE, AMONG
OTHER THINGS, THAT AN EMPLOYER WHO IS EXEMPT FROM
TITLE 42 ELECTS TO ADOPT THE TITLE BY OBTAINING
WORKERS' COMPENSATION INSURANCE OR BY OPERATING
UNDER AN APPROVED SELF-INSURANCE PROGRAM; TO
AMEND SECTION 42-1-340, RELATING TO THE EFFECTIVE
DATE OF AND THE MANNER OF GIVING NOTICE OF
NONACCEPTANCE OR WAIVER WITH RESPECT TO TITLE 42
(WORKERS' COMPENSATION), SO AS TO DELETE CERTAIN
LANGUAGE AND TO REFERENCE SECTION 42-1-315; TO
AMEND SECTION 42-1-510, RELATING TO DEFENSES WHICH
ARE NOT AVAILABLE TO AN EMPLOYER WHO IS NOT UNDER
TITLE 42 (WORKERS' COMPENSATION), SO AS TO PROVIDE
THAT COMPARATIVE NEGLIGENCE DOES NOT APPLY, AND
FURTHER DEFINE "EMPLOYER" FOR PURPOSES OF
DEFENDING AN ACTION AT LAW; TO AMEND SECTION
42-1-520, RELATING TO DEFENSES WHICH ARE AVAILABLE
TO AN EMPLOYER OPERATING UNDER TITLE 42 (WORKERS'
COMPENSATION) WHEN THE EMPLOYEE IS NOT SO
OPERATING, SO AS TO DELETE REFERENCES TO
"EMPLOYEE" AND SUBSTITUTE THEREFOR
"OFFICER OF A CORPORATION"; TO AMEND THE
1976 CODE BY ADDING SECTION 42-3-195 SO AS TO PROVIDE,
AMONG OTHER THINGS, THAT THE WORKERS'
COMPENSATION COMMISSION SHALL COOPERATE WITH AND
PROVIDE INFORMATION AND STATISTICS TO ANY AGENCY
OF THE STATE OR OF THE UNITED STATES CHARGED WITH
THE DUTY OF ENFORCING ANY LAW SECURING SAFETY
AGAINST INJURY IN ANY EMPLOYMENT COVERED BY TITLE
42 OR WITH ANY STATE OR FEDERAL AGENCY ENGAGED IN
ENFORCING ANY LAWS TO ASSURE SAFETY FOR
EMPLOYEES; TO AMEND SECTION 42-5-40, RELATING TO THE
PENALTY FOR FAILURE TO SECURE PAYMENT OF WORKERS'
COMPENSATION, SO AS TO DELETE CERTAIN LANGUAGE
AND PROVIDE A SEPARATE PENALTY FOR WILFUL OR
REPEATED VIOLATIONS; TO AMEND SECTION 42-7-200, AS
AMENDED, RELATING TO THE WORKERS' COMPENSATION
UNINSURED EMPLOYERS' FUND, SO AS TO PROVIDE THAT
THE REMEDY PROVIDED IN THIS SECTION SHALL NOT APPLY
UNTIL ALL AVAILABLE ADMINISTRATIVE REMEDIES UNDER
TITLE 42 AGAINST ANY INSURED STATUTORY EMPLOYER
HAVE BEEN EXHAUSTED; TO AMEND SECTION 42-9-220,
RELATING TO THE MANNER IN WHICH WORKERS'
COMPENSATION SHALL BE PAID, SO AS TO PROVIDE THAT
COMPENSATION MUST BE PAID BY A CHECK AND NOT A
DRAFT; TO AMEND SECTION 42-9-360, RELATING TO
ASSIGNMENTS OF WORKERS' COMPENSATION AND
EXEMPTIONS FROM CLAIMS OF CREDITORS AND TAXES, SO
AS TO ADD CERTAIN PROVISIONS, INCLUDING A PROVISION
THAT IT SHALL BE UNLAWFUL FOR AN AUTHORIZED
HEALTH CARE PROVIDER TO DEMAND OF OR CAUSE A
DEMAND TO BE MADE ON A WORKERS' COMPENSATION
CLAIMANT PRIOR TO THE FINAL ADJUDICATION OF HIS
CLAIM, AND PROVIDE FOR CERTAIN MONETARY PENALTIES
TO BE PAID TO THE WORKERS' COMPENSATION CLAIMANT;
TO AMEND THE 1976 CODE BY ADDING SECTION 42-9-395 SO
AS TO ADD PROVISIONS RELATING TO SETTLEMENT
AGREEMENTS PROVIDING FOR STRUCTURED SETTLEMENTS
IN WORKERS' COMPENSATION CASES; TO AMEND SECTION
42-17-90, RELATING TO REVIEW OF A WORKERS'
COMPENSATION AWARD ON A CHANGE OF CONDITION, SO
AS TO PROVIDE FOR THE ENTERING OF AN ORDER RATHER
THAN THE MAKING OF AN AWARD, AND ADD CERTAIN
PROVISIONS, INCLUDING A PROVISION THAT THE WORKERS'
COMPENSATION COMMISSION SHALL PROVIDE BY
REGULATION THE METHOD AND PROCEDURE BY WHICH AN
AWARD OR ORDER COMMENCING TEMPORARY
COMPENSATION AND ENTERED WITHOUT AN EVIDENTIARY
HEARING MAY BE SET ASIDE FOR FRAUD; TO AMEND
SECTION 42-19-10, AS AMENDED, RELATING TO EMPLOYERS'
RECORDS AND REPORTS OF INJURIES UNDER THE WORKERS'
COMPENSATION LAW, SO AS TO DELETE THE PROVISIONS OF
THE SECTION AND ADD PROVISIONS, INCLUDING A
PROVISION DETAILING THE CIRCUMSTANCES UNDER WHICH
AN EMPLOYER IS NOT REQUIRED TO MAKE A WRITTEN
REPORT; TO AMEND CHAPTER 55 OF TITLE 38, RELATING TO
CONDUCT OF INSURANCE BUSINESS, BY ADDING ARTICLE 5
SO AS TO ENACT THE "OMNIBUS INSURANCE FRAUD
AND REPORTING IMMUNITY ACT", INCLUDING
PROVISIONS FOR, AMONG OTHER THINGS, THE
ESTABLISHMENT IN THE OFFICE OF THE ATTORNEY
GENERAL OF AN INSURANCE FRAUD DIVISION AND THE
CREATION OF A FELONY OFFENSE AND THE PROVISION OF
PENALTIES THEREFOR; TO AMEND THE 1976 CODE BY
ADDING SECTION 42-9-440 SO AS TO PROVIDE THAT THE
WORKERS' COMPENSATION COMMISSION MAY REFER ALL
CASES OF SUSPECTED FRAUD TO THE INSURANCE FRAUD
DIVISION OF THE OFFICE OF THE ATTORNEY GENERAL FOR
INVESTIGATION AND PROSECUTION, IF WARRANTED,
PURSUANT TO THE OMNIBUS INSURANCE FRAUD AND
REPORTING IMMUNITY ACT; TO AMEND SECTION 16-1-10, AS
AMENDED, RELATING TO CRIMES CLASSIFIED AS FELONIES,
SO AS TO INCLUDE THE OFFENSE IN SECTION 38-55-540; AND
TO REPEAL SECTION 42-1-380, RELATING TO THE WAIVER OF
EXEMPTION BY EMPLOYER WITH RESPECT TO THE
MANDATORY PROVISIONS OF TITLE 42 (WORKERS'
COMPENSATION) AND SECTION 42-1-530, RELATING TO
DEFENSES WHICH ARE NOT AVAILABLE TO AN EMPLOYER
WHEN NEITHER HE NOR THE EMPLOYEE IS UNDER TITLE 42.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. The first paragraph of Section 42-1-40 of the 1976 Code
is amended to read:
"`Average weekly wages' means the earnings of the injured
employee in the employment in which he was working at the time of the
injury during the period of fifty-two weeks immediately preceding the
date of the injury, including the subsistence allowance paid to veteran
trainees by the United States Government if the amount of such
allowance is reported monthly by such trainee to his employer,
divided by fifty-two Average weekly wage is calculated by
taking the total wages paid for the last four quarters immediately
preceding the quarter in which the injury occurred as reported on the
Employment Security Commission's Employer Contribution Reports
divided by fifty-two or by the actual number of weeks for which wages
were paid, whichever is less. If the injured employee lost more
than seven consecutive calendar days at one or more times during such
period, although not in the same week, then the earnings for the
remainder of such fifty-two weeks shall be divided by the number of
weeks remaining after the time so lost has been deducted. When the
employment prior to the injury extended over a period of less than
fifty-two weeks, the method of dividing the earnings during that period
by the number of weeks and parts thereof during which the employee
earned wages shall be followed, so long as results fair and just to both
parties will be obtained. Where, by reason of a shortness of time during
which the employee has been in the employment of his employer or the
casual nature or terms of his employment, it is impracticable to compute
the average weekly wages as defined in this section, regard is to be had
to the average weekly amount which during the fifty-two weeks previous
to the injury was being earned by a person of the same grade and
character employed in the same class of employment in the same locality
or community."
SECTION 2. Section 42-1-160 of the 1976 Code is amended by
adding:
"Work-related stress unaccompanied by physical injury and
resulting in mental illness or injury is not a personal injury unless it is
established that the stressful employment conditions causing the mental
injury were extraordinary and unusual in comparison to the normal
conditions of the employment.
Work-related stress unaccompanied by physical injury is not
considered compensable if it results from any event which is incidental
to normal employer/employee relations, including, but not limited to,
personnel actions by the employer such as disciplinary actions, work
evaluations, transfers, promotions, demotions, salary reviews, or
terminations, except when such actions are taken in an extraordinary and
unusual manner."
SECTION 3. Section 42-1-310 of the 1976 Code is amended to read:
"Section 42-1-310. (A) Every employer and
employee, except as stated in this chapter, shall be presumed to have
accepted the provisions of this title respectively to pay and accept
compensation for personal injury or death by accident arising out of and
in the course of the employment and shall be bound thereby, unless
he shall have given, prior to any accident resulting in injury or death,
notice to the contrary in the manner provided in S 42-1-340.
(B) `Employment' subject to the provisions of this title means
any service performed by an employee for the person employing him.
(1) Employment includes all employments in which four or more
employees are employed by the same employer or, with respect to
improvement or modification of real property, all employment in which
one or more direct or indirect employees are employed by the same
employer.
(2) `Improvement or modification of real property' means
for-profit activities involved in the carrying out of any construction,
building, renovation, alteration, moving, clearing, filling, excavation, or
substantial improvement in the size or use of any structure or the
appearance of any land. When appropriate to the context, `improvement
or modification of real property' refers to the act of construction or the
result of construction. However `improvement or modification of real
property' shall not mean a landowner's act of construction or the result
of construction upon his own premises, provided that he or she is not an
owner as provided in Section 42-1-400.
(3) With respect to employment as referenced in subsection
(B)(2), the employer shall maintain proof of workers' compensation
coverage for its direct and indirect employees. Proof of coverage is a
contract of workers' compensation insurance issued to the employer for
coverage for the employer's direct and indirect employees."
SECTION 4. The 1976 Code is amended by adding:
"Section 42-1-315. Officers of a corporation are employees
under this title and may reject coverage under this title by giving notice
as prescribed by the commission. An employee who has rejected
coverage under this title or whose employer (1) has been exempted by
proper notice from the operation of this title or (2) is a sole proprietor or
a partner who has not elected to be covered may not claim to be a
statutory employee of another employer as described in Sections
42-1-400, 42-1-410, 42-1-420, 42-1-430, 42-1-440, and
42-1-450."
SECTION 5. Section 42-1-320 of the 1976 Code is amended to read:
"Section 42-1-320. Neither the State nor any municipal
corporation, nor any political subdivision thereof, nor any employee of
the State or of any such corporation or subdivision may reject the
provisions of this Title relative to payment and acceptance of
compensation and the provisions of SS 42-1-330, 42-1-340, 42-1-380,
42-1-390 and 42-1-460 to 42-1-530 shall not apply to them.
The State, its municipal corporations and political subdivisions
thereof, and the employees of the State or its municipal corporations and
political subdivisions are subject to this title."
SECTION 6. Section 42-1-330 of the 1976 Code is amended to read:
"Section 42-1-330. Either an An
employer or employee officer of a corporation who has
exempted himself by proper notice from the operation of this title may
at any time waive such exemption and thereby accept the provisions of
this title by giving notice as provided in Section 42-1-340
prescribed by the commission."
SECTION 7. The 1976 Code is amended by adding:
"Section 42-1-335. An employer who is exempt from this
title elects to adopt the title by obtaining workers' compensation
insurance or by operating under an approved self-insurance program. If
an employer exempt from this title adopts this title, the employer is
deemed to continue to operate under this title until a notice to the
contrary is filed in accordance with Section 42-1-390."
SECTION 8. Section 42-1-340 of the 1976 Code is amended to read:
"Section 42-1-340. The notices referred to in Sections
42-1-310 42-1-315 and 42-1-330 shall not be effective
as to any accident resulting in injury or death that occurs within thirty
days after the giving of any such notice; provided, that if any such
accident occurs less than thirty days after the date of employment, notice
of such exemption given at the time of employment shall be effective as
to such accident. Any such notice shall be in writing or print, in
substantially the form prescribed by the commission, and shall be
given by the employer by posting it in a conspicuous place in the shop,
plant, office, room or place in which the employee is employed or by
serving it personally upon him and shall be given by the employee
by sending it in registered letter, addressed to the employer at his
last-known residence or place of business, or by giving it personally to
the employer or any of his agents upon whom summons in a civil action
may be served under the laws of the State.
A copy of the notice in the prescribed form shall be filed with the
commission. In any suit by an employer or an employee who
has exempted himself by proper notice from the application of this title
a copy of such notice duly certified by the commission shall be
admissible in evidence as proof of such exemption."
SECTION 9. Section 42-1-510 of the 1976 Code is amended to read:
"Section 42-1-510. An employer who elects not to operate
under is not exempt from this title and who fails to
insure his workers' compensation liabilities shall not, in any suit at
law instituted by an employee subject to this title to recover damages for
personal injury or death by accident, be permitted to defend any such
suit at law upon any or all of the following grounds:
(1) that the employee was negligent; nor shall comparative
negligence apply;
(2) that the injury was caused by the negligence of a fellow employee;
or
(3) that the employee had assumed the risk of the injury."
SECTION 10. Section 42-1-520 of the 1976 Code is amended to
read:
"Section 42-1-520. An officer of a corporation
employee who elects not to operate under this title, shall, in any
action to recover damages for personal injury or death brought against
an employer accepting the compensation provisions of this title, proceed
at common law and the employer may avail himself of the defenses of
contributory comparative negligence, negligence of a
fellow servant, and assumption of risk, as such defenses exist
at common law."
SECTION 11. The 1976 Code is amended by adding:
"Section 42-3-195. (A) The commission shall cooperate
with and provide information and statistics to any agency of this State
or of the United States charged with the duty of enforcing any law
securing safety against injury in any employment covered by this title or
with any state or federal agency engaged in enforcing any laws to assure
safety for employees.
(B) Upon trial of any action other than a workers' compensation
claim, such information shall not be placed in evidence or be permitted
to be argued to the court or the jury."
SECTION 12. The first paragraph of Section 42-5-40 of the 1976
code is amended to read:
"Any employer required to secure the payment of compensation
under this title who refuses or neglects to secure such compensation
shall be punished by a fine of ten cents for each employee at the time
of the insurance becoming due, but not less than one dollar nor more
than fifty dollars for each day of such refusal or neglect, or, in
cases of wilful or repeated violations, one hundred dollars for each day
the employer fails to secure the necessary coverage, and until the
same ceases, and he shall be liable during continuance of such refusal or
neglect to an employee either for compensation under this title or at law
in an action instituted by the employee or his personal representative
against such employer to recover damages for personal injury or death
by accident and in any such action such employer shall not be permitted
to defend upon any of the grounds mentioned in Section
42-1-510."
SECTION 13. The second paragraph of Section 42-7-200(A) of the
1976 Code, as last amended by Act 589 of 1990, is further amended to
read:
"When an employee makes a claim for benefits pursuant to Title
42 and the State Workers' Compensation Commission determines that
the employer is subject to Title 42 and is operating without insurance or
as an unqualified self-insurer, the commission shall notify the fund of
the claim. The fund shall pay or defend the claim as it considers
necessary in accordance with the provisions of Title 42. The remedy
provided in this section shall not apply until all available administrative
remedies under this title against any insured statutory employer have
been exhausted."
SECTION 14. Section 42-9-220 of the 1976 Code is amended to
read:
"Section 42-9-220. (A) Compensation under this
title shall be paid periodically, promptly, and directly to the
person entitled thereto, unless otherwise specifically provided.
(B) Compensation must be paid by a check and not a
draft."
SECTION 15. Section 42-9-360 of the 1976 Code is amended to
read:
"Section 42-9-360. (A) No claim for
compensation under this title shall be assignable and all compensation
and claims therefor shall be exempt from all claims of creditors and from
taxes.
(B) It shall be unlawful for an authorized health care
provider to actively pursue collection procedures against a workers'
compensation claimant prior to the final adjudication of the claimant's
claim. Nothing in this section shall be construed to prohibit the
collection from and demand for collection from a workers' compensation
insurance carrier or self-insured employer. Violation of this section,
after written notice to the provider from the claimant or his
representative that adjudication is ongoing, shall result in a penalty of
five hundred dollars payable to the workers' compensation claimant.
(C) It shall be unlawful for an authorized health care
provider to actively pursue collection procedures against a workers'
compensation claimant for charges in excess of the fee or charge
provided by the commission's applicable fee or charge schedule, or to
charge any fee or charge in excess of the fee or charge provided by such
schedule. Violation of this section after written notice to the provider
from the claimant or his representative that adjudication is ongoing shall
result in a penalty of five hundred dollars payable to the workers'
compensation claimant.
(D) Payment to an authorized health care provider for services
shall be made timely but no later than thirty days from the date the
authorized health care provider tenders request for payment to the
employer's representative, unless the commission has received a request
to review the medical bill."
SECTION 16. The 1976 Code is amended by adding:
"Section 42-9-395. If a settlement agreement provides for a
structured settlement to be paid by a party other than the self-insured
employer or the insurer, then the agreement shall contain a provision
that the self-insured employer or insurer will be liable for the agreement
in the event of the default or failure of that third party to pay."
SECTION 17. Section 42-17-90 of the 1976 Code is amended to
read:
"Section 42-17-90. (A) Upon its own motion or
upon the application of any party in interest on the ground of a change
in condition, the commission may review any award and on such review
may enter an order make an award ending,
diminishing, or increasing the compensation previously
awarded, subject to the maximum or minimum provided in this title, and
shall immediately send to the parties a copy of the order changing the
award. No such review shall affect such award as regards any monies
paid and no such review shall be made after twelve months from the date
of the last payment of compensation pursuant to an award under this
title.
(B) The commission shall provide by regulation the method and
procedure by which an award or order commencing temporary
compensation and entered without an evidentiary hearing may be set
aside for fraud but such regulation must provide for an evidentiary
hearing. Further, the commission may not entertain any application to
set aside for fraud an award or order commencing temporary
compensation and entered without an evidentiary hearing unless and
until the employer or carrier is current with all payments due.
(C) The filing required by this section may be made by certified
mail, return receipt requested, in which case the date of filing is the date
of mailing as shown by the return receipt and the same shall constitute
filing within the time period set forth in this section."
SECTION 18. Section 42-19-10 of the 1976 Code, as last amended
by Section 15, Part II, of Act 612 of 1990, is further amended to read:
"Section 42-19-10. Every employer shall keep a record of
all injuries, fatal or otherwise, received by his employees in the course
of their employment on blanks approved by the commission. Within ten
days after the occurrence and knowledge of it, as provided in Section
42-15-20, of an injury to an employee requiring medical or surgical
attention, a report of the injury must be made in writing and mailed to
the commission on blanks approved by it for this purpose. However, for
the injury of a South Carolina National Guard member as provided for
in Section 42-7-67, the ten days must be counted from the date the
employer, the South Carolina National Guard, has knowledge that the
federal government has denied benefits to the injured guard member or
that benefits or additional benefits may be due under the provisions for
South Carolina Workers' Compensation.
Such report shall contain the name, nature and location of the business
of the employer and the name, age, sex, wages and occupation of the
injured employee and shall state the date and hour of the accident
causing injury, the nature and cause of the injury and such other
information as may be required by the Commission.
An injury for which there is no compensable lost time or permanency
and the medical treatment does not exceed an amount specified by
regulation of the Workers' Compensation Commission may be filed in
summary on a form and at a time prescribed by the commission.
Provided, however, this form may not be used to report an injury to the
back.
Every employer shall keep a record of all injuries, fatal or
otherwise, received by his employees in the course of their employment
on forms approved by the commission.
If the injury requires minimal medical attention at a cost not to exceed
an amount specified by regulation of the Workers' Compensation
Commission, does not cause more than one lost workday or permanency,
the employer is not required to make a written report to the commission
or their insurance carrier, provided the employer maintains a record as
prescribed by the commission and pays directly the incurred cost of the
resulting medical attention.
All other injuries must be reported in writing to the commission
according to the following guidelines:
(1) An injury for which there is no compensable lost time or
permanency and the medical treatment does not exceed an amount
specified by regulation of the Workers' Compensation Commission must
be reported annually on a form and at a time prescribed by the
commission.
(2) An injury involving compensable lost time, medical attention in
excess of the limit established by commission regulation in (1) above,
or the possibility of permanency must be reported within ten business
days after the occurrence and knowledge of it, as provided in Section
42-15-20, on a form or in an electronic format prescribed by the
commission.
However, for the injury of a South Carolina National Guard member
as provided for in Section 42-7-67, the reporting periods must be
counted from the date the employer, the South Carolina National Guard,
has knowledge that the federal government has denied benefits to the
injured guard member or that benefits or additional benefits may be due
under the provisions of Title 42."
SECTION 19. A. Chapter 55 of Title 38 of the 1976 Code is
amended by adding:
"Article 5
Insurance Fraud and
Reporting Immunity
Section 38-55-510. This article is known and may be cited as the
`Omnibus Insurance Fraud and Reporting Immunity Act'.
Section 38-55-520. The purpose of this article is to define what
constitutes insurance fraud; to facilitate the detection of insurance fraud;
to allow reporting of suspected insurance fraud; to grant immunity for
reporting suspected insurance fraud; to prescribe penalties for insurance
fraud; to require restitution for victims of insurance fraud; and to
establish a division within the Office of the Attorney General to
prosecute insurance fraud.
Section 38-55-530. As used in this article:
(a) `Authorized agency' means any duly constituted criminal
investigative department or agency of the United States or of this State;
the Department of Insurance; the Department of Highways and Public
Transportation; the Workers' Compensation Commission; the Office of
the Attorney General of this State; or the prosecuting attorney of any
judicial circuit, county, municipality, or political subdivision of this
State or of the United States, and their respective employees or
personnel acting in their official capacity.
(b) `Insurer' shall have the meaning set forth in Section 38-1-20(25)
and includes any authorized insurer, self-insurer, reinsurer, broker,
producer, or any agent thereof.
(c) `Person' means any natural person, company, corporation,
unincorporated association, partnership, professional corporation, or
other legal entity and includes any applicant, policyholder, claimant,
medical provider, vocational rehabilitation provider, attorney, agent,
insurer, fund, or advisory organization.
(d) `Insurance fraud' means any fraudulent conduct, act, or omission
committed by any person in connection with an insurance transaction
which is designed or intended to obtain an undeserved economic
advantage or benefit if such conduct, act, or omission is done knowingly
or with an intent to injure, defraud, or deceive.
Section 38-55-540. Any person or insurer who commits an insurance
fraud, and any other person knowingly, with an intent to injure, defraud
or deceive, who assists, abets, solicits, or conspires with such person or
insurer to commit an insurance fraud, shall be guilty of a felony and,
upon conviction thereof, shall be punished by a fine not to exceed fifty
thousand dollars or by imprisonment for a term not to exceed five years,
or by both such fine and imprisonment. When appropriate, any person
or insurer convicted of an insurance fraud may be required to make full
restitution of any economic benefit or advantage which has been
obtained through insurance fraud.
Section 38-55-550. (a) The Attorney General, upon receipt of any
allegation of insurance fraud, is empowered to:
(1) perform investigations;
(2) prosecute persons determined to be in violation of Section
38-55-540 in a court of appropriate jurisdiction; and
(3) collect fines and restitution ordered by such courts.
(b) There is established in the Office of the Attorney General a
division to be known as the Insurance Fraud Division, which shall
prosecute insurance fraud. The Insurance Fraud Division of the Office
of Attorney General must be funded by an appropriation of not less than
two hundred thousand dollars annually from the general revenues of the
State derived from the insurance premium taxes collected by the
Department of Insurance and/or from fines assessed under Section
38-55-540 which shall be deposited in the general revenue fund to the
credit of the Office of the Attorney General to offset the costs of this
program.
(c) Where deemed appropriate, the Attorney General may use the
Setoff Debt Collection Act to collect fines and restitution ordered as a
result of actions brought pursuant to Section 38-55-540.
Section 38-55-560. (a) Any person or insurer having reason to
believe that another has committed an insurance fraud or has knowledge
of a suspected insurance fraud shall, for purposes of reporting and
investigation, notify an authorized agency of the knowledge or belief
and provide any additional information within his possession relative
thereto.
(b) Upon request by an authorized agency, any person or insurer
may release to such authorized agency any or all information relating to
any suspected insurance fraud, including, but not limited to:
(1) insurance policy information relevant to the investigation,
including any application for such a policy;
(2) policy premium payment records, audits, or other documents
which are available;
(3) history of previous claims, payments, fees, commissions,
service bills, or other documents which are available; and
(4) other information relating to the investigation of the suspected
insurance fraud.
(c) Any authorized agency provided with or obtaining information
relating to a suspected insurance fraud as provided for above may
release or provide the information to any other authorized agency. The
Department of Insurance, the Department of Highways and Public
Transportation, and the Workers' Compensation Commission shall refer,
but not adjudicate, all cases of suspected or reported insurance fraud to
the Insurance Fraud Division of the Office of Attorney General for
appropriate investigation or prosecution, or both.
(d) Except as otherwise provided by law, any information furnished
pursuant to this section shall be privileged and shall not be part of any
public record. Any information or evidence furnished to an authorized
agency pursuant to this section shall not be subject to subpoena or
subpoena duces tecum in any civil or criminal proceeding unless, after
reasonable notice to any person, insurer, or authorized agency which has
an interest in the information and after a subsequent hearing, a court of
competent jurisdiction determines that the public interest and any
ongoing investigation will not be jeopardized by obeyance of the
subpoena or subpoena duces tecum.
Section 38-55-570. (a) No person, insurer, or authorized agency,
when acting without malice or in good faith, shall be subject to any civil
or criminal liability by virtue of filing reports, cooperating with
investigations by any authorized agency, or furnishing other
information, whether written or oral, and whether in response to a
request by an authorized agency or upon their own initiative, concerning
any suspected, anticipated, or completed insurance fraud, when such
reports or information are provided to or received by any authorized
agency.
(b) Nothing herein abrogates or modifies in any way common law
or statutory privilege or immunity heretofore enjoyed by any person,
insurer, or authorized agency.
(c) Nothing herein limits the liability of any person or insurer who,
with malice or in bad faith, makes a report of suspected fraud under the
provisions of this article."
B. The 1976 Code is amended by adding:
"Section 42-9-440. The commission may refer all cases of
suspected fraud to the Insurance Fraud Division of the Office of the
Attorney General for investigation and prosecution, if warranted,
pursuant to the Omnibus Insurance Fraud and Reporting Immunity
Act."
SECTION 20. The felony created by Section 38-55-540 of the 1976
Code, as contained in Section 19 of this act, is added to the list of crimes
classified as felonies pursuant to Section 16-1-10 of the 1976 Code.
SECTION 21. Section 42-1-380 and 42-1-530 of the 1976 Code are
repealed.
SECTION 22. Except as may otherwise be provided in this act, this
act takes effect upon approval by the Governor.
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