State News : South Carolina

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South Carolina

ROBINSON GRAY STEPP & LAFFITTE

  803-231-7874

As of late in South Carolina, it has become more and more common for the Claimant’s Bar to use the largely uncontested admission of medical questionnaires from authorized/unauthorized physicians as evidence in workers’ compensation matters to meet their burden of proof.  These statements typically are related to causation, permanent restrictions, physical limitations, future medical treatment, and more.  Generally, these questionnaires are not the written statements by the completing physician; rather, they are drafted by claimant’s counsel, using phrasing not likely to be used by medical professionals, and bolstering the statements made therein by qualifying them to the appropriate medical standard (“to a reasonable degree of medical certainty”) which is why they are problematic. The effect of these questionnaires is two-fold: (1) a detailed explanation of the claimant’s medical condition is boiled down to a check mark in a “yes” or “no” box, and (2) the claimant’s burden of proof is seemingly shifted to the defendants who must then go and depose said medical professional, at the cost of the employer/insurance provider, in order to cross-examine them on these statements that are most often not their own.   Under the “hearsay” definition (outlined below), a medical questionnaire is clearly hearsay, as it contains out-of-court statements (made by claimant’s counsel and adopted by the medical professional) and is offered into evidence to prove the truth of the matter asserted, i.e., to prove the statements made therein.  The rules regarding the submission of evidence in SC Workers Compensation are relaxed under the APA Guidelines, but these questionnaires seek to present a legal standard, fashioned as though the physician provided it in support of their unsolicited medical record, which is why they should be subjected to a different level of scrutiny and not omitted from the hearsay exception.

S.C. Code Ann. § 1-23-330(1) makes clear that the South Carolina Rules of Evidence do not apply in proceedings before the Workers’ Compensation Commission.  Hamilton v. Bob Bennett Ford, 339 S.C. 68, 70, 528 S.E.2d 667, 668 (2000) (citing Ham v. Mullins Lumber Co., 193 S.C. 66, 7 S.E.2d 712 (1940)).  As such, “great liberality is exercised in permitting the introduction of evidence in proceedings under the Workers’ Compensation Act.”  Id.  Note, however, that this liberality is not a wide-open door, permitting the admission of any and all evidence without thought; rather, South Carolina courts have opined that certain evidence must still meet judicial standards of admissibility.  Specifically, while the hearsay rules laid out in SCROE 801 – 806 are not applicable, hearsay evidence sought to be introduced in a workers’ compensation proceeding must still “be corroborated by facts, circumstances, or other evidence.”  Ham v. Mullins Lumber Co., 193 S.C. 66, 7 S.E.2d 712 (1940); See also Horton v. Pyramid Masonry Contractors, Inc., 2008 WL 9841237 (S.C. Ct. App. 2008); McCallum v. Beaufort County School Dist. Ex rel. South Carolina Boards Ins. Trust, 2005 WL 7083462 (S.C. Ct. App. 2005).  “Hearsay” is defined by South Carolina Rule of Evidence 801 as “a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted.”

Recently, the Defense Bar began contesting these medical questionnaires and pushing for an outright ban on the same.  To date, the Workers’ Compensation Commission has been largely unwilling to make affirmative findings as to their admissibility or inadmissibility.  But see Eric Counsel v. Transportation Servs. LLC, & United Wisconsin Ins. Co. 2020 WL 8872085 (S.C. Work. Comp. App. Panel. Sept. 16, 2020) (Commissioners Wilkerson, Barden, and Beck holding a medical questionnaire admissible as an exception to the rule against hearsay because the medical conclusions drawn therein were also noted in the physician’s prior medical records and were corroborated by the medical records of another treating physician).  In response to this contentious debate, the South Carolina Senate has proposed bill S. 366 which seeks to amend S.C. Code 42-17-40(A) so as to provide that medical records and opinions of medical providers (i.e., medical questionnaires) are deemed admissible without regard to the rules of evidence.  The effect of this bill would be to stifle any and all arguments from the defense bar and allow for the admissibility of medical questionnaires without objection.  This bill was introduced for its first reading on January 12, 2021, and was found favorable by the SC Senate Judiciary Committee on March 16, 2022.  The bill must now be read for the second and third times, not to occur on the same day.  At the third reading, the bill may be debated, amended, committed, recommended, tabled, etc.  After this third reading occurs, the Senate will put the bill to a vote wherein only a majority is needed for passage.  If this occurs, it will then be sent to the South Carolina General Assembly where it must be found favorable by the appropriate committee and read on three separate occasions, the debate of which will occur during the second reading.  If passed in the SC General Assembly, the Governor will have five days to veto it, after which time it will become law.  An override of the Governor’s veto would require 2/3 vote of the SC General Assembly.  If the General Assembly does not accept this bill as written, they may amend the same and send it back to the Senate for approval.  If the amendments are approved, the bill passes.  In the event of a disagreement, a conference committee of members from both houses will convene to resolve the issues.  If the conference fails to agree, the bill will likely fail to pass. 

            While the effect of this legislation will not bring about a drastic shift in defense practice in workers’ compensation matters, as the WCC has thus far chosen not to reject these questionnaires, the fact that the WCC will now accept them without question is rather concerning.  This unobjectionable acceptance ultimately takes us farther away from an even playing field in workers’ compensation claims where claimant’s attorney would be required to incur the same expenses and follow the same rules as defense attorney, and further allows claimants to shift their own statutory burden of proof on to the defense which is not proper under the Act.

Further updates on this issue will undoubtedly be forthcoming in the next few months. 

 

 

                                                                                                Authored by,

 

                                                                                                Brandon Rattray, Esq.

                                                                                                Workers’ Compensation Associate

                                                                                                Robinson Gray Stepp & Laffittee, LLC

The “statutory employee doctrine was included in the initial 1936 draft of the Workers’ Compensation Act and is now found in S.C. Code Ann. § 42-1-400 and -410.  For decades, the appellate Courts have relied upon the following three factor test to determine a claimant’s statutory employment status:

1.     Is the worker’s activity an important part of the owner’s business;

2.     Is the worker’s activity a necessary, essential or integral part of the owner’s business; and

3.     Has the identical activity been performed by the employees of the principal owner.

Glass v. Dow Chemical Co., 325 S.C. 198, 482 S.E.2d 49 (1997).  However, in an August 2021 decision by the South Carolina Supreme Court in Keene v. CNA Holdings, LLC, the Supreme Court seemingly abandoned these three tests, and replaced them with a much more employer-centric approach. Keene v. CNA Holdings, LLC, 2021 WL 3521085 (SC 2021).

In Keene, the estate of a deceased worker brought a survival and wrongful death action against the manufacturer (CNA Holdings) that hired the claimant’s employer (Daniel Construction Co.), a sophisticated international construction company, based on the claimant’s asbestos exposure while maintaining and repairing pumps, valves, and other equipment in the piping network of a CNA plant.  The Circuit Court and Court of Appeals found CNA was not a statutory employer of deceased claimant and therefore found the claimant’s estate was not limited to the exclusive remedy of the Workers’ Compensation Act.  In affirming the lower courts’ decisions, the South Caroline Supreme Court acknowledged a shift from the previous three tests of “importance,” “necessity,” and “identical activity,” and recognized the importance of “corporate decision making” in allowing “owners” to contract out work when such outsourcing is economically beneficial, instead of holding the owner accountable regardless of the purpose. 

In redefining what is considered part of an owner’s trade, business, or occupation for statutory employment issues, the Court in Keene stated,

 

[W]hat is or is not part of the owner’s business is a question of business judgment, not law.  If a business manager reasonably believes her workforce is not equipped to handle a certain job, or the financial or other business interests of her company are served by outsourcing the work, and if the decision to do so is not driven by a desire to avoid the cost of insuring workers, then the business manager has legitimately defined the scope of her company’s business to not include that particular work.

 

Under this new rule, the Court found the deceased claimant was not a statutory employee of CNA Holdings, LLC, because: (1) only employees with the claimant’s company performed maintenance and repairs on the equipment in the plant; (2) none of the CNA Holdings employees performed maintenance and repair work; (3) CNA Holdings contracted with claimant’s company because it was a “qualified, capable contractor that can do the expert work that CNA needed done;” and (4) there was no evidence presented that proved that CNA’s corporate purpose included equipment maintenance.”  Id. at 7.

 

The Court further concluded that this decision did not run afoul of the original purpose of the statutory employee doctrine because the deceased claimant presumably received Workers’ Compensation benefits through his employer (Daniel Construction) since the contract between CNA Holdings and Daniel Construction required Daniel to provided workers’ compensation benefits to its workers.  Id.  The Court found that “it is not the role of the court to second-guess a legitimate business decision whose effect – far from the improper purposes the statutory employee doctrine was designed to prevent – was actually to guarantee that the workers affected by the decision would be insured against work-related injuries.  Id.

 

This Opinion of the Court, for which a Petition for Reconsideration is pending, could create a more subjective “business judgment” analysis as to the intent of the business owner as opposed to the traditional objective analysis of the actual activities of the business.  Any shift in how these cases are adjudicated will have far-reaching consequences particularly as it pertains to the protections afforded business by the exclusive remedy doctrine.  Further updates on this issue will undoubtedly be forthcoming in the next few months. 

 

 

The South Carolina Second Injury Fund is being phased out of existence.   There are some very specific requirements for perfecting a claim for reimbursement.   According to Section 42-7-320 (B)(1), notice of a potential claim for reimbursement must be filed by December 31, 2010, and failure to provide timely notice shall bar recovery from the fund.   To provide notice of a claim, the employer or carrier must still notify the Workers’ Compensation Commission and the Director of the Second Injury Fund in writing.   However, the notice must now also include all of the following information:   (1) date of accident; (2) employee’s name; (3) employer’s name and address; (4) insurance carrier’s name, address, and the NCCI code; and (5) insurance carrier’s claim number (same number used by carrier to report claim to NCCI), policy number, and policy effective date.

All information required for consideration of accepting a claim for reimbursement must be submitted to the Second Injury Fund by June 30, 2011, and failure to submit information by this deadline shall act as a bar to recovery.   The Second Injury Fund shall not accept a claim for reimbursement after December 31, 2011.   No claim for reimbursement will be considered for an injury that occurs on or after July 1, 2008.
 
Pursuant to Section 42-7-320, the Second Injury Fund will be phased out until it ultimately ceases operations on July 1, 2013.   Section 42-7-200 provides that effective July 1, 2013, all functions of the Second Injury Fund will be transferred to the Uninsured Employers’ Fund, which will be operated within the office of the State Accident Fund.