State News : South Carolina

2022 came and went in the blink of an eye in South Carolina for employers, carriers, defense counsel, and the myriad of individuals involved in the workers’ compensation system.  It left behind, however two interesting points of reflection. 

First, it wasn’t a good year for the Workers’ Compensation Defense Bar when it came to appellate decisions.  The South Carolina Court of Appeals decided and published a total of five appeals from the Workers’ Compensation Full Commission, down from eight decisions in 2021.  “Are there any other differences?” you may ask.  Unfortunately, yes.  In 2021, Defendants prevailed in five of the eight opinions, with one arguable tie (affirm in part, reverse in part, and remand).  In 2022, however, workers’ compensation defendants struck out on all five appeals.   

For example, in Brooks v. Benore Logistics Systems & Great American Alliance Insurance Company, decided in January 2022, the Court of Appeals upended a long-standing test for repetitive trauma claims in South Carolina, seemingly reducing the burden of proof for the claimant in ceasing to require proof that a claimant’s specific job duties were, in fact, repetitive in nature.  In Padgett v. Cast and Crew Entertainment Services, Inc. & American Zurich Insurance Company, decided in October 2022, the Court of Appeals continued the trend and held that even when a claimant has reached the statutory 500-week cap for benefits under a single claim, TTD benefits must continue and may not be terminated until such time that the parties come to a separate, mutual agreement or the claimant is placed at MMI and permanent disability can be assessed. 

Second, the beginning of 2023 brought with it some new changes to the South Carolina Workers’ Compensation Net Present Value (NPV) Tables.  Pursuant to Reg. 67-1605(E)(5), the NPV Tables for weeks 101 through 500 are calculated based upon the yield-to-maturity rate of the Five-Year U.S. Treasury Note reported by the Federal Reserve.  As of January 3, 2023, the Five-Year YTM rate was 3.94%, up significantly from 1.54% in January 2021.  Therefore, the NPV Tables for 2023 for weeks 101 through 500 will now be calculated using a 3.94% discount rate.  These NPV tables are used to calculate the present value of any lump sum payment for an award greater than 100 weeks in benefits.  For example, defendants may choose to commute a 40% disability award to the back (120 weeks), or an award for permanent and total disability, or an award for death benefits; the list goes on as long as the award is greater than 100 weeks of compensation and the claimant hasn’t accrued (by receiving TTD benefits) enough weeks that would put the award below 101 weeks.  

So how does this affect South Carolina workers’ compensation claims moving forward?  Well, the higher discount rate means defendants are guaranteed to save anywhere from 1.88% to 8.53% in commuted lump sum payments to claimants.  For example, let’s say we have a claimant with a compensation rate of $500.00 who receives an award of 40% disability to his back, or 120 weeks of compensation with no prior TTD checks.  In 2022, that claimant would receive a commuted lump sum of $59,102.70, whereas in 2023, he will receive $57,788.60.  If that same claimant was determined permanently and totally disabled and entitled to 500 weeks (we’ll assume for ease that he didn’t receive any TTD checks), in 2022 he would have received $227,803.85, whereas in 2023 he will receive $208,375.65, a difference of almost $20,000.00. 

After a year of hard appellate blows and shifting burdens, the new NPV Tables serve as a welcomed silver lining.