South Carolina General Assembly
108th Session, 1989-1990

Bill 3918


                    Current Status

Bill Number:               3918
Ratification Number:       727
Act Number                 589
Introducing Body:          House
Subject:                   Relating to Workers' Compensation
                           Insolvency Fund
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(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)

(A589, R727, H3918)

AN ACT TO AMEND SECTION 42-7-200, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO WORKERS' COMPENSATION INSOLVENCY FUND, SO AS TO CHANGE THE NAME OF THE FUND TO THE UNINSURED EMPLOYERS' FUND AND TO FURTHER PROVIDE FOR THE MANNER IN WHICH THE FUND MUST BE ADMINISTERED AND FOR THE PAYMENT OF CLAIMS FROM THE FUND; AND TO AMEND SECTION 42-9-400, AS AMENDED, RELATING TO THE MANNER IN WHICH THE EMPLOYER OR INSURANCE CARRIER MUST BE REIMBURSED FROM THE SECOND INJURY FUND WHEN DISABILITY RESULTS FROM PREEXISTING IMPAIRMENT AND SUBSEQUENT INJURY, SO AS TO PROVIDE THAT AS A PREREQUISITE TO REIMBURSEMENT FROM THE FUND, THE INSURER IS REQUIRED TO CERTIFY THAT THE MEDICAL AND INDEMNITY RESERVES HAVE BEEN REDUCED TO THE THRESHOLD LIMITS OF REIMBURSEMENT.

Be it enacted by the General Assembly of the State of South Carolina:

Prerequisites to reimbursement

SECTION 1. Section 42-9-400 of the 1976 Code is amended by adding:

"(l) As a prerequisite to reimbursement from the fund, the insurer shall be required to certify that the medical and indemnity reserves have been reduced to the threshold limits of reimbursement."

Uninsured Employers' Fund

SECTION 2. Section 42-7-200 of the 1976 Code, as last amended by Act 54 of 1989, is further amended to read:

"Section 42-7-200. (A) There is established within the office of the Second Injury Fund the South Carolina Workers' Compensation Uninsured Employers' Fund to insure payment of workers' compensation benefits to injured employees whose employers have failed to acquire necessary coverage for employees. The fund must be administered by the director of the Second Injury Fund who shall establish procedures to implement this section.

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.

When the fund is notified of a claim, the fund may place a lien on the assets of the employer by way of lis pendens or otherwise so as to protect the fund from payments of costs and benefits. If the fund is required to incur costs or expenses or to pay benefits, the fund has a lien against the assets of the employer to the full extent of all costs, expenses, and benefits paid and may file notice of the lien with the clerk of court of any county in which the employer has assets and with the Secretary of State in the same manner as utilized under Title 36 (Uniform Commercial Code). Any of the employer's assets sold or conveyed during the litigation of the claim must be sold or conveyed subject to the lien.

The fund has all rights of attachment set forth in Section 15-19-10 and has the right to proceed otherwise in the collection of its lien in the same manner as the Tax Commission is allowed to enforce a collection of taxes generally pursuant to Section 12-49-10, et seq. When all benefits due the claimant, as well as all expenses and costs of litigation, have been paid, the fund shall file notice of the total of all monies paid with the clerk of court in any county in which the employer has assets and with the Secretary of State. This notice constitutes a judgment against the employer and has priority as a first lien in the same manner as liens of the Tax Commission, subject only to the lien of the Tax Commission pursuant to Section 12-49-10, et seq. If the employer files for bankruptcy or otherwise is placed into receivership, the fund becomes a secured creditor to the assets of the employer in the same manner as the Tax Commission has priority for unpaid taxes, subject only to the lien of the Tax Commission. The fund otherwise has all rights and remedies afforded the Tax Commission as set forth in Section 12-54-10, et seq.

(B) Nothing in this section precludes the South Carolina Workers' Compensation Uninsured Employers' Fund from entering into an agreement for the reimbursement of expenses, costs, or benefits paid by the fund. If an agreement is reached pursuant to this subsection, a lien must not be filed as provided in Section 42-7-200(A). If an agreement is entered into subsequent to the filing of a lien, the lien must be canceled by the fund. Provided, however, an agreement between the fund and an employer under this section may provide that in the event the employer breaches the terms or conditions of the agreement, the fund may file or reinstate a lien, as the case may be. For purposes of this section, the term `costs' includes reasonable administrative costs which must be set by the director of the Second Injury Fund, subject to the approval of the Workers' Compensation Commission.

(C) To establish and maintain the South Carolina Workers' Compensation Uninsured Employers' Fund, there must be earmarked from the collections of the tax on insurance carriers and self-insured persons provided for in Sections 38-7-50 and 42-5-190 an amount sufficient to establish and annually maintain the fund at a level of not less than two hundred thousand dollars."

Time effective

SECTION 3. This act takes effect upon approval by the Governor.

Approved the 12th day of June, 1990.