The vast majority of companies in South Carolina are required to carry valid workers’ compensation insurance to cover employees in the event of a work injury.
However, if an insurance company enters a period of financial difficulty and can’t meet its obligations, the state insurance commissioner will step in and initiate a process to help the company regain its financial footing. If it’s ultimately determined the company can’t be helped, the commissioner will request a court order for liquidation, and the payouts will be covered by a guaranty association.
Those claims covered under a guaranty association are subject to more stringent caps for payouts.
While the guaranty does provide an additional layer of protection for workers insured by now-insolvent companies, it can also create a layer of complication, as the recent case of Ex parte: South Carolina Property and Casualty Insurance Guarantee Association revealed. The case, which was actually a consolidation of 10 separate workers’ compensation claims, was recently weighed by the South Carolina Court of Appeal, which vacated an earlier order and remanded the case for further analysis.
The case involves 10 separate workers’ compensation claims that were filed more than a decade ago by one-time employees of two employment organizations. These companies had insurance through a company called Realm National. However, Realm became insolvent after a proposal to purchase the company fell through. But before it officially became insolvent, the prospective buyer, AIM, issued certificates of workers’ compensation coverage to workers of both companies on behalf of Realm.
Workers at the center of this case filed accident claims after those certificates were issued. However, Realm denied the claims on grounds AIM had no authority to issue the certificates.
The cases were consolidated and went before a single commissioner to determine whether Realm indeed would be responsible for paying the claims based on AIM’s certificates of insurance. Because Realm was insolvent by that time, the state Guaranty Association became a party to the matter.
At a hearing in 2008, commissioner clarified the issue at hand was who was liable to pay the claims, not whether any particular claimant was due benefits. Commissioner determined both Guaranty Association and the Uninsured Employers’ Fund were liable to pay differing claims depending on the dates of the accident.
An appellate panel of commissioners affirmed, but a circuit court later reversed, finding Guaranty liable to pay all claims. Guaranty appealed that finding, which was how the case found its way before the state appellate court.
Throughout all of this, no determination has been made regarding whether claimants are entitled to collect benefits. Therefore, no benefits have yet been paid to anyone.
Because there was never a finding of benefits for any one worker, the appellate court ruled, Guaranty Association had no right to appeal because the circuit court’s decision was not yet final.
The appellate court scolded the commission, however, for the fact these claims have been pending for a decade, noting workers’ compensation laws were intended to relieve workers of the uncertainty of trial by providing sure, fast coverage for workplace injuries, regardless of fault.
“If claimants were entitled to benefits,” the appellate court stated, “They were entitled to receive them many years ago.”
The appellate court instructed the commission to promptly resolve claims of all 10 workers.
If you have been injured at work, contact the Lee Law Offices at 800-887-1965.
Ex parte: South Carolina Property and Casualty Insurance Guarantee Association, Jan. 28, 2015, South Carolina Suprem Court
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Schultz v. Workers’ Compensation Appeals Board – Coming and Going Rule Exception, Jan. 17, 2015, Anderson Work Injury Lawyer Blog