S.C. House Leadership Drops Plan to Divert Millions From Second Injury Fund

In a move supported by the American Insurance Association (AIA), South Carolina House leaders earlier this week decided against appropriating $40 million from the state workers’ compensation Second Injury Fund (SIF) to help balance the state’s budget.

The original budget proviso adopted by the House Ways and Means Committee provided that the $40 million raided from the SIF would be allocated to 62 state agencies and programs. The proviso also provided for the elimination of the SIF beginning July 1, 2004.

Business groups, insurers, and even trial lawyers participated in the effort to educate the House leadership, ultimately convincing them not to move the private funds in the SIF to state coffers. SIFs are designed to reduce the financial impact of a workers’ comp claim in the event that a worker with a disability (who was injured on the job) aggravates a pre-existing impairment. The costs sustained as a result of these second injuries to workers are distributed among all employers in the state through annual assessments paid by carriers and self-insured employers into the Fund.

“In a tight budget year, with the legislature looking to non-traditional funding sources to find money for state government agencies, insurers have twice – so far – been a target of budget writers,” said Raymond Farmer, AIA assistant vice president, southeast region. “Fortunately, both times, we’ve been able to convince legislators that insurers should not be asked to shoulder such an unreasonable burden.”

By dropping the plan to appropriate the $40 million, House leaders also dropped legislative language to eliminate the SIF, a move advocated by AIA in states across the country.