South Carolina Uninsured Employers Fund Held Liable for Work Injury Due to Employer’s Fraud to Workers’ Compensation Carrier

Under South Carolina workers’ compensation law, employers are supposed to purchase and maintain a policy of workers’ compensation insurance to cover their employees, in case an accident or illness should happen on the job.

Of course, just as people break other rules in life, not every employer complies with the requirements placed on them under the law. Fortunately, a person who is hurt at work while on the job with an uninsured employer does have a potential remedy – the uninsured employers’ fund. (The employer does not get off scot-free, of course, but working out the details of how the employer ultimately reimburses the fund is a matter that typically does not require the injured employee’s involvement.)

Facts of the Case

A case recently considered by the South Carolina Court of Appeals involved the workers’ compensation claim of a man who was injured while working as a roofer. While the man was at the hospital seeking treatment for injuries to his hip, arm, ribs, and back, his employer went to an insurance center and purchased a policy of workers’ compensation insurance backdated to 12:01 a.m. that day. The employer did not inform the insurance company’s representative of the claimant’s accident and denied knowledge of any prior injuries or pending litigation. When the claimant filed a claim for workers’ compensation benefits a few days later, the insurance company denied the claim based on the employer’s fraud.

A single commissioner of the workers’ compensation commission declared that the policy of workers’ compensation insurance that the employer had attempted to buy after the claimant’s accident was void ab initio due to fraud and ruled that the uninsured employers’ fund was liable for benefits owed to the claimant. The appellate panel eventually affirmed the single commissioner’s decision, and the fund appealed.

Decision of the Appellate Court

The South Carolina Court of Appeals affirmed. Although much of the parties’ arguments on appeal pertained to procedural issues, the court found that the basic question was whether a workers’ compensation policy could be declared void ab initio under South Carolina law. The fund argued that the answer was “no” and that the policy had to be “cancelled” instead. The court disagreed.

Although it may sound like the same thing, it is a distinction with a difference. If a contract is declared void ab initio, the law treats the situation as if the contract had never been formed. If a contract is cancelled, it is deemed to have existed, which here would mean that the claimant’s injury would be covered. (Although the insurance company could file a breach of contract action against the employer to recover payment for monies paid out to the claimant due to the employer’s alleged fraud, the employer could very well be judgment-proof.)

For More Information About a Work Injury Case

To speak to a knowledgeable South Carolina workers’ compensation attorney about your legal rights following an injury, accident, or illness at work, call the Patrick E. Knie Law Offices in Spartanburg or Greenville today. You can reach us at 864-582-5118. We offer a free consultation, during which we will discuss how your accident happened, issues that might arise in proving your case, and possible benefits to which you may be entitled. You should remember that, like all cases involving injuries, workers’ compensation cases are subject to certain procedural deadlines that, if not strictly followed, will likely bar your claim.

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