§41-9-260 Does Not Prohibit Denying Compensability after 150 Days; But the Doctrines of Laches and Estoppel Can

The issue was addressed by the Court of Appeals in the case of Jervey v. Martint Environmental, Inc., Opinion No. 4930 (filed January 23, 2012).

Post by Founding Partner Stan Lacy

In 1996, South Carolina’s workers’ compensation system changed radically.  Prior to June 18, 1996, our system required the parties enter into a Form 15 in which the carrier agreed to pay, and the claimant agreed to accept TTD.  It was a contract.  Once executed, the carrier was stuck. If the employer found out later the claim was not compensable, the issue was deemed waived. The only escape was to prove the employee fraudulently induced the carrier into the agreement.  The result was a system in which carriers were loath to accept a claim except in the most obvious circumstances.  Compensable claims had to wait months to be heard by a commissioner while injured workers languished waiting for benefits.  A different system was needed.

In 1996, the old contract-based system was replaced by the present notice-based system.  Now, the carrier can initiate benefits and simply notify the South Carolina Workers’ Compensation Commission that benefits have commenced.  There is no need for signatures because there is no contract.  The carrier now has 150 days from the date the employer is notified of the accident to investigate the claim and unilaterally suspend benefits if the carrier determines the claim is not compensable.  Read all about it in South Carolina Code of Laws §42-9-260.

After the 150 day period, the Commission’s regulations control suspension and termination of benefits, which simply return us to the old system but without the contract aspect.  They require compensation continue until the claimant signs a Form 17 after working 14 calendar days or the carrier files a Form 21 and obtains an order from the Commission.   This is the same procedure used prior to 1996 whenever the carrier wanted to suspend or terminate benefits.

The question recently arose whether §42-9-260[1] acted as a statute of limitations to deny compensability.  If the statute gives the carrier 150 days to unilaterally suspend compensation if the claim is deemed not compensable, is the right to raise compensability as a defense barred after 150 days?

The issue was addressed by the Court of Appeals in the case of Jervey v. Martint Environmental, Inc., Opinion No. 4930 (filed January 23, 2012).  In Jervey, Claimant suffered sulfuric acid burns to neck, face and back.  Martint immediately initiated TTD and provided medical treatment.  Fifteen months later, Jervey filed a Form 50 seeking treatment for a cervical disc problem and asking the Commission to designate Dr. Donald Johnson as the authorized treating physician.  Martint filed a Form 51 denying the claim was compensable.  Jervey objected and argued the defense was barred by §42-9-260.  Additionally, Jervey argued Martint should be barred from raising the defense by the doctrines of laches and estoppel.  I’ll spare you the back and forth that went on from the hearing commissioner to the Court of Appeals.  Suffice it to say, the Court held that the plain reading of the statue did not create a statute of limitations, so the issue of compensability is not barred by the statue.  However, the employer/carrier can, by their actions, be estopped from denying compensability.   The doctrine laches likewise can be applied.

The moral is this.  While the legislature did not create a statute of limitations for raising a defense, the Commission and the Courts can utilize equitable principles to reach what they deem to be a just result.

[1]  §42-9-260 (F) reads in its entirety: After the one-hundred-fifty-day period has expired, the commission shall provide by regulation the method and procedure by which benefits may be suspended or terminated for any cause, but the regulation must provide for an evidentiary hearing and commission approval prior to termination or suspension unless such prior hearing is expressly waived in writing by the recipient or the circumstances identified in Section 42-9-260(B)(1) or (B)(2) are present. Further, the commission may not entertain any application to terminate or suspend benefits unless and until the employer or carrier is current with all payments due.
About Ellen Adams

Ellen's 20-year career at Collins & Lacy has involved more than 1,000 cases. She practices in workers' compensation and also has experience in general litigation and professional liability. Read Ellen's Biography