Washington--The insurance industry has established reform ofSouth Carolina's workers' compensation system as its toplegislative priority in that state for this year, insurers' tradegroup representatives said.

But while legislation to reform the system has been introducedin both houses of the South Carolina General Assembly, promptaction is not likely, according to a staff official of the AmericanInsurance Association.

The bills call for dissolution of the state's Second Injury Fundwhich pays an employer's additional insurance cost when an employeewith a prior disability is injured. The intent is to put thenon-disabled and disabled on an equal footing when it comes tohiring. The fund also ensures payment of workers' comp benefits toinjured workers whose employers fail to comply with workers' complaw coverage provisions

Lately employer assessments that bankroll the fund have beensoaring.

Under the legislation the burden of proof would be put onemployees to establish a workers' comp claim and they would have toprovide expert medical evidence to establish causation. Thisprovision would not apply to claims for an occupational disease orclaims for a change of condition.

The proposed measures would halt the Second Injury Fund fromreimbursing a self-insured employer or insurer for an otherwisequalifying injury occurring after June 30, 2007. It would continueto reimburse for claims resulting from injuries occurring on orbefore that date.

A notice of claim could not be filed with the fund after Dec.31, 2010, and a request for hearing could not be filed after Dec.31, 2011, for the purpose of establishing the validity for a claimfor fund reimbursement.

Other provisions of the bills would toughen sanctions forfraudulent claims and clarify various terms and limit attorneys'fees. The growing use by employees of attorneys to pursue theclaims is a primary reason for the upsurge in costs to the program,according to Julie Pulliam a staff official at the AIA office inAtlanta.

She said the first step towards passage of the measures will behearings on the bills in each chamber. The legislature will be insession until spring, Ms. Pulliam said, so it is unclear if andwhen final action on legislation will take place.

The AIA supports the bills, but reserves the right to see if thefinal product can include even more reforms, explained Ms. Pulliam."There is a consensus for reform," she said, "but we first have tosee the reaction of the legislators to the bills as introduced tosee what our next step will be."

The bills are the product of months of study by several taskforces, both governmental and private.

The task forces were created because of a series of problems,according to Raymond Farmer, AIA assistant vice president,southeast.

For example the state Second Injury Fund increased its annualassessment charged to employers by 98 percent, driven by increasesin disbursements from the SIF; South Carolina has had 30-40 percenthigher loss ratios than neighboring states during the past fiveyears; and, in 2003 the combined ratio for South Carolina was 127percent versus 98 percent countrywide, Mr. Farmer said.

Another problem is that an assigned risk plan is growing at sixtimes the rate of the voluntary market and court decisions overtime have broadened definitions of workplace injuries.

"There has been a growing chorus of discontent from SouthCarolina's employer community, as well as from insurers who provideworkers' compensation coverage, about a system that has becomeincreasingly dysfunctional," Mr. Farmer said.

Besides increased involvement of lawyers in the claims processin the state, a slowdown in claims processing by the commissionthat deals with claims has contributed to the higher costs, Ms.Pulliam said.