By Molly Parker, Charleston Regional Business Journal
Published March 5, 2009
The S.C. Small Business Chamber of Commerce is on a crusade to help small businesses that have been overcharged for workers’ compensation coverage to recover money from insurance companies.
The organization announced Wednesday that it has launched the S.C. Workers’ Comp Premium Recovery Project in conjunction with Advanced Insurance Management.
That Chicago-based company specializes in helping businesses determine whether they have been overcharged for coverage and in securing the owed money.
One of the main culprits for overcharged premiums is related to the state’s Second Injury Fund, the company says. That fund and similar funds across the county were created after World War II to encourage businesses to hire employees who had pre-existing medical conditions resulting from an injury.
Insurance companies providing workers’ compensation are required to pay into the fund, which could be drawn from if an employee suffers a so-called “second injury” while on the job. As part of the premium, the employer would be held harmless and not charged for the accident.
But, citing a 2006 study that Advanced Insurance Management conducted on behalf of the chamber, chamber president Frank Knapp said insurance companies were taking money from the fund and not passing savings on to clients.
“The insurance carrier was reimbursed from the state (through the fund), and they were supposed to pass on the benefit to the employers. Over 50% of the time, they were not adjusting the modifier rate,” Knapp said.
Advanced Insurance Management reviews companies’ insurance policies at no charge but collects a percentage of the rebate if it is determined that the insurer owes one.
“There are many ways they are systematically overcharged. One of the major ones is the Second Injury Fund,” said Brad Zaba, director of Advanced Insurance Management’s Southern division. “Nobody connects all the dots to make sure that everybody gets out of it what they should.”
A few years ago, at the insurance companies’ request, S.C. lawmakers voted to do away with the Second Injury Fund, as have most other states.
The federal Americans with Disabilities Act of 1990, which establishes that employers cannot discriminate on the basis of a disability, negated the need for the fund, the companies argued. The impetus for the fund was to encourage businesses not to discriminate against the disabled out of fear their workers’ compensation premiums could go up.
But because workers’ compensation claims can be filed several years after the injury, the fund is being phased out, not immediately eliminated. Zaba said companies still might find that they have been cheated out of savings that were supposed to have been passed on to them.
“Systematic discrepancies in South Carolina are to the point we have opened a South Carolina office simply to deal with it, Zaba said, noting that the firm opened its Columbia office in 2006.
Zaba said savings for companies vary.
“But it’s not unusual at all to see even small to midsize companies benefit in the five-figure range,” he said.
Reach Molly Parker at 843-849-3144.
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