SC Workers’ Compensation – Guaranty Fund – What Happens If Your Employer or Insurance Company Goes Out of Business

Feb 25, 2012 | Car Accidents, Personal Injury, Uncategorized, Workers' Compensation

This recent SC Court of Appeals case discusses what happens if the employer and/or workers’ compensation insurance carrier go out of business. This case seems particularly relevant in the current economic downturn that has been ongoing for several years now. Fortunately, in South Carolina, we have the Guaranty Fund which protects injured workers and their families if this contingency occurs. Thank goodness our legislature has taken this step for our State. Now, if a carrier does not survive, injured workers can still access funds to pay their medical bills and claims. In this case, even after the claimaint died prematurely from an unrelated illness, her family was still ultimately compensated from this Fund. Worker’s compensation cases are already difficult but having to proceed with litigation after a carrier fails is even more complex and anxiety producing. Better make sure your attorney knows what to do if this happens in your case. There is simply too much at stake for you and your family to risk having an inexperienced attorney.

At Reeves, Aiken & Hightower LLP, our lawyers are experienced workers’ compensation attorneys.  Robert J. Reeves is a former intensive care unit Registered Nurse (RN) who has actually treated patients with the same type of serious injuries he now represents in workers’ compensation cases.  Both Robert J. Reeves and Arthur K. Aiken are former insurance defense attorneys who know what to anticipate and how to prepare for trial and insurance company tactics.  During our twenty-two (22) years each of practicing law, we have handled virtually every type of workers’ compensation injury, including neck, back, shoulder, knee accidents, closed head / brain injury, herniated disks, bulging disks, diskectomy surgery, fusion procedures, arthroscopy, automobile accidents on the job, psychological / post traumatic stress, permanent and total disability claims, and wrongful death. We welcome the opportunity to sit down and personally discuss your case. Compare our attorneys’ credentials to any other firm. Then call us for a private consultation. www.rjrlaw.com

THE STATE OF SOUTH CAROLINA
In The Court of Appeals

Frances S. Hudson, Deceased Employee, by Kenneth L. Hudson and Keith B. Hudson, Co-Executors of her Estate, as well as Matthew Deese and/or Andrew Deese, Respondents,

v.

Lancaster Convalescent Center, Employer, and Legion Insurance Company, In Liquidation through the South Carolina Property and Casualty Insurance Guaranty Association, Carrier, Appellants.

Opinion No.4705
Heard March 3, 2010 – Filed June 30, 2010
Withdrawn, Substituted and Refiled February 4, 2011
Withdrawn, Substituted and Refiled April 21, 2011

Appeal From Lancaster County
Kenneth G. Goode, Circuit Court Judge

AFFIRMED IN PART AND REVERSED IN PART

E. Ros Huff, Jr., of Irmo, for Appellants Lancaster Convalescent Center and Legion Insurance Company, and Mark D. Cauthen and Peter P. Leventis, both of Columbia, for Appellant South Carolina Property and Casualty Insurance Guaranty Association.

Andrew Nathan Safran and Pope D. Johnson, both of Columbia, and Ann McCrowey Mickle, of Rock Hill, for Respondents.

LOCKEMY, J.:  In this workers’ compensation action, Lancaster Convalescent Center (Employer) and Legion Insurance Company (Legion), in liquidation through South Carolina Property and Casualty Insurance Guaranty Association (the Guaranty Association), appeal the circuit court’s decision affirming the decision of the Appellate Panel of the Workers’ Compensation Commission (Appellate Panel) to award Frances S. Hudson certain workers’ compensation benefits.  We affirm in part and reverse in part.    

FACTS

This appeal comes to this court after several workers’ compensation hearings.  In 1997, Frances S. Hudson sustained an injury to her left leg while in the course and scope of her employment with Employer for which she received workers’ compensation benefits.  Later, in an order dated October 3, 2001, the single commissioner found Hudson permanently and totally disabled based on a combination of injuries stemming from her original 1997 work-related injury.  Due to the combination of her injuries, the single commissioner found Hudson unable to perform any kind of work.

Thereafter, Hudson requested a lump-sum payment of her disability award, but Employer and Legion objected.  After a hearing on the matter, the single commissioner found it was in Hudson’s best interests to receive the lump-sum payment of her previous award.  The single commissioner noted that the South Carolina Code vests authority in the Workers’ Compensation Commission to determine, with discretion, whether a lump-sum payment is in an employee’s best interest.  During the pendency of the lump-sum workers’ compensation proceedings, Hudson died from cancer on June 30, 2002.

Employer and Legion appealed the single commissioner’s ruling to the Appellate Panel and argued it was error to award Hudson the lump-sum award.  Thereafter, the Appellate Panel affirmed all of the single commissioner’s findings of facts and conclusions of law, sustaining his order in its entirety.  On July 28, 2003, Legion became insolvent.  Accordingly, after the ruling regarding the lump-sum payment was rendered, the circuit court stayed the appeal due to Legion’s insolvency.  During the stay, the Guaranty Association assumed all rights, duties, and obligations of Legion as the insolvent insurance carrier pursuant to section 38-31-60 of the South Carolina Code (Supp. 2009).  Thereafter, Employer and the Guaranty Association appealed the Appellate Panel’s order to the circuit court and argued it was error to award the lump-sum award, and the Appellate Panel’s order must be vacated in light of Hudson’s untimely death.

The Honorable Paul E. Short, then a circuit court judge, affirmed the Appellate Panel’s order in its entirety by written order.  The circuit court found substantial evidence supported the Appellate Panel’s lump-sum award and that the award was not inconsistent with section 42-9-301 of the South Carolina Code (1985).  Concerning whether Hudson’s death impacted the workers’ compensation proceedings, the circuit court found this issue was not preserved for review.  Additionally, the circuit court found Employer and Legion’s assertion regarding the abatement of Hudson’s claim was unpersuasive.  Employer and the Guaranty Association appealed the circuit court’s decision to this court, but they subsequently withdrew the appeal.  Consequently, our clerk of court signed an order of dismissal and remittitur on April 20, 2004.

At some point during the proceedings, Employer and the Guaranty Association learned of Hudson’s death and ceased making payments.  In response, Kenneth and Keith Hudson, as executors of their mother’s estate (the Estate), requested payment of the lump-sum award.  The Hudson sons raised the issue on behalf of Matthew and Andrew Deese, Hudson’s dependent grandchildren.  Specifically, the Estate argued the grandchildren were entitled to payment of the lump sum, as Hudson’s dependents.  Employer and the Guaranty Association argued Hudson’s lump-sum payment abated upon her death and maintained they were not obliged to pay any sum.  The single commissioner found Judge Short’s 2004 order, which addressed Hudson’s lump-sum award, could not be challenged or relitigated.  Specifically, the single commissioner found: (1) Hudson’s disability award could reasonably fall within section 42-9-10 of the South Carolina Code (Supp. 2009); (2) all of the current beneficiaries had colorable claims to the lump-sum proceeds; and (3) the Guaranty Association failed to establish abatement under section 42-9-280 of the South Carolina Code (1985).  Further, the single commissioner ordered the Guaranty Association to pay the lump sum with interest and a ten percent penalty within seven days of the order.

Again, Employer and the Guaranty Association appealed the single commissioner’s order.  On appeal, the Appellate Panel affirmed all of the single commissioner’s factual findings and legal conclusions with the exception of the ten percent penalty imposed.  Specifically, the Appellate Panel noted the Guaranty Association did not pursue a frivolous defense.  Thereafter, the Estate and the Guaranty Association cross-appealed to the circuit court.  The Honorable Kenneth Goode issued an order affirming the Appellate Panel with the exception of the ten percent penalty it vacated.  In his order, Judge Goode concluded section 42-9-90 of the South Carolina Code (1985) compelled a penalty; accordingly, he reinstated the penalty.  This appeal followed.

STANDARD OF REVIEW

“The Administrative Procedures Act establishes the standard of review for decisions by the South Carolina Workers’ Compensation Commission.” Forrest v. A.S. Price Mech., 373 S.C. 303, 306, 644 S.E.2d 784, 785 (Ct. App. 2007).  “In workers’ compensation cases, the [Appellate Panel] is the ultimate fact finder.”  Shealy v. Aiken County, 341 S.C. 448, 455, 535 S.E.2d 438, 442 (2000).  This court reviews facts based on the substantial evidence standard.  Thompson v. S.C. Steel Erectors, 369 S.C. 606, 612, 632 S.E.2d 874, 877 (Ct. App. 2006).  Under the substantial evidence standard, the appellate court may not substitute its judgment for that of the Appellate Panel as to the weight of the evidence on questions of fact.  Forrest, 373 S.C. at 306, 644 S.E.2d at 785; see also S.C. Code § 1-23-380(5) (Supp. 2009).  The appellate court may reverse or modify the Appellate Panel’s decision only if the claimant’s substantial rights have been prejudiced because the decision is affected by an error of law or is clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record.  Forrest, 373 S.C. at 306, 644 S.E.2d at 785-86.  “Substantial evidence is not a mere scintilla of evidence nor evidence viewed from one side, but such evidence, when the whole record is considered, as would allow reasonable minds to reach the conclusion the [Appellate Panel] reached.”  Shealy, 341 S.C. at 455, 535 S.E.2d at 442.

LAW/ANALYSIS

I.  Abatement

Employer and the Guaranty Association argue the circuit court erred in affirming the Appellate Panel’s decision finding Hudson’s lump-sum award survived her death.  However, Judge Short’s order found this issue was not properly before the circuit court in 2004 because Employer and the Guaranty Association failed to raise it to the Appellate Panel after Hudson died.  Employer and the Guaranty Association appealed Judge Short’s ruling but later withdrew the appeal.  Thus, we find Judge Short’s ruling finding the abatement issue unpreserved is the law of the case.  See Judy v. Martin, 381 S.C. 455, 458, 674 S.E.2d 151, 153 (2009) (“Appellant may not seek relief from the prior unappealed order of the circuit court because the order has become the law of the case.  Under the law-of-the-case doctrine, a party is precluded from relitigating, after an appeal, matters that were either not raised on appeal, but should have been, or raised on appeal, but expressly rejected by the appellate court.”).  Accordingly, we decline to address the issue on the merits.

II.  Beneficiaries/Next of Kin Dependents

Employer argues the circuit court erred in failing to address whether all four beneficiaries have legitimate claims.  The Guaranty Association argues the circuit court erred in affirming the Appellate Panel’s decision to award Hudson’s lump sum to her Estate rather than to her beneficiaries pursuant to section 42-9-280 of the South Carolina Code (1985).  In response, the Estate argues Employer and the Guaranty Association acknowledged and accepted the beneficiaries’ valid and reasonable settlement of their respective claims to the lump-sum proceeds.  Thus, based on this stipulation, the Estate argues Employer and the Guaranty Association cannot now contest the manner in which the lump-sum award will be distributed.  We agree with Employer and the Guaranty Association.

We disagree with the Estate’s assertion that Employer and the Guaranty Association acknowledged and accepted the beneficiaries’ valid and reasonable settlement of their respective entitlements to the lump-sum proceeds.  On the contrary, during the hearing before the single commissioner on January 25, 2005, Employer’s counsel consistently questioned to whom the lump-sum award should go and the manner of the payment.  We note there was a discussion among the parties during which they agreed to divide the award evenly between Hudson’s sons and minor grandsons.  The single commissioner noted Employer’s counsel had no objection to the manner in which the funds were split but reserved the right to claim that the funds were payable.  However, we do not find such a stipulation by Employer’s counsel on the record and note he stated:  “our position is the [E]state takes nothing.”  Thereafter, Employer and the Guaranty Association appealed the single commissioner’s decision to award Hudson’s lump sum to her Estate, rather than to her beneficiaries, to both the Appellate Panel and the circuit court.  Therefore, we find this issue is properly preserved for our review and do not find Employer stipulated to the manner of dividing the lump-sum award.  Accordingly, we will address this issue on the merits.

Pursuant to section 42-9-280:

When an employee receives or is entitled to compensation under this Title for an injury covered by the second paragraph of § 42-9-10 or 42-9-30 and dies from any other cause than the injury for which he was entitled to compensation, payment of the unpaid balance of compensation shall be made to his next of kin dependent upon him for support, in lieu of the compensation the employee would have been entitled to had he lived. (emphasis added)

Here, Hudson’s cause of death, cancer, was unrelated to her work injury.  Pursuant to section 42-9-280, the workers’ compensation commission must pay the unpaid balance of her lump-sum award to her dependent grandchildren rather than to her sons as beneficiaries of the Estate.  Therefore, we find the circuit court erred in affirming the Appellate Panel’s decision to award Hudson’s lump sum to the Estate rather than to her beneficiaries pursuant to section 42-9-280 of the South Carolina Code (1985).  Accordingly, we reverse that portion of the circuit court’s order and direct all lump-sum payments to be paid directly to Hudson’s dependent grandsons.

III.   Interest Award

Next, Employer and the Guaranty Association argue the circuit court erred in affirming the Appellate Panel’s decision to award Hudson’s Estate interest on the lump-sum award.  Specifically, the Guaranty Association maintains section 38-31-20(8)(h) (Supp. 2009) of the South Carolina Property and Casualty Insurance Guaranty Association Act disallows claims for interest.  Section 38-31-20(8) provides:

“Covered claim” means an unpaid claim, including one of unearned premiums, which arises out of and is within the coverage and is subject to the applicable limits of an insurance policy to which this chapter applies issued by an insurer, if the insurer is an insolvent insurer and (a) the claimant or insured is a resident of this State at the time of the insured event, if for entities other than an individual, the residence of a claimant or insured is the state in which its principal place of business is located at the time of the insured event or (b) the claim is for first-party benefits for damage to property permanently located in this State. ‘Covered claim’ does not include: . . . (h) any claims for interest.  (emphasis added)

In response, the Estate points to section 38-31-60 of the South Carolina Code (1985 & Supp. 2009) which reveals broad duties owed by the Guaranty Association.  We agree with Employer and the Guaranty Association on this issue.

Section 38-31-60(b) states that the Guaranty Association “is considered the insurer to the extent of its obligation on the covered claims and, to this extent, has all rights, duties, and obligations of the insolvent insurer as if the insurer had not become insolvent.”  As we already indicated, interest is not covered.  Accordingly, based on the plain reading of the statute, we reverse the circuit court’s order affirming the Appellate Panel’s decision to award interest.

IV.  Penalty Imposed

Finally, Employer and the Guaranty Association argue the circuit court erred in reversing the Appellate Panel’s decision not to award Hudson’s Estate a ten percent penalty.  Originally, the single commissioner imposed a ten percent penalty under section 42-9-90 of the South Carolina Code (Supp. 2009) based on Employer and the Guaranty Association’s frivolous defense.  Thereafter, the Appellate Panel reversed the penalty after finding Employer and the Guaranty Association did not pursue a frivolous defense.  Finally, the circuit court reinstated the penalty and relied on Martin v. Rapid Plumbing, 369 S.C. 278, 631 S.E.2d 547 (Ct. App. 2006).  The Estate argues Martin is inapplicable to the facts of their case, and therefore, the circuit court erred by reinstating the ten-percent penalty.[1]

In response, the Estate maintains the circuit court properly found that the ten percent penalty pursuant to section 42-9-90 was mandatory.  Their reasoning is that Judge Short’s order was final and should not have been relitigated.  Further, the Estate maintains that under section 42-9-90, an employer or carrier must prove that circumstances beyond their control prevented payment of all compensation owed.  Also, the Estate maintains this section does not afford the Commission any discretion when deciding whether to impose a penalty.  We agree with the Estate.

Section 42-9-90 provides:

If any installment of compensation payable in accordance with the terms of an agreement approved by the Commission without an award is not paid within fourteen days after it becomes due, as provided in § 42-9-230, or if any installment of compensation payable in accordance with the terms of an award by the Commission is not paid within fourteen days after it becomes due, as provided in     § 42-9-240, there shall be added to such unpaid installment an amount equal to ten per cent thereof, which shall be paid at the same time as, but in addition to, such installment, unless such nonpayment is excused by the Commission after a showing by the employer that owing to conditions over which he had no control such installment could not be paid within the period prescribed for the payment.

Here, Employer and the Guaranty Association simply stopped paying compensation to the Estate.  We agree that they had a non-frivolous defense, as the Appellate Panel found.  However, as the single commissioner and Judge Goode found, the imposition of the penalty is mandatory under the statute.  Therefore, we affirm the circuit court’s reinstatement of the ten-percent penalty.

CONCLUSION

Judge Short’s ruling finding the abatement issue unpreserved is the law of the case.  Therefore, we decline to address this issue on the merits.  Pursuant to section 42-9-280 of the South Carolina Code, we reverse the portion of Judge Goode’s order affirming the Appellate Panel’s decision to pay Hudson’s remaining lump sum balance to her sons as beneficiaries and order the balance be paid to her grandsons as beneficiaries.  Finally, based on applicable statutes, we reverse the interest award and affirm the ten-percent penalty imposed.  Accordingly, the decision of the circuit court is

AFFIRMED IN PART AND REVERSED IN PART.

WILLIAMS and PIEPER, JJ., concur.

[1] We find Martin analogous yet distinguishable from the present situation.

SC Workers’ Compensation – Second Injury Fund – A Second Chance

Feb 25, 2012 | Car Accidents, Personal Injury, Uncategorized, Workers' Compensation

This recent SC Court of Appeals case discusses the interplay between insurance carriers and the SC Second Injury Fund. Before the federal prohibition against disability discrimination, South Carolina protected previously injured workers through the establishment of this Fund. Basically, it was a way to protect businesses from pre-existing injury claims while at the same time encouraged the hiring of those individuals who had been hurt on the job in the past. All businesses paid into this Fund to create a pool of money from which to draw if certain conditions were  satisfied. If a claim was accepted, a substantial reimbursement of medical and other costs paid could be given. Because of this reimbursement, employers did not have to fear hiring someone with a prior disability, and previously injured workers could find new employment after a work related accident. Workers’ compensation laws in SC are generally favorable to injured claimants. However, contrary to perception by many lawyers, this area of the law is quite complex, and attorneys who take cases randomly can easily make serious mistakes that compromise their clients’ claims. Better make sure your attorney regularly practices workers’ compensation law and really knows what they are doing. If not, you will be the one who pays the ultimate price. Your claim is too important to risk an inexperienced lawyer.

At Reeves, Aiken & Hightower LLP, our lawyers are experienced workers’ compensation attorneys.  Robert J. Reeves is a former intensive care unit Registered Nurse (RN) who has actually treated patients with the same type of serious injuries he now represents in workers’ compensation cases.  Both Robert J. Reeves and Arthur K. Aiken are former insurance defense attorneys who know what to anticipate and how to prepare for trial and insurance company tactics.  During our twenty-two (22) years each of practicing law, we have handled virtually every type of workers’ compensation injury, including neck, back, shoulder, knee accidents, closed head / brain injury, herniated disks, bulging disks, diskectomy surgery, fusion procedures, arthroscopy, automobile accidents on the job, psychological / post traumatic stress, permanent and total disability claims, and wrongful death. We welcome the opportunity to sit down and personally discuss your case. Compare our attorneys’ credentials to any other firm. Then call us for a private consultation. www.rjrlaw.com

THE STATE OF SOUTH CAROLINA
In The Court of Appeals

The State Accident Fund, Appellant,

v.

South Carolina Second Injury Fund, Respondent.

[In Re: Clinton Gaskins, Employee/Claimant,

v.

Pee Dee Regional Transportation Authority, Employer.]

Appeal From Florence County
Honorable Thomas A. Russo, Circuit Court Judge

Opinion No. 4684
Heard April 15, 2010 – Filed May 5, 2010

AFFIRMED

Mary Sowell League, of Columbia, for Appellant.

Latonya D. Edwards, of Columbia, for Respondent.

PER CURIAM: The State Accident Fund (Carrier) sought reimbursement from the South Carolina Second Injury Fund (the Fund) for monies Carrier paid to Clinton Gaskins for a stroke he suffered during surgery for a work-related back injury.  The Fund and the single commissioner denied Carrier’s claim as it related to monies paid for the stroke.  Both the Appellate Panel of the Workers’ Compensation Commission (Appellate Panel) and the circuit court affirmed.  We affirm.

FACTS

On January 30, 2002, while employed by Pee Dee Regional Transportation Authority, Gaskins suffered a work-related back injury.  Gaskins already suffered from degenerative disk disease and stenosis of the lumbar spine.  On May 9, 2002, Gaskins underwent surgery to treat his back problems.  During this surgery, he suffered a stroke that resulted in permanent brain injury.  Carrier initially denied coverage for the stroke as not causally related to the back problems, and Gaskins, his employer, and Carrier presented arguments to the single commissioner on the issue of causation.[1]

In the meantime, Carrier presented the Fund with its claim for reimbursement of monies paid for Gaskins’s back surgery.  On November 29, 2004, the Fund agreed to reimburse Carrier in an agreement that specified:

Nature of Injury: BACK
Nature of Prior Impairment:  DDD/LUMBAR
SPINAL STENOSIS/LUMBAR

The terms of this agreement are that the said STATE ACCIDENT FUND shall receive reimbursement of:

IN ACCORDANCE WITH THE PROVISIONS OF SECTION 42-9-400.

FOR THE LUMBAR SPINE ONLY

This agreement is in full and complete satisfaction of any and all claims by STATE ACCIDENT FUND against Second Injury Fund for the above referenced accident claim.

The Workers’ Compensation Commission (Commission) approved this agreement.  Neither party challenged the Commission’s approval.

One month after Carrier and the Fund signed the Agreement to Reimburse (Agreement), the single commissioner issued an order finding the stroke was causally related to the back injury in the action involving Gaskins, his employer, and Carrier.  On May 23, 2005, the single commissioner entered a consent order reflecting the agreement among Gaskins, his employer, and Carrier that Gaskins was entitled to $200,000 and all medical care causally related to his injuries.  The Fund was not a party to this agreement.

Nearly two years later, on September 25, 2006, Carrier requested reimbursement under the Agreement for monies paid to Gaskins for the stroke he suffered during back surgery, which Carrier asserted was causally connected to the back injury.  The Fund denied this request.  At the hearing before the single commissioner, Carrier presented evidence from the previous hearing regarding Gaskins’s treating physicians that supported its argument the stroke was causally related to the back surgery.  In addition, Carrier argued it relied upon the Fund’s past practice of including causally related injuries in those covered by its settlement agreements.  Finally, Carrier questioned the validity of the Agreement based upon the Fund’s change in practice and the fact only one commissioner, rather than a majority, approved the Agreement.[2]  The Fund argued the medical reports did not establish a sufficient causal connection between the back injury and the stroke to justify amending the Agreement to cover the stroke.  The single commissioner denied Carrier’s claim on the basis that the Agreement’s language excluded injuries other than to the lumbar spine and declined to reach the issue of causation.  The Appellate Panel affirmed the denial.

Before the circuit court, Carrier argued the statute referenced in the Agreement covered causally related conditions.  Because its refusal to amend the agreement represented a departure from the Fund’s usual practice, Carrier argued, the Fund should be estopped from refusing to amend and the issue of causal relation should be litigated before the Appellate Panel.  Furthermore, according to Carrier, the Appellate Panel committed reversible error by basing its decision upon an unpublished opinion of this court.  The Fund protested that Carrier actually sought to void the contract.  The circuit court affirmed the denial of Carrier’s claim and denied Carrier’s motion to reconsider this ruling.  This appeal followed.

STANDARD OF REVIEW

The South Carolina Administrative Procedures Act establishes the standard for judicial review of decisions of the Commission. Liberty Mut. Ins. Co. v. S.C. Second Injury Fund, 363 S.C. 612, 619, 611 S.E.2d 297, 300 (Ct. App. 2005).  In reviewing decisions of the Commission, the appellate court must ascertain “whether the circuit court properly determined whether the [A]ppellate [P]anel’s findings of fact are supported by substantial evidence in the record and whether the [Appellate P]anel’s decision is affected by an error of law.”  Baxter v. Martin Bros., Inc., 368 S.C. 510, 513, 630 S.E.2d 42, 43 (2006) (citations omitted); see also S.C. Code Ann. § 1-23-380(5) (Supp. 2009) (establishing the standard for judicial review of agency decisions).  Substantial evidence is not a mere scintilla of evidence, nor is it evidence viewed blindly from one side of the case; rather, it is “evidence which, considering the record as a whole, would allow reasonable minds to reach the conclusion the administrative agency reached in order to justify its action.” Liberty Mut., 363 S.C. at 620, 611 S.E.2d at 300.  “The possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative agency’s findings from being supported by substantial evidence.”  Id. at 620, 611 S.E.2d at 301.  Where conflicts in the evidence exist over a factual issue, the findings of the Appellate Panel are conclusive.  Id. at 620, 611 S.E.2d at 301.

LAW/ANALYSIS

I.  Coverage of Stroke under the Agreement

Carrier asserts the circuit court erred in affirming the Appellate Panel’s finding the Agreement did not cover Gaskins’s stroke as a consequence flowing from the back injury.  We disagree.

The Fund was established by statute and reimburses employers and insurance carriers after they pay certain claims.  S.C. Code Ann. § 42-7-310 (Supp. 2009).  To qualify for reimbursement, an employer or carrier must timely provide the Fund with certain information.  S.C. Code Ann. § 42-9-400(a), (c), (f), & (l) (Supp. 2009).  When a permanently disabled employee:

[I]ncurs a subsequent disability from injury by accident arising out of and in the course of his employment, resulting in compensation and medical payments liability or either, for disability that is substantially greater and is caused by aggravation of the preexisting impairment than that which would have resulted from the subsequent injury alone, the employer or his insurance carrier shall pay all awards of compensation and medical benefits provided by this title; but such employer or his insurance carrier shall be reimbursed from the Second Injury Fund . . . .

§ 42-9-400(a).  “Permanent physical impairment” refers to “any permanent condition, whether congenital or due to injury or disease, of such seriousness as to constitute a hindrance or obstacle to obtaining employment or to obtaining reemployment if the employee should become unemployed.”  S.C. Code Ann. § 42-9-400(d) (Supp. 2009).  If a claimant suffering from a permanent physical impairment most probably would not have suffered the subsequent injury “‘but for’ the presence of the prior impairment,” the Fund must reimburse an employer or carrier for properly requested compensation and medical benefits without regard to whether the liability is “substantially greater than that which would have resulted from the subsequent injury alone.”  S.C. Code Ann. § 42-9-400(g) (Supp. 2009).

The Fund “shall not be bound as to any question of law or fact” determined in an agreement, award, or adjudication to which it was not a party or of which it had less than twenty days’ notice.  S.C. Code Ann. § 42-9-400(e) (Supp. 2009).  The Fund “can enter into compromise settlements at the discretion of the director with approval of a majority of the Workers’ Compensation Commission, provided a bona fide dispute exists.”  S.C. Code Ann. § 42-9-400(j) (Supp. 2009).

Section 42-9-400(a) mandates that Carrier “shall” pay for Gaskins’s subsequent injuries and that the Fund “shall” reimburse Carrier for those payments.  However, subsection (j) of the same statute enables the Fund to enter into compromise agreements with carriers limiting the Fund’s obligations.  Here, Carrier and the Fund entered into just such a compromise agreement as to the payments Carrier made related to Gaskins’s back injury.  The terms of the Agreement clearly indicate the parties did not contemplate extending its coverage to any causally connected injuries that might have followed.  Moreover, the record indicates at the time the Agreement was made, Carrier still disputed its liability for Gaskins’s stroke.  Although Carrier knew Gaskins was seeking coverage for the stroke, the single commissioner did not find Carrier liable for medical benefits related to the stroke until a month after the Agreement was made.  At the time of the Agreement, Carrier knew the issue of its liability for the stroke remained unresolved.  Had Carrier intended to seek reimbursement for stroke expenses from the Fund under the subject Agreement, it had ample opportunity to negotiate this issue with the Fund.  However, the record does not indicate Carrier proposed adding to the Agreement any language addressing this issue or otherwise sought reimbursement from the Fund until two years later.  Consequently, the circuit court did not err in affirming the Appellate Panel’s exclusion of stroke-related expenses from the Agreement.[3]

II.  Voidness

Next, Carrier asserts the circuit court erred in failing to find the Agreement is void because no meeting of the minds occurred at the Agreement’s inception.  We disagree.

Whether the language of a contract is ambiguous is a question of law to be determined by the court from the terms of the contract as a whole.  Silver v. Aabstract Pools & Spas, Inc., 376 S.C. 585, 591, 658 S.E.2d 539, 542 (Ct. App. 2008).  In making this determination, the court must examine the entire contract and not merely whether certain phrases taken in isolation could be interpreted in more than one way.  Id.  “‘[O]ne may not, by pointing out a single sentence or clause, create an ambiguity.'”  Id.(quoting Yarborough v. Phoenix Mut. Life Ins. Co., 266 S.C. 584, 592, 225 S.E.2d 344, 348 (1976)).

“In construing and determining the effect of a written contract, the intention of the parties and the meaning are gathered primarily from the contents of the writing itself, or, as otherwise stated, from the four corners of the instrument, and when such contract is clear and unequivocal, its meaning must be determined by its contents alone; and a meaning cannot be given it other than that expressed. Hence words cannot be read into a contract which import an intent wholly unexpressed when the contract was executed.”

Id. (quoting McPherson v. J.E. Sirrine & Co., 206 S.C. 183, 204, 33 S.E.2d 501, 509 (1945)).

Carrier’s argument is essentially that the Agreement should be void because the coverage language within it contains an ambiguity.  Carrier avers it understood the coverage included both the lumbar spine and other causally related injuries because it believed the Fund covered other claimants’ causally related injuries.  The Fund argues the coverage was limited to the lumbar spine, only.  The alleged ambiguity springs not from the terms of the Agreement itself, but from Carrier’s observations of Fund behavior in matters unrelated to Gaskins’s claims.  According to Carrier, the Fund agreed to pay causally related expenses of other claimants after executing agreements similar to this one.[4]  However, no evidence indicates that Carrier was a party to any of these other agreements or that the Fund represented to Carrier it would pay for Gaskins’s stroke.  Therefore, the circuit court did not err in refusing to declare the Agreement void.

III.  Estoppel

Carrier asserts the circuit court erred in failing to find the Fund is estopped from denying reimbursement for Gaskins’s stroke.  We disagree.

Courts apply the doctrine of equitable estoppel when one party, “by his actions, conduct, words or silence which amounts to a representation, or a concealment of material facts, causes another to alter his position to his prejudice or injury.”  Rushing v. McKinney, 370 S.C. 280, 293, 633 S.E.2d 917, 924 (Ct. App. 2006) (quoting Hubbard v. Beverly, 197 S.C. 476, 480, 15 S.E.2d 740, 741 (1941)).  For equitable estoppel to apply, each party must meet certain criteria:

With regard to the party estopped, the elements of equitable estoppel are: (1) conduct amounting to a false representation or concealment of material facts, or, at least, which is calculated to convey the impression that the facts are otherwise than, and inconsistent with, those which the party subsequently attempts to assert; (2) the intention or expectation that such conduct shall be acted upon by the other party; and (3) actual or constructive knowledge of the real facts.  As related to the party claiming the estoppel, the essential elements are:  (1) lack of knowledge and of the means of knowledge of the truth as to the facts in question, (2) reliance upon the conduct of the party estopped, and (3) prejudicial change in position.

Id. at 293-94, 633 S.E.2d at 924 (internal citations and quotations omitted).  However, a court will not rescind a contract solely on the basis of unilateral mistake unless the party opposing rescission induced the mistake “by fraud, deceit, misrepresentation, concealment, or imposition . . . , without negligence on the part of the party claiming rescission, or where mistake is accompanied by very strong and extraordinary circumstances which would make it a great wrong to enforce the agreement.”  Truck South, Inc. v. Patel, 339 S.C. 40, 49, 528 S.E.2d 424, 429 (2000).

Equitable estoppel applies when each party meets three conditions.  Rushing, 370 S.C. at 293-94, 633 S.E.2d at 924.  One of those conditions requires that the party to be estopped must have exhibited misleading conduct during formation of the agreement with the intent or expectation the complaining party would rely on it.  Id.  Here, Carrier argues the Fund should be estopped from limiting reimbursement to monies paid for Gaskins’s back injury because the Fund did not notify Carrier that it ceased its practice of reimbursing for causally related injuries.  However, Carrier failed to establish the Fund made any representations with regard to reimbursement for Gaskins’s injuries other than those reflected in the Agreement.  Carrier bases its estoppel argument on the Fund’s payment of other, unrelated claims.  The details of these claims and of the Fund’s reasoning in paying them are unknown.  Furthermore, even if the Fund did suddenly change its policy, which it denies,^[5] no evidence indicates the Fund did so with the intention of inducing Carrier to rely on its past behavior in making the subject Agreement.  Rather, in this case, Carrier appears to have made a unilateral mistake in assuming the Fund would agree to cover benefits paid for the stroke under the current Agreement.  See Truck South, 339 S.C. at 49, 528 S.E.2d at 429.  Despite Carrier’s argument to the contrary, strong and extraordinary circumstances militating in favor of rescission do not exist here.  As a result, Carrier failed to establish the Fund’s actions merited equitable estoppel, and the circuit court did not err.

CONCLUSION

We find Carrier and the Fund executed an Agreement that clearly set forth the contours of their compromise agreement.  Furthermore, we find that, despite having knowledge of the expenses and ample opportunity to request their inclusion, Carrier failed to seek inclusion of the stroke expenses in the terms of the Agreement.  Therefore, we affirm the circuit court’s decision that the Agreement did not cover Carrier’s expenses flowing from Gaskins’s stroke.

Next, we find the terms of the Agreement are clear and unequivocal.  An ambiguity originating not in the terms of this Agreement but in Carrier’s observations of Fund behavior in other, unrelated matters is not a legal basis for declaring the Agreement void.  Accordingly, we affirm the circuit court’s determination that the Agreement is not void.

Finally, we find Carrier failed to prove all necessary elements of its claim for estoppel.  Consequently, we affirm the circuit court’s refusal to apply equitable estoppel to this matter.  For the foregoing reasons, the order of the circuit court is

AFFIRMED.

PIEPER and GEATHERS, JJ., and CURETON, A.J., concur. 

[1] The Fund was not a party to this proceeding.

[2] See S.C. Code Ann. § 42-9-400(j) (Supp. 2009) (authorizing the Fund to enter into settlement agreements “at the discretion of the director with approval of a majority of the Workers’ Compensation Commission”).

[3] We do not base this ruling upon the Fund’s argument that this Agreement was a “clincher.”  By definition, a clincher agreement is a final release between the employer and employee.  25A S.C. Code Ann. Reg. 67-801(E) (Supp. 2009).  A court is without jurisdiction to review a clincher agreement that includes language precluding judicial review and that has been duly approved by the Commission.  Spivey ex rel. Spivey v. Carolina Crawler, 367 S.C. 154, 159, 624 S.E.2d 435, 437 (Ct. App. 2005).  This Agreement, made between Carrier and the Fund, neither fits the definition of a clincher nor includes the necessary language depriving the court of jurisdiction.

[4] This argument appears to be more in the nature of an estoppel argument.

[5] On appeal, the Fund asserts it does not have a custom or practice of reimbursing employers and carriers for expenses not indicated in its settlement agreements.  However, the Fund admits that it agreed to amend some settlement agreements under certain circumstances.

SC Workers’ Compensation – Medical Treatment – Fee Payment Schedule

Feb 25, 2012 | Car Accidents, Personal Injury, Uncategorized, Workers' Compensation

This recent SC Supreme Court case discusses the legislative authority given to the Workers’ Compensation Commission to set and regulate medical payment fee schedules. As we all know, it is always about the money. Because fees in workers’ compensation cases are capped, many medical providers are now reconsidering whether they will treat non-emergency workers’ compensation injuries. Additionally, individual physicians are similarly re-evaluating whether they want to get involved in these cases either. Besides lower fees, physicians also may have to write opinion letters to requesting attorneys and even be available for depositions. From a workers’ compensation attorney’s perspective, we are finding fewer doctors willing to give “second opinions” and, when necessary to proving a case, deposition costs continue to rise significantly. Better make sure your attorney understands exactly which elements have to be proven and can save you unnecessary costs in your case.

At Reeves, Aiken & Hightower LLP, our lawyers are experienced workers’ compensation attorneys.  Robert J. Reeves is a former intensive care unit Registered Nurse (RN) who has actually treated patients with the same type of serious injuries he now represents in workers’ compensation cases.  Both Robert J. Reeves and Arthur K. Aiken are former insurance defense attorneys who know what to anticipate and how to prepare for trial and insurance company tactics.  During our twenty-two (22) years each of practicing law, we have handled virtually every type of workers’ compensation injury, including neck, back, shoulder, knee accidents, closed head / brain injury, herniated disks, bulging disks, diskectomy surgery, fusion procedures, arthroscopy, automobile accidents on the job, psychological / post traumatic stress, permanent and total disability claims, and wrongful death. We welcome the opportunity to sit down and personally discuss your case. Compare our attorneys’ credentials to any other firm. Then call us for a private consultation. www.rjrlaw.com

THE STATE OF SOUTH CAROLINA
In The Supreme Court

South Carolina Ambulatory Surgery Center Association; Ambulatory Surgery Center of Spartanburg, LLC; Blue Ridge Surgery Center; Low Country Orthopedics & Sports Medicine, LLC; Lowcountry Surgery Center, LLC; Midland Orthopaedics Surgery Center, LLC; Moore Orthopaedic Clinic Outpatient Surgery Center, LLC; Surgery Center at Pelham, LLC; Ocean Ambulatory Surgery Center; Upstate Surgery Center, L.L.C., Respondents/Appellants,

v.

The South Carolina Workers’ Compensation Commission, Appellant/Respondent.

Appeal From Richland County
John M. Milling, Circuit Court Judge

Opinion No.  26875
Heard February 16, 2010 – Filed September 7, 2010

AFFIRMED IN PART AND REVERSED IN PART

William H. Davidson, II and Kenneth P. Woodington, Davidson & Lindemann, of Columbia, for Appellant-Respondent.

Steven W. Hamm and C. Jo Anne Wessinger Hill, of Richardson, Plowden & Robinson, of Columbia, for Respondents-Appellants.

JUSTICE BEATTY:  In this cross-appeal, we consider the central question of whether the South Carolina Workers’ Compensation Commission (“the Commission”) was required to promulgate a new regulation in order to change the fee payment schedule for ambulatory care centers.  Because we find the Commission’s actions were specifically authorized by an extant regulation and did not implicate the requisite private right to warrant due process protections, we reverse the portion of the circuit court’s order finding that a new regulation was necessary to effectuate the Commission’s change to the fee payment schedule.  Accordingly, we affirm in part and reverse in part.

I.  FACTUAL/PROCEDURAL BACKGROUND

In this action, several ambulatory surgery centers and their trade association (collectively “Surgery Centers”) challenged the revised schedule for maximum allowable payments to outpatient medical providers approved by the Commission.

Under the South Carolina Workers’ Compensation Act, the medical fees charged claimants by physicians and hospitals are subject to the submission and approval by the Commission.  S.C. Code Ann. § 42-15-90 (1985).[1]  The purpose of fee payment schedules is for medical cost containment[2] as most employers are required to carry workers’ compensation insurance.  Id.  Medical care providers voluntarily treat workers’ compensation patients, but are not required to do so.  Although the Commission is authorized by statute to conduct a hearing to review each bill that is submitted, it has instead published schedules listing the maximum allowable payment. If the amount to be paid is under the cap, the Commission does not conduct a review.  Id. 

The Commission currently publishes three schedules of maximum allowable payments:  (1) Payments for Physicians’ Services, known as the Medical Services Provider Manual, first published in 1953; (2) Payments for Inpatient Hospital Services, first published in 1984; and (3) Payments for Outpatient Services, including those services provided by Surgery Centers, first published in 1997.

In 1997, the Commission also revised its regulations to reflect certain changes to the way the maximum allowable payment schedules would operate.  Regulation 67-1304, the regulation for hospital outpatient services and ambulatory surgical centers, states:

A.  The Commission shall develop a prospective payment system for outpatient hospital services and services rendered by ambulatory surgical centers.

B.  Until such time as the prospective payment system is operational the payments for hospital outpatient services and ambulatory surgical centers shall be set by the Commission based on a discount to the provider’s usual and customary charge.

25A S.C. Code Ann. Regs.  67-1304 (Supp. 2009) (emphasis added).

The Commission set the interim discount amount at 12.1 percent during a Commission business meeting in 1997, rather than by regulation.  As a result, all outpatient bills would be discounted 12.1 percent and payment would be made at an amount no higher than 87.9 percent of the charged amount.

In November 2004, the Commission convened its Hospital Advisory Committee (Advisory Committee) to discuss, among other things, the establishment of a new schedule of maximum allowable payments for hospital outpatient services and ambulatory surgical centers pursuant to Regulation 67-1304(A), to replace the interim discount amount adopted in 1997.  The Advisory Committee met six times over an eighteen-month period.  An additional subcommittee was formed and met twice more to fully collect and analyze data related to the schedule.[3]

On June 19, 2006, the Advisory Committee issued its report, recommending revisions to the existing schedules for payments.  The Advisory Committee recommended the maximum allowable payments be no more than 140 percent of the applicable Medicare payment, i.e., the cap would be equal to what Medicare would pay out, plus 40 percent.  Subsequently, in the course of a Full Commission business meeting, the Commission adopted the Advisory Committee’s recommended schedules with an effective start date of October 1, 2006.

On September 29, 2006, Surgery Centers filed this action challenging the Commission’s revised schedule for maximum allowable medical payments under the Administrative Procedures Act (APA)[4] and on due process grounds.  In conjunction, Surgery Centers filed a motion to restrain and enjoin the Commission pendente lite from instituting the revised schedule.  Following a hearing, a circuit court judge granted Surgery Centers’ motion for a preliminary injunction; thus, the Commission was ordered to maintain the pre-existing payment schedule pending a determination of the merits of Surgery Centers’ original suit.

The Commission appealed and filed a petition for supersedeas with the Court of Appeals to stay the pendente lite injunction.  A single judge denied this petition.  The Commission then sought full panel review of the denial of its request for supersedeas.  After the single judge’s decision was affirmed by the full panel, the Commission withdrew its appeal of the circuit court’s enjoinment of the new payment schedule.  In turn, the Court of Appeals dismissed the appeal.

Subsequently, both parties filed motions for summary judgment.  At the hearing on these motions, the parties agreed the underlying facts were not in dispute and the matter presented solely a question of law to be decided by the circuit court.

In prefacing its order, the circuit court stated the “[t]he question before the Court is whether or not the Commission followed the proper procedures established by the laws of the State of South Carolina or complied with the due process clause of the South Carolina Constitution.”  In answering this question, the circuit court granted each party’s motion for summary judgment in part and denied it in part.

Specifically, the court held section 1-23-310(3) of the South Carolina Code, defining a “contested case” that requires a hearing, was inapplicable for several reasons.[5]  First, the court noted that the APA “does not itself create the right to a hearing, but instead only provides for procedures to be followed when some other provision of law creates a right to a hearing.”  Because Surgery Centers had no right required by law, the court concluded the APA did not mandate that Surgery Centers be afforded a hearing prior to the Commission’s adoption of the revised payment schedule.  Secondly, given the Commission’s actions did not involve “rate making,” the court concluded there was no “contested case” as that term is used under the APA.

Despite this holding, the court found the Commission was required to promulgate a new regulation that would be subject to the review and approval of the General Assembly.  In reaching this conclusion, the court reasoned “the Constitution provides some requirement of notice and an opportunity to be heard in this matter, and that the Commission must adopt a regulation in accordance with the APA.”  Thus, the court found “[s]uch regulation will provide the type of due process rights required by law and to which [Surgery Centers] are entitled.”  Furthermore, the court concluded that “a specific regulation was required in order to implement changes to R. 67-1304.”  The court explained that “[s]uch regulation would contain a defined procedure whereby the methodology for these payments would be established as has been done in Regulations 67-1302 and 1303.”

The court, however, concluded that Surgery Centers “do not have any ‘property’ interest or rights in the payment schedule established by the Commission and are not entitled to any due process rights on those grounds.”  In so ruling, the court rejected Surgery Centers’ contention that a property right was established by the mere fact the revised payment schedule could potentially reduce its earnings by 4.4 million dollars.  Notwithstanding this ruling, the court found Surgery Centers would be “afforded appropriate due process protections by the adoption of a proper regulation relating to the change of the payment schedule affecting [Surgery Centers].”

Following the issuance of this order, both parties filed motions for reconsideration pursuant to Rule 59(e) of the South Carolina Rules of Civil Procedure.  With the exception of the correction of a scrivener’s error, the court denied each party’s motion in full.

Both parties appealed the circuit court’s order to the Court of Appeals.  Upon request of the parties, this Court certified the appeal from the Court of Appeals pursuant to Rule 204(b) of the South Carolina Appellate Court Rules.

II.  DISCUSSION

A.

Although Surgery Centers articulate several issues, they essentially argue the circuit court erred in concluding that they were not entitled to due process protections concerning the implementation of the Commission’s revised payment schedule.  Specifically, Surgery Centers claim the Commission’s actions constituted a “contested case” under the APA, thus, warranting the APA hearing procedures.  Additionally, Surgery Centers assert they have a substantive property interest in the payment schedule process and that, in turn, Article I, Section 22 of the South Carolina Constitution required the Commission to give notice and provide an opportunity to be heard before adopting the Advisory Committee’s recommended schedules.

In contrast, the Commission contends the circuit court erred in holding Surgery Centers had a due process right to have any revision of the payment schedules promulgated in a regulation, while at the same time holding Surgery Centers had no property interest in the payment schedule established by the Commission.

For reasons that will be more thoroughly explained, we agree with the circuit court’s findings that Surgery Centers did not establish a right to a “contested case” hearing under the APA and did not have the requisite property interest to invoke our state’s constitutional due process protections. We disagree, however, with the circuit court’s fundamental holding that the Commission was required to promulgate a new regulation in order to change the fee payment schedule.

B.

Initially, we believe the circuit court correctly held Surgery Centers did not establish the necessary independent right to a “contested case” under section 1-23-310(3) of the APA.

Significantly, Surgery Centers failed to set forth any specific argument establishing that the Commission’s actions fell within the ambit of criteria required for a “contested case.”  Although they reference the term in their brief, Surgery Centers do not identify the necessary South Carolina or Federal law that would warrant their entitlement to a “contested case” hearing.  See Triska v. Dep’t of Health & Envtl. Control, 292 S.C. 190, 355 S.E.2d 531 (1987) (recognizing that a “contested case” does not exist where there is no requirement deriving from South Carolina or Federal law that there be an opportunity for a hearing).

Furthermore, we do not believe nor do Surgery Centers expressly argue that the Commission’s actions involved “ratemaking” or “price fixing” as required by section 1-23-310(3), which defines a “contested case” as “a proceeding including, but not restricted to, ratemaking, price fixing.”  S.C. Code Ann. § 1-23-310(3) (2005).  As the circuit court correctly noted, the “Commission does not determine how much a regulated utility must charge to its customers, or conversely, how much the utility’s customers must pay.”  Moreover, unlike in public utility or regulated industry cases, there is no such statute in the instant case that clearly creates a requirement for a hearing.  Cf. S.C. Code Ann. § 58-27-870(A) (Supp. 2009) (providing that Public Service Commission “must hold a public hearing concerning the lawfulness or reasonableness of the proposed changes” in electric rates); S.C. Code Ann. § 58-9-540(A) (Supp. 2009) (stating Public Service Commission “shall . . . hold a hearing concerning the lawfulness or reasonableness of the [telephone utility] rate or rates”).

Our conclusion, however, is not dispositive of this appeal.  Instead, we must still consider whether Surgery Centers, apart from the “contested case” provision of the APA, were entitled to notice and an opportunity to be heard.

C.

Unlike the circuit court, we do not believe the Commission was required to promulgate a new regulation and provide Surgery Centers an opportunity to be heard before adopting the Advisory Committee’s recommended schedules.  Rather, we find the Commission’s actions were specifically authorized by existing Regulation 67-1304 and did not implicate the requisite private right to warrant the due process protections of Article I, Section 22 of the South Carolina Constitution.

In reaching this conclusion we must examine Regulation 67-1304 by utilizing the well-established rules of statutory construction.  “The cardinal rule of statutory construction is to ascertain and effectuate the intent of the legislature.”  Hodges v. Rainey, 341 S.C. 79, 85, 533 S.E.2d 578, 581 (2000).  If a statute’s language is plain and unambiguous, and conveys a clear and definite meaning, there is no occasion for employing rules of statutory interpretation and the Court has no right to look for or impose another meaning. Miller v. Doe, 312 S.C. 444, 447, 441 S.E.2d 319, 321 (1994).

As a threshold matter, we note that Surgery Centers have never asserted that Regulation 67-1304 was promulgated in violation of their due process rights.  Thus, this extant regulation is controlling as to the authority allocated to the Commission.

Based on our review of this regulation, the plain and unambiguous terms authorize the Commission to establish a fee payment system applicable to Surgery Centers.  Significantly, subsection A of the regulation, states “The Commission shall develop a prospective payment system.” 25A S.C. Code Ann. Regs. 67-1304 (Supp. 2009) (emphasis added).  This legislatively-endorsed mandate permits the Commission to act without the need for additional approval.

Furthermore, we find the circuit court’s reliance on section 1-23-110 of the South Carolina Code to be misplaced.  In its order, the circuit court concluded that section 1-23-110 “establishes a requirement for a public hearing for proposed regulations.”  Based on this conclusion, the circuit court determined that “a specific regulation was required in order to implement changes to R. 67-1304.”

We do not interpret section 1-23-110 as being the source for which Surgery Centers have a right to have a regulation promulgated.  Rather, the statute merely provides for the procedures that must be followed whenever a regulation is otherwise mandated.  Based on our reading of the statute, we discern nothing that establishes when a regulation is required for changes to the Commission’s fee payment schedule for ambulatory surgery centers.[6]

Finally, we hold the protections provided by our state Constitution are inapplicable in the instant case.  Under our state Constitution, due process in the administrative context has been established by Article I, Section 22.[7]  This section provides:

No person shall be finally bound by a judicial or quasi-judicial decision of an administrative agency affecting private rights except on due notice and an opportunity to be heard; nor shall he be subject to the same person for both prosecution and adjudication; nor shall he be deprived of liberty or property unless by a mode of procedure prescribed by the General Assembly, and he shall have in all such instances the right to judicial review.

S.C. Const. art. I, § 22 (emphasis added).

In explaining this provision, we have stated, “[i]n recognition of the increasing number of governmental powers delegated to administrative agencies, South Carolina Constitution article I, § 22 was added to the 1895 Constitution in 1970 ‘as a safeguard for the protection of liberty and property of citizens.'”  Ross v. Med. Univ. of S.C., 328 S.C. 51, 68, 492 S.E.2d 62, 71 (1997) (quotingFinal Report of the Committee to Make a Study of the South Carolina Constitution of 1895, p. 21 (1969)).

Although our appellate courts have not always used the term “due process rights” when discussing Article I, Section 22, we have consistently indicated that the protections provided under this section are the equivalent of those afforded by the Due Process Clause of our state and federal Constitutions.  See, e.g., Kurschner v. City of Camden Planning Comm’n, 376 S.C. 165, 171, 656 S.E.2d 346, 350 (2008) (citing Article I, Section 22 and stating “[p]rocedural due process imposes constraints on governmental decisions which deprive individuals of liberty or property interests within the meaning of the Due Process Clause of the Fifth or Fourteenth Amendment of the United States Constitution.  The fundamental requirements of due process include notice, an opportunity to be heard in a meaningful way, and judicial review.” (citation omitted));Harbit v. City of Charleston, 382 S.C. 383, 393, 675 S.E.2d 776, 781 (Ct. App. 2009) (citing Amendments V and XIV of the United States Constitution and Article I, Section 22 of the South Carolina Constitution and stating “[t]he fundamental requirements of due process under the United States Constitution and the South Carolina Constitution include notice, an opportunity to be heard in a meaningful way, and judicial review”).

Given the absence of distinction in our jurisprudence, we conclude a traditional due process analysis is required to assess whether the Commission’s actions deprived Surgery Centers of constitutionally-protected interests.

Applying this analysis, we hold Surgery Centers have not established the requisite liberty or property interest to invoke the due process protections of Article I, Section 22.  Initially, we agree with the circuit court’s conclusion that Surgery Centers have no property interest that was implicated by the Commission’s revision of the maximum allowable payment schedules.  Furthermore, Surgery Centers have not set forth any argument that the result of the Commission’s actions implicated a liberty interest. Instead, as we interpret Surgery Centers’ argument, they are primarily concerned with receiving future income based on desired future work.  The mere desire for future work, however, is not sufficient to constitute a private right.  Moreover, we emphasize that Surgery Centers’ decision to provide medical care to workers’ compensation claimants is entirely voluntary.

Accordingly, we conclude Surgery Centers have failed to establish any private right that warrants the protections provided in Article I, Section 22.  See 16C C.J.S. Constitutional Law § 1516 (2010) (“[A]n interest in property which is protected by due process arises only when there is a legitimate claim of entitlement, as created and defined by independent sources, and a person clearly must have more than an abstract need or desire for it, and the person must have more than a unilateral expectation of it.”); see also Am. Soc’y of Cataract & Refractive Surgery v. Thompson, 279 F.3d 447 (7th Cir. 2002) (holding physicians providing Medicare services had no protected property interest in statutory transition formula used to determine practice expense relative value units as a component of a Medicare physician fee schedule); Painter v. Shalala, 97 F.3d 1351 (10th Cir. 1996) (concluding physicians, who voluntarily participated in Medicare program, failed to demonstrate a legitimate property interest in having reimbursement payments calculated in a specific manner).

Our conclusion should not be interpreted as providing the Commission with “unfettered authority” to adjust the reimbursement rate.  If Surgery Centers believe that the authorized payment for services rendered is inadequate, they may invoke the due process protections afforded by the Commission. See 25A S.C. Code Ann. Regs. 67-1305 (Supp. 2009) (outlining appellate procedures for when a medical provider disagrees, based on Commission payment policy, with a charge reduction).

Furthermore, to the extent Surgery Centers claim our decision will in essence provide all state agencies with unlimited authority, we find this concern to be unfounded.  Given the analysis outlined in the opinion, we emphasize our decision is controlled by specific statutory and regulatory provisions at issue in the instant case.  Thus, our holding should not be construed as advocating for state agencies to exceed the authority granted to them by the General Assembly.  See Bazzle v. Huff, 319 S.C. 443, 445, 462 S.E.2d 273, 274 (1995) (“An administrative agency has only such powers as have been conferred by law and must act within the authority granted for that purpose.”); Captain’s Quarters Motor Inn, Inc. v. S.C. Coastal Council, 306 S.C. 488, 490, 413 S.E.2d 13, 14 (1991) (stating that “[a]s a creature of statute, a regulatory body is possessed of only those powers expressly conferred or necessarily implied for it to effectively fulfill the duties with which it is charged”).

III.  CONCLUSION

Based on the foregoing, we affirm the circuit court’s findings that Surgery Centers did not establish a right to a “contested case” hearing under the APA and did not have the requisite property interest to invoke our state’s constitutional due process protections.  We, however, reverse the circuit court’s holding that the Commission was required to promulgate a new regulation in order to change the fee payment schedule.  In light of our decision, we lift the pendente lite order enjoining the Commission from instituting the new payment schedule.

AFFIRMED IN PART AND REVERSED IN PART.

TOAL, C.J. and PLEICONES, J., concur. HEARN, J., dissenting in a separate opinion in which KITTREDGE, J., concurs.

JUSTICE HEARN:  I respectfully dissent and would affirm the decision of the circuit court.  In my opinion, the Workers Compensation Commission (Commission), when changing the reimbursement rate for ambulatory surgery centers in a manner that substantially alters the prior rate, must afford notice and an opportunity to be heard to those affected by the change.  The proper means to achieve notice and an opportunity to be heard is by requiring these revisions to be promulgated through regulations submitted to the General Assembly for its approval, and I would require the Commission to do so in this case.

Although both sides agree this issue should be decided as a matter of law, both disagree with the decision of the circuit court.  Surgery Centers argue the circuit court erred in finding they did not have the right to a contested case under Section 1-23-310(3).[8]  Conversely, the Commission contends the circuit court erred in holding Surgery Centers had a right to have any revision of the schedules promulgated in a regulation, while at the same time holding Surgery Centers had no property interest in the payment schedule established by the Commission.  Unlike the majority, I would find no error, because I believe the right to notice and a hearing claimed by Surgery Centers does not hinge on the existence of a liberty or property interest.

Section 42-3-30 of the South Carolina Code (1985) requires the Commission to promulgate regulations relating to the administration of the workers’ compensation laws of this State.  Section 1-23-110 of the South Carolina Code (2005 & Supp. 2009) provides that, before the Commission promulgates a regulation, it must publicize notice of the change, detailing an address where interested persons may submit written comments before the regulations are tendered to the General Assembly.  Thus, generally speaking, section 42-3-30 requires the Commission to promulgate regulations for matters affecting workers’ compensation programs in this state, and section 1-23-110 requires the Commission to give notice before promulgating a regulation and provide interested individuals with the opportunity to be heard.  Therefore, pursuant to the statutes detailed above, I believe the Commission is required to give notice and provide for an opportunity to be heard before adopting the new schedules contained in the recommendations of the Hospital Advisory Committee.

The Commission maintains, and the majority holds, the necessary regulation authorizing its conduct has already been promulgated in regulation 67-1304.  Following this reasoning, the Commission’s conduct in commissioning the Advisory Committee to study the situation, then subsequently adopting its recommendations, is simply fulfilling the directive of regulation 67-1304, albeit nine years later.  Additionally, the Commission cites the affidavit of its Executive Director, Gary Thibault, wherein he stated that since 1984, “in each case where the Commission has established a new or revised schedule of maximum allowable payments for services, the Commission did so by a vote of the Full Commission at a monthly Business Meeting.”  The mere fact that this practice has existed, without apparent challenge until today, is, in my opinion, not dispositive of its legitimacy.

Furthermore, “there is a basic presumption that the legislature has knowledge of previous legislation as well as of judicial decisions construing that legislation when later statutes are enacted concerning related subjects.”  Whitner v. State, 328 S.C. 1, 6, 492 S.E.2d 777, 779 (1997) (citing Berkebile v. Outen, 311 S.C. 50, 426 S.E.2d 760 (1993); 82 C.J.S. Statutes § 316, at 541-42 (1953)).  Therefore, absent specific language in regulation 67-1304, or other qualifying statute, that authorizes the Commission to act in the revision of these maximum allowable payment schedules for ambulatory surgery centers without promulgating a new regulation as provided in sections 42-3-30 and 1-23-110, this Court must presume the General Assembly intended the Commission to promulgate a regulation in this matter.  Instead, the majority reads a mandate in favor of the Commission that does not expressly exist within the plain and unambiguous terms of regulation 67-1304:  instead of adhering to the general rule that all changes in the administration of Workers’ Compensation must be accomplished through the promulgation of regulations, the majority holds that a legislative directive contained in a prior regulation absolves the Commission in perpetuity from thereafter complying with an express statute.  Importantly, although regulations authorized and adopted by the General Assembly generally have the force of law, a regulation may not alter or add to an existing statute.  See Goodman v. City of Columbia, 318 S.C. 488, 490, 458 S.E.2d 531, 532 (1995) (stating that insofar as a regulation added a requirement to a statute, the specifications set forth in the statute must prevail).  Therefore, even assuming such a “mandate” can be read into regulation 67-1304, it is invalid insofar as it could be interpreted to permit the Commission to act absent promulgation of a regulation under section 42-3-30.

Moreover, article 1, section 22 of the South Carolina Constitution, which was adopted by the General Assembly in 1970, provides:  “No person shall be finally bound by a judicial or quasi judicial decision of an administrative agency[9] affecting private rights except on due notice and an opportunity to be heard . . . and he shall have in all such instances the right to judicial review.”  Commenting on the basis for the recommended addition of section 22, the Committee authorized to make proposals to change the existing Constitution stated:

More and more governmental decisions are being made under powers delegated to administrative divisions of State Government.  In many cases, the decisions of administrative divisions are more significant than laws enacted by the General Assembly or decisions made by the courts.  The Committee agrees with many other constitutional study groups throughout the country that judicial and quasi-judicial decisions of administrative agencies should be consistent with due process of law and complete fairness to the citizen.  This provision is recommended as a safeguard for the protection of liberty and property of citizens.

Final Report of the Committee to Make a Study of the South Carolina Constitution of 1895, p. 21 (1969).

I agree with the majority that the circuit court correctly found Surgery Centers had no “property” interest that was implicated by the Commission’s revision of the maximum allowable payment schedules, in the sense that Surgery Centers had no right to a guaranteed payment schedule at the discount rate of 12.1 percent.  In order to determine the effect of Surgery Centers’ lack of a cognizable property interest on their entitlement to notice and an opportunity to be heard under article 1, section 22, it is imperative that this Court examine the source of these private rights.  While the circuit court, the parties, and the majority by acquiescence, have denominated the rights sought by Surgery Centers as “due process rights,” I believe a closer examination reveals the label to be incorrect.  In previous cases, this Court has been inconsistent in the manner in which it has labeled rights flowing from article 1, section 22 of our State Constitution.  In some cases, we have referred to the guarantees of notice and the right to be heard emanating from article 1, section 22 as “due process rights.”  See League of Women Voters of Georgetown County v. Litchfield-by-the-Sea, 305 S.C. 424, 426-27, 409 S.E.2d 378, 380 (1991) (overruled on specific grounds by Brown v. S.C. Dep’t of Health and Envtl. Control, 348 S.C. 507, 560 S.E.2d 410 (2002); Garris v. Governing Bd. of S.C. Reinsurance Facility, 333 S.C. 432, 444, 511 S.E.2d 48, 54 (1998).  In other cases, the Court has, without calling them “due process rights,” simply stated article 1, section 22 guarantees “persons the right to notice and an opportunity to be heard by an administrative agency . . . .”  Ross v. Medical Univ. of S.C., 328 S.C. 51, 68, 492 S.E.2d 62, 71 (1997).

I do not think the rights guaranteed under article 1, section 22 are the same as those classically protected under the Due Process Clause of our State and National Constitutions.  See U.S. Const. amend. XIV § 1; S.C. Const. art. V, § 5 (stating no person shall be deprived of life, liberty, or property without due process of law).  Even if the Court has referred to the rights under article 1, section 22 as “due process rights,” for claims under section 22, we have neither focused on, nor required the existence of a liberty or property interest, in the sense of a prerequisite to the Court’s analysis of claims under the Due Process Clause.  Stono River Envtl. Prot. Ass’n v. S.C. Dep’t of Health and Envtl. Control, 305 S.C. 90, 94, 406 S.E.2d 340, 342 (1991); League of Women Voters of Georgetown County, 305 S.C. at 426-27, 409 S.E.2d at 380; Ross, 328 S.C. at 68, 492 S.E.2d at 71; Garris, 333 S.C. at 444, 511 S.E.2d at 54.

As stated above, I recognize the right to notice and an opportunity to be heard are typically identifiable with rights incident to the Due Process Clause of the Fourteenth Amendment.  See Clear Channel Outdoor v. City of Myrtle Beach, 372 S.C. 230, 235, 642 S.E.2d 565, 567 (2007) (“Due process requires (1) adequate notice; (2) adequate opportunity for a hearing; (3) the right to introduce evidence; and (4) the right to confront and cross-examine witnesses.”).  However, in this case, the right of Surgery Centers to notice and an opportunity to be heard emanates, not from the Due Process Clause, but from article 1, section 22 of our State Constitution and from section 1-23-110.  Therefore, because the rights in this case do not flow from the Due Process Clause, I believe it unnecessary, as the majority has done, to employ a traditional due process analysis to determine whether Surgery Centers’ constitutionally protected interests have been deprived.  See Sloan v. S.C. Bd. of Physical Therapy Exam’rs, 370 S.C. 452, 483, 636 S.E.2d 598, 614 (2006) (stating in order for due  process rights to attach, a party must show that he was arbitrarily and capriciously deprived of a cognizable property interest rooted in state law).

Instead, I would look solely to the process through which the Commission enacted its new prospective payment system for Surgery Centers.  In my view, the Commission’s actions in forming the Advisory Committee to study, develop, and propose a new prospective payment system for outpatient hospital services and the services rendered by ambulatory surgical centers, and the Commission’s subsequent adoption of the Advisory Committee’s proposal, all without the proper notice and opportunity to be heard by Surgery Centers, constitute exactly the sort of quasi judicial decision section 22 was intended to address.

Finally, I am not persuaded that the General Assembly intended to provide the Commission with unfettered authority to adjust this reimbursement rate in perpetuity without affording the safeguards which attach to provisions promulgated within the framework of the regulatory process.  Consequently, I would vote to affirm the circuit court’s determination that Surgery Centers are entitled to the proper notice and opportunity to be heard under section 1-23-110.  Under out State’s jurisprudence, should the Commission want to establish a new prospective payment system it should do so by promulgating a new regulation subject to the participation of interested parties under sections 42-3-30 and 1-23-110, and the subsequent adoption by the General Assembly.

KITTREDGE, J., concurs.

[1]  Section 42-15-90 provides in relevant part:

Fees for attorneys and physicians and charges of hospitals for services under this title shall be subject to the approval of the Commission; but no physician or hospital shall be entitled to collect fees from an employer or insurance carrier until he has made the reports required by the Commission in connection with the case.

S.C. Code Ann. § 42-15-90 (1985).  The approval process is outlined in 25A S.C. Code Ann. Regs. 67-1305 (Supp. 2009), which provides that a fee dispute between a medical provider and an employer or insurance carrier is referred to the Commission’s medical division for final resolution.  Any policies or procedures implementing the provisions of section 42-15-90 are governed by the South Carolina Administrative Procedures Act.  S.C. Code Ann. § 42-3-185 (1985).

[2]  In terms of medical cost containment, the General Assembly has provided that medical costs should be limited to reasonable costs.  See S.C. Code Ann. § 42-15-70 (1985) (“The pecuniary liability of the employer for medical, surgical and hospital service or other treatment required, when ordered by the Commission, shall be limited to such charges as prevail in the community for similar treatment of injured persons of a like standard of living when such treatment is paid for by the injured person . . . .”).

[3]  To a limited extent, articles about the issues and the process were published in the following periodicals:  (1) the Winter 2004 and 2005 editions of Workers’ Comp Notes, a publication of the South Carolina Workers’ Compensation Educational Association; (2) the April 2005 Commission Update; and (3) the State Register that was published in April 2006.

[4]  S.C. Code Ann. §§ 1-23-10 to -660 (2005 & Supp. 2009).

[5]  Section 1-23-310(3) defines a “contested case” as “a proceeding including, but not restricted to, ratemaking, price fixing, and licensing, in which the legal rights, duties, or privileges of a party are required by law to be determined by an agency after an opportunity for hearing.”  S.C. Code Ann. § 1-23-310(3) (2005).

[6]  Although not relied upon by the circuit court, we likewise reject Surgery Centers’ contention that section 42-3-30 of the South Carolina Code required the Commission to promulgate a regulation in this instance.  Section 42-3-30 provides that the Commission “shall promulgate all regulations relating to the administration of the workers’ compensation laws of this State necessary to implement the provisions of this title and consistent therewith.”  S.C. Code Ann. § 42-3-30 (1985).  We believe this general code provision merely represents the General Assembly’s intent to identify the Commission as the sole authority for the administration of workers’ compensation law.  Given the absence of a specific statutory provision, we decline to read into section 42-3-30 a requirement that the Commission promulgate a regulation in order to change the fee payment schedule for ambulatory care centers.

[7]  In terms of our state’s general due process protection, Article I, Section 3 provides:

The privileges and immunities of citizens of this State and of the United States under this Constitution shall not be abridged, nor shall any person be deprived of life, liberty, or property without due process of law, nor shall any person be denied the equal protection of the laws.

S.C. Const. art. I, § 3.

[8] I agree with the majority that the circuit court correctly held Surgery Centers did not establish the necessary independent right to a contested case under section 1-23-310(3).  See Triska v. Dep’t of Health and Envtl. Control, 292 S.C. 190, 196-97, 355 S.E.2d 531, 534 (1987) (stating a contested case does not exist where there is no requirement deriving from South Carolina or Federal law that there be an opportunity for a hearing).  However, that ruling does not foreclose Surgery Centers’ right to notice and an opportunity to be heard on other grounds, as set forth herein.  See Stono River Envtl. Prot. Ass’n v. S.C. Dep’t of Health and Envtl. Control, 305 S.C. 90, 94, 406 S.E.2d 340, 342 (1991) (finding parties are entitled to notice and an opportunity to be heard, apart from the APA, under article 1, section 22 of our Constitution).

[9] The Commission qualifies as an agency under section 1-23-10(1) of the South Carolina Code (2005).  (providing an “‘[a]gency’ or ‘State agency’ means each state board, commission, department, executive department or officer . . . authorized by law to make regulations or to determine contested cases”).