Where did fines imposed by the Workers’ Compensation Commission go?

Plain-English summary

In 2011, the South Carolina Attorney General concluded that fines imposed by the Workers' Compensation Commission for willful disobedience of its orders were to be used for commission salaries and expenses. It read the statute directing certain fines to the state's general fund as applying to the separate Department of Insurance penalty process, not to commission-imposed sanctions.

The question arose because one provision generally assigned commission-collected fines to its operations, while another sent fines collected under an insurance-related subsection to the general fund. The AG reconciled the provisions by reading the latter subsection's placement and wording in context. It also noted the commission's longstanding practice of using its collected fines for its own operations.

Currency note

This opinion was issued in 2011. Subsequent statutory amendments, court decisions, or later
AG opinions may have changed the analysis. Treat this page as historical context, not current
legal advice. Verify current law before relying on any specific rule, deadline, or remedy
mentioned here.

Common questions

Could the commission use its own sanctions revenue for operations? A: The AG said yes for the sanctions described. The general collection provision assigned those receipts to commission salaries and expenses.

Which fines went to the general fund under the AG's reading? A: The opinion read the general-fund direction as covering fines in the Department of Insurance process addressed by the separate subsection.

Did the AG find the two funding provisions irreconcilable? A: No. It interpreted the provisions together and gave each a separate role.

Background and statutory framework

The commission chairman asked about two provisions that seemed to direct fine revenue to different places. The AG quoted S.C. CODE ANN. § 42-3-220 for commission collections and analyzed the insurance-sanctions provision by its subsection structure, word choice, and surrounding enforcement scheme.

Citations and references

The opinion quotes S.C. CODE ANN. § 42-3-220 and cites In re Hosp. Pricing Litig., King v. AnMed Health for statutory construction. It distinguishes commission sanctions from Department of Insurance penalties.

Official title

Regarding a “perceived contradiction” in Title 42 (Workers’ Compensation) of the South Carolina Code. Specifically, you note that section 42-3-220 permits the Workers’ Compensation Commission to enforce the collection of any fines or penalties provided by this Title (emphasis yours) and further that any such fines and penalties shall be used for the purpose of paying salaries and expenses of the Commission.

Requester

The Honorable T. Scott Beck, Chairman, Workers’ Compensation Commission

Source

• Landing page: https://www.scag.gov/opinions/opinions-archive/april-18-2011-2/
• Original PDF: https://www.scag.gov/wp-content/uploads/2011/05/beck-t-s-os-9229-4-18-11-perceived-contradiction-title-42-workers-compensation-commission.pdf

Original opinion text

ALANWILsoN
ATTORNEY GENF.RAL

April 18, 2011

The Honorable T. Scott Beck
Chairman, Workers' Compensation Commission
Post Office Box 1715
Columbia, SC 29202-1715
Dear Chairman Beck:
We are in receipt of your letter requesting an opinion of this Office regarding a "perceived contradiction" in Title 42 (Worker' s Compensation) of the South Carolina Code. Specifically, you note that section 42-3-220 permits the Workers' Compensation Commission to enforce the collection of any fines or penalties provided by this Title (emphasis yours) and further that any such fines and penalties shall be used for the purpose of paying salaries and expenses of the Commission. However, section 42-3-175 specifically provides that fines collected pursuant to this section (emphasis yours) must be submitted to the General Fund. You state that it is the Commission' s position that section 42-3-220 is the controlling statute for all fines and penalties collected by the Commission and that those revenues are to be used for salaries and expenses. You further note that you believe section 42-3-175(B)(3) is applicable only to Department of Insurance sanctions. However, as you acknowledge that there is room for interpretation, you request an opinion from this Office regarding the same. This opinion is based on prior opinions, case law, as well as statutory construction. Law/Analysis

S.C. CODE ANN. § 42-3-220 provides: "The Commission may, by civil action brought in its own name, enforce the collection of any fines or penalties provided by this Title and such fines and penalties shall be used for the purpose of paying salaries and expenses of the Commission." S.C. CODE ANN. § 42-3-175(A)(l ), which addresses an insurer's 1 failure, without good cause, to authorize medical treatment and/or pay benefits in violation of an order of the Commission, authorizes the Commission to "impose sanctions for willful disobedience of an order, including, but not limited to, a fine of up to five hundred dollars for each day of the violation." Subsection {A){2) mandates notification to the Department of Insurance in said situations and provides that, should the Director of the Department of Insurance detennine that there has been a violation of Title 38 (Insurance), he may impose penalties. Thereafter, subsection (B)(l) provides for the notification ofthe Director of 1

In addition to insurers, this section includes self-insured employers, self-insured funds, and adjusters.

REMBERT c. DENNIS Bun.DING • POST OFFICE Box 11549 • COLUMBIA, SC 29211- 1549 • TELEPHONE 803-734-3970 • FACSIMlLB 803-253-6283

The Honorable T. Scott Beck
Page2
April 18, 2011
the Department of Insurance and the possible revocation of an insurer's license should the Director of the Department of Insurance find nonpayment was intentional three or more times in a two year period. Subsection (B)(2) begins, "[f]or purposes of this section," and then defines what constitutes a "pattern" with regard to an insurer's failure to pay awards. (emphasis added). Finally, subsection (B)(3) mandates that "[a]ll fines collected pursuant to this section must be submitted to the general fund." (emphasis added). As we stated in a prior opinion of this Office:

"All rules of statutory construction are subservient to the one that the legislative intent must prevail if it can be reasonably discovered in the language used, and that language must be construed in light of the intended purpose of the statute." In re Hosp. Pricing Litig., King v. AnMed Health, 377 S.C. 48, 54, 659 S.E.2d 131, 134 (2008)). Furthermore, "[s]ections which are part of the same statutory law of the State must be construed together. In construing statutory language, the statute must be read as a whole and sections which are part ofthe same general statutory law must be construed together and each one given effect, if it can be done by any reasonable construction. Statutes pertaining to the same subject matter must be harmonized ifat all possible." In Interest of Doe, 318 S.C. 527, 531-32, 458 S.E.2d 556, 559 (Ct App. 1995) (citations omitted). Op. S.C. Att'y Gen. (July 11, 2008). It appears, based on the rules of statutory construction stated above, that § 42-3-l 75(B)(3) applies only to fines collected by the Department of Insurance. The placement of section B(3) under section B, as opposed to labeling it section "C," indicates legislative intent for it to apply to the subject matter addressed in section B (i.e. the repercussions from the Department of Insurance to an insurer for repeated failure to pay benefits). Although the language in § 42-3-175(B)(3) stating that it applies to "[a]ll fines collected pursuant to this section ... " may appear ambiguous as to whether it applies to§ 42-3-175 as a whole or to only to section B, the legislature also chose the word "section" in § 42-3-175(B)(2) to refer only to section B of the statute, as opposed to the statute as a whole.2 Accordingly, reading the statute as a whole, it is logical that the legislature intended § 42-3175(B)(3) to apply only to section B of the statute, which addresses actions to be taken by the Department of Insurance. Furthermore,§ 42-3-175(A)(2) provides that after the Workers' Compensation Commission has notified the Department ofInsurance of an insurer's failure to authorize and pay benefits for medical treatment, ifthe Director ofthe Department oflnsurance determines that there has been a violation of 2

§42-3-175(B)(2) states: "For purposes of this section, a pattern is established upon an insurer's failure to pay an award at least three times within a two-year period by failing to pay: ..." (emphasis added) It is plain that the tenn "section" refers to Section B of the statute because §42-3-17S(B)( I) addresses the discovery ofa pattern ofan insurer failing to pay benefits pursuant to an award. Section A of§ 42-3-175 does not address said "pattern" of conduct.

The Honorable T. Scott Beck
Page 3
April 18, 2011
Title 38, he may impose penalties, including, but not limited to, penalties pursuant to § 38-2-10. As
§42-3-175(B) simply addresses a pattern of the same behavior (an insurer failing to pay benefits pursuant to an award), clearly the Department of Insurance has the authority to impose penalties for this even more egregious conduct. Thus, the "fines" provided for in §42-3-175(8)(3) logically appear to pertain to section B for this reason as well. Moreover, as you stated in our phone conversation and in your letter, the Workers' Compensation Commission has a longstanding practice of adhering to § 42-3-220 as the controlling statute for all fines and penalties collected by the Commission and uses the revenue from said fines and penalties for the purpose of paying salaries and expenses of the Commission, as mandated by the statute. Significantly, the comparable statute in Title 38 (Insurance) provides: "All fees, taxes, penalties, and interest collected by the director or his designee under this title, unless specifically provided otherwise, must be deposited by the director or his designee in the general fund of the State." S.C. CODE ANN. § 3 8-7-170 (emphasis added). As the Legislature mandated that the fines provided for in
§ 42-3-175(B)(3) be submitted to the general fund, this is further evidence that the Legislature intended § 42-3-175 to apply to fines collected by the Department of Insurance.

Conclusion
Based on the rules of statutory construction and particularly (1) the placement ofthe section within the statute, (2) the legislature's use of the word "section" to indicate the subsection in the statute, (3) the Department ofInsurance's authority to impose fines pursuant to the statute, and (4) the language directing the fines to go to the general fund, it is the opinion of this Office that § 42-3- l 75(B)(3) applies only to section B of the statute. Accordingly, sanctions imposed by the Workers' Compensation Commission pursuant to§ 42-3-175(A)(l) fall under§ 42-3-220, and the revenue from said fines and penalties is to be used for paying the salaries and expenses ofthe Commission, as mandated by said statute.

Sincerely,

Assistant Attorney General

REVIEWED AND APPROVED BY:

~· ~

tlObertIUOOk

Deputy Attorney General