by: Andrew Smith
CHARLESTON, SC – On July 10, 2024, South Carolina’s Supreme Court effectively eliminated an affirmative defense which has been used to defend claims for more than fifty years—fraud in the application of employment.
Imagine this scenario: a prospective employee applies for a job as a material handler. The job description makes clear that the physical requirements of the job include lifting up to fifty pounds. The prospective employee completes a pre-employment questionnaire in which he denies any prior back injuries or permanent physical restrictions. The employer, relying mostly on the answers in the questionnaire, hires the employee to perform the physically demanding job. The employee then injures his low back during the second day on the job while lifting a fifty-pound pallet. However, unbeknownst to the employer and shortly before he applied for the job, a spine specialist had issued the Claimant permanent physical restrictions of no lifting over ten pounds as the result of a prior workers’ compensation accident involving his back. The employee was aware of his restrictions when he completed the questionnaire. The employee—now a claimant—files a claim seeking benefits for a back injury.
Under the 1973 case Cooper v. McDevitt Street & Company, employers and carriers had been able to assert the defense of fraud in the application of employment in this scenario. In sum, this defense was a bar to compensability where the employee intentionally makes a false representation to his physical condition in a job application, the employer relies in substantial part on his misrepresentation in the hiring of the employee, and there is a causal connection between the false representation and the injury. It is the employer/carrier’s burden to prove these three elements. In recent years, however, South Carolina courts chipped away at the effectiveness of this defense.
The death knell for this defense came in July 2024 with the Supreme Court’s decision in Brailey v. Michelin North America, Inc. There, the Court noted that federal law—namely the ADA—prohibits an employer from asking about prior impairments until after the decision is made to hire the employee. Further, the Court noted that the South Carolina Workers’ Compensation Act does not address fraud in the application. Instead, the defense is a court-made doctrine—which doctrine the Court said is now out of date. The Court was clear that it does not condone fraud in workers’ compensation claims, but the defense as set forth in Cooper is flawed as a matter of law. The Court ultimately found that the employer/carrier in the Brailey case had not proven the third element of the Cooper test. Still, the Court urged that the best way to address fraud in the application of employment is for the South Carolina legislature to resolve the issue by statute.
So what does this mean for stakeholders? First, it is critical that employers consult with employment counsel when utilizing post-offer medical questionnaires to ensure the questionnaires comply with local, state, and federal law. Second, employers and carriers should consult with workers’ compensation defense counsel as soon as fraud is suspected in a claim. Finally, it is important for stakeholders in South Carolina to contact their representatives in the General Assembly to ensure that the legislature addresses this scenario in order to provide protections from fraud for businesses and stakeholders of all sizes.
Andrew T. Smith is a workers’ compensation defense attorney in the Charleston, South Carolina office of Willson Jones Carter & Baxley, P.A. Andrew handles a wide variety of workers’ compensation claims. He can be reached at [email protected].