Labor, Commerce and Industry

Representative Harry F. Cato
Chairman

C. JoAnne Wessinger,
Esquire
Staff Counsel

C.B. "Sam" Sammataro
Research Assistant

Dottie N. Nidiffer
Executive Secretary

This legislation is a recommendation of the Joint Committee on Aging. As implementing agency for the Continuing Care Retirement Community Act, the Department of Consumer Affairs recommends several changes to improve its ability to effectively enforce the Act, primarily with respect to ensuring that the Continuing Care Retirement Communities (CCRCs) are financially sound. H.3191 contains these changes: (1) requiring an operator of a CCRC to obtain approval from the department before declaring or distribu ting certain dividends or similar distributions, and (2) authorizing the department to require the CCRC to file a plan to overcome potential insolvency problems. It would also exempt from the department's financial soundness review CCRCs that do not require payment of an entrance fee or other fee in return for a promise of future care.

The Continuing Care Retirement Community Act was passed by the General Assembly as Act 97 of 1989, and became effective July 1, 1991. Continuing Care Retirement Communities (CCRCs) are living arrangements which offer board, medical, nursing and other social/recreational care to residents based on a contract but do not include nursing homes and residential care facilities that are regulated by the Department of Health and Environmental Control. The act is intended to provide consumer protection for those persons who pay now for future services by requiring CCRCs to be licensed by the Department of Consumer Affairs, who must determine whether the facility is financially sound and can meet its obligations.

Signed April 4, 1995.

H.3443 repeals Section , which provides that a state bank may invest in real estate mortgages at any one time no more than an amount equal to one-half of the capital stock of a banking corporation and one half of its deposits. This maximum investment limitation was placed upon state banks during the Great Depression in an effort to promote conservative bank investments. The majority of states do not have such investment limitation on the amount a bank may invest in r eal estate mortgages at any one time.

This act deletes South Carolina's antiquated statutory provision of the Banking Code and establishes parity between state banks and national banks. H.3443 places both federally and state chartered banks operating within South Carolina on a "even playing field." Thus, the enactment of such legislation is one step toward bringing state banking laws in line with federal laws and regulations.

Signed April 6, 1995.

H.3552 requires motor vehicle manufacturers to disclose post-manufacturing damages or repairs in writing to motor vehicle dealers upon delivery of the new automobiles. For this disclosure requirement to apply, the damage occurring while in possession of the manufacturer must exceed three percent of the manufacturer's suggested retail price.

Prior to entry into a sales contract, the dealer must disclose, in writing, any damage and repair to the new vehicle to the purchaser if the cost of the damage exceeds three percent of the manufacturer's suggested retail price.

Both the manufacturer and dealer are not required to disclose to a dealer that the glass, tires, bumper, or indash equipment of or in a motor vehicle was damaged if the damaged item has been replaced with original or comparable new equipment. If disclosure is not required (damage does not exceed three percent threshold), a purchaser may not revoke or rescind a sales contract nor bring a civil action based solely upon the fact that the new motor vehicle was damaged and repaired before completion of the sale.

Similar legislation exists in twenty-eight states, including North Carolina and Georgia.

Signed May 17, 1995.

This legislation modifies the current prohibitions against granting a license or permit to sell beer, wine, and other alcoholic beverages under the Alcoholic Beverage Control Act where a previous license has been suspended or revoked.

Under current law, when a license or permit for a location is suspended or revoked, no partner or person with a financial interest of any kind in the business or premises may be issued a license or permit for the premises concerned. Nor can such license or permit be issued to a person within the third degree of kinship to the person to whom a license or permit has been issued (and subsequently revoked or suspended).

H.3567 deletes the limitation on licensure of a person within the third degree of kinship and replaces it with a one-year limitation to persons within the second degree of kinship to the person whose license or permit has been issued and subsequently suspended or revoked. This "one-year" limitation for the premises concerned begins on the date of suspension or revocation.

Became law without signature of the Governor on June 13, 1995.

H.3573 is a disclosure act authorizing the release of certain information by the Employment Security Commission and the Department of Revenue to a Public Housing Authority upon an individual's request for public housing. This legislation represents an attempt to stem abuses of the system which lead to shortages of housing and an estimated $6 million in fraud annually.

Under this legislation, local housing authorities may verify the eligibility of public housing applicants (subsidized and Title 8) by obtaining pertinent information via electronic or other cost effective means. Information may include, but is not limited to, the names of individuals receiving unemployment benefits, the amounts of benefits received and current and/or previous employment. H.3573 also stipulates that the requesting agency will be responsible for reimbursing the actual costs incur red in supplying information.

Signed June 12, 1995.

This act requires that when a motor vehicle qualifies as wreckage or salvage, the title of the vehicle must be marked with the designation of `wreckage' or `salvage'. Titles must be marked prior to transfer and in such a way as to inform transferees of the title of the exact condition of the vehicle. This requirement applies to transfers of title in South Carolina, whether the vehicle is totaled (declared a total loss), junked or salvaged. The act also applies to vehicles titled in another sta te which are transferred into South Carolina. This designation applies to all subsequent transfers of the vehicle title and may not be `washed,' or removed, once it has been placed on the title.

H.3608 also broadens the category of individuals who must file an affidavit and other information as required by the Department of Revenue to require affidavits from individuals who reconstruct a vehicle when damage is equal to or greater than 75 percent of the market value. The owner must provide an affidavit from the rebuilder as to the cost of repair.

Signed June 12, 1995.

This legislation offers clarification and additional definitions to the South Carolina Residential Landlord and Tenant Act of 1986. Licensed appraisers are added to the list of persons who may offer appraisals to a court determining the fair market rental value of property. In addition, this act provides a statutory definition of `security deposit'.

H.3733 allows the landlord to waive the `fifteen day rule', or the usual fifteen day waiting period, before constituting abandonment when the tenant has voluntarily terminated utilities and is in default in payment of rent. The act also allows the landlord to withhold any security deposit or prepaid rent if the tenant is at fault for fire or casualty damage, provided that the landlord complies with the notice requirement. Landlords are also authorized to recover costs for work done to correct t he tenant's noncompliance affecting the health and safety of the property.

Although the act prohibits the tenant from changing the locks on a dwelling without prior approval by the landlord, the tenant may recover actual damages for unreasonable noncompliance with the rental agreement on the part of the landlord.

Signed June 12, 1995.

H.3741 seeks to modify enactments by the General Assembly in 1992 by changing the name of the "Notice of Intent to Lien" to "Notice of Furnishing Labor or Materials." As background information on the process of filing or posting such notices, Act 368 of 1992 was aimed at doing away with "surprise liens." Such liens are filed by third parties when someone in a subcontract chain fails to make payment. This often results in the general contractor having to pay twice for the same labor and/or materials.

This legislation changes the name of the form from "notice of intent to lien" to "notice of furnishing labor or materials" to ease confusion and "negative effect" when received by individuals.

Signed June 12, 1995.

This legislation provides a method by which individuals may obtain prorated alcoholic beverage permits and licenses and deletes obsolete language intended to bring the biennial licensure process "on line." Licensees or permittees applying for licensure after the first day of a license period shall pay license fees in accordance with a prorated fee schedule determined by the Department of Revenue. This change mirrors the schedule already used for the proration of transportation and pos session licenses.

Proration of licenses under this legislation also applies to any biennial license of which the second year portion is not used. The amount of the license or permit fee attributable to the second year must be refunded, unless the license or permit has been canceled, relinquished, or revoked as a result of an enforcement action or a failure to adhere to the conditions of the license or permit.

Signed July 20, 1995.

H.3808 requires that taxes paid on cigarettes be paid by the distributor by means of the "reporting method" rather than the manual practice of affixing a tax stamp on every package.

The "reporting method" is currently utilized to track and collect taxes paid on soft drinks, liquor, beer, and wine in the state. Even the neighboring State of North Carolina uses the "reporting" procedure in connection with the payment of taxes on its tobacco products.

Switching to the reporting method was also needed for the following reasons:

EFFICIENCY: It is a more efficient means of tracking the transactions between the manufacturer, wholesaler, distrbutor, and retailer.

EASIER METHOD: With the reporting method and today's technology, it is easier to cross-check transactions through audits and ensure that the taxes are being paid through the distribution level.

COST SAVINGS: It will reduce the administrative costs of the distributors and the Department of Revenue. The Revenue Department no longer will be forced to maintain an inventory of stamps, nor will a lot of the "leg work" currently performed by the department be necessary. There are only two or three revenue agents who check metering machines for such items as cigarettes and video poker machines; however, the 150 sales and use tax auditors of the department would easily handle the work of cross-checking cigarette taxes; and

METER MACHINES NO LONGER BEING PRODUCED: the primary supplier of the metering devices which affix the stamp on cigarettes is discontiuing production of these types of machines.

Signed June 7, 1995.

H.3839 modernizes the law concerning the manner in which bank records may be copied, stored, and reproduced so as to allow electronic graphic imaging. This form of document storage is cost efficient and reduces the amount of storage space that must be maintained. Many financial institutions and other businesses using this mode to store records and original documents are concerned that copies or reproductions of such documents are not legally considered as an "original record" in court venues.

Enactment of this legislation eliminates any cloud of concern surrounding the reproduced document when utilized in court actions. By statute, a printed reproduction of a document stored by such image technology or other process shall be considered an original record for all purposes. Secondly, this act extends the application of the "storage and reproduction statute" to other entities: state agencies or nonprofit corporations making or holding educational loans.

Signed June 28, 1995.

H.3840 repeals the mandate to publish reports of assets and liabilities in newspapers of general circulation in the county where the bank was established. The call report furnishes only certain information taken from the audited financial statements filed with the State Board of Financial Institutions, and does not give the consumer a clear and complete picture of the bank's true financial soundness. An informal poll of the executive officers of state chartered banks revealed that customers typ ically do not question the bank's condition after reviewing the financial information published in the newspaper.

This legislation also seeks to establish parity for publication requirements between banks with a state as opposed to a federally granted charter. The "publication of call report" requirement has been eliminated at the federal level, freeing federally chartered banks from the mandate to publish their financial report in the newspaper. The continuation of this publication mandate on state chartered banks hinders competitiveness with nationally-chartered banks doing business in South Ca rolina.

Repealing the publication requirement is not detrimental to the public. Since all banks or financial institutions must continue to complete and file audited financial statements with the State Board of Financial Institutions, bank customers can obtain a copy of the audited financial statements from the branch offices of the bank; from the State Board of Financial Institutions; or from some libraries.

Became law without signature of the Governor on June 13, 1995.

H.4015 is a legislative proposal modifying the South Carolina Business Development Corporation Act so as to enhance its ability to promote economic development for small businesses throughout the State. These changes were endorsed by Secretary of Commerce Robert Royall.

This act removes that prohibition of amending the charter of a business development corporation to authorize any additional classes of capital stock. The charter may be amended by the stockholders and members upon two-thirds vote of each group to create a new class of capital stock. This act clarifies: (1) that the amount of capital stock which a member (financial institution) may acquire is not to exceed 5 percent of the capital and surplus of the member; (2) that the business development corp oration board of directors shall be elected in the manner prescribed in the charter; and (3) what document shall be used to determine if the member is in compliance with statutory thresholds establishing limits on the total amount of outstanding loans so that initially a member's limits are based upon the audited balance sheet of the member at the close of its fiscal year immediately preceding its application for membership. The percentage of capital and surplus of commercial ban ks and trust companies is increased from 2 percent to 5 percent.

Furthermore, a mechanism is provided to establish `loan limits' for the merger or consolidation of (a) two or more members, or (b) a member and other entity. The consolidated or merged organization shall elect that its total amount on loan to the corporation must be equal to the combined loan limits of the members or the loan limit of the member merging or consolidating with the other entity; determined immediately before the merger or consolidation.

A board of the business development corporation is authorized to issue shares of capital stock in the classes, series, and denominations set forth in the charter subject to the same restrictions as any other corporate business entity organized under South Carolina law. However, no stock may be issued that would impair or limit the rights of members or stockholders provided by law.

H.4015 also states that general corporation law is applicable to every business development corporation organized by the State Business Development Corporations Act; however, if any conflict should arise between the acts, the State Business Development Corporations Act shall prevail.

Signed June 7, 1995.

This measure is part of the legislative agenda of the Department of Labor, Licensing and Regulation and is based upon "unethical" problems that have arisen in connection with elevator inspectors. H.4018 prohibits a special inspector from performing elevator inspections under this chapter or regulations promulgated pursuant to it on an elevator upon which he or his employer has a current service or warranty contract.

H.4018 also incorporates two other legislative requests by LLR. One standardizes the information contained on a home or commercial inspector's form. However, the inspector can use his own form provided it contains the same information as the approved for use by the Commission. This will not require an inspector to inspect every item on the commission-approved form; nor shall it limit him from performing a home inspection whose scope goes beyond the information contained in the approved form. The inspector must indicate on the inspection report which items, if any, were not inspected.

The other proposal specifies certain information such licensees (home or commercial inspector) must use when advertising. Like other licensed professionals in this industry, the inspector must include his name, business name, address, and license number. The use of any false, misleading, unfair, or deceptive practice in any advertisement is grounds for disciplinary action.

Signed June 12, 1995.

As may be recalled, on the next to last day of the 1994 Session (June 1, 1994), provisions were passed by the House and Senate to require licensure of home inspectors and commercial inspectors by the Residential Home Builders Commission. Act 463 of 1994 (H.3742) regulates home inspectors through the Residential Builders Commission and requires commercial inspectors to be either registered or certified as an architect through the Board of Architectural Examiners; licensed as a general contractor through the Licensing Board for Contractors; or licensed or registered as a professional engineer through the State Board of Registration for Professional Engineers and Land Surveyors. Individuals seeking licensure as a home inspector would be required to pass an examination, pay the required fees, and meet "minimum qualifications and uniform criteria" as established by the Residential Builders Commission.

In order to establish "minimum qualifications and uniform criteria" and fees for licensure, the Department of Labor, Licensing and Regulation promulgated emergency regulations when Act 463 was signed into law on June 29, 1994. These temporary regulations expired in March of this year, resulting in a situation where there are no current guidelines, criteria, or regulations for licensure.

H.4042 establishes temporary minimum criteria and fees for licensure in statute which would remain in effect until permanent regulations could be established. These temporary provisions are the same as those in the expired emergency regulations. In the past, the General Assembly has enacted similar acts to establish temporary fees and qualifications for the Residential Specialty Contractors and the Real Estate Appraisers Board. H.4042 is similar legislation to provide temporary fees and qualif ications until such are established in permanent regulations.

Signed June 12, 1995.

This legislation prohibits any insurance company from surcharging or increasing premiums for an accident resulting in bodily injury damages of no more than $600 or property damages of no more than $1,000. Previously, a person's auto insurance premiums could not be increased due to a chargeable accident resulting in no more than $300 in bodily injury or $750 in property damage.

Not only does H.4188 change the dollar amounts for the first time since the 1980s, but it also provides a mechanism for these thresholds to be adjusted at the rate of inflation based on the Consumer Price Index by the Chief Insurance Commissioner. It provides a unique opportunity to provide some relief to the citizens of South Carolina by making adjustments similar to the inflationary increases in the expense of auto repairs and medical treatment. This change in threshold amounts applies only t o accidents occurring after June 30, 1995, and automatically applies to the Merit Rating Plan promulgated by the Commissioner.

Signed June 7, 1995.

S.238 is a pro-consumer act creating a "savings" standard by requiring HMOs and insurance companies to base copayments or deductibles, which are paid by the insured, on the provider rate or lesser charge negotiated with the insuring entity. To this end, individual insureds directly benefit from this lower negotiated cost for services by having a smaller out-of-pocket outlay in a copayment or deductible. Through the diligent efforts of the Committee, this le gislation was enhanced by:

giving the Insurance Commissioner the ability to approve different definitions of copayment and deductible if it would be more favorable to the enrollee;

reinstating the current "deemer" clause for HMO product approval;

allowing insurers to develop and use a trade name for advertising and correspondence, like 48 other states; and

amending the 1994 "Insurance Fraud and Immunity Act" so as to provide a reciprocal confidentiality provision, as requested by the Department of Insurance, thereby enabling the State to improve its regulation of the insurance industry and to strengthen the fight against insurance fraud.

Signed June 12, 1995.

S.532 authorizes the State Board of Registration for Professional Engineers and Land Surveyors to institute a continuing professional competency requirement for engineers and land surveyors as a condition for recertification.

Became law without signature of the Governor on May 8, 1995.

This legislation addresses the problems resultant from the deregulation of the consumer finance industry in the 1980's. S.602 addresses two classes of lenders: restricted lenders and supervised lenders. Restricted lenders operate under a rate structure set by statute. Supervised lenders, on the other hand, may charge any rate of interest on loans, so long as the rate is within the maximum posted in the lender's office and filed with the Department of Consumer Affairs. Restricted lenders were originall y intended to operate on a smaller scale than were the supervised lenders, making loans for amounts typically under $600. As a result of deregulation, however, a number of supervised lenders (deregulated) remain active in the small loan area. Because of their deregulated nature, supervised lenders can and do charge significantly higher rates of interest on small loans than do restricted lenders. S.602 addresses this and other problems associated with the consumer finance industry.

In addition to new reporting requirements, S.602 authorizes restricted and supervised lenders to contract for and receive fees for services such as credit checks. The act also prohibits renewals of loans more than once during a fifteen month interval. This change restricts the practice know as `flipping,' whereby lenders renew a loan to provide a small amount of cash to the consumer while collecting additional fees, charges and interest. Another significant change relating to supervised loans relates to the filing and posting of maximum rate schedules. Supervised lenders may not charge a rate higher than that disclosed as an annual percentage rate or one posted with the Department of Consumer Affairs. Supervised lenders also must follow the maximum rate imposed on restricted lenders when making a loan where the cash advanced does not exceed $600.

This act further clarifies `unconscionable conduct' in collecting a debt arising from a consumer credit transaction. These provisions mirror the Federal Fair Debt Collection Practices Act and specify the consumer's rights and obligations upon entering into such transactions. Also, lenders are authorized to require reasonable insurance, purchased by the borrower, for the purpose of insuring against any losses.

For the benefit of the consumer, S.602 requires that the Administrator of the Department of Consumer Affairs develop a pamphlet explaining the rights and responsibilities of consumers who obtain consumer loans from either supervised or restricted lenders. Finally, this legislation sets guidelines for mandatory review of the consumer finance industry for studying the impact of this act and any subsequent amendments to the consumer finance laws.

Became law without signature of the Governor on June 13, 1995.

S.679 clarifies that the authority of the Athletic Commission does encompass the regulation of "combative sports in this State" which include, but are not limited to, boxing, wrestling, and sparring events, exhibitions, contests, and performances whether in person or via closed circuit television in this State. Combative sports means a contest in which the participants are disposed to fight before an audience on a platform, a pad, or in an area surrounded by ro pes or other markings.

However, there are exemptions from regulation by the State Athletic Commission:

schools or organizations that fall under the auspices of the United States Olympic Committee, USA Boxing - South Carolina Association, Inc., sponsored events;

businesses that offer instruction in the combative sports; and

associations or other entities determined by the Commission after investigation to have health and saefty rules sufficient to meet the requirements of this article may be exempt by the Commission from its regulations.

Contests which involve more than one combative sport or combative sports using weapons are prohibited in South Carolina. Anyone knowingly violating this provision is guilty of a misdemeanor and, upon conviction, must be fined no more than $1,000, or imprisoned for not more than two years, or both.

The purpose of this act was to prohibit certain combative sports events, which are commonly referred to as the "ultimate warrior". According to the Department of Labor, Licensing and Regulation (LLR), there have only been about eight or nine of these events held nationwide, but only in the handful of states which do not specifically prohibit such events.

Became law without signature of the Governor on June 13, 1995.

SIGNIFICANT PENDING LEGISLATION
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Backed by Mothers Against Drunk Driving (MADD) and other civic organizations, Representative Fair sponsored this legislation in an attempt to curb underage drinking. Since beer by the keg is the most economical way for underage drinkers to consume alcohol, keg beer has become their beverage of choice. This bill is an attempt to make attaining kegs more difficult for underage consumers and their suppliers.

H.3372 provides for the regulation of retail sale of beer by the keg in two significant ways: (1) it establishes a system of registering kegs by number at the manufacturer's level, and (2) it implements a deposit and forfeiture provision for returning kegs at retail outlets; thus providing a mechanism for law enforcement to track individuals who provide kegs to underage drinkers. Additionally, noncompliance constitutes grounds for revocation or suspension of a retailer's permit to sell such bev erages. H.3372 only applies to retail sale of beer by the keg, and the cost of compliance will be reflected in the consumer's purchase price.

Citizen advocacy groups and industry representatives have been very vocal in support of and in opposition to this bill. Citizen groups argue that passage of this initiative is a positive step toward limiting the availability of `cheap', and therefore easily accessible, alcoholic beverages for underage consumers. On the other hand, industry representatives counter that H.3372 would place another undue burden on an already heavily regulated market.

Status: Pending in the House Labor, Commerce and Industry Committee.

H.3653 provides that the personal motor vehicle insurance coverage of a car renter is the primary coverage for any liability or collision claim arising from the operation of a motor vehicle rented under a written rental agreement where the person renting the car agrees therein to provide such coverage. Thus, this legislation contractually places primary liability to the car renter without relieving the car rental company from secondary liability.

No claim may be made against the coverage available for the rental vehicle by the rental vehicle company until the limits of the motor vehicle insurance coverage provided by the renter for the vehicle are exhausted.

Currently, when renting a car, the rental company may charge the renter for a collision damage waiver which relieves him from some or all liability for damages to the rental vehicle. Personal auto insurance and certain credit cards often provide coverage for damages to rental vehicles.

Status: Pending on the House Contested Calendar.

This bill revises the requirements for building codes and the manner in which counties and municipalities adopt and enforce mandatory building codes. Currently, a number of counties and municipalities in South Carolina do not have building codes. Nor have these governing entities been required by the State to do so -- only authorized to adopt some building codes.

H.3687 also revises the membership of the Building Codes Council and creates building codes enforcement officers who are registered with the Building Codes Council. A `building codes enforcement officer' means a person employed by a public entity responsible in whole or part for the inspection or enforcement of applicable building code requirements within the jurisdiction of the employer.

Status: Pending in the House Labor, Commerce and Industry Committee.

The purpose of H.3729 is to statutorily list certain express minimum warranties which must be given to the new homebuyer when the builder and/or seller disclaims implied warranties including, but not limited to, implied warranties of habitability and fitness.

The builder may provide an express written warranty to the initial purchaser which provides, at a minimum:

1. for one year the home must be free from defects due to noncompliance with building standards and/or defects caused by faulty workmanship or defective parts;

2. for two years the new home must be free from defects caused by faulty installation of plumbing, electrical, heating, cooling and ventilating systems;

3. for ten years the home must be free from major structural defects.

Furthermore, the builder may disclaim all implied warranties if he provides the minimum warranties in the written contract with the initial purchaser. Any disputed claims can be settled by binding arbitration, if the warranty or insurance policy so provides, as well as set out claims procedures for the homebuyer to receive on actual damages incurred. Any action or arbitration must be initiated within one year after the expiration date of the warranty period for which a defect is claimed. Other wise, such action or arbitration is permanently barred.

Status: Pending in the House Labor, Commerce and Industry Committee.

A continuing legislative challenge is making changes in the state's workers' compensation law which will help to lower the rising costs of the workers' compensation system yet ensure that injured workers are adequately reimbursed for work-place injuries. The cost of workers' compensation insurance is a two-fold vital concern for the members of the General Assembly. Not only does it provide benefits to South Carolina citizens injured on the job, but also its cost is a concern for the growing bus iness environment of the State. To this end, workers' compensation reform ranked number nine (9) on the list of priorities for the General Assembly this session.

After considerable debate, the House passed four Labor, Commerce and Industry Committee bills by adopting several workers' compensation reforms designed to reduce costs. These legislative measures are pending in the Senate Judiciary Committee, in a subcommittee chaired by Senator Ed Saleeby.

1. H.3835 - Administrative Changes One of these House-passed bills provide three (3) administrative changes in the workers' compensation system which are supported by the SC Workers' Compensation Commission and others. In fact, these measures are aimed at reducing administrative costs to the Commission, the employer and the insurance carrier.

   It proposes a new method (simplification) of calculating average weekly wage by taking the total wages paid to the injured employee for the preceding four quarters and dividing this total wage figure by the lesser of 52 or actual number of weeks paid. Changing the calculation method is a projected cost saving measure. Employers and insurance carriers should benefit from the reduction and simplification of the current requirements to compute and verify average weekly wage; thereby, reducing over head costs.

   Another provision of H.3835 adds a protection for the injured worker and his credit history. The bill specifically prohibits a health care provider from actively pursuing collection procedures against workers' compensation claimants until their claims are finally adjudicated. This does not prohibit the provider from initiating collection procedures against, or billing, a workers' compensation insurance carrier or self-insured employer. However, it does requires timely payment within 30 days of the payment request by the provider for medical services unless the Commission has received a request to review the medical bill.

   Lastly, employers are not required to send a report of an injury which requires minimal medical attention and which does not cause more than one lost workday or permanency. However, the employer must maintain a record of the injury and pay directly the incurred medical cost. All other injuries must be reported in writing to the Commission. Also, it allows reporting of accidents by electronic means.

   Again, this is a projected cost saving measure. The insurance industry and the Commission could both recognize savings by reducing paperwork through reporting accidents by electronic data interchange. Certain small claims would be consolidated for annual reporting and employers would be given the option of paying for certain first aid cases without reporting them to their insurance carrier.

2. H.3836 - Work Related Stress: There is legislation, which for the first time, provides clear statutory language defining the work related stress claims and the benefits available to the employee. Although there is no statutory provision regarding workers' compensation benefits for compensable stress claims, court cases have developed and provided guidelines regarding compensation in the absence of a code provision.

   This bill sets forth a statutory definition for work-related stress to create uniformity and establish a standard patterned after a recent Supreme Court Case on the issue, Stokes vs. First National Bank, 410 S.E.2d ). Thus, work related stress not accompanied by physical injury would not be compensable if its occurrence was incidental to ordinary personnel actions (such as work evaluations, demotions, or terminations) unless the stressful employment conditions caus ing the mental injury are extraordinary and unusual in comparison to normal working conditions.

   Through the establishment of a code provision defining under what conditions stress claims may be awarded, litigation (costs) associated with stress claims for both employees and employers should be reduced.

3. H.3837 - The "Start/Stop Payment" Bill: Under this provision, an employer may start temporary total disability payments immediately when an employee is out of work for eight days and may continue payments for up to 120 days without waiver of any grounds the employer may have for denying the claim discovered in a good faith investigation.

   H.3837 also provides a manner for terminating or suspending benefit payments for certain reasons during this 120 day period (return to work, released by physician and refuses to return to limited duty work). However, an employee is ensured to right to request a priority hearing to have temporary compensation reinstated after termination.

   An insurance carrier or employer failing to comply with these provisions shall be penalized 25 percent of the benefits withheld, which must paid to the employee.

4. H.3838 - "Back Injury" Awards: Another area of change in the existing workers' compensation statutes is the law which deems that a 50 percent injury to the back to be a total disability. It has been argued that this automatic presumption leads claimants to receive more compensation than deserved.

   H.3838 provides that the presumption of total and permanent disability due to a 50 percent or more loss of use of the back may be rebutted by a preponderance of the evidence to the contrary.

   The Governor's Insurance Task Force for Workers' Compensation recommended that the presumption of total disability to injured employees suffering a 50 percent loss of use of the back be removed. Likewise, in 1988, the Legislative Audit Council recommended the removal of this nonrebuttable presumption.

This bill updates references to the State energy code, provides more options and greater flexibility to builders in meeting code standards, and deletes a waiver provision that has the effect of negating insulation standards for ceilings and floors and putting South Carolina out of compliance with national standards.

This bill has the support of the Homebuilders Association of South Carolina; the State Energy Office; the Building Codes Council; and the North American Insulation Manufacturers' Association.

Status: Pending in the House Labor, Commerce and Industry Committee.

The purpose of this bill is to establish a system of notification to the utility company of work to be performed within certain distances of its high voltage lines. H.3959, commonly referred to as the "crane" bill, requires that a written agreement setting out agreed-upon safety arrangements be entered into by the utility and contractor performing the work. If a contractor fails to comply with this act, he is subject to a civil penalty of up to $1,000 payable to the General Fund.

Unlike today, the contractor -- not the utility -- is liable for any personal injury or property damage occurring as a result of work done in violation of this act. Furthermore, the contractor must indemnify the utility for any claims and costs incurred by it from any claim against the utility as a result of a "contact" case. Before a utility company is liable for damages in a contact case, negligence on the part of the utility must be proved. For example, the power line was improper ly installed in violation of the National Electric Safety Code (line is too low). Yet, this bill as introduced will hold all others -- not the utility company -- strictly liable for any injury or damage occurring within the vicinity of the high voltage lines, including the negligence of the utility itself.

There are approximately 300 fatalities a year from contact with a power line; however, the incidence of losing a body part is higher than being killed because the high voltage is burns off the body part. Current federal regulations prohibit a worker or machinery to be within 10 feet of an overhead power line. The worse offenders are the Department of Transportation and the municipalities. They are the ones having equipment parked under a power line that is easily touchable within ten feet.

Status: Pending in the House Labor, Commerce and Industry Committee.

H.4104 provides that a county or municipality, but not both, may by ordinance impose a fee on the transfer of real property. If the real property is located within the municipal limits, the fee may be imposed by the municipality. If the real property is located in an unincorporated area, the fee may be imposed by the county. This provision does not apply to the purchase of timber, even if such transfers are recorded.

The transfer fee may not exceed one-fourth of one percent of the purchase price. The county or municipal ordinance imposing the property transfer fee must specify the dedicated purpose for which the fee shall be specifically allocated.

Additionally, this bill will eliminate a loophole allowing a `dual system' of collection whereby counties and municipalities collect separate real estate transfer fees. This is particularly true in the low country coastal regions such as Beaufort County.

A companion bill, S.320 sponsored by Senator Cork, has been pending on the Senate Calendar awaiting second reading since April 19, 1995.

Status: Pending in the House Labor, Commerce and Industry Committee.

H.4267 requires a workers' compensation insurance carrier to offer, as a part of the policy or as an optional endorsement to the policy, deductibles optional to the employer (policyholder) for workers' compensation benefits beginning July 1, 1996. Deductible amounts offered must be disclosed fully to the prospective policyholder in writing and can be in the amount of $100, $200, $300, $400, $500, or increments of $500 up to a maximum of $2,500 for each compensable claim. However, the employer ( policyholder) exercising the deductible option can choose only one deductible amount.

If the employer exercises the option and chooses a deductible, the insured employer is liable for the amount of the deductible for benefits paid for each compensable claim of work injury suffered by an employee. The insurer pays all or part of the deductible amount, whichever is applicable to a compensable claim, to the injured worker or provider entitled to the benefits conferred by workers' compensation laws. Then, the insurer seeks reimbursement from the insured employer for the applicable deductible amount.

This is a legislative measure which has been adopted in other states. Its purpose is to provide the option to the employer to pay for small claims in exchange for a lower workers' compensation insurance premium. The employer would choose or decide which deductible amount would be affordable as an "out of pocket expense".

H.4267 does not reduce or alter the amount of workers' compensation benefits which an injured worker would be entitled to receive. Nor does this "deductible option" apply to approved self-insurers or approved group self-insured funds.

A Senate companion bill, S.195 by Senator Gregory, is pending in the Senate Banking and Insurance Committee.

Status: Pending in the House Labor, Commerce and Industry Committee.

S.505 prohibits a contractor operating in the State for money without first being licensed by the State Licensing Board for Contractors from initiating any action at law or in equity to enforce the provisions of a construction contract which he entered into in violation of state law¹. [¹Operating without a license when such person or contractor was required to have a contractors' license.] This prohibition also encompasses any actions to secure or collect any s um due under the contract if the contracting party who is subject to the action brought by the contractor had no knowledge at the time of entering into the construction contract that the contractor was not licensed.

This legislation would not apply to a residential contractor, but to: (a) a person engaged in the business of general contracting for a fee and who undertakes a project in the amount of $30,000 or more; or (b) persons engaged in the business of mechanical contracting for a fee and who undertakes a project in the amount of $17,500 or more. Furthermore, it applies to those actions commenced after the effective date of this act, which is upon approval by the Governor.

Status: Pending in the House Labor, Commerce and Industry Committee.

In response to the public's outcry for automobile insurance reform, the Senate Banking and Insurance Committee formulated a legislative initiative to alter the current vehicle insurance system. Similar proposals were studied in the House and one of these bills, H.3827, sponsored by Representative Cato, is pending on the House Contested Calendar.

In addition to many technical changes in the insurance laws, S.628 eliminates the current `two' rate<sup>2</sup> system by January 1, 1996. [<sup>2</sup>Under current law, the `base rate' is a rate by coverage calculated solely upon the experience generate by the risk for each class and territory retained by the insurer in its voluntary book of business and which must not include experience generated by risks ceded or assumed from the Reinsurance Facility. The `objective standards rate' is 25% above the base rate. An applicant must be written at the base rate unless certain factors or conditions exist. For example, 3 or more driving violations within 36 months; 2 or more chargeable accidents within 36 months; obtained auto insurance coverage through material misrepresentation within the past 36 months; etc. See S.C. Code Sections and .] The current rating system is replaced with rating tiers in the voluntary market and a uniform facility rate for business ced ed to the Reinsurance Facility. The premium for drivers ceded to the facility is the state uniform rate or the company filed rate approved for use by the insurer, whichever is greater.

Member companies of an affiliated group of automobile insurers, commonly referred to as `pup companies', are granted the ability to use different filed rates (and rating plans) for auto insurance coverages which they are mandated by law to write. Currently, member companies cannot use different rates when underwriting mandated auto insurance coverages; however, such practice is allowed in other lines of property and casualty insurance.

There is a `partial' repeal of the mandate that insurance companies write physical damage coverages (comprehensive and collision) for any insurer. The mandate to write physical damage coverage in the voluntary market is repealed; however, designated agents must write such coverage for all persons in the Reinsurance Facility who request coverage. If an company underwrites physical damage coverage for a driver (although not mandated to do so), all physical damage coverage ceded to the facility mu st be at the self-sustaining "facility physical damage rate." Beginning on January 1, 1997, physical damage coverage on renewals must be ceded at the (self-sustaining) facility physical damage rate. Currently, there are coverages which are offered and underwritten by insurance companies that they are not required by the State to write.

Distinctions between policyholders with respect to rates, coverages, claims, or other services based upon those provided in the facility rate plans are now allowed. Currently, an insurer can make such distinctions solely based the classification of risks and territories promulgated by the department. S.628 removes the prohibition for an insurer to provide to agents, directly or indirectly, orally or in writing, any listing of classes or types of automobile insurance risks which it considers ne cessary to reinsure in the Facility.

For fiscal year , the recoupment fee charged to drivers is frozen at the amounts charged for the period of July 1, 1994 through June 30, 1995. Thus, attempting to avert the increases realized by the driving public on July 1, 1995. The increased recoupment fees effective on July 1, 1995, which are attributable to increased losses of approximately $40 million in the Reinsurance Facility, would not have take effect and would have been "unrecouped". However, these unrecouped los ses would have been spread out evenly over a three year period beginning July 1, 1996, for collection, in addition to any annual facility losses. As you may recall, the increased losses attributable to "Hugo" where recouped over a three year period.

In addition to calling for the election of the Chief Insurance Commissioner by the public in the November 1996 general election, S.628 requires the Reinsurance Facility governing board to add additional qualified designated agents that do not have to meet any of the criteria set forth that all other designated agents where required to meet. In making these additional designations, the facility governing board must survey the representation of minorities among designated agents in each area of th e State and where minorities are underrepresented with respect to the population of the area, shall use the designation of these additional agents to make up for the disparity. Also, designated agents are have direct or indirect access to the voluntary market.

Other pending automobile insurance measures being studied by the House Labor, Commerce and Industry Committee, call for the repeal of the mandate to write physical damage coverages (comprehensive and collision); the abolishment of the compulsory insurance system; and mandatory driver education.

Status: Pending in the House Labor, Commerce and Industry Committee.