Feb 13 2019

South Carolina lawmakers are debating legislation that, if passed, would greatly affect liability burdens on government-run healthcare providers as well as affecting the limits recoverable against charitable hospitals and healthcare providers.

On January 8, 2019, the South Carolina Senate introduced Bill No. S0007 which proposes to increase the limits of liability under the South Carolina Tort Claims Act, S.C. Code Ann. §15-78-120(a)(1)-(2).

The bill, if passed, will increase the amounts recoverable against a governmental entity for torts committed by non-physician and non-dentist employees over threefold. This means that in cases involving the torts committed by healthcare professionals, such as nurses and Advanced Practice Providers (“APPs”), a plaintiff’s potential recovery will increase significantly. Proponents of the bill contend that the increases address woeful disparities caused by the current limits on recovery under the SCTCA. The South Carolina Senate Judiciary Committee uniformly agreed that the limits on liability under the SCTCA should be raised and that the government “should have an interest in making any injured person whole.” Commentators to the bill testified that government entities “never pay the cap because they don’t have to.” Senator Dick Harpootlian (D) noted: “the question is balancing increasing this to something that would compensate folks adequately, at the same time this is the State of South Carolina’s active insurance company.” He further urged evaluating “an exception for gross negligence.” However, a number of senators are concerned that raising the limits will cause insurance premiums to skyrocket for state and local agencies, resulting in increased taxes.

The proposed amendments to the SCTCA will increase the limits of liability as follows (with some exceptions) :

(1) From $300,000 to a sum not exceeding $1 million in any action or claim because of loss arising from a single occurrence regardless of the number of agencies or political subdivisions involved.

(2) The total sum recovered arising out of a single occurrence will increase from $600,000 to $2

million regardless of the number of agencies or political subdivisions or claims or actions involved.

The amendments further require the adjustment of all liability amounts annually in accordance with the Consumer Price Index for all Urban Consumers (CPI-U), South Region, published by the U.S. Department of Labor. According to the amendment, the South Carolina Insurance Reserve Fund, which is the state owned insurance reserve fund, will be responsible for calculating this annual adjustment, effective on July first of each year. The revised limitation amount that can be recovered will be published on the Insurance Reserve Fund’s website.

Notably, the annual adjustments apply to all limits of liability set forth in the SCTCA, including the amounts recoverable against a governmental entity as a result of a tort caused by any licensed physician or dentist employed by a governmental entity. Historically, the amount recoverable against a governmental entity as a result of torts committed by licensed physicians or dentists employed by a governmental entity is limited to $1.2 million. This amount has never been subject to inflation. The new amendments will make this amount subject to inflation and upward adjustment annually. During the State Senate hearing on the bill, the Committee entertained the possibility of expanding the limit applicable to physicians and dentists to other “medical professionals…to cover a broader range” such that the limits be expanded to apply to Advanced Practice Providers, such as Nurse Practitioners and Physician Assistants. Senator Malloy, the Chairman of the Committee, vowed to examine that possibility. The SCTCA prohibits the recovery of punitive damages against a governmental entity and the proposed bill will not change that prohibition.

These amendments not only affect governmental entities subject to the SCTCA. For instance, the Solicitation of Charitable Funds Act, S.C. Code Ann. 33-56-180, incorporates the limits of liability under the SCTCA and limits the recovery against a charitable organization, as a result of injury or death caused by the tortious act or omission of an employee, to the actual damages sustained in an amount not to exceed the limitations on liability in the SCTCA. If these amendments become law, South Carolina charities also could face a far greater liability burden.

Jury verdicts against governmental entity healthcare providers have historically been reduced if the verdict exceeded the amount recoverable under the SCTCA. Further, governmental entity healthcare providers, historically, were incentivized to delineate between the acts and omissions of non-physician and non-dentist healthcare providers to take advantage of the lower limits on liability. The limits also served as a deterrent for plaintiffs in bringing costly malpractice suits against governmental entities and charitable organizations because the cost of pursuing the case often far exceeded the recovery available under the SCTCA arising from the torts of non-physician health care providers.

The proposed amendments will most certainly change this. If these amendments become law, plaintiffs would now be more encouraged to pursue lawsuits that may not have otherwise been brought because it was simply not cost-effective to do so.

The Bill, sponsored by Senators Malloy, Climer, Goldfinch, Talley, Harpootlian and Kimpson, proposes that the amendments to the limits on liability under the SCTCA will take effect July 1, 2020, for causes of action with a date of loss arising on or after that date. Senator Malloy indicated that the legislature first plans to pass a bipartisan bill addressing the limits on liability. After that is accomplished, the Committee plans “to have another bill to deal with the exceptions.” Senator Goldfinch agreed that the exceptions, including the gross negligence exception need to be addressed. He professed “a life here is just as important as a life in North Carolina.” Senator Goldfinch continued: “these Tort Claims Act cases are just a problem…justices and attorneys don’t know how to deal with the Tort Claims Act…we need some real clarity…eliminating the gross negligence exceptions within the exceptions are a big problem…”

Debate on Bill No. S0007 is ongoing, so parties with concerns about its impact are encouraged to contact their state senator’s office. For more information on legal issues surrounding the South Carolina Tort Claims Act, please contact the authors of this alert, or the Womble Bond Dickinson attorney with whom you usually work.