Firing an Employee for Alleging a Fraudulent Workers’ Compensation Claim
Attorney: Stephanie Lamb Pugh
The South Carolina Court of Appeals recently handed down the decision of Crosby v. Prysmian Communications Cables and Systems USA, 397 S.C. 101, 723 S.E.2d 813 (Ct. App. 2012), which could play a significant impact on an employer’s decision to fire an employee for filing a fraudulent workers’ compensation claim. In Crosby, an employee alleged she sustained an injury while in the course and scope of her employment. The employer and its carrier denied the claim, and the employer fired the employee for filing a fraudulent claim. The case proceeded to a hearing, and the South Carolina Workers’ Compensation Commission held that the claimant had sustained a compensable injury.
The injured employee also filed a civil claim for retaliatory discharge against the employer. The employer asserted, as an affirmative defense, that the employee had filed a fraudulent workers’ compensation claim. The court of appeals held that the Commission’s decision regarding the fact that the claimant had sustained a compensable injury had preclusive effect in the civil suit. Thus, the employer could not assert as a defense, in the civil retaliatory discharge suit, that the employee had fraudulently filed a workers’ compensation claim.
This case is important to employers because it stands for the proposition that if an employer fires an employee for filing a fraudulent workers’ compensation claim without being 100% positive that the claim is in fact fraudulent, that it could be setting itself up for a retaliatory discharge suit. In order to establish such a claim, an employee only has to establish the following elements, pursuant to South Carolina Code Annotated § 41-1-80: (1) institution of a workers' compensation proceeding; (2) discharge or demotion; and (3) a causal connection between the first two elements. Thus, in most cases, if an employer fires an employee because the employee has filed a fraudulent workers’ compensation claim, and the Commission ultimately finds that the claim was not fraudulent, an employee could very easily have a retaliatory discharge claim against the employer, as well.
Crosby makes clear that employers should tread very carefully when firing employees for filing false workers’ compensation claims. The risks could far outweigh the benefits, until such time as the Commission and/or the appellate courts have made an ultimate finding regarding the compensability of the claim.