By The Honorable Cynthia C. Dooley, J. Keith Roberts, Esquire, and Eric L. Baxley, Esquire*
In South Carolina, the question of whether fraud in the application for employment remains a valid defense has gained renewed attention. A recent State Supreme Court case and a call for a legislative fix underscore a shift in how fraud can be pled as an affirmative defense in South Carolina.
UNDERSTANDING AFFIRMATIVE DEFENSES
An affirmative defense is an assertion of facts and arguments that, if true, can defeat the plaintiff’s or prosecution’s claim, even if all the allegations in the complaint are true.[1] In South Carolina, Rule 8(c) of the South Carolina Rules of Civil Procedure (SCRPC) outlines various defenses that a party may assert, including fraud and misrepresentation. The burden of proof for affirmative defenses rest with the party asserting it.[2]
Under South Carolina’s Workers’ Compensation Act, specific statutory defenses include no compensation is payable if an injury results from the employee’s intoxication or willful intent to injure themselves or others[3], notice of injury must be provided within 90 days[4], and claims must be filed within two years of the accident.[5]
South Carolina courts have long recognized other affirmative defenses available at common law, including fraud in the application for employment.
FRAUD IN APPLICATION FOR EMPLOYMENT
Fraud in the application occurs when an employee knowingly provides false information as to their physical condition on their employment application. Historically, this type of fraud could bar workers’ compensation benefits if certain conditions were met. In Cooper v. McDevitt Street & Co., the South Carolina Supreme Court established that for an employer to bar compensation on the grounds of fraud, it must be proven that the employee knowingly made false representations about their physical condition, the employer relied on these misrepresentations in hiring, and this reliance was a substantial factor in the hiring decision.[6]
This case has been cited so frequently as an affirmative defense that practitioners commonly refer to it as the “McDevitt Street Defense”. However, the effectiveness of Cooper as an affirmative defense has been called into question by our Supreme Court. In Brailey v. Michelin North America, the Supreme Court of South Carolina addressed whether an employee’s false representation about a back impairment could be used to deny workers’ compensation benefits.[7] The Court stated that an employer could not use such a misrepresentation as a basis to deny benefits because under the Americans with Disabilities Act (ADA) the employer cannot make medical examinations or inquiries as part of the employment application. Further, the Court opined that fraud in the application should not be a jurisdictional issue[8]; if an employee is found to have committed fraud in the application, the Court felt that it made little sense to void the employer-employee relationship and thus give the fraudulent employee the right to file a civil suit against their employer, now that they are no longer bound by the exclusive remedy provided by the Workers’ Compensation Act.
Cooper was decided in 1973, long before disabled employees had the protections under the Americans with Disabilities Act of 1990. The Supreme Court in Brailey seriously questioned whether misrepresentations about a prior injury or disability can continue to be a valid defense in a post-ADA world.[9]
To address these concerns, the Supreme Court in Brailey suggested a need for legislative intervention to clearly define the consequences of fraud in employment applications and to prevent potential misuse of the exclusive remedy.[10]
This is not the first time the Supreme Court has called for legislative changes to the Workers’ Compensation Act. In Bentley v. Spartanburg Co., the Court urged the Legislature to address perceived problems in the remedies for an employee with a mental injury unaccompanied by a physical injury. Bentley dealt with a mental-mental[11] claim brought by a sheriff’s deputy after he fatally shot a suspect. The court found, from the subjective perspective of a police officer, that shooting a suspect is not “unusual or extraordinary” circumstances; thus, the deputy was not entitled to benefits.[12] Though numerous bills have been introduced on this subject, none have been enacted into law.
It should be noted, however, that Cooper v. McDevitt Street & Co. has not yet been officially overturned; in Brailey, the employer had not proven its entitlement to the Cooper defense, so it was not necessary for the Court to rule on the validity of the Cooper defense. Currently, a motion for rehearing is pending in the Brailey case. How the court treats it may further influence how fraud defenses are applied in South Carolina. We anticipate that there will be an increase in litigation surrounding fraud in the application for employment.
CONCLUSION
Fraud in the application for employment remains a valid defense in South Carolina, but its applicability has been narrowed by the recent judicial interpretation. As legal and legislative developments continue, employers and employees alike should stay informed about potential changes in the law that could impact the handling of such cases.
*The Honorable Cynthia C. Dooley is a South Carolina Workers’ Compensation Commissioner and can be reached at acardwell@wcc.sc.gov. J. Keith Roberts is General Counsel for the South Carolina Workers’ Compensation Commission and can be reached at keroberts@wcc.sc.gov. Eric L. Baxley is a staff attorney for the South Carolina Workers’ Compensation Commission.
[1] Black’s Law Dictionary, 482 (9th. Ed. 2009).
[2] See Rule 8(c), SCRPC
[3] S.C. Code Ann. § 42-9-60 (1976, as amended).
[4] S.C. Code Ann. § 42-15-20
[5] S.C. Code Ann. § 42-15-40
[6] Cooper v. McDevitt Street & Co. 260 S.C. 463, 196 S.E.2d 833 (1973).
[7] Brailey v. Michelin NA, —S.E.2d—, 2024 WL 332560 (July 10, 2024)
[8] Id.
[9] Id.
[10] Id.
[11] “Mental-mental” refers to mental injuries that are caused by mental stimulus, as opposed to mental or physical injuries caused by physical stimulus.
[12] Bentley v. Spartanburg Co., 398 S.C. 418, 730 S.E.2d 296 (2012).