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Workers’ Comp Fundamentals: Fraud in the Application

Leslie Whitten

As many of you know, our “Workers’ Comp Fundamentals” series is meant to be a learning tool as well as a refresher.  We hope you find it useful.  Today, we’ll discuss the fraud in the application defense.

Over 40 years ago, the South Carolina judicial system adopted the legal theory that an employer may deny an employee’s claim for workers’ compensation benefits under the South Carolina Workers’ Compensation Act on grounds of fraudulent misrepresentation in the employment application.  The general rule is that employee’s false statement on an employment application with regard to his or her medical history bars an award of workers’ compensation benefits when: (1) the employee knowingly and willfully makes a false representation as to his physical condition; (2) the employer relies upon the false representation and this reliance is a substantial factor in the hiring; and (3) there is a causal connection between the false representation and the injury.

So, put very simply, if an employee lies in his application about his pre-existing injuries and is injured on the job as a result, that claim isn’t compensable because the fraud means the employment relationship was invalid in the first place.

We are unable to raise this defense often, partly because many employers don’t seem to ask these pre-employment questions in a post conditional offer questionnaire.  A word of caution is required here; it would be easy for an employer to run afoul of federal law by asking these questions in the wrong way or at the wrong time.  While it can help us defend against a workers’ compensation claim, we highly recommend consulting an employment attorney before creating or implementing any policies in this area.

As always, feel free to contact us with any questions or concerns.