Roberto Ceniceros

Roberto Ceniceros is senior editor at Risk & Insurance® and chair of the National Workers' Compensation and Disability Conference® & Expo. He can be reached at [email protected] Read more of his columns and features.

Oklahoma Option

Oklahoma Justices: Opt-Out No Longer an Option

Have employers have been left in the lurch by the state Supreme Court decision ruling Oklahoma's Opt Out Act unconstitutional?
By: | September 15, 2016 • 5 min read
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Raising considerable concern for employers and their injured workers, Oklahoma Supreme Court justices ruled 7-2 that the state’s workers’ compensation opt-out law is unconstitutional.

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The dissenting justices wrote that the majority’s opinion eliminating the Oklahoma Employee Injury Benefit Act adopted in 2013 now leaves “employees and their employers without a clear path to enforce their respective remedies or defenses.”

Indeed, whether the path forward has been thrown into a disarray regarding claims resolutions and new insurance coverage that opt-out employers must now purchase became a debate topic immediately following the Supreme Court’s Sept. 13 ruling in Jonnie Yvonne Vasquez v. Dillards, Inc.

Any assertion that the employers will now face difficulties purchasing coverage, or resolving injured worker claims filed under their opt out plans is inaccurate, said Bill Minick, a chief advocate of the state’s opt out law and president at PartnerSource.

“The trial attorneys and workers’ compensation insurers would love to paint a picture of chaos and the end of the option as a result of this decision,” Minick said. “But the reality couldn’t be further from the truth.”

Since the adoption of the opt-out law that supporters call “The Option,” about 55 employers created their own alternative workers’ comp plans outside Oklahoma’s traditional system.

Bill Minick, president, PartnerSource

Bill Minick, president, PartnerSource

Those employers have 90 days to negotiate for insurance coverage or arrange to self-insure the risk. However, it was unclear immediately following the decision when the 90-day period would begin.

The employers will also have to revisit all of their insurance-related contracts for services such as claims administration, provider networks and consulting services, Minick said.

But in anticipation of the unfavorable court ruling, his firm began development last summer of “well-defined contingency and transition plans for employer clients to return to the Oklahoma workers’ comp system,” Minick said.

He described the process for those employers as similar to annual insurance renewals and said 90 days is sufficient time for such negotiations.

“The PartnerSource team and others are now assisting employers and their insurance brokers with each step in that process,” Minick said.

Yet questions remained, experts said.

“There are going to be a lot of questions that need to be answered moving forward,” said Jonathan Buxton, senior VP of government affairs for the State Chamber of Oklahoma, which expressed disappointment with the court ruling.

“I don’t know how the courts or the [Oklahoma Workers’ Compensation] Commission will handle the claims that are in the pipeline.”

The Supreme Court ruled that the “core provision of the Opt Out Act creates impermissible, unequal, and disparate treatment of a select group of injured workers.”

The court majority emphasized that its ruling applies to “a number” of other cases currently before the Commission and in the appellate pipeline.

Those claims in the appeals pipeline had been stayed until the Supreme Court decided the Vasquez case.

“I don’t know how the courts or the [Oklahoma Workers’ Compensation] Commission will handle the claims that are in the pipeline.” — Jonathan Buxton, senior VP of government affairs, State Chamber of Oklahoma

The Commission will lift the stay as soon as it is instructed to do so by the Supreme Court, said Kim Bailey, the Commission’s executive director. Then, the claims will proceed under normal administrative procedures.

However, not all work injuries result in claims heard by the Commission.
Employers’ operational policies will have some bearing on how those claims are resolved, Buxton said.

The original opt-out legislation anticipated a court challenge against its provisions and provided employers with the 90-day period to arrange insurance coverage, said Bob Burke, an Oklahoma claimants’ attorney known for leading the constitutional challenge against the opt-out law.

Burke said that opt out employers may now be without workers’ comp coverage. But the statute protects them from injured workers filing civil claims during the 90-day period, he said.

Undeterred opt-out proponents, meanwhile, vowed to continue pressing their goals in Oklahoma and other states.

Following the Supreme Court decision, the Association for Responsible Alternatives to Workers’ Compensation released a report stating that option employers experienced better return-to-work and medical outcomes while their costs were 70 percent lower than employers under the traditional workers’ comp system.

Minick said he is confident those results will encourage Oklahoma lawmakers to pass legislation addressing the Supreme Court’s concerns, so that the option can continue in the state.

Insurers, meanwhile, praised the court’s decision.

“The Oklahoma Opt Out Act allowed some employers to shift much of their responsibility for occupational injuries to injured workers and their families, government programs, charities, and ultimately taxpayers,” the Property Casualty Insurers Association of America said in a statement.

“The opt-out plans put all power in the hands of the employer, with no independent review of the employer’s decision.”

“This Court has previously made it clear we will not accept the invitation of employers to find a discriminatory state statute constitutional by relying on the interests of employers in reducing compensation costs.” — Oklahoma Supreme Court decision in Vasquez v. Dillards

The Supreme Court ruling stems from a September 2014 claim filed by Vasquez, who injured her shoulder and upper neck. Her employer, Dillards, covered her treatment. But when Vasquez requested an MRI, two review doctors obtained by the retailer found the injury resulted from a pre-existing condition.

Dillards denied the claim and Vasquez appealed, eventually leading to the Supreme Court decision.

“This Court has previously made it clear we will not accept the invitation of employers to find a discriminatory state statute constitutional by relying on the interests of employers in reducing compensation costs,” the high court’s majority opinion states.

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The court’s dissenters criticized the majority, however, for ruling on opt-out’s constitutionality while skirting the case facts on whether Vasquez should receive benefits for a pre-existing condition.

“Here, the Court has provided no guidance for employees, or their employers, as to where a cause of action should be pursued if the Opt Out Act ceases to exist,” Justice James Winchester wrote in his dissent.

“Further, other employers with plans under the Opt Out Act that have met or exceeded the Act’s terms will never get the opportunity to have the validity of their plans tested.”

Roberto Ceniceros is senior editor at Risk & Insurance® and chair of the National Workers' Compensation and Disability Conference® & Expo. He can be reached at [email protected] Read more of his columns and features.
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Column: Workers' Comp

Reform Gone Awry

By: | September 14, 2016 • 2 min read
Roberto Ceniceros is senior editor at Risk & Insurance® and chair of the National Workers' Compensation and Disability Conference® & Expo. He can be reached at [email protected] Read more of his columns and features.

A law that blocks an attorney from collecting more than $1.53 an hour for representing an injured worker apparently backfired. Now Florida insurers and employers collectively are on the hook for $1 billion in unfunded workers’ comp liability.

It brings to mind the CIA term “blowback.” It describes unintended outcomes, like how supporting the Afghan mujahedeen’s fight against the Russians eventually helped the Taliban’s rise.

The unintended outcome in this case is a $1 billion crisis that presents a lesson in how reforms that seem too good to be true might be just that — especially if courts construe them to take away workers’ constitutional protections.

To fix Florida’s troubled system, lawmakers adopted reform laws that would reportedly save $400 million to $450 million per year.

Reforms eventually included a 2009 attorney fee schedule amendment defining all fees capped by the schedule’s formula as “reasonable,” no matter how low they might be. Advocates praised the reforms for reducing the risk of frivolous litigation.

The unintended outcome in this case is a $1 billion crisis that presents a lesson in how reforms that seem too good to be true might be just that — especially if courts construe them to take away workers’ constitutional protections.

In April 2016, however, Florida’s Supreme Court found the fee cap deprived injured workers of the right to adequate legal representation.

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The court wasn’t troubled so much by limiting attorney pay as it was by the reform law’s prohibition on appealing when the fee schedule resulted in unreasonably low compensation.

The ruling came in Marvin Castellanos v. Next Door Co. The case focused on how the fee schedule prevented Castellanos’ attorney from receiving more than $164 for 107 hours of work — what the court called an “absurdly low amount.”

Opponents of the ruling emphasize that the attorney sought $38,000 in fees for winning a mere $800 in benefits for the injured worker.

Along with two other Florida decisions, the ruling created pressure for future rate increases in addition to the $1 billion in unfunded liability employers and insurers will pay for.

Reform supporters didn’t envision that when they pushed the fee-schedule legislation into law. Even the term “blowback” doesn’t adequately portray the body slam dealt to Florida insurers and employers.

The following month, Utah’s Supreme Court eliminated its state’s fee schedule that also capped claimant attorney compensation, finding that legislators and the state’s Labor Commission were constitutionally barred from creating the schedule.

In its reasoning, the court harmonized with Florida, finding the fee schedule harmed workers by limiting both the quantity and quality of legal representation they received.

Both rulings will drive more litigation expenses and insurance costs. As surely as insurance cycles come and go, I foresee this coming full circle, with cost increases eventually driving calls for new reforms.

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Column: Workers' Comp

Nurses Provide Frontline Care

By: | August 31, 2016 • 2 min read
Roberto Ceniceros is senior editor at Risk & Insurance® and chair of the National Workers' Compensation and Disability Conference® & Expo. He can be reached at [email protected] Read more of his columns and features.

Discussions about physician performance and its impact on claims is a frequent workers’ compensation topic. But spend time around a hospital and you witness nurses providing more of the frontline care and comfort. They interact with patients more than doctors.

Yet I have rarely heard workers’ compensation observers discuss current nursing-profession challenges. That contrasts with the attention paid to selecting treating physicians, discussions on a doctor shortage impacting claims outcomes, physician pay and so on.

Sure, doctors make treatment decisions that largely determine how injured workers mend and recover. But the level of care and compassion hospital nurses provide also impacts an injured worker’s overall experience.

As it goes with all employees, there are always a few not suited for the job. Fortunately, there are many different roles for them.

That experience shapes their attitudes about their medical recovery. It also affects their views on returning to the job and whether they should call the attorney 1-800 numbers pitched on TV commercials.

Most nurses I’ve encountered in hospitals exhibit great care about their roles and their patients. They are competent professionals.

As it goes with all employees, there are always a few not suited for the job. Fortunately, there are many different roles for them.

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You have noticed, for example, the growing number of nurses employed by the insurance industry. Some of those roles still require patient empathy, while others are more administrative, analytical or company leadership positions not requiring direct patient care.

While most hospital nurses I’ve encountered bring their compassion and professional acumen to the job every day, many are leaving the profession.

Some are retiring baby boomers. Others are leaving because of the stress of too large a patient load. A nationwide R.N. shortage and hospital systems attempting to control labor costs can strain their abilities.

Nursing burnout is a much studied and written about topic. It’s a point of contention in nurse labor union disputes with hospitals and it’s evident when talking to nurses.

The challenge is evident in other ways.

Only 168 out of 3,544 hospitals received a five-star rating while more than 600 received one or two stars in a recent, albeit controversial, U.S. Centers for Medicare & Medicaid Services survey of patient satisfaction with hospitals.

The nationwide survey asked about communication with nurses and the responsiveness of hospital staff.

Perhaps this means it’s time for workers’ comp claims payers to expand the discussion about the people caring for injured workers.

Personally, when I accompany friends or family to a hospital I make sure that the caring and compassionate nurses I see get my appreciation. &

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