Tribe's sovereign immunity does not save insurer from comp claim

In Oklahoma, a workers' compensation insurer cannot enjoy an Indian tribe's workers' compensation immunity and is estopped from denying coverage under a policy for which it accepted premiums computed in part on a worker's earnings.

Case name: Waltrip v. Osage Million Dollar Elm Casino, No. 109030 (Okla. 06/26/12).

Ruling: The Oklahoma Supreme Court held that a supervisor's workers' compensation claim against an Indian tribe and its insurer was reinstated against the insurer.

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What it means: In Oklahoma, a workers' compensation insurer cannot enjoy an Indian tribe's workers' compensation immunity and is estopped from denying coverage under a policy for which it accepted premiums computed in part on a worker's earnings.

Summary: A surveillance supervisor for an Indian casino fell on a patch of ice while working. He injured his right shoulder. He filed a workers' compensation claim, seeking medical treatment and temporary total disability. The casino and its insurer asserted that the court lacked jurisdiction based on the tribe's sovereign immunity. The Oklahoma Supreme Court reinstated the supervisor's claim against the insurer.

The court stated that the workers' compensation law's estoppel act prevents those who insure employers against liability from denying coverage based on the status of the parties. The insurer argued that it was not subject to the estoppel act because the policy did not demonstrate an intent to cover the claims of injured workers under the state workers' compensation law. The terms of the policy contemplated the claims of injured workers to be adjudicated in tribal court. However, the tribe did not have a tribal ordinance pertaining to workers' compensation.

The third-party administrator handled claims as the "sole and exclusive remedy" for claims. The court said the TPA appeared to function as "legislature, executive, trial court, and appellate court" of claims. The insurer collected premiums from the tribe for providing workers' compensation benefits under a "nonexistent tribal ordinance" believing that it would step into the shoes of the tribe and receive the benefit of the tribe's sovereign immunity. The court explained that the insurer obtained unjust enrichment from its contract with the tribe.

The court said that if it were to allow the insurer's procedure it could arbitrarily deny claims and trample on the fundamental rights of workers. The estoppel act brought the insurer within the workers' compensation system because the tribe did not have its own forum for workers' compensation claims.

Read more at the WorkersComp Forum homepage.

August 30, 2012

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