Oklahoma reforms to opt out of comp system almost a done deal
The state Legislature passed, and the governor signed S.B. 1062. It will make Oklahoma only the second state after Texas to give employers the choice to be part of the state workers' comp system.
The bill was passed largely along party lines with most Republicans voting in favor and most Democrats opposing the measure. The opt-out provision of the bill would allow employers to offer injured workers alternative benefit systems based on the federal Employee Retirement Income Security Act.
Proponents point out that unlike Texas' system, Oklahoma's opt-out program would apply to employers who meet specific financial strength and loss experience parameters. In addition to the potential cost savings, which they say can be significant, the opt-out plan offers a more simplified approach and can get care to injured workers more quickly than the traditional workers' comp system.
But opponents argue it gives those employers who opt-out unbalanced control. In addition to workers' rights advocates, insurance industry representatives also oppose the idea.
It "essentially changes the way the benefits are delivered substantially in as much as the employer unilaterally decides what injuries will be covered or not and what all the conditions and limitations are on the employee being able to receive benefits," said Trey Gillespie, senior workers' compensation director for the Property Casualty Insurers Association of America. "At the same time, the employer basically controls the dispute resolution system in the event there is a dispute between the employee and employer as to whether medical benefits should be paid or whether there should be benefits paid in general. That certainly changes the paradigm of workers' comp dramatically."
Gillespie believes the opt-out provision, as well as other aspects of the legislation, will wind up in the courts. "I think the courts will eventually have to hash out whether an employer is entitled to the exclusive remedy protection from their employee when, basically, the employer sets up all the conditions ... with no input from the employees as a group, or no input from a neutral group such as the legislature in terms of what benefits should be payable."
Overall, however, PCI supported the measure and urged the governor to sign it. Gillespie says it addresses some major pitfalls in the Oklahoma workers' comp system.
"The two biggest problems in Oklahoma are the amount of litigation and the uncontrolled costs that largely center around awards of permanent partial disability benefits, and I believe that the reforms are going to substantially reduce the amount of litigation that takes place and bring PPD awards in line with awards that are in other states," Gillespie said. "Also, the move to an administrative process will provide for more efficient dispute resolution when disputes do arise."
The legislation consists of three parts: the Administrative Compensation Act, the Oklahoma Employee Benefit Act (including the opt-out provisions), and the Arbitration Act. Within the three acts are the following provisions:
- Replacing the court system with an administrative one beginning Feb. 1, 2013, with three appointed commissioners instead of 10 judges.
- Reducing temporary disability payments to 104 weeks instead of 156, and capping them at 70 percent of the state's average weekly wage -- about $540 per week.
- Reducing permanent disability payments to 350 weeks from 520 weeks.
- Allowing employees to change treating physicians one time as long as the selection is from a list of three doctors provided by the employer.
- Allowing employers to require employees to settle claims and disputes through arbitration.
"Something that is abundantly clear is that the plaintiff's attorneys bar in Oklahoma will challenge the constitutionality of numerous provisions in all three acts in the bill, and the Oklahoma Supreme Court will ultimately decide on the constitutionality of the Oklahoma Employee Benefit Act," Gillespie said.
Read more at the WorkersComp Forum homepage.
May 28, 2013
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