Despite a constitutional challenge to Oklahoma's opt-out law and that similar legislation has been put on hold in Tennessee and South Carolina, some experts are warming to the idea of responsible alternatives to state workers compensation systems.

The Oklahoma Workers' Compensation Commission ruled in February that provisions of the state's 2-year-old Employee Injury Benefit Act deprive injured workers of equal protection and access to the courts, and unfairly allow employers to define “injury.”

The case, Jonnie Yvonne Vasquez v. Dillard's Inc., has been accepted by the Oklahoma Supreme Court.

However, Oklahoma Attorney General Scott Pruitt in April asked the state high court to postpone its review while lawmakers consider amendments to the law “that would directly address the issues raised in this case.”

Little Rock, Arkansas-based Dillard's did not object to the motion but said in a statement that it “does not believe that (H.B. 2205) resolves or moots all issues in this appeal.”

The bill “takes a couple of steps forward,” but it still allows employers “a rather devious escape hatch to leave the state oversight and be unregulated under federal law,” said Trey Gillespie, Austin, Texas-based senior workers compensation director at the Property Casualty Insurers Association of America.

“There is a requirement for the alternative plans to be approved by the state and available for public inspection, so that's good,” Mr. Gillespie added. “But it has no data reporting requirements ... If these plans are approved as (Employee Retirement Income Security Act) benefit plan(s), the employer doesn't have to — in any way, shape or form — cooperate in that monitoring because that state monitoring would be pre-empted by federal law.”

In the case before the Oklahoma Supreme Court, Ms. Vasquez was denied benefits because Dillard's alternative plan doesn't cover pre-existing injuries.

H.B. 2205 states that employers who opt out are subject to the same definition of compensable injury as employers who participate in the state's plan under the Administrative Workers' Compensation Act.

The legislation also says that alternative benefit plans must cover the same forms of benefits included under workers comp on a “no-fault basis, with the same statute of limitations, notice of injury reporting, and with dollar, percentage and duration limits that are at least equal to or greater than the dollar, percentage and duration limits contained in such act.”

Mr. Gillespie, who has spoken out against opt-out laws and bills, said he would be open to an “alternative workers compensation mechanism” that assures fair competition among employers, provides equal protection for employees and includes appropriate state data reporting requirements, among other things.

Eric Silverstein, Dallas-based senior vice president of the national casualty broking practice at Willis Towers Watson P.L.C., said his clients are interested in alternatives.

“If there's an alternative that can help our clients save money, be more effective, reduce the administration, then we're interested,” Mr. Silverstein said.

Albert B. Randall Jr., Baltimore-based principal at law firm Franklin & Prokopik P.C., said he's not familiar with specific options to workers comp that aren't “really more akin to the opt-out system we see in Oklahoma and, to some extent, Texas.” But that doesn't mean people aren't interested in an alternative, he said.

It's important to note that “comp works remarkably well in the vast majority of cases,” said Steve Coonrod, a partner at McConnaughhay, Coonrod, Pope, Weaver, Stern & Thomas P.A. in Tallahassee, Florida. “It's a mistake to use an individual case to indict the entire system as being unfair.”

One thing most workers comp professionals agree on is that federal oversight would not benefit the comp system. Messrs. Randall and Gillespie and others said the odds of that happening are slim.

“People on both sides of the sea are just happy to leave things the way they are without rustling up too much congressional angst,” Mr. Randall said.

But with “the opt-out issue, the federal government is going to be very interested in not creating avenues where employers can leave the state workers compensation system and transfer risk and losses to taxpayers through the Social Security Administration system or through higher health insurance premiums paid by taxpayers,” Mr. Gillespie said.

Opt-out bills introduced last year in Tennessee and South Carolina are on hold, but amendments are anticipated, sources said.

“In 2017, there could easily be (opt-out) activity in multiple states,” Mr. Gillespie said. In addition to Tennessee and South Carolina, he said there has been speculation about states such as Arkansas, Georgia, Wisconsin and even Texas, which for a century has allowed employers to opt out of workers comp without requiring that they provide alternative benefits to injured workers.

“Time will tell,” Mr. Gillespie said, adding that Oklahoma likely “will continue to have opt-out issues going forward” — with or without the passage of H.B. 2205.