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Report critical of workers comp opt-out laws unlikely to change minds

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A new report that examines the equity of alternatives to workers compensation is not likely to deter backers who support opt-out legislation, sources say.

On Wednesday, National Public Radio and investigative journalism website ProPublica Inc. released a report questioning whether employers should be allowed to opt out of state workers compensation systems.

Though the ability to leave the workers comp system has been around more than 100 years in Texas, Oklahoma passed opt-out legislation in 2013, and legislators in Tennessee and South Carolina introduced opt-out bills this year.

“The ProPublica article depicts some of the concerns related to cost shifting for occupational injuries, differing treatment for workers who experience injuries and medical coverage limitations that are associated with many workers compensation opt-out proposals,” said Rita Nowak, vice president of commercial lines and research at the Property Casualty Insurers Association of America in Des Plaines, Illinois.

The association's Austin, Texas-based senior workers comp director, Trey Gillespie, said in the NPR and ProPublica report that the wording of the Oklahoma law could be used to deny almost any injured worker's claim.

This report “doesn't mean there's a trend of states seriously looking at opt out provisions,” said Richard Glovsky, Boston-based partner and co-chair of the labor and employment practice group at Locke Lord L.L.P. “I suspect in the Northeast and Midwest, and perhaps other parts of the country, there would be a tremendous amount of resistance.”

Sources have said Georgia could be the next state to propose opt-out legislation. And, according to a report last week by the Risk & Insurance Management Society Inc., Florida is also considering it, but plans to await a state Supreme Court ruling in a case challenging the constitutionality of the state's workers comp system.

As noted in the article, Oklahoma's law defines an accident as “an event involving factors external to the employee that was unintended, unanticipated, unforeseen, unplanned and unexpected,” that “occurred at a specifically identifiable time and place ... by chance or from unknown causes.”

Though more than 55 employers have opted out in Oklahoma, critics continue to challenge the constitutionality of opt-out plans, saying they provide insufficient benefits. But backers say an opt-out system allows for better care for injured workers compared with the traditional workers comp system.

The Association for Responsible Alternatives to Workers' Compensation “will continue to actively advocate for the option to be implemented in a transparent manner in other states so employees across the nation are able to participate in a program that fosters better care and ensures a faster recovery process,” a spokeswoman for the association said in a statement, noting that “references to employees in (the NPR and ProPublica) story not receiving care are truly tragic.”

Despite the report's commentary from injured workers whose employers have opted out of states' workers comp systems, it's hard to make a general statement about “whether what's out there is better of worse for employees,” Mr. Glovsky said.

“You're only going to hear complaints where the employee feels slighted,” Mr. Glovsky said. “You're not going to hear that they think the opt-out plan is better for them.”