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Constitutional challenges to the opt-out provision in Oklahoma's workers compensation reform law likely won't dissuade Tennessee lawmakers from pursuing similar legislation.
In a petition file last week, attorneys representing two injured workers asked the Oklahoma Supreme Court to declare the Employee Injury Benefit Act unconstitutional. The law, also known as the Oklahoma Option, allows employers to opt out of the state's workers comp system by providing alternative coverage.
The day before the challenge was filed to Oklahoma's 2014 law, legislators in Tennessee introduced a bill that would allow employers to set up their own injury benefit plans. The bill borrows language from Oklahoma and Texas, two states that traditionally allow employers to leave the state workers comp insurance system.
Challenges to Oklahoma's law “probably will not deter supporters of the proposed Tennessee legislation,” Fred Baker, a member of law firm Wimberly Lawson Wright Daves & Jones P.L.L.C. in Cookeville, Tennessee, said in an email. “While possible constitutional challenges in Tennessee must be considered, proponents of the Tennessee opt-out bill are likely focused at the moment on developing enough support to get the bill passed.”
It's hard to speculate on whether “the legislature in Tennessee will be reluctant to pass legislation based on what's currently going on in Oklahoma,” said Trey Gillespie, Austin, Texas-based senior workers comp director with the Property Casualty Insurers Association of America. “We're not even sure at this point if the Oklahoma Supreme Court is even going to grant the petition and hear the case yet.”
In September 2013, an Oklahoma firefighters union and two state lawmakers filed a lawsuit asking the Oklahoma Supreme Court to declare the reform law unconstitutional because it violates due process, among other reasons. However, the state Supreme Court upheld the constitutionality of the reform law in a 7-1 ruling in December 2013.
Oklahoma workers Judy Pilkington and Kim Lee were both injured on the job last September, and their claims for benefits were denied by their respective employers, Dillard's Inc. and Swift Transportation Co., according to the petition.
The petition argues the Oklahoma law is unconstitutional because it includes no due process protections. “Under the opt-out scheme, the initial determination of compensability is made by the employer, and then appealed to an employer committee, rather than to an impartial reviewer such as a court or administrative agency,” according to the workers' suit.
Mr. Gillespie said additional legal challenges to the Oklahoma law were expected, which could be why only 33 companies have opted out of the system since the law took effect on Feb. 1, 2014.
“I've heard from a few insurance defense attorneys in Oklahoma who've said they advised some of their clients to hold off … until all the constitutional challenges have been exhausted,” Mr. Gillespie said.
Oklahoma businesses will see a 7.8% cut in workers compensation loss cost rates in 2015, the Oklahoma Insurance Department said Tuesday.