BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.
To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.
To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.
While Oklahoma’s high court struck down a state law allowing employers to opt out of the workers compensation system, observers expect opt-out proponents to keep working to create alternatives to traditional workers comp plans nationwide.
“You’re going to have lobbying efforts out there to try to keep perpetuating this,” said Christopher Flatt, managing director and leader of Marsh L.L.C.’s Workers’ Compensation Center of Excellence in New York.
Oklahoma’s Employee Injury Benefit Act, which took effect in 2014, allowed employers to opt out of the state’s workers comp system by providing alternative benefits plans for injured workers.
Following the Oklahoma Supreme Court’s September ruling in Jonnie Yvonne Vasquez v. Dillard’s Inc., more than 50 companies that opted out of the state’s workers comp system have been given 90 days to either buy traditional workers comp insurance or become qualified in Oklahoma as a self-insured employer for workers comp, according to experts.
Companies that opted out under the “Oklahoma Option” are “making an orderly return to traditional workers’ compensation,” according to an emailed statement from the Association for Responsible Alternatives to Workers’ Compensation, a national employer group that seeks to opt out of traditional state comp systems.
Since Oklahoma’s opt out law was ruled unconstitutional, injury benefits for companies that opted out will need to match the benefit levels of claims under Oklahoma’s traditional workers comp system, although those claims will be paid directly by companies rather than insurers.
Claimants who were denied benefits under alternative benefit plans, such as Ms. Vasquez in the Dillard’s case, will now have the opportunity to appeal those decisions through the Oklahoma Workers’ Compensation Commission, said Oklahoma City-based attorney Bob Burke, who challenged Oklahoma’s opt-out law and represented Ms. Vasquez.
Ms. Vasquez’s case was supported by the American Insurance Association, the Property Casualty Insurers Association of America and the National Association of Mutual Insurance Companies, which filed a joint amicus brief disputing the constitutionality of the Oklahoma opt-out law.
“Any projected cost savings by these … employers are out the window, and they may have already been out the window because of the huge costs of defending these cases all the way to the supreme court,” Mr. Burke, who expects 200 to 300 denied injury claims to be revived for employees of companies that opted out.
Bill Minick, president of Dallas-based PartnerSource, an alternative workers comp consultant and unit of Arthur J. Gallagher Risk Management Services Inc., believes the Vasquez decision hinders benefits that he and members of the employers’ association saw under the Oklahoma Option.
A September study released by ARAWC showed that companies under the Oklahoma Option saved 70% on injury claim costs compared with traditional comp.
“Workers comp insurance company trade groups have portrayed the option as saving money through claim denials when, in fact, money’s been saved by ensuring that these programs are only paying for injuries that happened on the job and then getting better medical outcomes on those claims,” Mr. Minick said.
Sources say this may not be the last time that alternative workers comp plans appear in the national comp landscape. For instance, Tennessee and South Carolina introduced similar workers comp opt-out bills last year, though both states have put the legislation on hold.
Texas, which inspired the Oklahoma Option, remains the only state where employers can opt out of the traditional workers comp system.
Mr. Minick said, “Active dialogue about a competitive alternative to traditional workers comp continues in several other states” that he declined to identify.
While opt out was ruled out in Oklahoma, proponents likely learned lessons that could help them create alternative injury benefit plans with staying power, said Eric Silverstein, Dallas-based head of the national casualty broking practice, West region at Willis Towers Watson P.L.C.
“I think Oklahoma’s a great learning experience for the industry,” he said. “The industry tried to do something to bring the system forward … into something that was maybe more current and more efficient.”
“Sometimes, we learn more from that which doesn’t work than from (what) does work,” Mr. Silverstein added.
Despite Dillard's Inc.'s objection, amicus curiae briefs are starting to roll in on behalf of an injured worker who was denied benefits under Oklahoma's opt-out law.