Okla. law could create template for deregulating workers comp nationwide

Oklahoma's new law allowing employers to exit the state's statutory workers compensation system could create a template for deregulating workers comp nationwide, concludes a white paper released Tuesday.

Prior to Oklahoma adopting its new law last month, Texas was the only state allowing employers to opt out of its workers comp system. But in Texas, state oversight of “nonsubscribers” is virtually nonexistent, according to “Workers' Compensation Deregulation Alert: What Employers Need to Know about the New Oklahoma Law,” a white paper published by Philadelphia-based New Street Group with funding by Sedgwick Claims Management Services Inc.

In contrast, Oklahoma's law requires, among other measures, that employers pay alternative injured-worker benefits at least equal to those mandated under the existing state system.

And Oklahoma's insurance commissioner “appears to have the power to disapprove specific employer benefit plans and to induce employers into a financial back-up plan (e.g., insurance, letters of credit, bonds) that may nullify the cost advantages of leaving the current state system,” the white paper states.

Because Oklahoma's law lays out rules for adopting an alternative workers comp benefit plan, it provides a “template for replication” in other states, said columnist Peter Rousmaniere, one of the white paper's authors.

Sedgwick supported employer efforts pushing for adoption of Oklahoma's new law, but the third-party administrator did not influence the white paper's editorial direction, Mr. Rousmaniere said.

The white paper also discusses how employers and employees may benefit under Oklahoma's new law.

The white paper is available here.