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NEW YORK — Laws that allow employers in Texas and Oklahoma to opt out of the states' workers comp systems could be subject to federal oversight amid concerns about their effect on injured workers' access to benefits and care and potential discrimination against employees who report workplace injuries and illnesses.
Several Congressmen last October wrote the U.S. Department of Labor asking for a report on how it would reinstitute oversight of state workers comp systems — the department annually tracked states' compliance with recommended federal standards from 1972 to 2004 — following an investigation by ProPublica Inc. and National Public Radio into state workers comp programs.
The letter also asked whether the department needed additional authority to protect injured workers' rights and prevent cost shifting to taxpayers via programs such as Social Security.
“Is that a prelude to federalization?” Chris Mandel, senior vice president of strategic solutions at Sedgwick Claims Management Services Inc. in Nashville, Tennessee, said Tuesday during the Business Insurance Risk Management Summit in New York. “Who knows? But let's just say they're not happy with what they see.”
The costs removed from these opt-out plans through limits on the types of injuries covered and other provisions “don't just disappear into the Ethernet,” but are transferred through higher costs for health insurance or government programs such as Social Security, said Trey Gillespie, senior workers compensation director, Property Casualty Insurers Association of America in Austin, Texas.
The Labor Department is reportedly investigating the Texas and Oklahoma programs for potential violations of the Employee Retirement Income Security Act and the Occupational Safety and Health Administration Act.
The Labor Department believes that opt-out programs' immediate reporting requirement “discriminates against employees unfairly for reporting injuries,” Mr. Gillespie said, adding that the National Council on Compensation Insurance said that less than 20% of lost-time claims are reported on the date of the accident.
Oklahoma's opt-out law has been found to be unconstitutional, but employer Dillard's Inc. has filed an appeal.
Workers compensation systems generally give employees 30 days to report their injuries, but employers providing opt-out coverage can and should shorten that timeframe to one to three days, said Bill Minick, president of PartnerSource, a unit of Arthur J. Gallagher Risk Management Services Inc. in Dallas.
“Why should we set the bar so far out there?” he asked. “Essentially, we've stripped away all employee accountability by trying to layer in bureaucracy and statutory leniency. We need to bring back accountability. The result is employees get faster care, you have a more timely investigation of the accident, you have valid drug and alcohol testing due to that earlier reporting and faster correction of unsafe conditions for co-workers. Those are the types of public policies we should be pursuing with respect to injury reporting.”
Proponents of opt-out alternatives “welcome (the department's) involvement and have encouraged it for 27 years,” Mr. Minick said. “But the fact is that even after the resolution of over a million claims in this environment over the past 20 years, not one complaint has ever been filed with the U.S. Department of Labor over those programs — even though employees received information on how to contact the DOL to file a complaint. That speaks volumes.”
A Tennessee House of Representatives subcommittee hearing for a bill that would allow private employers to opt out of the state's workers compensation system has been canceled.