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Employer challenges opt-out ruling

Oklahoma case cause for pause

Employer challenges opt-out ruling

The challenge to the Oklahoma Employee Injury Benefit Act that’s before the state Supreme Court has put a chill on the workers compensation opt-out movement and may prompt some employers to return to the state comp system.

Opt-out backers, however, say the fight is far from over.

In an appeal filed earlier this month, retailer Dillard’s Inc. asked the Oklahoma high court to vacate the Oklahoma Workers’ Compensation Commission’s February ruling in Jonnie Yvonne Vasquez v. Dillard’s Inc. that the state’s opt-out law unconstitutionally deprives injured workers of equal protection and access to the court access.

Ms. Vasquez, who aggravated an earlier spine injury in September 2014 while working at a Shawnee, Oklahoma, Dillard’s store, was denied benefits because the Little Rock, Arkansas-based retailer’s alternative benefits plan does not cover pre-existing injuries, according to court records.

In its appeal, Dillard’s argued the commission does not have jurisdiction to invalidate the law, saying “a finding of unconstitutionality affects all qualified employers under the option.”

Dillard’s is one of 60 employers that have opted out of the state workers comp system, said James Mills, Tulsa, Oklahoma-based chief of staff and director of workers comp at the Oklahoma Insurance Department.

Neither Dillard’s nor its attorneys responded to requests for further comment.

While the commission’s decision affects all qualified employers who have opted out, Ms. Vasquez’s attorney, Bob Burke in Oklahoma City, said he doubts the state Supreme Court will allow other employers to join the suit “because they are not party to this litigation.”

“However, anyone can file a friend-of-the court brief. I am sure there will be plenty,” Mr. Burke said in an email.

In the meantime, employers likely will “continue to operate their Oklahoma option programs, including the processing of claims in accordance with the terms of their insurance department-approved plans and applicable state and federal laws,” said Bill Minick, president of Dallas-based PartnerSource, an alternative workers comp consultant and unit of Arthur J. Gallagher Risk Management Services Inc. “My expectation at this point for Oklahoma is that some combination of an Oklahoma Supreme Court (ruling) and legislative action in 2016 will make adjustments to the state’s option, and we will keep moving forward,” he said.

But Mr. Minick said some employers might rejoin the state’s workers comp system.

Nationwide, fewer employers are publicly expressing interest in opting out of workers comp, said Mike Vitulli, vice president of insurance brokerage Risk Strategies Co. Inc. in Boston. Many employers “don’t want to be seen as trying to reduce workers’ rights,” but others remain focused on saving money for their shareholders, Mr. Vitulli said. “If we had a better medical care system, my guess is this would be less of an issue.”

Sources said end-of-shift or 24-hour injury reporting requirements — as well as an employer’s ability to decide what injuries and types of medical care, such as physical therapy or surgery, it will cover — are among the major issues detractors cite concerning opt-out plans.

For example, in addition to making it more difficult for injured workers with pre-existing conditions to obtain benefits, the Dillard’s plan does not cover bodily harm caused by exposure to asbestos, court records say. “It would behoove most employers to be somewhat less draconian in the way they apply those limitations” given the challenge in Oklahoma, Mr. Vitulli said.

Dillard’s alternative benefits plan — in line with most other employers’ plans — also says “the claims administrator may terminate, modify or reduce a previously approved treatment plan prior to the completion of the approved treatment,” Trey Gillespie, Austin, Texas-based senior workers compensation director at the Property Casualty Insurers Association of America, said this month during the Workers Compensation Research Institute’s conference in Boston.

In its decision, “the Oklahoma Workers’ Compensation Commission clearly found that the opt-out plans do not provide the same benefits as regular workers comp,” Mr. Burke said, adding that such plans wouldn’t be very appealing to employers if they did.

Despite the challenge in Oklahoma, “Texas nonsubscription remains very much alive and well,” Mr. Minick said.