Oklahoma Waiting for Guidance on Workers’ Comp Opt Out Transition

There seems to be more questions than answers as to what happens next in the wake of the Oklahoma Supreme Court’s finding that the opt out portion of the state’s 2013 comprehensive workers’ compensation legislative overhaul is unconstitutional.

That’s because the Court has yet to publish its mandate on the Sept. 13 ruling — the document that will outline the steps companies that developed their own employee injury benefit plans must take to become compliant with Oklahoma’s workers’ compensation statutes.

The mandate will provide “more specific direction as to how to carry out the decision of the Court. Right now we’re waiting on the document to get more details,” said James Mills, director of Workers’ Compensation at the Oklahoma Insurance Department.

When the mandate is published, opt out companies will have 90 days to secure workers’ compensation coverage under the Administrative Workers’ Compensation Act, according to the Oklahoma Workers’ Compensation Commission (OWCC).

The Opt Out Act was passed by the legislature in 2013 as part of a workers’ compensation reform package that also established the OWCC to replace the former Oklahoma Workers’ Compensation Court.

The act allowed qualified employers to opt out of the Oklahoma workers’ compensation system by creating an Employee Benefit Plan (Plan) under the provisions of federal law, the Employee Retirement Income Security Act (ERISA).

There were 54 companies providing their own opt out plans on the day the Supreme Court issued its ruling, according to Mills.

In a press statement, the OWCC said the Court on Sept. 13 ruled “that a section of the Oklahoma Workers’ Compensation Statute, the ‘Opt Out’ provision, is unconstitutional as it violates Article 2, section 59, the prohibition of ‘special laws.’ Oklahoma’s workers’ compensation statute provided a unique Opt Out section, which allowed companies to create their own workers’ compensation plans or provide coverage under the state system.”

The 7-2 ruling came in Vasquez v. Dillards, which was appealed to the Oklahoma Supreme Court after the OWCC came to the same conclusion about the law in its ruling on the case in February.

The Court remanded the case back to the OWCC to consider whether the plaintiff in the case, Jonnie Yvonne Vasquez, was properly served by Dillards’ injury benefit plan. At issue is whether or not the injury that prompted Vasquez’s claim was a work injury or a pre-existing condition.

Vasquez alleged she injured her shoulder and neck while lifting shoe boxes at her workplace. She received benefits while her claim was being investigated, but Dillards ultimately denied her claim on the grounds that Vasquez’ injury was pre-existing and not an injury defined by Dillards’ benefit plan.

“Our task now is to consider this case, and several other cases which have been stayed awaiting this ruling, under the provisions of the Administrative Workers’ Compensation Act (AWCA),” Commissioner Mark Liotta said in the commission’s release.

Mills said that the reform package passed by the legislature in 2013 has “on the whole been very successful for our state.”

The insurance department reported in September 2015 that the National Council on Compensation Insurance (NCCI) filed an overall loss cost decrease of 10.2 percent, which is expected to go into effect on Jan. 1, 2017. With this drop, the total impact of NCCI filings since 2013 is a 44 percent decrease, the department said. NCCI has credited Oklahoma’s loss cost decrease to declines in market experience and market trend, as well as the recent reforms.

Asked whether he anticipated that lawmakers would take another look at opt out in the coming legislative session, Mills said he didn’t “know if the legislature will take it up in the same way given that it’s only one component of the overall reforms. And all of the other pieces are continuing to work.

“I would expect them to continue to revisit the topic of workers’ compensation in Oklahoma to ensure that our system is providing the best way to address workplace injuries for Oklahomans that we can create. But I don’t know if that will mean small or large changes, including removing or rebuilding the Oklahoma option,” he said.

A Transition Plan

Bill Minick, president of Dallas-based PartnerSource, which designs, implements and provides support for workers’ comp nonsubscription plans, said his team had previously developed a transition plan for companies involved in opt out in case the Court decision in Vasquez went the way it ultimately did.

That 10-step plan advises companies on the 90-day time period for returning to the workers’ comp system, and stresses the importance of identifying claims with “potential exposure under worker’ compensation” and developing a plan of action to deal with those claims. Other steps include engaging a broker to secure workers’ compensation coverage and providing proper notices to the Oklahoma Insurance Department, the OWCC and employees of the company’s plan to return to the workers’ comp system.

“We are continuing to advise employers and their insurance companies and their administrators who handle the vast majority of claims to continue to focus on timely report of injury, getting the best medical care possible and return to work,” Minick said.

“While the possibility of introducing new legislation is under consideration, right now we are focused on the orderly transition [of] claims and getting great outcomes for the injured workers. If employers and legislators in Oklahoma and other states find performance records in Oklahoma and Texas compelling, then the pursuit of new option laws will continue,” he said.

Related:

• Oklahoma Supreme Court Rules Workers’ Comp Opt-Out Unconstitutional
• Oklahoma’s Workers’ Comp Opt-Out Act Ruled Unconstitutional
• Oklahoma Workers’ Comp Overhaul Takes Another Hit
• Oklahoma Workers’ Comp Loss Costs Fall 10.2%
• Oklahoma Governor Signs Workers’ Compensation Overhaul

Topics Workers' Compensation Oklahoma