Oklahoma Lawmakers Studying Workers’ Comp Opt-Out Idea

October 4, 2011

An interim study approved by the Oklahoma state Senate could be the first step to allowing employers to bypass the state’s workers’ comp system.

The state Senate approved an interim study regarding the use of Employment Retirement Income Security Act (ERISA) plans in dealing with workers’ comp issues, similar to the procedure Texas uses for nonsubscribers to the workers’ comp system, according to a workers’ comp attorney.

The study would explore the idea of putting ERISA plans in place “to cover work-related injuries for indemnity and medical benefits,” said Michael Perez, an associate of Owen & Fazio in Dallas. “An administrator would administer the plan. If there is a denial, [the claimant] would have the right to bring a lawsuit or go to arbitration, typically, to get any benefits they believe they are owed.”

The study participants will bring their findings before the legislature, which convenes in February. Depending on the results, it could lead to legislation that would make Oklahoma only the second state, along with Texas, to allow employers to choose whether to participate in the state’s workers’ comp system.

Perez, who practices in both Oklahoma and Texas, believes the idea has merit. “If you’re looking to make your state business-friendly, this is a step in the right direction to attract new businesses,” he said. “I think the leadership of Oklahoma has gone out and sold their new workers’ comp reform to businesses and I think if this goes into place, it would be something they would market as well to potential employers.”

The idea of allowing employers to opt out of the workers’ comp system has attracted the attention of Oklahoma Lt. Gov. Todd Lamb. In a recent speech, Lamb spoke of the need to give businesses more latitude and make the state more competitive, especially against Texas.

The interim study committee was developed shortly before workers’ comp reform legislation went into effect in August. Senate Bill 878 passed the Legislature in May and represented the first major overhaul of the workers’ comp system in 30 years. Among its provisions are:

• Requiring a new medical fee schedule to be developed by January 2012. It would reduce medical costs in the system by an estimated 5 percent.
• Narrowing the definition of a compensable injury by excluding injuries that result directly from the willful failure of the employee to use a guard or protection furnished for use pursuant to statute or by order of the Commissioner of Labor; injuries which occur when the employee tests positive or refuses to be tested for alcohol or illegal substances; and injuries that occur before the person is hired or after he is terminated from employment.
• Reducing the maximum period for workers to receive temporary total disability benefits to 156 weeks, unless there is a finding of a consequential injury, in which case an additional 52 weeks could be awarded.
• Requiring the use of nationally recognized treatment guidelines to control the type of treatment an injured worker may receive.
• Requiring the development of an independent medical examiner system composed of licensed physicians who have completed certain course work.
• Disallowing vocational rehabilitation benefits to any nondocumented employee who is unable by law to be hired in Oklahoma.
• Expanding the Workers’ Compensation Court to 10 members and allowing the governor to select two members.

This article appeared September 19, 2011, on the website of Risk and Insurance magazine and is reprinted here with permission.