Oklahoma Gov. Mary Fallin is expected to sign legislation reforming the state workers compensation system, after the state Senate passed a measure designed to save costs.
The legislation, SB 1062, allows Oklahoma to join Texas as the only states allowing employers to opt-out of the state workers compensation program a move insurance groups remain wary of and changes drastically the way disputes are handled.
Officials at the Property Casualty Insurers Association of America said the bill will provide companies and consumers savings throughout the state system, in large part because SB 1062 moves administration of disputes out of the state courts and into a new Advisory Council on Workers' Compensation. The governor, speaker of the House and president pro tempore of the Senate each would appoint three commissioners to the new council, whose rulings ultimately could be appealed to the state Supreme Court.
Costs should shrink because the new law eliminates appeals and would also prevent judges and juries from determining compensation for injured workers, said Joe Woods, PCIs vice president, state government relations. He cited a National Council on Compensation Insurance analysis estimating changes to the system would reduce costs by 13%. If you litigate a lot, the claimant, the employer and the insurance company are spending time and money on litigation that they won't have to spend, Woods told Bests News Service.
One key provision allows employers to opt businesses out of the state workers compensation system entirely. PCI fears the move will shrink the pool of workers. It could take a lot of big-box retailer employees out of the system, he said.
American Insurance Association also had a mixed reaction to the final product. "Restructuring CompSource, permitting employers to abandon the workers' compensation system and changing existing benefits to the workers' compensation system are all ill-considered and bad public policy measurers contained within this bill. We would have preferred to see a bill that better addressed the cost-driving measures of Oklahoma's workers' compensation system," said Bruce Wood, associate general counsel and director of workers' compensation. "Unfortunately, many of these actions overshadow the positive step in Oklahoma's embracing of an administrative system for adjudicating disputes, jettisoning the court-based system. We have long urged Oklahoma to adopt an administrative system and are encouraged by this step forward."
PCI's Woods does not expect any additional workers compensation reforms in Oklahoma for several years and sees opponents moving to challenge parts of the law in court. Future efforts to improve workers compensation in the state could include greater reliance by the state on nationally peer-reviewed medical and disability guidelines that currently are only used as a suggestion, he said.
Opponents in the Senate were disappointed with the final version. Senate Democratic Leader Sean Burrage said in a written statement the bill does almost nothing to address the rising medical costs that fuel system cost increases. This bill does nothing to address this part of workers compensation costs it purports to be addressing. In fact, less than 1% of the savings this bill creates come from the out-of-control medical expenses in the workers compensation system, Burrage's statement said. Almost every penny of savings found in this bill comes from taking legitimate benefits away from legitimately injured workers.
The bill saves money, but only by cutting payments and benefit to injured workers, said Democrat Sen. John Sparks in a written statement. The bill cuts weekly temporary total disability maximum payments by 80% and limits cumulative trauma coverage to legitimately injured workers, he said. And Republican Sen. Harry Coates said the final bill provides companies that can barely pay employees with an incentive to opt out of the system and move money to cover their bottom line finances. When these companies collapse under the weight of these unbalanced bottom lines, legitimately injured workers will be left to fend for themselves, he said.