Attempts to Defend the “Oklahoma Option” Offer Incomparable Comic Relief
February 27, 2015
Attempts to Defend the “Oklahoma Option” Offer Incomparable Comic Relief
Ever since we heard the first explanation and defense of the “opt-out” workers’ compensation concept included in SB 1062 we have been very impressed with the comical attempts at explaining the idea and defending its constitutionality. In light of the recent request that the Oklahoma Supreme Court assume original jurisdiction to review the law, it is important to revisit the arguments and, frankly, silly claims made by proponents of opt-out, (which they refer to as the Oklahoma Option).
The most frequent claim made is that this is similar to Texas. Texas is the only state in the country where employers are not required by state law to cover employees for on the job injuries. Many employers have no coverage at all. Others purchase occupational accident and health insurance policies with varying levels of coverage for injuries. The majority of Texas employers, even though they are not required by law to do so, purchase workers’ compensation insurance. Why? Many reasons, but the two most prevalent are the recognition that coverage is important for their employees and their businesses’ success and to protect their business from being sued when an employer can be alleged to have contributed to the cause of an accident.
As difficult as it would be for some Texans to adopt anything with the title “Oklahoma” in it, Texas would have adopted the Oklahoma Option in about five seconds (and would have done so 75 years ago as well) if it were not for one problem. Texans know that it is not constitutional. In fact, apparently the only Texan who believes the Oklahoma Option is constitutional is its creator, Bill Minick, a Texas insurance broker. It does not take a lawyer to explain the problem; a good Oklahoma or Texas high school civics student could do an adequate job.
Oklahoma requires most employers to provide coverage for their workers. Senate Bill 1062 made major changes in Oklahoma’s workers’ compensation laws including a drastic reduction in benefits for workers. But it also allows employers to not purchase workers’ compensation insurance but to provide coverage in other ways, if approved by the Oklahoma Insurance Department. Regardless of which path the employer decides to pursue, employers get protection from lawsuits by employees by being covered. Under the new law protection from employee court actions for employers applies to both those with traditional coverage or those who are financing their liabilities another way (so called “opt out”, so called “Oklahoma Option’’).
An injured employee whose employer has purchased a workers’ compensation policy will discover a very large body of laws, rules, case law, and other issues that may apply to their injury. This body of law will provide the framework to determine whether the injury is covered by the workers’ compensation system, to determine the benefits that are due if those laws apply, and to lay out the procedures to use if there are disputes regarding the claim for compensation. There are rules of the Workers’ Compensation Commission that must be followed, counselors at the Commission to assist with understanding the law, hearings before Administrative Law Judges, appeals to the Commission as a whole, Title 85A of Oklahoma law which applies to all rights for both parties under the law, appeals and decisions of the Oklahoma Court of Appeals and of the Oklahoma Supreme Court which could affect virtually every aspect of the case. Why go through all this expense and time and effort? To make sure that the rights of both the employee and employer are protected. Why is that important? Because it is the exclusive remedy for employees and unlike those suffering other injuries, a worker cannot bring a claim against an employer in District Court, the fundamental concept all workers’ compensation systems are built upon (sometimes referred to as the grand bargain).
An injured employee whose employer has “opted-out” has none of the safeguards and protections governing the claims mentioned above. Whatever plan the employer concocts and files and whatever protections or rights they choose to give or withhold from workers, these decisions are totally up to the employer. Interpreting how to apply benefits, the duration of benefits, what injuries are covered under the plan, the amount and duration of medical benefits, and many other aspects of the injury are totally under the employer’s control, as long as they follow their own adopted plan. The employee has no access to the procedures set up in the paragraph above to protect their rights. Well, fine, this is a little like the law in Texas. Where this becomes unconstitutional is that the opt out law also bars, unlike Texas, the right to sue an employer for benefits, a right guaranteed by Article 2, Section 6, of the Oklahoma Constitution. One worker receives the protection that Oklahoma statutes and the Oklahoma Constitution provide, the other does not, simply because of a decision their employer makes.
Do proponents of opt-out seriously believe that the Oklahoma Constitution is so fundamentally flawed that it would allow this type of treatment of different citizens solely based upon choices employers make? Apparently, either the answer to this is “yes” or they have begun to, as the saying goes, purchase lipstick by the boxcar to apply to the pig called the Oklahoma Option. Lets look at frequent statements praising the difference for our state the Oklahoma Option is providing, according to Mr. Minick.
“More Employee Accountability and Medical Control. For example, faster notice of injury and direction of care to the best medical providers.”
Plans filed by Oklahoma opt-out employers Dillards and Swift give either 24 hours or, in the case of Dillards, until the end of a shift to report an injury(!). That certainly qualifies as fast notice, especially if the injury happens to occur one minute before the end of a shift. Failure to do so means those companies would not have to provide benefits. Nothing in law or the plans guarantees “the best medical providers,” or any way to determine what that even means. State law allows 30 days for employees not working for companies who have opted out to report a claim; after that, an employee can provide arguments regarding why they delayed reporting to address a rebuttable presumption in the law that the injury is not compensable.
"More Employee and Employer Engagement. Employees and employers actively communicate on program rights and responsibilities and payments (often higher than workers’ compensation benefits) are processed on the employer’s normal payroll system."
The Oklahoma Option does likely require more employee/employer engagement as employers explain to their employees how state workers’ compensation laws and the Oklahoma Constitution no longer apply to them, that the laws they are governed by are 100% decided by the employer with no oversight. As to whether benefits are higher or lower than those governed by other pesky “state laws,” those decisions are 100% decided by employers. In the case of Swift and Dillards benefits are a mixed bag, with some benefits being greater than state workers’ compensation laws dictate and some being less. Incidentally, in reference to the statements regarding benefits processed on normal payroll systems, those two plans have no limit on the amount of temporary total disability benefits for higher paid workers. This is much better than the disastrous 70% of the state’s average weekly wage benefit cut now burdening other workers. Oddly, though, the Dillards and Swift plans appear to give workers 85% of pre-injury wages and then go through the usual withholding for income taxes, FICA, etc… This will result in some workers receiving much less than the state requires for those whose employers have not opted out and will create unknown tax consequences for all Swift and Dillards injured employees.
"Free Market Insurance Competition. Insurance companies are allowed to compete against one another to determine who can offer the lowest price for the broadest coverage."
This claim may be the silliest of all, which is saying a lot. Previously, and in all other states, workers’ compensation insurance carriers compete based upon service. The state mandates uniform benefits that must be paid for all injuries and companies compete through innovation and by providing better service, better safety programs, better claims practices, greater financial stability, and more efficient overall operations. Under the Oklahoma Option companies are now able to compete by providing fewer services, lower benefits, and more restrictions on which claims to pay in a kamikaze race to the bottom, with all of the savings coming out of the pockets of injured workers. It is the opposite of free market competition.
There are many other efforts made attempting to defend opt-out, with many citing federal ERISA (Employee Retirement Income and Security Act) procedures that may or may not govern aspects of opt-out plans. These ERISA assertions are predicated on a couple of factors. First, they know that life for most humans on earth is too short to even begin to acquire the comprehensive understanding of ERISA necessary to do the job so attempts often vaguely refer to ERISA as an answer to any question. The most important challenge ERISA forces upon opt-out proponents though is that there is an exemption in ERISA for workers’ compensation benefits. This is not a problem in Texas because, as was mentioned earlier, there is no state requirement that employers have to cover employees for work-related injuries. In Oklahoma, however, most employers must provide coverage. This creates a dilemma for opt-out proponents. They are forced, on one hand, to argue that these are workers’ compensation benefits and therefore employers receive exclusive remedy protection from employee lawsuits. But then they must argue, for ERISA purposes, that these are not workers’ compensation benefits and simply part of an employee benefit plan that they are voluntarily providing to employees.
In summary, the Oklahoma Option begs for an honest answer to a simple question. How can it be constitutional to ask employees to give up the right to seek a remedy under the Oklahoma Constitution in exchange for a system they have no role in constructing and no rights in other than those allowed by their employer? The grand bargain between employee and employer, which is the fundamental concept behind all workers’ compensation systems, becomes a farce when one side is given all the rights and all the protection under the law. The lack of independent oversight guarantees that abuse of discretion will be a routine occurrence. The Oklahoma Coalition for Workers Rights is opposed to these unconstitutional restrictions on Oklahoma’s working families and supports all efforts to repeal the “Oklahoma Option”.