Workers’ Comp Reform: Priority Number One for Oklahoma Lawmakers

In an effort to avoid losing businesses to other states, lawmakers in Oklahoma are seeking to control costs for business residents through workers’ compensation reform.

Deemed “broken” by Republi-can House Spea-ker Todd Heitt, Oklahoma’s workers’ comp system has moved to the 15th most expensive system in the nation, according to an Oregon study.

Heitt’s position is that jobs are being lost to other states because of high workers’ comp rates and says change is his number one priority.

Democratic Gov. Brad Henry agrees that change is essential and workers’ compensation reform tops his list of priorities for the 2005 Oklahoma Legislature, as well.

Both have released comprehensive reform plans addressing the current state of Oklahoma’s workers’ comp system.

Gov. Henry’s plan is laid out in Senate Bill 846, authored by Judiciary Chairman Charlie Laster, D-Shawnee, stressing workplace safety and proposing to curb medical costs. It passed the Senate Judiciary Committee on a 5 to 4 vote.

“Senate Bill 846 is a result of work from a bi-partisan task force that spent months developing a progressive workers’ comp reform package that will dramatically reduce costs for business without compromising the rights of injured workers,” Laster said.

The vote split upon party lines with Republican members voting against the bill, complaining it was “watered down.”

Sen. James Williamson of Tulsa said Henry’s proposal was just a “baby step” when the state really needs comprehensive reform. “The governor claims this is a bi-partisan bill, but in reality it is an effort by the governor and the Senate Democrats to shield their trial lawyer friends from meaningful reforms–just like they did last year during the lawsuit reform debate.”

Sen. Scott Pruitt, R-Broken Arrow, said, “Senate Bill 846 does nothing to address the out of control legal costs that are driving up workers’ comp rates in Oklahoma.” Adding that in Oklahoma, attorneys are two-and-a-half to three times more likely to be involved in workers’ comp cases than the national average.

Heitt agreed stating the bill does not confront the high cost of workers’ compensation litigation, claiming it’s the single biggest factor driving up costs. “Our broken workers’ comp system is the number one barrier to new jobs and better wages for Oklahomans. We can’t afford to tinker around the edges. We must have comprehensive reform.”

The House and Senate Republicans estimate their workers’ comp reform plan outlined in House Bill 2046 will save employers in Oklahoma more than $100 million a year. It passed the House Judiciary Committee by a vote of eight to five.

Representative Fred Morgan, (R-Oklahoma City) said, “Oklahoma’s workers’ comp system is a severe strain on our state’s economy. We passed House Bill 2046 out of the House Judiciary committee to offer a breakthrough plan to fix this problem once and for all. HB 2046 reduces litigation and medical costs, increases worker benefits and injects competition into the marketplace. We’ll make workers’ comp less costly to employers and better for injured workers.”

Dan Ramsey, president and chief executive officer of the Independent Insurance Agents of Oklahoma, said the IIAO supports HB 2046 because it is the only bill that will achieve increased benefits and savings.

Both plans include a new law that would call for “use and file” rates for workers’ comp insurance, allowing an insurance company to use a rate as long as they file it with the Board for Property and Casualty Rates within 30 days of initial use.

HB 2046 would relieve the Guaranty Fund from paying 100 percent of a workers’ comp claim for companies who have either left the state or filed for bankruptcy and allow for drug testing any time an employee has sustained a work-related injury or property damage occurs.

It would increase funeral benefits from $5,000 to $10,000 and increase lump-sum death benefits to a surviving spouse from $20,000 to $100,000. Lump-sum death benefits to surviving children would increase from $5,000 to $25,000 each, except where there is no surviving spouse, in which case benefits would increase from $10,000 to $25,000 each, with a combined cap of $150,000.

The bill addresses workers’ comp fraud by allowing an employer to proceed with civil action for fraud against an employee if the employer believes they are engaged in a fraudulent workers’ comp action and collect punitive damages if successful.

SB 846 proposes to contain medical costs through utilization standards and treatment guidelines, stating they should be based upon nationally accepted practice standards and be included in all major cost areas including treatment of back, knee, neck and shoulder injuries as well as utilizing x-ray and imaging technologies for diagnostic purposes.

The bill would increase burial benefits from $5,000 to $8,000 and increase disfigurement awards from $20,000 to $30,000. Additionally it proposes a fee schedule for provider charges based on a percentage of Medicare with a higher percentage paid to surgeons providing more objective reim-bursement. It also calls for the price of prescription drugs to be set at 90 percent of the average wholesale price, plus a $5 dispensing fee.

To address issues of workers’ comp fraud SB 846 would increase funding for the attorney general’s anti-fraud unit by $300,000 per year to allow the addition of five staff members, enhance penalties for all fraud participants, eliminate benefits obtained by fraud and create a Premium Fraud Task Force.