The transition of Oklahoma’s workers’ compensation system from a court-based system to an administrative one became effective Feb. 1, 2014, a change that proponents believe will lower costs and help make the state more competitive in attracting businesses.
In May 2013, Oklahoma Gov. Mary Fallin signed Senate Bill 1062, which also established the Oklahoma Workers’ Compensation Commission to replace the former Oklahoma Workers’ Compensation Court. Additionally, the bill created the Oklahoma Employee Injury Benefit Act, an alternative system that employers may use to satisfy state requirements to provide benefits to injured workers.
Both the restructuring of the statutory workers’ comp system and the Employee Injury Benefit Act were held to be constitutional by the state Supreme Court in December 2013 in response to various legal challenges.
The Benefits Act
The benefits act has been compared to the nonsubscription system in Texas where employers can choose to opt out of the workers’ compensation system. But in a podcast sponsored by ratings agency A.M. Best, said attorney David Dodge, a partner with the law firm McCathern PLLC in Dallas, Texas, said there are differences between the two.
“The aim of the benefits act is to allow employers to adopt claims handling procedures that will enhance workplace safety and return employees to work, including light duty work as soon as they’re cleared by their treating physician to do so,” Dodge said. “It also allows qualified employers to adopt positions requiring employees suspected of malingering to submit to independent medical evaluations, functional capacity exams and occupational assessments.”
Unlike in Texas, where an employer who opts to nonsubscribe to workers’ comp may be sued by an injured employee, the “Oklahoma benefits act provides that plan benefits are the exclusive remedy for all occupational injury claims,” Dodge said. “The only exception is that the employee can sue the employer directly for intentional tort if he or she can prove a willful, deliberate, specific intent of the employer to cause his or her injuries. It sets an incredibly high bar of proof.”
To appeal a claim denial under the benefits act, the employee must first go to the plan’s review committee, “a group of at least three people previously not involved in the claim and don’t report to anyone who was involved in deciding the claim initially,” Dodge said.
After reviewing the claim and any new evidence provided, the committee makes a decision as to whether the claim is covered by the plan. If the employee is dissatisfied with the committee’s decision, he or she may file an ERISA suit or file an appeal with the Oklahoma Workers’ Compensation Commission, Dodge said.
“ERISA claims would proceed through the state or federal court system, whereas appeals to the commission would be decided by the commission,” Dodge said. “And then any further appeal would proceed directly to the Oklahoma Supreme Court. The path available to the employee will generally be dictated by the terms of the plan itself.”
By comparison, under the administrative act the commission makes the determination as to whether a carrier’s denial of a claim or an attempt to limit benefits under a claim is allowed.
Dodge said that while the Oklahoma Supreme Court upheld the constitutionality of SB 1062, he expects there will be future challenges to the law, particularly with regard to the benefits act.
Oklahoma Supreme Court Justice Combs anticipated future challenges in a separate concurring opinion in December 2013 noting “the potential for disparate treatment of employees under the different appeal procedures in the two statutes,” Dodge said.
Meanwhile insurance companies are continuing to design new products to meet the requirements of the new law, Dodge said.
“Senate Bill 1062 completely overhauls our flawed workers’ comp system, dramatically reducing the costs to businesses and freeing up private-sector resources that can be invested in jobs rather than lawsuits,” Gov. Fallin, a Republican, said upon signing the bill.
The National Council on Compensation Insurance estimates the overhaul will save around $125 million in employer costs each year, the bulk of which – around $120 million – will come from cutting disability payments, according to an Associated Press report.
The bill’s Democratic opponents claimed the cost savings come at the expense of injured workers, but Fallin said the “reforms ensure injured workers are treated fairly and given the medical care needed to return to work.”
Dodge anticipates “it will be a couple of years before we know whether the act has achieved its goals of improving employee health outcomes and reducing occupational accident frequency costs.”