If a recent ruling by the Oklahoma Supreme Court remains unchanged, the state’s tax authority may end up having to pay millions of dollars in rebates to workers’ compensation carriers and companies that self-insure for workplace injuries.
In an unpublished opinion dated June 26, Oklahoma’s high court ruled that the Oklahoma Tax Commission was wrong to deny rebates to CompSource Mutual Insurance Co. and the Oklahoma Association of Electric Self Insurers for money those entities were assessed on behalf of the Multiple Injury Trust Fund. The Court noted that because the opinion has not been released for publication, it could be subject to revision or withdrawal.
Insurers and self-insured companies are assessed for the Multiple Injury Trust Fund, which provides benefits for workers that suffer permanent total disability due to multiple workplace accidents. The money is paid to the Tax Commission, which deposits it into the Workers’ Compensation Assessment Rebate Fund administered by the state treasury.
Traditionally under state law, insurers have been allowed to request a rebate for two-thirds of their assessment.
According to the Oklahoma Supreme Court’s written opinion, in May 2016 CompSource, the largest workers’ comp carrier in the state, filed a request for a rebate “in the amount of $10,777,247.00 based upon the Multiple Injury Trust Fund assessment CompSource paid in 2015.” The Oklahoma Association of Electric Self Insurers Fund in March 2016 sought a rebate for its 2015 assessment of $136,754.82.
An administrative law judge determined the rebates should be paid, but the Tax Commission denied the rebate requests of both entities.
In the Court’s opinion, Justice Edmondson wrote: “The legal issue presented by these cases is whether certain parties are entitled to a rebate of funds previously paid to the Tax Commission. The controversy involves statutory construction and the intent of the Legislature concerning the rebate.”
CompSource and the Self Insurers Fund argued “they are entitled to a refund pursuant to 68 O.S. §§ 6101-6102, and the Tax Commission argues these statutes have been repealed citing an Executive Order issued by the Governor,” the Court’s opinion states.
According to the Court’s opinion, “68 O.S. § 6101 states a party required to pay an assessment pursuant to 85 O.S. § 173 is entitled to receive a rebate equal to two-thirds (2/3) of the amount of the assessment actually paid, subject to application to and approval by the Oklahoma Tax Commission.”
The Tax Commission had argued that sections 6101 and 6102 had been repealed by implication when the Legislature in 2015 passed House Bill 2238, which contains an amendment removing some restrictions on how much of the paid assessment insurers can recover from policyholders.
The Court concluded, however, that the “insurer assessments remained the same after the 2015 amendment except for the former billing restrictions which were removed by the amendment.”
The Court added: “The Legislature knows how to expressly repeal a statute, and our recognition of this fact is one reason for the general rule that it will not be presumed that a legislature, in the enactment of a subsequent statute, intended to repeal an earlier one, unless it has done so in express terms. The Legislature did not expressly repeal 68 O.S.2011 § 6101.”
The Supreme Court remanded the proceedings to the “Tax Commission for the appropriate processing of section 6101 rebates for protestants.”
The Court denied, however, the requests by CompSource and the Self Insurers Fund for payment of interest on the 2015 rebates. It also acknowledged that its ruling could impact other insurers that have paid assessments for the multiple injury fund.
The case is: Compsource Mutual Insur. Co. v. State Ex Rel. Okla. Tax Comm. and Okla. Assoc. of Electric Self Insurers Fund V. State Of Okla. Tax Comm. Case Number: 116337; 116341.
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