Oklahoma Option

Oklahoma Justices: Opt-Out No Longer an Option

Have employers have been left in the lurch by the state Supreme Court decision ruling Oklahoma's Opt Out Act unconstitutional?
By: | September 15, 2016 • 5 min read

Raising considerable concern for employers and their injured workers, Oklahoma Supreme Court justices ruled 7-2 that the state’s workers’ compensation opt-out law is unconstitutional.

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The dissenting justices wrote that the majority’s opinion eliminating the Oklahoma Employee Injury Benefit Act adopted in 2013 now leaves “employees and their employers without a clear path to enforce their respective remedies or defenses.”

Indeed, whether the path forward has been thrown into a disarray regarding claims resolutions and new insurance coverage that opt-out employers must now purchase became a debate topic immediately following the Supreme Court’s Sept. 13 ruling in Jonnie Yvonne Vasquez v. Dillards, Inc.

Any assertion that the employers will now face difficulties purchasing coverage, or resolving injured worker claims filed under their opt out plans is inaccurate, said Bill Minick, a chief advocate of the state’s opt out law and president at PartnerSource.

“The trial attorneys and workers’ compensation insurers would love to paint a picture of chaos and the end of the option as a result of this decision,” Minick said. “But the reality couldn’t be further from the truth.”

Since the adoption of the opt-out law that supporters call “The Option,” about 55 employers created their own alternative workers’ comp plans outside Oklahoma’s traditional system.

Bill Minick, president, PartnerSource

Bill Minick, president, PartnerSource

Those employers have 90 days to negotiate for insurance coverage or arrange to self-insure the risk. However, it was unclear immediately following the decision when the 90-day period would begin.

The employers will also have to revisit all of their insurance-related contracts for services such as claims administration, provider networks and consulting services, Minick said.

But in anticipation of the unfavorable court ruling, his firm began development last summer of “well-defined contingency and transition plans for employer clients to return to the Oklahoma workers’ comp system,” Minick said.

He described the process for those employers as similar to annual insurance renewals and said 90 days is sufficient time for such negotiations.

“The PartnerSource team and others are now assisting employers and their insurance brokers with each step in that process,” Minick said.

Yet questions remained, experts said.

“There are going to be a lot of questions that need to be answered moving forward,” said Jonathan Buxton, senior VP of government affairs for the State Chamber of Oklahoma, which expressed disappointment with the court ruling.

“I don’t know how the courts or the [Oklahoma Workers’ Compensation] Commission will handle the claims that are in the pipeline.”

The Supreme Court ruled that the “core provision of the Opt Out Act creates impermissible, unequal, and disparate treatment of a select group of injured workers.”

The court majority emphasized that its ruling applies to “a number” of other cases currently before the Commission and in the appellate pipeline.

Those claims in the appeals pipeline had been stayed until the Supreme Court decided the Vasquez case.

“I don’t know how the courts or the [Oklahoma Workers’ Compensation] Commission will handle the claims that are in the pipeline.” — Jonathan Buxton, senior VP of government affairs, State Chamber of Oklahoma

The Commission will lift the stay as soon as it is instructed to do so by the Supreme Court, said Kim Bailey, the Commission’s executive director. Then, the claims will proceed under normal administrative procedures.

However, not all work injuries result in claims heard by the Commission.
Employers’ operational policies will have some bearing on how those claims are resolved, Buxton said.

The original opt-out legislation anticipated a court challenge against its provisions and provided employers with the 90-day period to arrange insurance coverage, said Bob Burke, an Oklahoma claimants’ attorney known for leading the constitutional challenge against the opt-out law.

Burke said that opt out employers may now be without workers’ comp coverage. But the statute protects them from injured workers filing civil claims during the 90-day period, he said.

Undeterred opt-out proponents, meanwhile, vowed to continue pressing their goals in Oklahoma and other states.

Following the Supreme Court decision, the Association for Responsible Alternatives to Workers’ Compensation released a report stating that option employers experienced better return-to-work and medical outcomes while their costs were 70 percent lower than employers under the traditional workers’ comp system.

Minick said he is confident those results will encourage Oklahoma lawmakers to pass legislation addressing the Supreme Court’s concerns, so that the option can continue in the state.

Insurers, meanwhile, praised the court’s decision.

“The Oklahoma Opt Out Act allowed some employers to shift much of their responsibility for occupational injuries to injured workers and their families, government programs, charities, and ultimately taxpayers,” the Property Casualty Insurers Association of America said in a statement.

“The opt-out plans put all power in the hands of the employer, with no independent review of the employer’s decision.”

“This Court has previously made it clear we will not accept the invitation of employers to find a discriminatory state statute constitutional by relying on the interests of employers in reducing compensation costs.” — Oklahoma Supreme Court decision in Vasquez v. Dillards

The Supreme Court ruling stems from a September 2014 claim filed by Vasquez, who injured her shoulder and upper neck. Her employer, Dillards, covered her treatment. But when Vasquez requested an MRI, two review doctors obtained by the retailer found the injury resulted from a pre-existing condition.

Dillards denied the claim and Vasquez appealed, eventually leading to the Supreme Court decision.

“This Court has previously made it clear we will not accept the invitation of employers to find a discriminatory state statute constitutional by relying on the interests of employers in reducing compensation costs,” the high court’s majority opinion states.

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The court’s dissenters criticized the majority, however, for ruling on opt-out’s constitutionality while skirting the case facts on whether Vasquez should receive benefits for a pre-existing condition.

“Here, the Court has provided no guidance for employees, or their employers, as to where a cause of action should be pursued if the Opt Out Act ceases to exist,” Justice James Winchester wrote in his dissent.

“Further, other employers with plans under the Opt Out Act that have met or exceeded the Act’s terms will never get the opportunity to have the validity of their plans tested.”

Roberto Ceniceros is senior editor at Risk & Insurance® and chair of the National Workers' Compensation and Disability Conference® & Expo. He can be reached at [email protected] Read more of his columns and features.

More from Risk & Insurance

More from Risk & Insurance

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.

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That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.

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Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]