Workers compensation reform legislation debated by lawmakers inOklahoma continues to contain a provision opposed by insurancetrade groups.

The state House on April 4 unveiled legislation that would rollback cuts in compensation for injured workers, which was proposedby the Oklahoma Senate in February.

However, the proposed law still contains provisions that wouldallow companies in the state to opt-out of the system.

“AIA opposes legislation that will allow for an opt-out systemin Oklahoma and we will continue to work against its passage forthe remainder of the session,” says Willem Rijksen, a spokesman forthe American Insurance Association (AIA).

Bruce Wood, AIA associate general counsel and director ofworkers' compensation programs, says the opt-out is a proposal thathas been around in Oklahoma for a few years and is being promotedby “non-subscriber interests in Texas,” as well as certainemployers, particularly in the oi-and-gas and retailindustries.

Wood says, “There is no substitute plan, no opt-out plan, whichcan provide the protection that workers compensation does.”

He said workers compensation benefits provided by insurance arebacked by a state guaranty fund. If an insurer goes insolvent, thefund—which is financed by all carriers participating in thatstate—will ensure the payment of claims.

“That guarantee is 100 percent; it is unlike any other,” Woodsaid. “That cannot be replicated.”

Under the current Oklahoma proposal, Wood says, employers whoopted out would have to buy an ERISA-qualified plan of benefit toprovide a substitute benefit to workers. But, because the opt-outis not backed by the guaranty fund, the AIA opposes it.

The lengthy proposal submitted last week is meant to scrapOklahoma's judicial compensation system and replace it with anadministrative system run by three governor-appointedcommissioners. The latest version of the bill aims to phase out thecurrent court-run system by 2017.

The new version of the bill, among other things, restoresbenefits for widows and amputees to current levels; extends theamount of time an injured worker can file a claim from three daysback to 30; and reinstates compensation rights for volunteerfirefighters and members of the Oklahoma National Guard.

It also streamlines the transition from the current court-basedcompensation system to an administrative one, allowing currentcourt judges to continue to work existing claims until their termsexpire.

But the new bill would balance a decrease in cost savingsanticipated by these reinstatements with even further cuts to themost common claim filed in the system — permanent partialdisability.

Oklahoma is one of the last three states that settle theresolution of claim disputes to the courts. Tennessee and Alabamaare the other states, and they are also considering a transition toan administrative system.

Paul T. Martin, the National Association of Mutual InsuranceCompanies' state affairs manager for the Southwestern Region, saysthe bill is “a step toward making workers' compensation insurancein Oklahoma more affordable for businesses. It's a complexissue, as evidenced by the differences between the various versionsof the bill.

“We're confident the Legislature will find common ground in aneffort to help make workers' compensa

Mike Seney, senior vice president of policy analysis andstrategic planning for the Chamber of Commerce of Oklahoma, rejectsuse of the term “opt-out” to describe what thelegislation would allow Oklahoma companies to do.

“We prefer to call the 'Oklahoma option' what it reallyis: alternative coverage rather than opt-out,” Seneysays. He adds that in Texas, an employer can opt out and “gobare” with no coverage for their workers.

“The 'Oklahoma option' requires that any employer choosing toremove themselves from the Oklahoma workers compensation systemmust still provide equivalent benefits to their workers,” heexplains.

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