The Oklahoma Supreme Court Monday cleared the way for the state to implement an administrative system for resolving disputed workers' compensation claims.

However the decision left important industry trade groups, each with members that underwrite workers' comp insurance, at odds over the outcome.

The state Supreme Court decision to support a law enacted in May, combined with action by Tennessee that clears the way for a similar system to go into effect next July, leaves Alabama as the only state to maintain a court-based adjudicative system for settling workers' comp claims.

Joe Woods, vice president, state government relations for the Property Casualty Insurers Association of America, says the decision, coming a week after oral arguments in the case, means that the state can now begin to implement the law that was in dispute, which is scheduled to go into effect in February.

He cautions that the decision leaves the door open for court challenges to specific provisions of the law. “We all know there will be challenges to specific provisions of the law over the next year. But the court decided to rule on multiple-subject rule and leave specific provisions to later scrutiny,” Woods says.

He says besides accelerated handling of disputed claims, there will be some cuts in benefits, which will also have a direct and immediate impact. “We are glad that that uncertainty has been eliminated. Challenges through the courts and adjustments to the new system will take time, but at least it has been started,” says Woods.

But, Wil Rijksen, a spokesman for the American Insurance Association, raised concerns over the decision. He says the decision held that the underlying law does not violate the constitutional prohibition against a legislative bill addressing multiple subjects.

But he says, “The decision creates instability in the workers' compensation system for the foreseeable future as the justices left open the question of whether the new law might be unconstitutional as applied, but decided that determination cannot be made until after it has taken effect, and a particular set of facts has been presented.”

Until then, Rijksen says, the court is without power to take further action.

Therefore, this decision “results in the worst of both worlds,” he states.

“The state and the carriers must go through the effort of implementing the new law as passed, with the understanding that various provisions of the law could be struck down in the future, and the 'future' taking many years of additional litigation to finally determine.”

The National Council on Compensation Insurance estimates that the law, combined with other changes, will reduce the cost of workers' compensation claims in Oklahoma by 14.2 percent, or $138 million annually.

NCCI says in an analysis that other provisions not capable of being quantified could also produce significant additional savings in the long-term, although the impact in the short-term is unclear.

In its decision, the court rejected a constitutional challenge by state firefighters. The majority ruled that “the Legislature has exercised proper authority in a matter over which it has the power to act.”

The lawsuit had alleged, among other things, the law amounted to unconstitutional “log-rolling” because it contains multiple subjects in violation of the state's Constitution's single-subject rule.

“As all sections of the new law are inter-related and refer to a single subject, workers' compensation or the manner in which employees may ensure protection against work-related injuries, we disagree with the constitutional challenge to the administrative act on grounds of log-rolling,” the Oklahoma Supreme Court wrote in its majority opinion.

“Until such time as a case or controversy or a justiciable issue is presented to this court, we are without jurisdiction to rule further with regard to this act,” the opinion states

Justice John Reif wrote a separate opinion that said most future challenges should be decided by the new Workers' Compensation Commission before they reach the courts.

“In a few cases, however, there are provisions that are unconstitutional on their face,” Reif says.

The law is S.B. 1062.

Among the law's most controversial provisions is one that allows companies to “opt-out” of the state WC system.

Bruce Wood, AIA associate general counsel and director of workers' compensation programs, says, “Opt-out is a step that AIA strongly opposes for a number of reasons,” the chief one of which is that, “There is not the ultimate guarantee provided by the workers compensation plan.”

An employer who opts out under this legislative proposal would have to buy an ERISA-qualified plan of benefit that would provide a substitute benefit to workers.

Special Reports /

Okla. Supreme Court Clears Workers' Comp Law, but Future Remains Unclear

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