Oklahoma WCC Rules Opt-Out Unconstitutional
Mar 2, 2016

LEAD STORY

Last Friday the Oklahoma Workers' Compensation Commission (WCC) unanimously ruled the Oklahoma opt-out option unconstitutional. The Commission found that the Oklahoma Employee Injury Benefit Act ("the Act") as a "whole is not enforceable." The Act allowed employers to opt out of the state's workers' compensation system if they provide alternative benefits for their injured employees.

WHY?

The WCC found the Act unconstitutional because it deprives injured workers equal protection and access to the Court. The WCC went on to say that the opt-out provision created a "dual system under which injured workers are not treated equally" making it more difficult for the injured employee to claim benefits. The WCC also found that the opt-out Act did not eliminate the exclusive remedy provision of the state workers' compensation act. Thus, the Act unconstitutionally denies injured workers from bringing a court challenge for recovery of damages.

A QUESTION OF JURISDICTION

Usually, employee benefit plans are governed by the Federal Employee Retirement Income Security Act (ERISA), which sets minimum standards for most voluntarily established pension and health plans in private industry to provide protection for employees in these plans. Since ERISA is a federal statute, then federal courts would have jurisdiction over these plans and an employee's right to recovery. However, the Oklahoma legislature gave jurisdictional authority to the WCC to hear appeals under the Act. Under this authority, the WCC held that it was "empowered…to consider constitutional challenges."

NOW WHAT?

The decision is immediately appealable to the Oklahoma Supreme Court, which must consider the case on an expedited basis. If the Supreme Court were to uphold this decision, the employer would have 90 days to comply with the Oklahoma workers' compensation act. The WCC found that the employer's liability to the injured employee is now limited to the Oklahoma workers' compensation act. According to Insurance Commissioner John Doak, his department will continue to perform its statutory responsibilities pending the appeal.

BOOMER SOONER

OKLAHOMA - AGAIN

The Oklahoma legislature is considering two bills on earthquake insurance reform. The bills (S.B. 1497&S.B. 1498) would create a state earthquake insurance program and would stop insurers from denying claims from man-made earthquakes caused from oil and gas activity in the state. Currently earthquake policies are allowed to exclude man-made earthquakes.

MORE EARTHQUAKES THAN ANYWHERE IN THE WORLD

Oklahoma has seen a dramatic increase in the number of earthquakes. Once averaging two earthquakes per year, Oklahoma is now the most seismically active state with almost three earthquakes a day and close to 1,000 earthquakes per year. Oklahoma Insurance Commissioner John Doak reported that nine out of 10 earthquake claims were denied in 2014 on the assertion that the quakes were man-make. We'll keep watch on how this shakes out.

MAKING OUR WAY AROUND THE COUNTRY

VIRGINIA

Virginia S.B. 631 passed both the House and Senate and is now awaiting signature by Governor Terry McAuliffe. The bill would direct the Workers' Compensation Commission to create regulations to establish the first Virginia fee schedule for workers' compensation medical services. Once signed by the Governor, the regulations will be effective January 1, 2018.

OHIO

The Ohio Bureau of Workers' Compensation (BWC) announced a proposal to reduce premium rates by 8.6% effective July 1, 2016. The BWC said the rate cuts will save private employers $463 million annually compared to rates in early 2011. The recommendation needs to be approved by the BWC Board of Directors, which is scheduled on March 17th.

SUPER TUESDAY

Too busy watching back-to-back reruns of The Big Bang Theory? This way to Super Tuesday’s results.

RIMS 2016

Thank you for your readership. We greatly appreciate your feedback and support of The Way. We have begun work on several mid-session legislative updates, including our comprehensive CloakroomReport, which we will be discussing at the RIMS Annual Conference in San Diego, April 10-13. If you are planning to attend the conference, please send a line to Greg McKenna or Cari Miller. Let’s get together. 

As always, please connect with GB on LinkedIn and follow us on Twitter.

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