OK & TN Reforms: Someone Will Get Gored

Oklahoma lawmakers are being asked again to approve a plan that would allow employers to opt out of traditional workers' compensation and provide alternative work injury benefit plans that meet minimum statutory criteria.

Last year's attempt failed when the House of Representatives refused to approve Senate amendments to the original bill.

The opt out provision is part of a larger reform plan that was filed by Senate President Pro Tem Brian Bingman, R-Sapulpa, that would make sweeping changes to Oklahoma's system, including the creation of an administrative review system, restrictions to indemnity benefits and would also recognize the Official Disability Guidelines (ODG) published by the Work Loss Data Institute as the primary standard of reference for determining the frequency and extent of services presumed to be medically necessary and appropriate for compensable injuries..

Senate Bill 1062, the 260-page reform proposal filed by Bingman, was approved by the Senate Judiciary Committee on an 8-2 vote during a meeting on Tuesday at which the Committee did not take public testimony.

The new "Oklahoma Injury Benefit Act" differs from last year's proposal in that it does not require an employer to have a high experience modifier or a $50,000 one-year loss in order to qualify for the program. And, unlike the 2012 proposal, there is no provision specifying use of an ERISA (Employee Retirement Income Security Act) plan to provide benefits.

The bill sets out financial security requirements for the program similar to those for self-insured employers. It also establishes the "Oklahoma Option Insured Guaranty Fund" to assure continued payments to injured employees.

While I have interest in seeing whether the Oklahoma opt out provision makes progress against political headwinds this legislative season, the proposal to create an administrative appeal system for claim disputes is more remarkable, and is coincidentally what is being proposed for another state just a couple of borders away, Tennessee.

Tennessee Gov. Bill Haslam's administration is pitching House Bill 194 and Senate Bill 200 which would, among other things like tinkering with indemnity and medical treatment guides, create a new workers' compensation claims court headed by a chief judge. Judges would have to be attorneys with at least five years of experience and be at least 30 years old.

Decisions could be appealed to a three-judge panel appointed by the governor. The bill also allows either party to appeal rulings from the new DWC claims court to the Tennessee Supreme Court.

I have not hidden my opinion that an administrative dispute resolution system for workers' compensation is a preferable method over the civil courts. Workers' compensation requires a high degree of legal sophistication that is not appreciated by general civil practitioners. And if constructed properly an administrative system should speed up the dispute resolution process and get claims out of the system faster.

Should, because I have also seen administrative dispute resolution systems become so procedurally burdened over time that the speed at which disputes are resolved is not any faster than going through a civil court process.

The key is whether these states allow the administrative systems to deal with the substance of the claims over the procedural processes. Administrative informality will likely result in cases where employers are unhappy with results because details are missed, or because of tendencies to liberally construe provisions in favor of the workers, or because of loose evidentiary rules.

When these things happen employers get upset and petition their lawmakers to tighten up the rules, which then increases the procedural burdens on the system thus slowing the entire process.

It's easy to bog down an administrative system with procedural technicalities to satisfy specific interests - filing deadlines, service requirements, fees, review processes - that the efficiency of informal review is lost.

Opt out Oklahoma employers, like their Texas counter parts, likely would adopt arbitration provisions in their plans. This has huge appeal to employers, but is not well received by labor and worker advocates, because the employer is perceived to control the arbitration process since the employer generally will have the right to choose arbitrators (or arbitration companies) and pays for the process.

But it is an informal process and dispute resolution typically ends with the arbitrator's decision because generally those can not be appealed unless the appellant can prove fraud or some other misconduct on the part of the arbitrator That is a high burden of proof.

Ergo, claims are resolved very quickly compared to systems where adjudication is more thorough.

It's the old six of one, half dozen of the other, type of thing. It is very difficult to balance due process and benefit rights with speedy claim resolution. Does it matter more that all details of a claim are considered and accounted for, or that issues are quickly disposed of so the parties can move on?

It's a delicate balance that is never perfected. And can't because there are too many competing interests.

Tennessee Representative Mike Turner, D-Old Hickory, a member of the Consumer and Human Resources Committee which is expected to take up the Tennessee proposal in early March, said, "Anytime you have a change like this, somebody is going to get gored by this somehow."

Yep - that's politics.