OK's True Cost Control Feature

Most of the attention Oklahoma's reform is getting in the work comp world is about opt-out.

But another minor provision of that law may be something more meaningful for traditional work comp systems to keep an eye on.

Oklahoma for some time has had a "value added" provision on its books for attorney fees.

In short, claimant attorneys fees are capped at 30%, but in the past that cap was available only if the employer admitted the claim, provided medical coverage and made a written settlement offer.

Under Senate Bill 1062 all that is required now is that the employer make a written settlement offer, then the claimant attorney fee is capped at 30% of the difference between what the settlement offer is, and what the award actually ends up being.

For instance, if an employer offers an injured worker a settlement of $10,000, the worker hires an attorney and obtains a $15,000 settlement, the claimant's attorney would only be entitled to attorney fees of up to 30% on the $5,000 difference between the two awards.

Because the law in the past required admitting liability and providing medical services, many employers deferred making settlement offers, thus prolonging case adjudication, ergo expense.

Since employers would have to admit the claim in order to invoke the cap on attorney fees, claimants' attorneys began adding additional body parts to increase the value of the case and make it more difficult for employers to admit the claim - employers were loath to admit to body parts that they didn't feel were part of the original compensable injury.

Consequently there would be no cap on attorney fees so the "value added" provision of the law was not as effective as had been hoped.

Now the employer need not admit to liability and can make an offer of settlement without jeopardizing its position on various claim elements.

Another provision of the law is intended to incentivize claimants to accept offers.

Under SB 1062's deferred Partial Permanent Disability program, an injured worker with a court-issued PPD award who returns to work would have his benefits reduced by each week he is back at his pre-injury job. However, employees who accept pretrial settlements will not face the risk of having their PPD awards reduced by returning to work.

The thinking is that many injured workers will be tempted to accept an early settlement, rather than risk losing part of their PPD award by returning to work.

Claimant attorneys have told WorkCompCentral that they don't believe the changes will cut the number of cases being filed, and they're probably right.

But the theory is that many more cases will settle early on with these incentives.

Whether or not these new provisions actually achieve what is intended - more cases settling earlier - depends upon how well the state educates injured workers and employers/carriers about these provisions.

And my guess is that most of that education will come from actual cases going through the adjudication gauntlet.

Nevertheless, I find these provisions very interesting and something to keep an eye on to see if, in fact, cases actually do settle earlier.

Regardless of whether the value of cases goes up or down is not the point. The biggest threat to an employer in any work comp case is duration - the longer a case stays open regardless of the extent of disability, the more expensive it becomes.

I'm excited about Oklahoma's originality in this regard and look forward to seeing the results in a few years. This small provision may prove more effective in claims management than any opt-out systems.