Tuesday, April 3, 2012

OK's ERISA Option Movement Underlies Broader Discontent

Oklahoma's experiment with an ERISA option to workers' compensation moves forward remarkably fast, with a hearing today before the state House Judiciary Committee.

Two bills, House Bill 2155 and Senate Bill 1378, began as identical measures but the Senate bill was amended to include a provision to require that any alternative plan offered by an employer must provide benefits at least equal to those provided under the workers’ compensation system.

In my opinion this amendment would be a minimum requirement for success of a voluntary option.

House Bill 2155 by Speaker of the House Kris Steele, R-Shawnee, passed March 13 with bipartisan support on a 70-22 vote in the House and was sent to the Senate.

Senate Bill 1378, by Senate President Pro Tempore Brian Bingman, R-Sapulpa, passed by a 27-17 margin in the Senate on March 14 and moved to the House where it is before committee today.

Nathan Atkins, communications director for Bingman, told WorkCompCentral Monday that last week there was discussion of expanding the pool of employers who could qualify under the proposed program, but did not elaborate on any specifics on possible changes.

Currently, the bills would apply to employers that:
  • Have employed at least 50 workers during the preceding calendar year.
  • Have a workers’ compensation experience modifier, as reported by the National Council of Compensation Insurance (NCCI), "greater than one (1.00) for the preceding Oklahoma workers’ policy year."
  • Have total annual incurred claims, "as reflected in an NCCI experience modifier worksheet or their workers’ compensation carrier loss runs," greater than $50,000 in at least one of the three preceding Oklahoma workers’ compensation insurance policy years. 
Qualifying employers, who adopt alternative plans, would have the same exclusive remedy protection as employers under the workers’ compensation law.

Though the concept of a voluntary option was introduced last year, it was brought before state legislators too late for any action. Supporters knew that, but introduced bill regardless to pave the way for smoother sailing in 2012.

The strategy seems to be working. While there is some opposition to an optional system, it does not appear to be very robust or vehement, and progress towards the option is moving surprisingly swift.

Some of the provisions seem counter-intuitive, such as the requirement that an employer have an ex-mod of greater that 1.00 since that would seem to reward employers with poor safety records. And the requirement of greater than $50,000 in loss runs likewise seems contrary to good public policy as well as being rather arbitrary.

But these are not what I would call deal breakers in the grand scheme - the fact that this proposal is getting good legislative response with minimal resistance speaks to an overall frustration with the status quo - that workers' compensation isn't doing what people want it to do in the State of Oklahoma.

Presently there are nearly a dozen states that have some workers' compensation "reform" agenda either in process or brewing, indicating a broader discontent with existing systems. How Oklahoma deals with the voluntary option is going to give reformists more alternatives in the coming years.

I think that we are in the middle of a revolution - the confluence of a national health care reformation (regardless of how the Supreme Court deals with the issue), multiple state systems engaged in substantial workers' compensation changes, the drag of a very slow recessionary recovery, changes in the very fabric of this country's underlying economy ... social protection systems such as workers' compensation are going to look very different 10 years from now.

When I got into work comp in 1985 it seemed to me a sleepy little industry that wasn't very exciting. Those outside the industry may not see work comp as exciting, but that's only because they aren't trying to keep up with all the changes!

For additional information and the text of HB 2155 go here.

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