OK Opt Outs - Hold Your Horses!

While there is quite a bit of attention being paid to Oklahoma and the opportunities that its new opt-out program may bring to employers with the resources to participate, a recent case out of Texas is a reminder that if you are going to have an alternative work injury protection plan in place you had better have all of the details accounted for, otherwise that plan is for naught.

PM Leasing hired Rita Murdock to work as a nursing assistant at Park Place Care Center in Georgetown, Texas, on April 21, 2003. She signed a binding arbitration agreement as a condition of her employment with PM Leasing.

Murdock later became an employee of Trisun Healthcare, which provided professional and licensed staff to the nursing home.

In August 2005, Trisun called its employees into a meeting and informed them that it had elected not to purchase workers' compensation insurance but was instead implementing the Trisun Healthcare Associate Injury Protection Plan. Murdock signed an acknowledgment that she had attended the meeting and received copies of the plan and an arbitration agreement.

The acknowledgment form that Murdock signed notes that she accepted the plan's arbitration agreement, but the documents that Murdock received are not included in the court record and the acknowledgment form does not summarize or provide the terms of the plan's arbitration agreement.

Of course Murdock gets injured, seeks benefits and files suit for negligence. And of course Trisun files a motion to compel mandatory arbitration.

Trisun lost.

The court said that under the Federal Arbitration Act, in order to compel arbitration, a party must establish that there is a valid arbitration agreement and that the claim in question falls within the scope of that agreement.

It all comes down to the evidence:

Trisun did not attach the plan's arbitration agreement to its motion to compel. The acknowledgment form that Murdock signed does not prove her consent, according to the opinion, because the arbitration agreement it references is not in the record and that form also does not make any mention of the prior PM Leasing arbitration agreement.

The court noted that prior case law has established that Texas employees can consent to an arbitration agreement if they continue working for an employer after being informed of its contents, but such notice must be proved through evidence. Trisun had not requested an evidentiary hearing and submitted no documents that even summarized the arbitration agreement that Murdock had purportedly consented to.

"The absence of these material terms raises issues about the existence of a mandatory arbitration policy effective at the time of Murdock's injury covering the claims at issue," the court said. "Trisun's summary proof does not include any evidence that resolves those issues, such as evidence of communications occurring at the Plan announcement meeting notifying Murdock of the material terms of the Plan or other proof of the contents of the referenced summary plan description book, highlights brochure, or arbitration agreement."

A non-subscribing, opt-out employer needs to keep accurate, timely records and be prepared to produce those records when litigation arrives challenging the alternative work injury plan.

The case is Murdock v. Trisun Healthcare Inc., No. 03-10-00711-CV, 05/09/2013.