Tuesday, March 3, 2015

Employee Opt Out

Texas and Oklahoma permit employers to opt out of participating in those state workers' compensation systems. A bill in Tennessee is pending on the same topic, and I suspect that this is a trend that will spread to many other states over the near future.

The reason opting out of work comp is attractive to employers is because of the freedom provided: freedom to control medical more tightly, freedom to provide more generous benefits if desired, freedom to coordinate other benefit programs, etc.

Workers' compensation otherwise, with little exception, is a compulsory insurance line with mandated procedures controlling nearly every aspect of system participation, particularly after a claim occurs.

A hundred years ago this made sense. There was a direct relationship between labor and management. The friction between the two was resolved with the simple idea of workers' compensation.

Over time, however, many different lubrication points have been inserted so the direct relationship between employer and employee has been diluted, and those lubrication points have dried up causing even more friction.

When a claim occurs the injured worker cedes his or her life's control to third parties who are tasked with providing a laundry list of "benefits" legislators determined are necessary to provide protection until the claimant can return to a self sustaining mode.

What happens too frequently, though, is that the system itself enters a sustaining mode whereby purveyors of goods and services find ways to extract profit from misery.

While many states mandate participation in other lines of insurance, such as automobile,  the difference is that no other line of insurance controls the panoply of options available after a claim occurs.

Workers' compensation claimants are mandated, for instance, to participate in a particular medical network. Or can not avail themselves of supplemental income to make ends meet. Or can not seek medical treatment that does not meet some defined standard.

So while the movement grows for employers to get out of work comp and take control of their experience and work force more tightly, there is no such option for employees to get out of comp.

Once a claim is made, the injured worker enters the vortex of workers' compensation and those with injuries that fall outside of the bell curve of expected injury outcomes in particular lose control of their lives.

I was taken by the story of Glenn and Natalie Johnson of Texas, and that state's Supreme Court's ruling Friday to recognize exclusive remedy protection for the claims payer despite what can only be described as despicable conduct by them, if the allegations of the Johnson's civil complaint are true.

Recall that Glenn Johnson sustained serious burn injuries, resulting in amputations of limbs and other devastating injuries. According to his complaint the employer's carrier and claims administrator then embarked on a series of actions to deny, delay, intimidate and discredit him and his wife to the extent that it took them two years to clear their names from a criminal investigation based on allegedly trumped evidence.

The Johnsons sued Old Republic Insurance Company and Crawford & Company in retribution on legal theories that weren't, yet, constricted by the Texas Supreme Court's 2012 ruling in Ruttiger.

On Friday that court threw out the Johnson's complaint, saying the defendants enjoyed the same exclusive remedy protection as the insured employer.

What if the Johnsons had not been the subject of workers' compensation? What if the injury had occurred in some other setting? And the Johnsons used other resources, such as general health insurance and private disability insurance, to regain some living normality?

What if the Johnsons had opted-out of work comp?

If employers can opt-out, why can't employees?

I'm sure industry pundits will find all sorts of reasons why this can't be done, but I don't see any real objection that can't be engineered around.

For instance, employees could be given an option at the outset of employment, after some probationary period, to participate in the company's work comp program or not.

If an employee elected not to participate then that employee would be required to maintain adequate medical insurance (partially paid for by the employer per minimum Affordable Care Act standards) and would be required to maintain disability insurance that meets minimum standards of latency and indemnity levels.

The employee would have freedom to get treatment within their medical insurance plan, with the doctors of their choosing. Those doctors would need to conform to the reporting requirements of the disability plan, but likely those are not nearly as onerous as the required reporting for work comp.

And there would, of course, be provision for the protection of the employer from suit assuming the employer did not intentionally cause an injury, or act with gross negligence in same.

In his white paper, Peter Rousmaniere examines a changing workers' compensation world where the industry is essentially forced to morph into a greater integrated systems management role.

As the industry matures to account for absence management and integration of diverse, but related, state and federal employment mandates, it is not inconceivable that products and services could be tailored to permit employee opt-out; in fact, this could be a whole new insurance market...

Certainly an employee opt-out isn't something that's going to happen tomorrow. There are many unanswered questions that go beyond who pays for what: social impact, economic impact, political impact, etc.

But the times, they are a changin'. Just as employer opt-out wasn't taken seriously outside of Texas only a decade ago, permitting employees to opt out in the future shouldn't be discounted.


  1. As an employee we do have the choice to LIE and opt out now, as many do for they can not take dealing with our comp systems as they are, any more. And many are being forced to LIE and put OJI"s on their regular ins these days, encouraged by their Dr.s to do so. For the Dr.s don't agree with our comp laws, so they just break them at the bed side know it will take the patient years before they ever see any justice, if they ever do.

    Why do health care organizations like The Everett Clinic, Snohomish Country Community Health Centers, Sea Mar ect. all get to take the Work Comp ins for the emergent OJI's, but they all reserved the right to refuse to treat work comp patients if their cases are over a years old.
    So they get to make all the gravy off the original OJI:s but then refuse to treat folks after their cases with comp are over a year old. on a case by case basis they say.
    Must be nice to be able to treat only those you select to treat. Abused victims of our comp system, no one wants to treat if their over a year old.
    And why do all these institutions take the Work Comp ins. for the OJI's, but will not take that same ins. when treating these workers MH issues derived from the abuses going on in their health care and claims?
    How can they take the ins. for the emergent OJI's but not take the same ins to treat the MH issues derived from the OJI and our broken one sided system?
    Why are these institutions allowed to do this to Work comp claimants?
    And Why do all these places offer psychiatric services, but none will take the WC ins, to cover MH issues related to the OJI's? Is that not discriminating on a grand scale against aging injured workers fighting an trying to work with a very broken one sided system against labor and patients who are injured on or by their jobs in WA STATE?
    So these institutions all get to work and conspire against the injured worker.
    Why? When they all claim to be there to help people? Hmmm?
    Has the medical community declared war on the injured aging workers? That choose to fight back against this abuse in their health care needs today?

  2. I'd say that there's exactly zero instances of this being used to facilitate more generous benefits that an Employer is desiring to provide. It also implies that there would otherwise be a prohibition on such generosity. There is not. Beyond that, I'm unsure why an employee would opt out of a system in order to gain sub-par benefits at greater costs.