Another Part of Oklahoma Workers’ Comp Act Struck Down

The Oklahoma Supreme Court dealt another blow to the state’s 2013 workers’ comp overhaul by finding unconstitutional a provision of the Oklahoma Administrative Workers’ Compensation Act pertaining to the deferral of permanent partial disability benefits.

Other recent rulings have represented setbacks for the AWCA, which has had the support of the business community, as well as Gov. Mary Fallon and Insurance Commissioner John Doak, who has attributed a significant drop in loss costs in the state’s workers’ comp system to the 2013 law.

In Maxwell v. Sprint PCS, (Case Number: 113898), which is representative of a class of several companion cases, the Court ruled that “scheduled members are exempt from the AMA Guides under the Administrative Workers’ Compensation Act,” and that the permanent partial disability deferral provision of statute “is an unconstitutional violation of due process.”

In state statute, the term “scheduled member” includes body parts such as arms, legs, toes, fingers, etc.

The case involved a Sprint employee, Theresa Maxwell, who injured her knee in a work-related incident, properly notified her employer and filed the appropriate forms in relation to her workers’ comp claim, the Court explained. She had surgery on her knee and received temporary total disability benefits for just under three weeks.

“After reaching maximum medical improvement on July 2, 2014, she returned to her pre-injury position with her employer earning her pre-injury wages,” the Court said in its unpublished opinion dated April 12, 2016. In late September, the injured employee “filed a request for a contested hearing on the issue of permanent partial disability.”

Relying on the AMA Guide 6th Edition, the administrative law judge determined that the injury to Maxwell’s knee resulted in 2 percent permanent partial disability to the body as a whole. The compensation rate was set at $323.00 for a total award of $2,261.00. However, because the employee had returned to her job at her pre-injury compensation rate, the ALJ ordered the benefit award to “be deferred at a rate of $323.00 beginning July 2, 2014, for every week Petitioner worked in her pre-injury or equivalent job.”

The ALJ’s decision was upheld by the Oklahoma Workers’ Compensation Commission and Maxwell appealed.

Upon review, the Court found that the ALJ wrongly assigned Maxwell’s disability award to the body as a whole because the injury was to a scheduled member, which are exempt from AMA Guides.

“This Court, for nearly forty years, has interpreted such language to mean exactly what it says — scheduled members are exempt from the AMA Guides,” the opinion states.

The permanent partial disability award should have been in compensation for the injury to the knee, the Court said.

Also at issue for the Court is that the new permanent partial disability benefits “deferral provision advances a legislative policy that disability payments be directly connected to a reduction in earnings capacity.”

However, since “1941, permanent partial disability compensation has been awarded solely on the basis of loss of function as established by medical evidence,” and not tied to an employee’s loss of earning capacity, the April 12 opinion states.

The Court noted that “a permanent physical impairment caused by a work-related injury frequently results in a reduced earning capacity in the future rather than an immediate reduction in present earning capacity.”

It pointed out that workers’ comp benefits are not rewards, they replace something that is lost by the employee, “for which the employer is liable.”

The due process clause of the Oklahoma Constitution protects “‘citizens from arbitrary and unreasonable action by the state,'” and the deferral of permanent partial disability benefits provision under the AWCA violates that clause, the Court maintained.

“Under the statutory deferral scheme, an injured employee who returns to work loses the ability to collect any subsequent permanent partial disability award issued by the ALJ because by the time the case is heard, enough time will have passed so that the injured employee, in most cases, will have forfeited his right to receive any portion of the permanent partial disability award,” the Court wrote.

In Maxwell’s case, the hearing was held more than six months after she returned to work. The Court stated that Maxwell’s “permanent partial disability award was exhausted well before the hearing on permanent partial disability actually took place.”

Effect of the Ruling

Following the Court’s ruling, Commissioner Doak warned the decision could raise workers’ compensation rates.

In a statement released by the Oklahoma Insurance Department, Doak said the National Council on Compensation Insurance (NCCI) has filed a supplemental advisory loss cost filing that shows an overall increase in loss costs of 3.4 percent. The department’s release indicated the increase was attributed to the Maxwell ruling.

The loss cost filing is scheduled to be effective July 1. However, NCCI said the filing may be withdrawn depending on legislation passed during the current legislative session, according to the OID.

Other Hits

At the end of February, the Oklahoma Workers’ Compensation Commission determined that the opt-out portion of the state’s 2013 workers’ compensation statute is unconstitutional.

Ruling on an appeal under the provisions of the Oklahoma Employee Injury Benefit Act, or Opt-Out Act, the three-judge panel found the act to be unconstitutional and “not enforceable.”

In its ruling in Vasquez v. Dillards, the commission stated: “The appearance of equal treatment under the dual system is like a water mirage on the highway that disappears upon closer inspection.”

In early March, the Oklahoma Supreme Court ruled as unconstitutional the provision in the 2013 Act that prohibits workers’ comp claims from workers who have been employed less than 180 days. That decision in Torres v. Seaboard Foods LLC (Case No. 113649) came less a week after the OWCC’s ruling on the opt-out provision.

In his concurring opinion in Torres, Justice Tom Colbert, stated that “with the enactment of the Administrative Workers’ Compensation Act (AWCA), the balance is now off kilter and has become one-sided to the benefit of the employer.”