Oklahoma Governor Signs Workers’ Compensation Overhaul

Oklahoma Gov. Mary Fallin on May 6 signed a measure to overhaul the state’s workers’ compensation system, one that was backed by Republican lawmakers, the state’s top insurance regulator and insurance trade groups.

Senate Bill 1062 changes Oklahoma’s current court-based system to an administrative structure, a move that supporters say will reduce workers’ comp costs for businesses.

“For decades, Oklahoma has had one of the most expensive and inefficient workers’ compensation systems in the country, a constant obstacle for business owners looking to expand operations or create more jobs,” Fallin said in a statement released by her office. “Senate Bill 1062 completely overhauls our flawed workers’ comp system, dramatically reducing the costs to businesses and freeing up private-sector resources that can be invested in jobs rather than lawsuits.”

The bill was fiercely opposed by Democrats, who complain that the cost savings come at the expense of injured workers, whose benefits are slashed by roughly $120 million as a result of the bill, the Associated Press reported. The governor, however, said the “reforms ensure injured workers are treated fairly and given the medical care needed to return to work.”

Oklahoma Insurance Commissioner John D. Doak called the signing of the bill “a historic moment for Oklahoma and for Workers’ Compensation reform.”

In a statement released after the bill was signed, Doak said Oklahoma currently “has one of the highest average costs of Workers’ Compensation benefits in the nation at a rate of $830 per employee. This has not only had an enormous impact on our state economy, but also limits the growth of local businesses. I am thrilled to say that with the signing of this bill, we are about to see positive changes statewide to Oklahoma businesses and employees that will be felt for many years to come.”

While acknowledging the bill was not perfect, leadership of the Independent Insurance Agents of Oklahoma strongly endorsed SB 1062.

In March, Chairman Ed McGrath sent a letter to IIAO members, calling the measure “the opportunity of a lifetime! The reforms are too important to let slip away. I strongly urge your support of SB1062 when it is brought to the floor for a vote. It will bring needed reforms for Oklahoma businesses, injured workers, and insurance carriers. It will also bring new options for consumers to choose which program is best for their business.”

Some agents had expressed concerns about the optional coverage provision in the bill. McGrath said the majority of the concerns had been addressed in the evolution of the bill.

He said the optional coverage is a choice within the workers’ compensation system. “It will be a licensed insurance product that will be regulated by the Oklahoma Insurance Commissioner, as are all other carriers,” he said.

“No one is required to buy it; no one is required to sell it. Ultimately, the free market will decide if this is the preferred option,” McGrath added.

The Property Casualty Insurers Association of America (PCI), which also backed the measure, said Oklahoma was one of the last three states with court-based workers’ compensation systems.

According to PCI, important provisions in SB1062 include:

• Replaces the Workers Compensation Court with an administrative dispute resolution system
• Revamps the indemnity benefit system to make it more predictable and easier to administer without the need for attorney involvement
• Allows Oklahoma employers to opt out of the workers’ compensation system and administer work related injury benefits to employees through a qualified benefit plan
• Allows Oklahoma employers who remain in the workers’ compensation system to develop an alternative dispute resolution program subject to the Federal Arbitration Act

In more workers’ compensation reform action, the Oklahoma House approved a bill on May 6 to convert the nonprofit CompSource Oklahoma into an independent mutual company, the AP reported. The agency writes about one-third of Oklahoma’s workers’ compensation policies.