Workers comp reform likely on legislative agenda
BY ZIVA BRANSTETTER World Enterprise Editor
Monday, December 24, 2012
12/24/12 at 7:14 AM
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Editor's note: This is the second in a two-part series examining Oklahoma's worker's compensation system.
Reforming Oklahoma's expensive workers compensation system would ultimately put tax dollars in the coffer for other needs, including schools and local governments, according to the State Chamber and a legislative leader pushing additional changes.
"Let's say we can come up with a 20 percent savings in this bill. That's 20 percent savings for the schools, the cities, the state government," said Mike Seney, senior vice president for policy analysis and strategic planning at the State Chamber of Oklahoma.
Senate President Pro Tem Brian Bingman said lawmakers will likely consider even bigger changes to the state's workers comp system in the upcoming legislative session than the changes made last year. Bingman said changes may include switching Oklahoma's workers comp court to an administrative system rather than the current "court of record" system.
A proposal allowing employers to opt out of the workers compensation system entirely - as Texas has done - may also be "an alternative that businesses would have" if additional reforms are passed, Bingman said.
Seney noted that a similar proposal was made last year. That proposal did "much more than Texas to protect workers" and would have required employers opting out to still provide "a certain level of benefits," he said.
Seney and Bingman said additional changes to the state's system of compensating injured workers is the top priority for the upcoming legislative session, which begins in February.
Most costly in the region
With Oklahoma's GOP-controlled legislature and a Republican governor, Bingman, Seney and others seeking such changes may prevail. Any changes would come on top of an overhaul of the state's workers compensation system last year.
The 2011 changes included a reduction in the maximum weekly rate injured workers can be paid, a limit on the number of times a worker may change doctors and a new system of diagnostic guidelines for injuries.
Seney said more changes need to be made because the 2011 changes haven't been effective in bringing rates down. He said he expects portions of the 2011 law to be struck down anyway, muting the law's effectiveness.
"I've seen half a dozen work comp bills passed. ... Every time there is an expected (insurance rate) reduction, it gets gutted by the courts. We've already seen that begin" with the 2011 law, he said.
For years, Oklahoma's workers compensation insurance rates have been higher than rates in neighboring states.
A study by the state of Oregon ranks Oklahoma No. 6 nationally in terms of the average cost of workers compensation insurance. Neighboring states Texas and Arkansas rank No. 38 and No. 49.
The study has ranked Oklahoma among the most expensive states as long as it has been conducted, at least since 1987, according to its website. The state reached No. 19 in 2002, but the state's workers comp insurance rates have climbed steadily higher ever since, the study shows.
But even the organization that helps set rates for workers comp insurance says it's too soon for last year's reforms to have had an impact on Oklahoma's rates.
Said Lori Lovgren, a division executive for state relations for the National Council on Compensation Insurance: "A law that passed in 2011 is too new to have had much of an impact on the data we used for the most recent Oklahoma rate filing."
The organization sets "loss costs," a key ingredient used to set workers compensation insurance rates for the industry. NCCI sets rates for Oklahoma and most of the nation.
Roy Wood, also a state relations executive with the council, said Oklahoma's workers compensation insurance actually decreased in cost during the past decade and legislative changes deserve part of the credit. Still, the state's rates are more expensive than in neighboring states, records show.
For every $100 of payroll, employers in Oklahoma pay $2.12 for workers comp insurance, while the regional average is 94 cents per $100, NCCI's 2012 figures show.
Despite claims the state's workers comp system is out of control, records show declining numbers in all but a few categories. The number of claims filed by injured workers declined to its lowest point ever in 2011: Less than 14,000 cases were filed by injured workers last year.
Brad McClure, an Oklahoma City attorney who represents large and small companies defending workers compensation cases, said workers may be responsible for the decline in cases because they fear losing their jobs and file fewer claims. He said whatever the reason, "it's way too premature, I think, to make a determination that the changes that were made on Aug. 26, 2011, haven't worked."
'It just takes time'
Even though he represents companies seeking to control their costs, McClure said he would not be in favor of changing to an administrative court system to handle claims if it limited his clients' ability to argue their cases.
"Our country was founded on taking a set of impartial facts to an impartial trier of facts," he said. "My job is to argue my case and let my client have their day in court, not being represented by paperwork."
Seney said Oklahoma's system is more "litigious," noting that workers comp courts in Arkansas and Texas each hold about 4,000 hearings in contested cases each year while Oklahoma's system holds more than 28,000.
Overall, awards to injured workers increased 26 percent between 2007 and 2011, a Tulsa World study found. That increase in total awards cost employers and insurance companies an additional $76 million, the World's analysis shows.
Eric Quandt, vice presiding judge of Workers Compensation Court in Tulsa, said it's unfair to blame judges' rulings for the expense of Oklahoma's system.
"Claims are only contested if the employer or insurance carrier contest it. As additional reforms (mostly employer friendly) are made, employers contest more claims to test the boundaries," he said. "A judge does not determine how many cases are contested. It is driven by legislative changes."
Regardless of who or what is responsible for Oklahoma's relatively high insurance rates, some employers clearly dislike the system.
"Why are the rates in Oklahoma higher than Texas, Arkansas, Kansas (where they are half of ours) and worst of all, Louisiana (a cesspool of claims on every other kind of insurance)," wrote an executive with the Rich and Cartmill insurance firm, in a survey sponsored by the State Chamber in 2010.
The Tulsa-based insurance company operates in Oklahoma, Kansas, Missouri and Colorado. "That tells you more than anything that our system is only good for the attorneys."
"The current system is a no-win situation for the employer," wrote an executive with Sysco Foods in Norman. "The system makes it easy for an associate to fabricate a claim of on-the-job injury. Even if the employers do not accept the claim, we end up paying for it in the end. Much reform is needed on a system that is in bad need of repair."
Tulsa attorney Thomas Layon, who represents injured workers, said the system is an easy target for politicians and other policymakers.
"The workers compensation system is very frequently flogged by people who have an agenda - a political agenda," Layon said. "They sound the alarms, and based upon that, they can raise money. So it's always going to be a whipping boy for people in leadership with an agenda, and let's face it - who is sticking up for the injured worker in all of this? Labor unions? We all know where unions stand in Oklahoma."
Layon pointed out that some changes could even pit big businesses against small companies. If an opt-out system were approved, "big companies could leave the system, leaving smaller companies holding the bag and paying higher premiums."
"We have a lot of good employers in this state and a lot of good employees," he said. "... No system is going to equally serve what those two groups think is, quote unquote, fair."
Wood, with the National Compensation Insurance Council, said employers, lawmakers and others in Oklahoma need to be patient.
"One important factor for Oklahoma is that it has made some substantive changes and those changes need time to take effect. ... I know there's a certain amount of impatience and I understand that, but it just takes time to come out in the numbers and in the experience," Wood said.
Workers Compensation Court
Oklahoma's Workers Compensation Court system handles about 20 percent of all workers compensation cases in the state and is one of only three court systems of its kind in the country. Oklahoma's court has 10 judges, with at least three in Tulsa.
The system is a "court of record" rather than an administrative court. Courts such as Oklahoma's have judges who follow rules of evidence and include court reporters. Appeals can go straight to the state appeals courts rather than through district courts first, or to a panel of judges.
Here are some key facts about Oklahoma's Workers Compensation Court:
History: State lawmakers approved the Workers Compensation Act in 1978, which created a new court system with exclusive jurisdiction over workers compensation issues. Last year the Legislature repealed the act and overhauled laws relating to workers compensation. Many changes were made to the law, including a reduction in the maximum weekly rate injured workers can be paid, a limit on the number of times a person may change doctors, an increase in the number of judges and a new system of diagnostic guidelines for some injuries. The new Workers Compensation Code became effective Aug. 26, 2011. However, cases involving injuries occurring before that date are still subject to the old laws.
How the court works: Employees in all but a few types of jobs who are injured "within the course and scope of their employment" may file a case with the court. Those who file cases are called claimants, and their current or former employers are called respondents. Employees are not required to show negligence. Cases that go to trial are often handled in a few hours, with both sides stipulating or agreeing to some of the facts. Most cases are settled before that point. Workers may be awarded payment for medical treatment and lost wages resulting from work-related injuries, as well as rehabilitation services. Injuries can occur due to a single incident, trauma over time or an occupational illness, which is rare.
How orders are appealed: A party may appeal a judge's order to a three-judge panel (called an "en banc" appeal) or to the state Supreme Court, which refers most cases down to the state Civil Appeals Court. A party may appeal an en banc order to the Supreme Court.
Curtis Killman contributed to this report.
Original Print Headline: Workers comp review pushed
Ziva Branstetter 918-581-8306
Attorney Mark Litton (right) talks with his client, Alvin Bowler, in the Workers Compensation Court lobby recently. Almost daily, the Tulsa court is packed with workers, their attorneys and attorneys representing employers. CORY YOUNG / Tulsa World
Lawyers, clients and other officials walk through the lobby of Tulsa's Workers Compensation Court, 440 S. Houston Ave., recently. Oklahoma's system is one of only a few "courts of record" in the nation. CORY YOUNG / Tulsa World