The Oklahoma Workers’ Compensation Commission is the agency responsible for handling claims of injured workers.
LAWTON – Oklahoma’s transition from a court-based workers’ compensation system to an administrative system has been wildly successful.
“It’s all good news in terms of results if viewed through the lens of what the reformers wanted,” Mark Liotta, chairman of the three-member state Workers’ Compensation Commission, said during a WCC “roadshow” here Aug. 9. “We now have five years of data to show results and trends from the transition,” he said.
The switch was mandated by Senate Bill 1062, which was enacted by the Republican-controlled Oklahoma Legislature in 2013 and went into effect Feb. 1, 2014.
The dual Workers’ Comp systems will continue operating side-by-side for another three years, because the Workers’ Comp Court of Existing Claims is still processing cases that were adjudicated for injuries or deaths that occurred prior to Feb. 1, 2014. The court-based system was recently extended until July 1, 2022.
Ironically, operating both systems is not more expensive, and several similar administrative operations are being consolidated, Liotta said. Consequently, the number of employees in the two systems has been shaved from105 in FY2014 to 61in FY 2019. “We are operating two agencies at less cost than it previously cost to operate one system,” Liotta said.
‘THE GRAND BARGAIN’
Workers’ compensation is generally referred to as “the grand bargain” for employers and employees alike, Liotta noted. Employees are guaranteed medical treatment for work-related injuries, plus a paycheck while mending – the Legislature this year approved a moderate increase in benefits – and employers are accorded protection from crippling lawsuits. The no-fault program is “a win-win for both sides,” Liotta said. “Both sides get something and both sides give up something.
“One of the major benefits of the new system versus the old one is that we get people into treatment faster, and thus we get them back to work faster,” Liotta said. Cases in the administrative system “average less than nine months,” whereas cases handled via the judicial system “typically last one to two years,” he said.
From 2001 through 2012, Oklahoma’s Workers’ Comp system averaged almost 16,000 new cases per year. Over the past five years, the number of new cases filed has fallen to 6,760 per year, a 57.7% reduction.
Transition to the administrative system has resulted in a marked decline in fraud, Liotta said. The state Attorney General’s office used to divert almost $900,000 of the WCC’s $3 million budget to devote to fraud investigations, Liotta said. But in 2016 the AG quit diverting WCC funds because workers’ comp fraud was severely curtailed.
Because of reforms implemented by SB 1062, appeals in workers’ comp cases have been slashed by 92%, “Which means we have more time to devote to each particular case,” Liotta said. Orders for mediation, intended to resolve cases amicably without resorting to lengthy and expensive litigation, have multiplied from 43 in 2014 to 1,736 in 2018.
MORE INSURANCE PROVIDERS
Another benefit resulting from SB 1062 has been an increase in the number of insurance companies offering Workers’ Comp insurance. Over the past five years, 22 new insurance companies have registered with the state Insurance Department and are offering Workers’ Comp insurance coverage, and 15 previously existing insurance companies have added Workers’ Comp insurance to their portfolios.
The cost of Workers’ Comp premiums for Oklahoma businesses has fallen by 31%: from $961 million in 2013 to $662 million in 2018, records show. “We now have more insurers and more competition, which has driven prices down,” Liotta said. “We have a direct effect on people’s lives and on businesses large and small.”
WORKERS’ COMP COVERAGE WAS COSTLY
Oklahoma previously had one of the costliest Workers’ Comp systems in the nation.
In the late 1990s, for example, then Gov. Frank Keating held a news conference at the State Capitol that focused on Workers’ Comp rates. The event featured a business owner who said he had manufacturing plants in southeast Oklahoma and nearby across the Red River in north Texas that made horse trailers.
Both facilities were approximately the same size, had about the same number of employees and logged approximately the same workplace injury records; however, he said, his Workers’ Comp rates in Oklahoma were twice as high as what he was charged in Texas.
Prior to SB 1062, Workers’ Compensation rates were rising faster in Oklahoma than in any other state in the nation: an average of 19.8%. Now the rates are dropping faster in Oklahoma than in any other state. Data from the National Council on Compensation Insurance (NCCI) showed that in 2018 Oklahoma had experienced a five-year premium level reduction of 47.8%.
“When businesses do better, they hire more people. And when they save money, they can hire more people and pay their employees more,” said Ian Steedman, director of the WCC’s Compliance and Enforcement Department.
NEW SYSTEM ‘STREAMLINED, EFFICIENT’
The administrative system is “more streamlined and efficient” than the judicial system, said Lindsey Bushyhead, the WCC’s appellate counsel.
For example, the decision of a WCC administrative law judge must be issued within 30 days of a hearing. Appeals are heard by the three commissioners sitting en banc; the affected parties can no longer appeal directly to the state Supreme Court. State statutes now dictate stricter limitation periods for filing and prosecuting claims.
Compensability for degenerative conditions and for pre-existing conditions is limited. Another reform is more restrictive definitions that exclude specific injuries and circumstances from compensability. Only injuries that occur at work or are causally related to work can be covered by Workers’ Comp insurance.
Injuries that occur during travel not specifically directed by an employer, or during unauthorized or off-premises work breaks, are not compensable. Injuries occurring in parking lots and common areas not owned or exclusively controlled by an employer – that issue is still being litigated in court, Bushyhead said.
Medical marijuana is another issue that’s still murky. Previously a significant factor for denial of compensation for an injury was the mere presence of an “illegal substance” in an employee’s bloodstream, Liotta related. However, marijuana tests are not “quantitative,” he said; the quantity of the substance is not measured. Now, though, Bushyhead said, the deciding factor is “intoxication” and whether it contributed to the worker’s injury.
WORKERS’ COMP COVERAGE COMPULSORYThe WCC’s Compliance Department ensures that employers have Workers’ Comp coverage. The agency can impose fines ranging from $1,000/day up to a maximum of $50,000 to compel an employer to secure Workers’ Comp insurance. The WCC collected more than $900,000 in penalties last year, Steedman said.
However, the commission staff “try to show a lot of leniency with first-time offenders and new businesses, and will generally work on not imposing maximum fines,” said Collin Fowler, the WCC’s director of communication and administration. “Most of the time they try to set the fine at what the business would have had to pay in insurance premiums during the time when they had no coverage.”
Three-quarters of all Oklahomans live pay-check-to-paycheck, Steedman said; consequently, an on-the-job injury can bankrupt a worker and his/her family, he said.
“We further help ensure that employers are competing on a level playing field, that no employer is gaining a competitive advantage by avoiding the cost of Workers’ Compensation coverage,” Steedman said.