Business owners' cries for workers' compensation reform are reverberating through the Oklahoma Legislature, with more than 30 bills filed that could radically change the way injured workers are treated.
“It is the most important issue for us this year,” said Mike Seney, senior vice president for policy analysis and strategic planning for The State Chamber of Oklahoma. “Let's recognize the system is not working and start over.”
Jimmy Curry, president of the AFL-CIO labor union in Oklahoma, agrees change is needed. However, he questions whether some of the changes proposed by businesses and lawmakers will fix the system's real problems.
“Safety has to be paramount,” Curry said. The best way to reduce workers' compensation costs is to decrease the number of on-the-job accidents, he said.
Determining what changes some lawmakers have in mind is difficult at this point. More than half of the bills filed to date are shell bills that do not yet contain substantive language.
However, some bills do spell out proposed changes, ranging from relatively minor tweaks to major overhauls of the system.
Some of the most radical changes are proposed by state Rep. Mark McCullough, R-Sapulpa, state Rep. Arthur Hulbert, R-Fort Gibson, state Sen. Josh Brecheen, R-Coalgate, and state Sen. Mark Allen, R-Spiro. They have introduced bills to replace the Oklahoma Workers' Compensation Court with an administrative system.
State Rep. Lewis Moore, R-Arcadia, has a far-reaching bill that would allow certain employers to opt out of the state's workers' compensation system and replace it with benefit plans of their own — as long as those plans meet certain standards.
Disincentive to work?
Seney said Oklahoma businesses are ready for such radical change.
A huge problem with the current system is that it can provide a disincentive for employees to want to get back to work, he said.
While off work, injured workers can receive 70 percent of their weekly salaries, up to 100 percent of the state's average weekly wage, and the money is tax-free, he said.
That's almost like having a paid vacation for lower-paid workers, he said.
And when people are ready to go back to work, workers' compensation judges often award permanent partial disability awards totaling tens of thousands of dollars, he said, comparing it to receiving a large bonus.
“We really don't need a lottery in Oklahoma. We have workers' comp,” Seney said. “It pays better. There's a better chance of winning, and now it's nontaxable.”
The Legislature has passed reform after reform over the years, but nothing seems to make much difference, he said.
“We think it's time to scrap the system and get into an administrative system and do it right,” he said.
Oklahoma employers pay nearly $1 billion a year in workers' compensation premiums and premium equivalents, he said. Seney believes businesses could save 10 to 15 percent of that amount by going to an administrative system and enacting other reforms.
Focus on safety
Curry questions whether an administrative system is the answer.
The root of the workers' compensation problem is workers getting hurt. Improving safety is the most basic way to address the problem, and Oklahoma has made strides in that area in recent years, he said.
Statistics back that up. The number of employer injury notice filings has dropped by more than half in the past 16 years, going from 100,363 in 1995 to 44,216 in 2011. The number of workers' compensation claim filings also has dropped substantially during that time, going from 25,817 to 13,906.
“The problem with the system now is the cost of each one of those cases has gone through the roof,” Curry said. As a consequence, employers haven't seen the cost savings that people would expect.
Curry said he doesn't see how going to an administrative system where administrative law judges rather than workers' compensation judges hear disputed cases will result in savings.
Process takes time
One problem with switching is that workers are entitled to have their cases decided based on the laws in effect at the times of their injuries, so the state would have to operate a dual system for several years, Curry said. Simultaneously operating two systems would seem to be more costly than operating one, he said.
Curry said visits to the workers' compensation court have been eye opening for him.
“There was a lot of just dragging the feet — going for two or three different MRI's (magnetic resonance imaging tests),” he said.
The focus needs to change to getting workers treated quickly so that can heal and get back to work, Curry said.
“Most of the employers in Oklahoma are good and they try to do the right thing, but there's always going to be the one that's unscrupulous,” he said.
“We want to make sure there are provisions for an injured worker if he runs up against a bad employer.”
Source of controversy
Much of the controversy in Oklahoma has focused on permanent partial disability awards handed down by workers' compensation court judges.
Permanent partial disability payments are designed to compensate workers for damage to body parts that prevent workers from being able to do things they could before.
Employers point to a report released last year by the National Council on Compensation Insurance that showed Oklahoma's claim frequency for permanent partial disability was the highest in an eight-state region and more than double the regional average.
The report showed Oklahoma's $47,000 average cost per permanent partial disability case also was nearly double the regional average of $25,000.
Tim Lyon, assistant city manager for administration in Midwest City, said rising workers' compensation costs over the past eight years have siphoned away money that could be used to fund city services.
Lyon said judges often award large permanent partial disability awards to workers, even though they are able to return to work and appear to be able to do all the same things they've done in the past.
In some cases, workers who have been injured multiple times over the years have received permanent partial disability awards totaling more than 100 percent, even though they are able to return to work and perform normal duties, he said.
Becky Robinson, assistant vice president in charge of risk management for Hobby Lobby, said the company's workers' compensation claims in Oklahoma are two to three times higher than in Texas or Arkansas. She said the company operates in 42 states and claims costs in Oklahoma are among the five most expensive.
“We see the Oklahoma system as being extremely adversarial,” she said, adding she's heard it described as being like “Alice in Wonderland — you never know what you're going to get.”
Robinson said Hobby Lobby would like to see laws passed that would create an administrative system and give employers the option of opting out of the system so “they could design something that they may think is better.”
Effects of 2011 reform
Bob Burke, a workers' compensation attorney who represents injured workers, was one of the primary individuals involved in a 220-page rewrite of state workers' compensation laws in 2011.
Burke said many of the problems employers are complaining about were addressed in that bill, and he believes businesses will realize significant savings if they just give the new laws time to work.
Because cases are decided based on the laws in place when injuries occur, it traditionally takes about two years for changes in the law to be reflected in workers' compensation statistics.
Burke said he expects employers will realize about $100 million a year in cost savings from the 2011 law changes once they are fully implemented.