In an unanimous decision, the Oklahoma Supreme Court ruled Tuesday that legislative changes to the insurance company for the state’s workers’ compensation system were constitutional.
Justices denied a challenge by Tulsa Stockyards Inc. that the state should keep ownership of CompSource Oklahoma assets as it converts to a private mutual insurance company owned by its policyholders. The mutualization is set for Jan. 1.
Attorneys for the stockyards argued CompSource was a state agency with assets valued at $265 million. Justices disagreed, and let stand a 1975 decision that said the state can’t profit from the State Insurance Fund, the former name for CompSource.
“We conclude that CompSource’s money and other assets are held in trust for the benefit of the employers and employees protected by the insurance issued by CompSource,” Justice Steven W. Taylor wrote in the opinion. “The Oklahoma Constitution does not prohibit the Legislature from placing CompSource’s money and other assets in trust with a domestic mutual insurer.”
Justices said CompSource funds were not state funds that could be used for other purposes, even though the agency was considered a component of the state for financial reporting purposes. The new company, CompSource Mutual, will be a continuation of CompSource but independent of the state, the ruling said.
Attorneys for the Tulsa Stockyards could not be reached for comment Tuesday. A message to the stockyards was not returned.
Attorney General Scott Pruitt, whose office defended the law, said the lawsuit was brought by workers’ comp attorneys who profited from an outdated system.
“The Legislature took this action as part of a series of reforms to improve and modernize the state’s costly and antiquated workers’ compensation system,” Pruitt said in a statement.
Business groups applauded the ruling upholding the CompSource mutualization.
“As the voice of businesses across the state and a CompSource policy holder, we believe this important reform will continue to improve Oklahoma’s business environment by moving our workers’ compensation system away from antiquated systems,” said Fred Morgan, president and CEO of the State Chamber of Oklahoma.
About the reforms
In December, the Supreme Court ruled the 2013 law that enacted workers’ comp reforms did not violate a constitutional prohibition against covering multiple subjects in a single bill.
As part of the reforms, the state’s Workers’ Compensation Court is transitioning to an administrative system under the new Workers’ Compensation Commission. The commission began work Feb. 1.
Rick Farmer, executive director of the commission, said it has hired two administrative law judges, with a third starting soon. The commission recently hired a medical director who was formerly the chief of staff at Integris Baptist Medical Center in Oklahoma City. The medical director also will coordinate the commission’s vocational rehabilitation efforts, Farmer said.
“We are ramping up as the cases come in, and we’ve got the resources to be able to hear them,” Farmer said. “We’re looking forward to getting started.”
The old Workers’ Compensation Court is now called the Court of Existing Claims.
The court will continue working on injury claims filed before Feb. 1 until it is scheduled to be phased out by 2017.
Farmer said the court and the commission have signed an agreement to share some services so duplication of functions is kept to a minimum during the transition.
“It guarantees the court its constitutional autonomy, and it will be a significant cost reduction to the taxpayers because we’re able to share,” Farmer said.