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Pruitt, whose office defended the law, said the lawsuit was brought by workers’ comp attorneys who profited from an outdated system.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.
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