FOR decades, policymakers have sought to reform Oklahoma's workers' compensation system and bring its sky-high costs under control, mostly to little avail.
Mike Seney, senior vice president of policy analysis and strategic planning for The State Chamber, notes the rate of claims filed per 100 workers is now less than half what occurred in 1994. Yet the average permanent partial disability order is $32,453, more than double the amount awarded in 2000 and the highest in 22 years.
Following 2011 reforms in Oklahoma, the National Council on Compensation Insurance requested a rate reduction of only 1.7 percent. The NCCI's timidity was likely tied to the fate of 2005 reforms that were struck down by the courts. If so, NCCI was right. The courts have since chunked parts of the 2011 law as well.
Andrew Spiropoulos, a professor of law at Oklahoma City University and a distinguished fellow with the conservative Oklahoma Council of Public Affairs, notes that the Oklahoma Supreme Court's interpretation of two constitutional provisions are a challenge to reform efforts. Those provisions declare a person's right to legal remedy for injury and establish separation of powers among the executive, legislative and judicial branches.
Neither provision is uncommon nationally, but Spiropoulos says Oklahoma's courts have interpreted both very broadly. As a result, he notes Oklahoma's courts will allow the Legislature to determine legal causes of action but won't let legislators set parameters for adjudication. Past reforms have been deemed an infringement upon those restrictions.
That's why meaningful reform of the existing court-based system has proved elusive and rates continue to climb. According to a 2010 ranking by Oregon officials, Oklahoma's workers' compensation rates were fourth-highest in the nation. Our litigation-driven system is expensive for businesses, but also difficult for insurers, who often face insolvency. Our injured worker benefits aren't terrible, but they're not world-renowned either.
This year, lawmakers sought to allow companies to “opt out” of the system, as can be done in Texas. However, that measure posed many potential problems, including possible harm to small businesses stuck in a more financially precarious private market pool as large businesses exited, a lack of worker safeguards in cases of insurer insolvency, and no guarantee of adequate benefits for injured workers. In a case of strange bedfellows, both the insurance industry and attorneys opposed the bill, which failed in the state House.
The bill's demise doesn't mean the drive for reform has ended, however. Policymakers are reportedly considering a complete overhaul of workers' compensation for the 2012 session. That plan would transform workers' comp into an administrative system, largely taking the issue out of the courtroom.
Because an administrative system would be established in the executive (not judicial) branch, Spiropoulos predicts this reform can avoid the constitutional problems of past efforts and would be more likely to be upheld.
It would also put Oklahoma in line with the rest of the nation. Oklahoma has just one of two purely court-centered systems in the nation. The others are administrative or hybrid systems. Moving to an administrative system would be a dramatic change. It would draw fierce opposition from attorneys. But if the only alternative is to tolerate the economic drag created by the current system's skyrocketing business costs, how can lawmakers justify doing otherwise?