Oklahoma will be paying money to save money if it switches to an administrative workers' compensation system. And the projected savings will far outstrip the extra costs, said Mike Seney, of The State Chamber of Oklahoma.
Workers' compensation attorney Bob Burke disagrees. He said assumptions being made by backers of workers' compensation legislation are far from certain, and the proposed law may violate the state constitution.
Their comments follow a letter written by the Workers' Compensation Court administrator that indicated switching to an administrative system would require operating a dual workers' compensation system for an indeterminate number of years.
Court Administrator Michael Clingman estimated operating a dual system would cost an extra $20 million over the first three years, or about $6.7 million a year.
Seney said that may be true but contends the state can expect to save far more than that in reduced workers' compensation costs for its employees.
Seney pointed to a National Council on Compensation Insurance analysis of pending Oklahoma workers' compensation legislation that said switching to an administrative system as described in Senate Bill 1062 would save state employers an estimated 14.2 percent, or $138 million, a year. The study said additional long-term savings, that have not yet been quantified, could save an additional 5 percent ($48 million) or more.
“What people tend to forget is state and local governments are huge employers,” Seney said.
Oklahoma has about 275,000 state and local government employees and 1.5 million total employees, he said.
Consequently, state and local government employees represent about 18.5 percent of the workforce, he said.
If 18.5 percent of the projected $138 million in workers' compensation cost savings go to state and local governments, that would be about $25.5 million.
That is more than triple the projected additional cost of operating a dual workers' compensation system during transition years.
Other employers also would save money, which means “more businesses looking to move to Oklahoma and more (and better-paying) jobs,” Seney said.
Burke, who opposes an administrative system, disputes Seney's analysis.
He said the cost of operating a dual system is a “hard cost” that would have to be paid, while projected savings are based on projected workers' compensation awards that can vary considerably depending on things like how conservative or liberal the appointed administrative law judges are.
Seney also is assuming the law changes are constitutional, Burke said.
“I believe at least 17 of the provisions are blatantly unconstitutional,” Burke said, adding that if the courts throw out certain provisions of the legislation, the state could end up paying the extra costs of a dual system without realizing the cost benefits employers are hoping to achieve.
“And 98.5 percent of the savings would come on the backs of injured workers,” Burke contends.