March 2, 2016

Oklahoma Option Litigation Continues
Workers’ Comp Commission Rejects Legislature’s Authority 

The Oklahoma Workers’ Compensation Commission ruled on February 26 that the “Oklahoma Option” does not satisfy the requirements of their unique state Constitution.  The 15-page Commission Order can be found here.  

Statement from Oklahoma Insurance DepartmentA statement released February 29th from Oklahoma Insurance Commissioner John Doak says, "The Commission Order anticipates an appeal…, and I look forward to a complete and careful review of these issues by the judicial branch. My department will continue to perform its statutory responsibilities while this consideration occurs, and we will support our legislators as they continue to develop Oklahoma’s workers’ compensation system this session. I believe that addressing these issues head-on will enable our state to provide the best care possible for Oklahomans at a price employers can afford."

Mixed ResultsThere are two important, positive aspects of this decision:

  1. The Commission acknowledged that both state law and federal law apply to Oklahoma injury benefit plans.  Oklahoma Option state law mandates benefit, financial security and employer qualification requirements.  The Employee Retirement Income Security Act (ERISA) is a federal law providing well-established rules for employee communications, fiduciary standards and claim procedures that also apply to group health, retirement and other employee benefits.
  2. The Commission also acknowledged it has jurisdiction over such injury benefit claims.  This results in more value from an existing, familiar forum for dispute resolution.

Beyond that, the WC Commission’s Order rejects the Oklahoma Legislature’s authority to pass a law that gives every employer a choice between workers’ compensation and a competitive Option.  Note that the Oklahoma Legislature (like virtually every other state legislature in America) has long-provided such a choice to some employers through coverage exemptions for certain agricultural, real estate, health care, transportation and other workers.  

The WC Commission’s Order did not address the medical and wage replacement benefits actually paid, or whether the injured employee was wrongfully denied any benefits or would have received different benefits under WC.  The Commission also did not say the employee was denied any due process under the Dillard’s plan or ERISA.  These issues will be addressed, if at all, following the Supreme Court’s decision on constitutionality.

AppealEither party can appeal this case directly to the Oklahoma Supreme Court.  The outcome of such an appeal is uncertain.  The Oklahoma Supreme Court has dismissed two prior constitutional challenges to the Oklahoma Option where there was no prior finding of any harm to the injured worker.  Consideration must also be given to whether a state administrative agency has authority to rule on constitutional issues, and the heavy burden on any party challenging a law’s constitutionality.  

Current Program OperationsWhile the appeal in this case is pending, the Commission’s decision does not preclude Oklahoma employers from continuing to operate their Oklahoma Option programs, including the processing claims in accordance with the terms of their Insurance Department-approved plan and applicable state and federal laws.  The Commission also acknowledged that employers retain the “exclusive remedy” protection limiting their liability in the same manner as any other employer who has complied with the WC law.

Program RenewalsThe Oklahoma Insurance Department has indicated it will also continue to process new and renewal applications for Qualified Employer status under the Oklahoma Option law. 

Alternatives and TimingEven if the Oklahoma Supreme Court ultimately rejects some or all of the Oklahoma Option law, Qualified Employers will still likely have alternatives.  For example, the Court’s decision (which could be several months away) may lead to:

  1. employer amendments to injury benefit plans to conform to the Court's decision;
  2. revisions to the law by the Oklahoma Legislature, which is currently in session; or 
  3. employers returning to the WC system within 90 days after the Court's ruling becomes final.

Good Results and Pressing ForwardThere have been many success stories and very few Oklahoma Option litigated cases to date.  A common thread running through the litigated cases is the injured worker actually received injury benefit plan payments until qualified physicians determined they required no further medical care for a work-related injury. 

PartnerSource and many other workers’ compensation option supporters remain committed to filling the widely-acknowledged need for a more effective system that improves the lives of injured workers and reduces employer and taxpayer costs.  Data collected by PartnerSource for the past two years indicates that the Oklahoma Option is producing positive results for injured workers and employers. 

Building a better workers’ compensation system is critically important, and we will continue to work with the private and public sector to find effective solutions.

This document is not intended to provide legal advice.  Consult with your attorney.  For more information, contact your PartnerSource Team Leader or Bill Minick at