State Workers’ Comp Opt-Out Act Ruled Unconstitutional

South Carolina should pay close attention to the decision recently handed down by the Oklahoma Workers’ Compensation Commission, which just ruled the 2013 opt-out statute is unconstitutional. gavel21

The ruling in Vasquez v. Dillards now paves the way for an appeal to the state supreme court and, perhaps ultimately, the U.S. Supreme Court. This is a significant victory for workers everywhere, who have seen their workers’ compensation provision protections gutted in recent years by a concerted effort by lobbyists and politicians.

The Oklahoma Employee Benefit Act – also known as the “Opt-Out Act,” gave employers an alternative system to satisfy the state requirement to carry workers’ compensation insurance to grant benefits to workers injured on the job. 

But this has not been a good deal for employees – and that’s been an important element of workers’ compensation laws since they were first created.

Workers’ compensation is intended to function as part of a “grand bargain” between employees and employers. Employees get fast, necessary compensation for medical bills and a portion of lost wages and they don’t have to prove the company was negligent. Employers get the benefit of paying out less than they would in a lawsuit, and they are actually immune from litigation from injured employees – even if they were negligent.

This national erosion of worker benefits these last several years, as detailed not long ago by NPR/ProPublica, has made it tougher for workers to get benefits, while offering further protections to employers. These opt-out provisions are just one example. Texas first past the law. Then Oklahoma. Now Tennessee and South Carolina are considering these measures.

Opt-out plans are supposed to make it cheaper and easier for employers and gives companies the option of offering their own plan, so long as it is equal or better to that offered by the state. In theory, not such a bad idea. The problem is these plans give employers much more control over which claims get approved and which don’t. It controls which doctors claimants can see. The plans define “work injuries” different than the way the state does; in fact, employers are allowed to create their own definition of “work injury” for purposes of these plans. In some cases, workers injured by exposure to asbestos were written out of the “work injury” definition altogether. Employers also are empowered to force a settlement at the conclusion of the case – regardless of whether that is in the injured worker’s best interest.

The commission, in reviewing an appeal against this case, noted that while it may seem at first blush these plans allow for equal coverage, this is in fact “a mirage,” the three-judge panel ruled. Further, opt-out plans put all the power in the hands of the employer, with no opportunity for independent review. For this reason, the commission decided these opt-out plans were unconstitutional and unenforceable.

The case stems from a work-related injury in which a department store employee suffered neck and shoulder injuries while lifting shoe boxes at work. Her employer denied the claim, alleging she had a pre-existing condition and she had not suffered an “injury” as defined by their opt-out plan.

Following the commission’s decision, employer indicated it intended to appeal. Other states that are considering adopting such measures should weigh carefully the possibility of passing such a measure that may ultimately fail to pass constitutional muster.

If you have been injured at work, contact the Lee Law Offices at 800-887-1965.

Additional Resources:

Oklahoma’s Workers’ Comp Opt-Out Plan Ruled Unconstitutional, Feb. 29, 2016, By Stephanie K. Jones, Insurance Journal

More Blog Entries:

Court: Pain, Suffering Excluded From Workers’ Comp Lien, March 1, 2016, Spartanburg Workers’ Compensation Lawyer Blog

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