Study: Workers’ Comp Opt-Out Creates Barriers to Benefits, Unequal Treatment, No Oversight

In the first independent assessment of the so-called “opt-out” alternative to workers’ compensation since the ProPublica/NPR think piece last year, the International Association of Industrial Accident Boards and Commissions (IAIABC) took on the issue. workers

What researchers discovered is troubling, especially in light of the fact that an opt-out alternative is still technically on the table for workers in South Carolina.

The crux of the research is that these programs – also referred to as “employer alternatives” or “the option” – are bad for workers. They give companies a choice of either buying a traditional workers’ compensation policy or formulating one of their own. Oklahoma has already enacted such a plan, and proposals for similar alternatives have been weighed in South Carolina and Tennessee. What the study authors found was that under opt-out plans, workers are subjected to:

  • An inherent conflict of interest;
  • Barriers to benefits;
  • Unequal treatment;
  • Limited appeals;
  • Little to no independent oversight.

One of the main selling points for those who support these opt-out plans is that they are supposed to provide coverage that is “equal or better to” the state’s existing workers’ compensation plan. But in practice, those terms aren’t clearly defined and whether a worker really does get an equal or better deal (usually they do not) depends on the specifics of the plan and the type of injury they have. And that’s one of the major problems that has been identified: A lack of consistency. Equality with regard to treatment and benefits for workers – no matter who their employer is – is central to the workers’ compensation value system.

In general, claims that involved longer-term or more serious injuries often resulted in less favorable results for injured workers. Plus, those long-term benefits are usually subject to income tax.

Another way we see inequality is in how the two systems determine whether an injury or illness is indeed work-related. This is referred to as the “causation threshold.” In Oklahoma, the workers’ compensation system threshold is outlined by state statute, but it’s also influenced a great deal by case law. With the opt-out plans, meanwhile, causation is outlined by the individual employer. Each plan usually has a litany of conditions that are excluded, and may include things like illness due to mold, silica or asbestos (which causes a terminal cancer known as mesothelioma). In the workers’ compensation system, injuries and illnesses are broadly construed by the courts in terms of whether they arose out of or occurred in the course and scope of employment. Meanwhile with the opt-out plan, most injuries that occur in workplace parking lots, during brakes or that involve exacerbation of a degenerative condition aren’t covered.

So far in Oklahoma, about 60 companies have chosen an opt-out system in Oklahoma. Others have chosen instead to stick with the traditional plans, mostly because they say the future of the opt-out plan is certain. Already, there are numerous legal challenges. In fact, the Oklahoma Workers’ Compensation Commission ruled in February that the opt-out system was unconstitutional. However, until one of those cases makes it to the state supreme court for a final ruling, it continues to be implemented.

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

Additional Resources:

IAIABC: Understanding the Opt-Out Alternative, May 11, 2016, IAIABC

More Blog Entries:

Rainey v. Charlotte – 2-Year Statute of Limitations on NC Workers’ Comp Claims, May 20, 2016, Spartanburg Workers’ Compensation Lawyer Blog

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