Oklahoma Senate Approves Workers’ Comp Alternative

Oklahoma companies would be allowed to opt out of the state’s traditional workers’ compensation system and instead self-insure or have alternative coverage under new guidelines outlined in a bill approved Wednesday in the state Senate.

Groups representing big businesses and industry hailed the bill’s passage as a sure-fire way to reduce workers’ compensation insurance costs, but opponents maintain it will dramatically reduce benefits for injured workers.

The bill passed on a 28-17 vote, with a few Republicans joining Democrats in opposition, and it now returns to the House for consideration.

“We’re just trying to avoid compensating workers,” said state Sen. Jim Wilson, D-Tahlequah, who voted against the bill. “I know what we’re going to do is stick it to the employee with this. And I’m concerned we’re going to take businesses down with it.”

Under the bill, businesses would be required to meet certain requirements before they would be allowed to opt out of state coverage – either by reaching a certain risk threshold or by having paid out at least $50,000 in losses over one of the previous three years. Any plans would also have to meet the employee benefit plan requirements of the federal Employee Retirement Income Security Act, or ERISA.

A similar plan offered in Texas has allowed arts and crafts store Hobby Lobby to reduce its overall workers’ compensation-related costs by 50 percent, said Becky Robinson, the risk manager for the Oklahoma City-based retailer.

“Not only are we seeing the savings component, but we’re seeing high employee satisfaction,” Robinson said. “We have a 90 percent satisfaction rate from those who file a claim under our ERISA plan.”

Hobby Lobby, which employs about nearly 4,000 employees in Oklahoma and 4,400 in Texas, pays about $1,800 per claim in Texas, compared with about $8,000 per claim in Oklahoma when analyzing comparable employees, Robinson said.

“The challenge you have in Oklahoma is that it’s so adversarial from the beginning. The claim drags on,” Robinson said.

Some opponents maintain the bill also could result in increased premiums for companies that remain in the traditional workers’ compensation system.

“As those big employers pull out of the system, you shrink the pool, and you can’t spread the risk as widely,” said Sen. John Sparks, a Norman Democrat who opposed the bill. “As you focus the risk, the premiums will increase.”

But Senate President Pro Tem Brian Bingman, who co-authored the bill in the Senate, said under the alternative coverage, injured employees will receive the same level of benefits that they do under the current system.

“Out-of-control workers’ compensation costs are the No. 1 obstacle to job growth in Oklahoma,” said Bingman, R-Sapulpa. “If we are serious about making Oklahoma a more prosperous place for our families, we must address the No. 1 issue that is making Oklahoma less competitive with our surrounding neighbors.”