A “Sort of” Short Course in Workers’ Compensation Opt-Out

In Oklahoma, the legislature passed a statute a few years back, the Injury Benefit Act, stating in part that “Any employer may voluntarily elect to be exempt from the [traditional Oklahoma] Workers’ Compensation Act and become a qualified employer” if the employer establishes a written [alternative] benefit plan “provid[ing] for payment of the same forms of benefits included in the [traditional] . . . Act for temporary total disability, temporary partial disability, permanent partial disability, vocational rehabilitation, permanent total disability, disfigurement, amputation or permanent total loss of use of a scheduled member, death and medical benefits as a result of an occupational injury, on a no-fault basis, and with dollar, percentage, and duration limits that are at least equal to or greater than the dollar, percentage, and duration limits . . . [as in the traditional Act].”  However, “no other provision of the Administrative Workers’ Compensation Act defining covered injuries, medical management, dispute resolution or other process, funding, notices or penalties shall apply or otherwise be controlling . . .”

Yeah, like there was not going to be a fight over that.  Go ahead and read the language again, I’ll wait . . .

In my judgment the language says something like, WC-exempt employers will pay for claims roughly per claim what they paid under the traditional WC Act but will have a great deal more to say about whether a qualifying injury has occurred. Pending at the Oklahoma Supreme Court is a case deciding, in substantial part, whether it is unconstitutional under Oklahoma law to treat “alternative benefit plan” employees so differently from “traditional WC Act” employees. (You might get injured under an alternative plan and discover the injury is not covered, for example).

And all that before we even get to the question of the federal statute ERISA, the Employee Retirement Income Security Act of 1974. I am hard at work this weekend on a law review article discussing the complex interaction between ERISA and statutes like the IBA. ERISA covers virtually all “employee welfare benefit plans.” Think of any employee benefit (besides pensions) and whatever jumped into your mind is probably an ERISA-covered welfare benefit. Workers’ compensation plans are not covered by ERISA. But the written plans under the IBA may well be (because they deliver “welfare” and not “workers’ compensation” benefits). If IBA plans are ERISA-governed, it is quite possible that states cannot regulate them under principles of ERISA preemption (federal law trumps conflicting state law). The case at the Oklahoma Supreme Court is apparently (and for complicated reasons) being argued almost exclusively on state law constitutional grounds. Nevertheless, in future state courts may be unable to evade complicated ERISA preemption issues if they attempt to set up workplace injury remedial regimes that are “not workers’ compensation.” Even aside from preemption problems, the Supreme Court has made very clear that an employer has a fundamental right to unilaterally terminate an ERISA-governed welfare benefit plan, whether or not the right to terminate was reserved in the plan’s policy language. Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73 (1995).  Whatever an alternative benefit plan employee gets it doesn’t sound much like much of a substitute for a traditional workers’ compensation right.

What a mess.

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