I was recently honored to moderate a panel at the Judicial College of the National Association of Workers’ Compensation Judiciary in Orlando. My fellow panelists included the chief administrative officials of the workers’ compensation agencies functioning within states where workers’ compensation is elective rather than mandatory, Ryan Brannan of Texas and Robert Gilliland of Oklahoma. These dedicated public servants seemed as perplexed as everyone else about the impact of an opt out structure on the landscape of workers’ compensation. Mr. Brannan was understandably eager to point out that Texas has always been an elective state. In fact, he quipped on a few occasions that Oklahoma had dragged Texas into the debate.
For my part I wanted to make clear that opt out is the harbinger of complexities yet to come. The legal problem we will continue to face is that the ERISA statute very broadly applies to employee welfare benefit plans, with exemption granted only to church plans, government plans, and plans maintained “solely” to comply with state “workmen’s compensation laws,” unemployment laws, and disability insurance laws. If a state law attempts to regulate any employee welfare benefit plans other than the kind I’ve mentioned in the preceding sentence, it will be preempted under Section 514(a) of ERISA.
When one considers the scope of ERISA coverage, it becomes immediately clear that any innovation by a state in matters of workplace injury (or more generally in the area of employee benefits) runs grave risk of being preempted by what is in effect a federal law with no substantive component.
I’ve written about this elsewhere and will be writing about it more. But for once it was nice to be speaking in a room in which all hearers instantly understood the dilemma.