Previously ranked 5th in the nation for highest worker’s compensation costs, sweeping legislation took effect in Oklahoma on February 1, 2014 that allowed Oklahoma businesses to follow the example of their southern neighbors and opt-out of the worker’s compensation system. Oklahoma adopted what is referred to as the Oklahoma Option Benefit Plan and it incorporated many of the favorable elements from the Texas Non-Subscriber Plan. Texas was previously the only other state plan to allow employers to fully opt-out of worker’s compensation.
Both the Oklahoma Option and the Texas Non-Subscriber System gives the employer, instead of the government, control over an employee’s medical treatment. This serves to avoid abuse of benefits, increases employee accountability and leads to reduced costs. Employers under both plans also control the terms for receiving benefits by employees and the plans allow employers to manage claims much more efficiently, allowing them to close claims faster.
But there are several differences between the Texas Non-Subscriber System and the Oklahoma Option, with the largest being how they handle employee litigation. In Texas, non-subscriber employees can bring negligence lawsuits against their employers and the employer cannot use the affirmative defenses of contributory negligence, assumption of the risk or negligence by a fellow employee (though employers can contract to force employees to arbitrate their claims instead of litigate, as explained in previous blog posts). In contrast, under the Oklahoma Option, employers maintain the benefit of the “exclusive remedy” defense as they had under the statutory workers’ compensation system, substantially limiting litigation. This defense ensures that employees who enjoy the benefits of the employers’ injury policy are not also able to bring negligence claims against their employers for causing the injury, though the Oklahoma Option does still allow employees to bring claims for intentional torts. The “exclusive remedy” defense was allowed to remain in Oklahoma because of the different political climates of the two states and Oklahoma’s more liberal judiciary, but also because the Oklahoma Option has more state regulatory oversight, no limit on medical benefits, mandatory insurance coverage, guaranteed fund protection and mandatory benefits for employees at least equal to workers’ compensation levels (Texas has no benefit mandate).
Thus far the Oklahoma Option has shown to be enjoying the same success as the Texas Non-Subscriber System. As businesses navigate the new Oklahoma workers’ compensation landscape, other states will be watching and are likely to follow the lead of Oklahoma and Texas in the future.