March 23, 2016
Texas Is NOT an Opt-Out State
by Bob Wilson
Texas has always been an Opt In state -- no one need buy workers' comp insurance -- but some mischaracterize Texas in pursuit of an agenda.
There were two sessions on “Opt Out” at the 32nd WCRI Annual Issues & Research Conference, but a single, critical point was generally omitted by all six speakers across both sessions; an omission that could cause confusion for those not well-versed in the vernacular of alternative workers’ compensation systems.
Texas is not an Opt Out state. It never has been. No one may “opt out” in Texas. Period.
Instead, Texas is, and always has been, an “Opt In” state. Workers’ compensation coverage is not required of employers there. They can choose to buy insurance, or not. They can choose to set up alternative plans, or not. Either way, they can “opt” for some sort of coverage or go completely bare; they don’t have to have a policy, a plan or a prayer.
Those that do not acquire coverage or self-insure under state auspices are called “non-subscribers,” on the surface, the distinction about Opt Out vs. Opt In may seem like a shallow and insignificant point. But the differences in the Texas and Oklahoma systems run deep, and the speakers should have pointed that out.
Instead, I believe some intentionally conflate the two for the benefit of their arguments.
Most notably, for employers in Texas who choose not to opt in for workers’ compensation coverage, open liability prominently remains. They can be sued for negligence. They can be found responsible for pain and suffering. They are wide open to all of the foibles and pitfalls generally absent for those who choose to participate in the grand bargain and the exclusive remedy it provides.
By comparison, employers in Oklahoma have managed to develop a system that gives them unparalleled secrecy and control while maintaining the benefits of exclusive remedy. They have liability protections that Texas employers can only dream about.
Common sense would tell us that any alternative plans in Texas are probably better than those found to their north in Oklahoma. The looming reality of open liability means that employers actually have to be responsible if they wish to avoid litigious challenges and expensive jury verdicts. Yet people continually speak of “Opt Out” as if it was one common theme in both states. Our session speakers are not the only ones to do that. Recent articles in ProPublica and NPR also failed to adequately define the difference between the two.
See Also: The Bizarre Decision on Oklahoma Option
Bill Minick, a Dallas attorney whose firm has written most of the Oklahoma Option plans, mentioned the more than “20 years of history” when talking about the “proven” success of Opt Out. He did not really mention that the 20 years he repeatedly referred to was all based in Texas. Oklahoma has only offered the Option for two years, and only 60 of the state’s 70,000 employers have gone that route. Similarly, presenter Elizabeth Bailey of Waffle House, spoke only of their experience in Texas as a non-subscriber. To her credit, she was the only speaker to deliver hard statistics about the experience in that area, but she made no mention of the Oklahoma Option except to note that they had elected not to Opt Out in Oklahoma. She did not say why.
And I really would’ve liked to know.
Really, none of the speakers made an effort to define the difference between these two systems. To the uninitiated, it would seem they are the same thing. They are not. Oklahoma-style Opt Out is what is being proposed in at least two other states, not Texas-style non-subscription. Future sessions on the subject should clarify that point, focus on actual Opt Out and call out presenters if they dilute or confuse the facts.
Additionally, only one speaker, Trey Gillespie of Property Casualty Insurers Association of America, really mentioned that the Oklahoma Option has been ruled unconstitutional in that state. From an overall panel perspective, that fact was almost a non-event, like it never even happened. But more on that later…
See Also: Five Workers’ Compensation Myths
The point is, the Texas non-subscriber system has been around for a long time. The Oklahoma Option, by Minick’s own admission, is an “experiment” (one commenter at the conference pointed out that Frankenstein’s monster was also an experiment). We should not confuse the two. Oklahoma Opt Out, along with proposed similar plans in Tennessee and South Carolina, are unique creatures that deserve to be fully judged on their own scant merits and significant flaws. We should stop providing them cover by supporting them with the alleged achievements of a dissimilar system.
After all, Texas has never been an Opt Out state, and we should stop talking about it like it is.