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January 16, 2015

Is Workers’ Comp on the Ropes?

Summary:

A court decision raises questions not only about the "Oklahoma option" -- but about the "grand bargain" that is the basis for workers' comp.

Photo Courtesy of Todd Martin

Well, the Oklahoma experiment was fun while it lasted.

Dramatic reforms there in 2013 were intended to move the state workers’ compensation system from a court-based model to an administrative one. The experiment established Oklahoma as just the second state where employers can “opt out” of workers’ comp entirely, although they are required to offer alternate, privately managed plans.

However, thanks to a court decision a week ago, employers may be opting out of comp a lot more than they intended or even desire. That is because a Pottawatomie County district judge ruled that an injured tire worker can sue his employer for negligence because the injury was “foreseeable.”

While courts in the past have allowed tort action based on extreme negligence, the concept of a “foreseeable” accident doesn’t necessarily come close to that standard. The judge’s decision certainly risks broadening the definition of when an employee may be entitled to damages. After all, it might be “foreseeable” that a prison guard could get injured in an exercise yard fight, but that doesn’t mean his employer was negligent.

Injured tire worker Darrell Duck sued his employer, Hibdon Tire Plus, for injuries to his neck and back that he sustained while using equipment to try to loosen a bolt on a wheel. Workers’ compensation attorney Bob Burke, who is representing Duck, said the court “has issued a monumental ruling that challenges the foundation of Oklahoma’s workers’ compensation system.” He says, “The sloppy drafting of that law in 2013 has caused so many problems. It has really created a crisis now.”

A number of attorneys have raised constitutional challenges to the new Oklahoma laws. I have to give them credit. When Florida underwent significant reforms in 2003, it took attorneys in that state more than 10 years of whaling away at it before they tore a few holes in the system. The Oklahoma boys seemingly have done it in less than a year.

At stake here, of course, is the future of “exclusive remedy,” not just in Oklahoma but across the nation. There has been some discussion on this over the years, but only recently have court decisions started giving urgency to the dialogue. There are several key elements playing into this new melodrama:

  1. The assigning of guilt, or blame, in a no-fault system.
  2. The erosion of benefits provided injured workers’ to the point they are no longer adequately protected by the system.
  3. Increasing burdens on employers, now responsible for co-morbidity and social issues not of their making.

The first item listed, in my view, offers the greatest potential threat to exclusive remedy. I’ve talked about this before. The case I have cited in Tennessee is a terrific example. An electrical lineman was successfully denied benefits because he failed to follow established safety rules. Employers and insurance people I know loved that decision – after all, if it is the fault of the worker, why should we have to pay? Except, the “grand bargain: and “exclusive remedy” in workers’ comp are double-edged swords. When they swing back the other way and start allowing negligence claims that include pain and suffering awards, employers will be singing a different tune. Bottom line: You cannot assign guilt in a no-fault system, either to the employee or the employer, or the entire concept will come crashing to its knees.

The Padgett case in Florida is a good example of item number two, the erosion of benefits. In that case, a judge with very little exposure to workers’ comp declared the entire system unconstitutional. The decision was largely based on what he viewed as the continuing degradation of benefits in Florida over many years since the grand bargain. He declared that the erosion undermined the original intent of the program, and that the system no longer serves Florida’s injured workers in a fair and constitutionally sound manner. While the case itself will have limited impact for jurisdictional reasons, it is a major shot across the bow for legislators and businesses in that state.

The third item I listed is not one normally cited when discussing threats to exclusive remedy, but I think it is a mistake to ignore it. Employers today are being asked – make that required – to pay for conditions and health issues that have nothing to do with a claim; and social demands along with increasing beliefs of entitlement are pressuring employers to cover much more than they would have had to do 40 years ago. As we all get old, fat, diabetic and mentally unstable, this situation will only get worse. Employers forced to pick up the tab for these significant, yet unrelated, conditions are getting fed up with the system, and are more open to its eventual demise. For these employers, cases like our Tennessee lineman are almost seen as “payback” for what they increasingly view as a lopsided and unjust system.

The fact that their injured workers also feel it is lopsided and unjust should be telling us something.

While it is true that our process-intensive, complex and confusing system has lost its way on some fronts, people anxious to return to the days of unending litigation and open liability should rethink that position. For the vast majority of employers and their injured workers, workers’ comp has worked for more than 100 years, and the statistics bear that out. There was a reason both sides worked together to create this mess in the first place; the mess it replaced was even worse.

So we should fix workers’ compensation (starting, of course, by calling it workers’ recovery) and protect the concept of exclusive remedy for another 100 years.

As for our friends in Oklahoma, appeals to the state Supreme Court are sure to manifest themselves. That story is just beginning. No one can clearly see where this trend will take the nation. Alas, while apparently injuries are “foreseeable” in Oklahoma, the future of exclusive remedy is not.

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About the Author

Bob Wilson is a founding partner, president and CEO of WorkersCompensation.com, based in Sarasota, Fla. He has presented at seminars and conferences on a variety of topics, related to both technology within the workers’ compensation industry and bettering the workers’ comp system through improved employee/employer relations and claims management techniques.

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