Tag Archives: workerscompensationoptions.com

What Happened on the Oklahoma Option?

Regarding the Dillard’s v. Vasquez ruling, I point everyone to the dissenting opinion, which is so insightful and succinct that all concerned parties should read it.

The majority’s opinions ruling the Oklahoma Option unconstitutional were predictable in light of a number of cases on which the justices have opined over the past several months. For the fully developed rationale behind my own rejection of their poor decisions, I refer you to an essay I wrote four months ago: “Why Oklahoma’s Title 85A Has Been Right for the Sooner State Since 1917.” Leaning heavily on that essay and the aforementioned dissenting opinion from Justice Winchester, I offer a few thoughts below.

See also: An Open Letter on the Oklahoma Option  

Grand v. Petit Bargain

In my aforementioned essay, I introduce the concept that the petit bargain replaced the Grand Bargain over the past half century. This evolution can be summarized as follows:

Genesis of the Grand Bargain circa 1910

  • Before the Grand Bargain, employers could use extremely powerful (and unfair) common law defenses when sued by employees who were injured on the job.
  • Importantly, the only legal exposures by employers prior to the Grand Bargain were limited to: a) defense costs and b) damages when found negligent.
  • The Grand Bargain was meant to adjust this arrangement by: a) minimizing legal costs while b) dumping the medical and lost wage expense of workplace injuries on the employer.
  • The employee, therefore, would have a mitigated but universal solution via a no-fault system.

Incremental Incorporation of the Petit Bargain circa 1960

  • The legal community was excluded from the Grand Bargain except in rare cases of dispute.
  • Since disputes led to involvement, attorneys found ways to expand the grounds for disputes.
  • Attorneys (both plaintiff and defense) have steadily increased their standing, sophistication of arguments and expenses in workers’ compensation (WC).
  • For all WC cases (win or lose, plaintiff and defense) medical AND legal expenses are billed to employers.
  • Dispute resolution became the norm in many states’ WC systems—with Oklahoma being near the top of that unfortunate list prior to the overhaul of 2013.

The above summary demonstrates deft, self-serving maneuvers by the legal community until 2013. Recent court decisions are less deft and more blatant in their promotion of antagonism between employers and employees. The above summary should also help explain statements such as the one below from Mark Schell, co-chair of the Oklahoma Injury Benefit Coalition (the lobbying force behind the statutory overhaul):

The OIBC will continue to work with the [l]egislature to preserve and improve the progress that this historic legislation has provided Oklahoma despite the opposition of those who cling to the old, more litigious system from which they benefited.

What concerned parties need to understand about Oklahoma politics is that the state bar association has a lot of control over who sits on the state’s Supreme Court. Justices are therefore subservient to the collective agenda of attorneys throughout the state. The petit bargain is a financial windfall for attorneys and judges. Eliminating the costs of these disputes is not a prospect they want to consider, because very few attorneys fare well when everyone is happy. To avoid that conversation, lawyers and judges pretend to be united in their commitment to traditional and patriotic notions of due process—notions that are misplaced in the world of Grand Bargain legislation, which is all about special adjudication (a distinction explained in more detail in my above-linked essay).

Gurich Opinion

The Gurich opinion bears some clarification, as her argument included multiple logical flaws that inattentive readers may have missed.

See also: The Pretzel Logic on Oklahoma Option

After offering a false dichotomy in her first sentence, Gurich spends several pages discussing the red herring of Texas nonsubscription. She follows that up with a straw man argument against the false narrative of ERISA before concluding with a classic equivocation in her misuse of “exclusive.” Logicians and rhetoricians throughout the nation should be impressed with her argument’s brazenness (if not its efficacy).

More important than detailing Gurich’s sophistries are Winchester’s comments in his concise dissent.

Next

Several months ago, we at WorkersCompensationOptions.com could see the writing of this decision on the wall, so we helped draft House Bill 2205, which addresses virtually all the concerns put forth by the Supremes yesterday. That bill had more than enough support last session to pass. We suspect the same will hold true this next session. It is now up to the legislature—as spokesmen of the citizens of Oklahoma—to determine what the next step is.

An Open Letter on the Oklahoma Option

I’m the founder and CEO of WorkersCompensationOptions.com (WCO), a company dedicated to workers’ compensation (WC) and its legal alternatives. This letter is intended to quell the concerns of employees in our client companies—employees who may have been distressed by the recent (mostly negative) publicity from ProPublica and NPR regarding options to WC in Texas and Oklahoma.

In case you only saw one installment from the Insult to Injury series, I’ll provide a quick summary. In 2014, the project’s authors started to assimilate massive amounts of data from their research concerning each state’s (and the federal government’s) WC system. In March 2015, the authors began releasing articles with an indisputable premise: Collectively, these systems need improvement.

That commendable beginning eventually gave way, however, to a hypothesis that is supported neither by reality nor by the overwhelming quantity of data the authors provide. Their conclusion (that employers are in cahoots with insurers to pressure attorneys, anonymous doctors and legislators into discarding the lives of an unfortunate few for the sake of bolstering corporate profits) completely misses the mark in pinpointing why so many WC systems are broken beyond repair. In fact, attorneys and doctors put at least as much pressure on WC systems as insurers, and any attempt to depict the medical and legal communities as innocent bystanders in the WC feud is simply too naive to be taken seriously.[1] I do not doubt the authors’ sincerity in addressing a serious societal problem, but I also do not believe they are equipped to understand the problem they sought—however earnestly—to demystify for their readers. Worse yet, I fear they have positioned themselves in the WC space in a manner that is only likely to retard the implementation of practical solutions.

This letter is prompted by the article on Oct. 14, 2015, which painted an inaccurate—even an irresponsible—picture of both Texas nonsubscription (TXNS) and the Oklahoma option (OKO). As that article’s title (“Inside Corporate America’s Campaign to Ditch Workers’ Comp”) is lengthy, I’ll shorten it to CDWC going forward.

Texas Nonsubscribing Employees: What Can We Learn?

Texas is exceptional in the WC world because it has, for more than a century, offered employers a viable alternative to WC. Of approximately 380,000 employers in Texas, roughly two-thirds subscribe to a traditional WC system; the other third are nonsubscribers who develop their own models. That’s about 120,000 different systems, and there is plenty to be learned. We’ve seen various organically grown components develop from these disparate systems, many of which superficially resemble WC. Despite those similarities, however, industry experts understand how counterproductive it is to make unilateral comparisons between TXNS and WC.

The authors of CDWC didn’t get that memo.

Of all the various lessons learned from diverse TXNS models, one runs counter to conventional WC dogma: Employers can protect themselves while delivering superior care for employees at a fraction of the cost of WC. Eliminating the inflated costs associated with abusive practices that run rampant in WC is a critical component of that particular lesson.

Because the CDWC authors insist on judging TXNS through the lens of WC, TXNS looks to them like a system that would appeal to skinflint employers who simply do not care whether their employees get hurt. However, because employees of nonsubscribing companies can sue their employers for tort, the decision to opt out of WC is likely to be penny-wise and pound-foolish for employers who do not take measures to ensure the safety of employees. The CDWC authors’ failure to unpack the importance of tort negligence means many readers will come away from the article without understanding that a typical $50,000 payout in WC could easily be either $0 or $5 million in TXNS—depending on who is at fault for the accident. Even more disappointing is CDWC’s attempt, in a one-sentence paragraph, to gloss over one of WC’s most dangerous shortcomings: the extent to which the no-fault arrangement between employers and employees has removed incentives for safety in the workplace throughout the country.

If you are an employee of one of our Texas nonsubscribers, rest assured that your employer has every reason to minimize workplace accidents and to take very good care of you if an occupational injury occurs.

In a nutshell, your interests are aligned with your employer’s—another critical lesson we’ve learned from TXNS.

Oklahoma Option Employees: A Whack-a-Mole WC System Led You Here

ProPublica and NPR harp on a consistent theme throughout the Insult to Injury series: WC is broken. We at WCO agree, and Oklahoma may provide the single best example of how and why a state’s WC system becomes unsustainable.

The WC ecosystem is made up of five major communities: insurance, medical, legal, employer and employee. Abuse within the system by any of these communities leads to adjustments to the boundaries of the system. Throughout the Insult to Injury series, the authors go out of their way to sidestep the discussion of systemic abuse. They even attempt to dismiss fraud by citing a study that minimizes its role. Abuse and fraud in WC are, in some ways, analogous to speeding on the highway: Almost all drivers abuse the speed limit, but very few are issued citations. Similarly, the cases of clear-cut fraud in WC only reflect a small portion of the amount of abuse going on. But even if we allow the authors to exclude all instances of clear-cut fraud from the WC conversation, we are still left with rampant abuse driven by insidious systemic incentives.

For decades, abuses and inefficiencies within the WC system have led to each of the five communities touting the need for major reforms—at the others’ expense. Real reform threatens each community, which leads to stalemates in negotiations. Major upheaval has been avoided via the compromise of pushing and pulling the system’s boundaries, resulting in a decades-long game of whack-a-mole being played across the nation. If one voice cries, “Data shows an alarming trend in opioid abuse,” that mole gets swatted by requiring more medical credentials for prescribing pain killers. When another shrieks, “Overutilization is surging,” that mole is whacked through costly and time-consuming independent medical examinations. When someone else observes, “Our disability payouts are higher than neighboring jurisdictions,” that mole prompts us to lower disability payouts. Immediately, a fourth voice shouts, “Pharmaceutical abuses make up 8.4% of total costs,” and that mole persuades us to introduce drug formularies. But there isn’t even a moment of silence before another voice remarks, “Our analysis shows dismemberment payouts in this jurisdiction are lower than those of our neighboring jurisdiction.” That mole gets whacked by proposing legislation to increase dismemberment payouts—legislation that is dead on arrival.[2] At some point, we have to realize the moles are multiplying faster than we can whack them. (If my commentary doesn’t apply to other jurisdictions, I’m happy to restrict it to Oklahoma and Texas because writers can best serve their readers by acknowledging the limitations of their own expertise.)

Even if we concede that the changes detailed in the paragraph above aren’t necessarily bad (which I’m not conceding; I’m just trying to be polite and move the argument along), they demonstrate a persistent pattern of outcomes, inclusive of abuse, inherent in any hierarchical bureaucratic system. Regulators are busy reacting to entrenched abuses while market participants find new and exciting ways to game the system. This futile game of whack-a-mole is endless.

The Sooner State had a front row seat to witness what TXNS accomplished—both the good and the bad.[3] With that first-hand knowledge, the Oklahoma legislature has finally provided the state—and the country—with an opportunity to see whether real change can restore function to a malfunctioning system. While WC stakeholders assure us they are only a few more whacks-at-the-mole away from making WC hum, Oklahoma lawmakers have written a new chapter in the history of workplace accident legislation. The OKO is neither WC nor TXNS.

The brilliance of the OKO is that it doesn’t attempt to overhaul a broken WC system. The legislators effectively stepped away from that decades-old stalemate. Instead of an all-out overthrow, they left WC in place and created an option for employers who were willing to try something new—which is exactly how WC itself was introduced a century ago.

Because the OKO is substantially modeled on TXNS, it is easy to see why the CDWC writers conflated the two in their analysis. The errors in CDWC concerning ERISA’s applicability, employee benefits and appeals committee processes in Oklahoma are all presumably honest mistakes made by writers who, in their zeal to distinguish TXNS and the OKO from WC, failed to distinguish TXNS and the OKO from each other.

Nevertheless, it’s important for employees to understand that TXNS varies dramatically from one employer to another, and many of the rules concerning TXNS do not apply north of the Red River.

Although the CDWC authors misleadingly couple TXNS and the OKO with respect to ERISA’s applicability, ERISA plays no direct role in occupational accidents in the OKO.[4] We’ll be happy to get you a legal opinion on that, but for our purposes regarding CDWC, take my non-legal opinion as on the record. If others disagree, they should go on the record, as well. While ERISA has served employers and employees well in TXNS, its role in the OKO is only implied (if that). We are free to use it where we wish, as long as we are compliant at the state level.

Presumably tied to their ERISA misapplication, the CDWC authors assert that “benefits under opt-out plans are subject to income and payroll taxes.” Such tax advice is unusual from investigative journalists without citation, and I have asked the authors to share their source. Although the jury is still out on this tax issue, it is a point the CDWC authors must distort to substantiate their otherwise baffling claim that the workplace accident plans of OKO employers “almost universally have lower benefits.”[5] If any OKO plans really do offer benefits that aren’t at least as good as those provided by WC, they’re illegal. That’s how the legislators have written the law, and it’s what they’re dedicated to achieving for workers, regardless of obfuscations invoking TXNS, ERISA and unresolved tax implications.

The authors of CDWC also completely misrepresent appeals committees for at least a majority of OKO employers. The authors overlook a dramatic improvement to employee protection that the OKO makes to TXNS when they claim that appeals committees in Oklahoma work analogously to appeals committees in Texas: “Workers must accept whatever is offered or lose all benefits. If they wish to appeal, they can—to a committee set up by their employers.” That’s dead wrong. Executives at each of our OKO employers are fully aware that, in case of an employee appeal, the employer has nothing to do with the selection of the appeals committee panel members or the work they complete. The process is independent from the employer and extremely fair.[6] The CDWC authors would do well to read Section 211 of the law more carefully.

On the subject of benefit denials, I’ll share a single data point from our OKO book: To date, we have denied exactly one claim. This is a nascent system, so we must be very careful in drawing actuarial conclusions. Still, our company has led more employers from traditional WC into the new OKO than any other retailer, so we have a bit of credibility to offer on this subject. The point of the system isn’t to deny benefits to deserving employees but to ensure benefits are delivered more efficiently. The system is working.

The CDWC authors only provide one OKO case study, Rachel Jenkins. Strangely, they lump Jenkins in with four TXNS case studies. The Jenkins case is still being tried. We will withhold opinions—as we hope others would—until a more appropriate time.

As a reminder, while the OKO law is stronger today than ever, if it were to be deemed unconstitutional by the Oklahoma Supreme Court, we would have 90 days to get everyone back into traditional WC (per Section 213.B.4.).

Next: Vigilance and Diligence

My comments are mine and mine alone. I do not speak for any associations or lobbyists. I have no interest in debating those who inexplicably assume that any alternatives proposed to a failing system must stem from sinister motives. However, I encourage anyone (from prospective clients to employees of existing clients) with questions or concerns to call me.

Another option for learning more is to click here and watch a formal debate regarding the OKO. This footage was shot in September 2015. It features Michael Clingman arguing against the OKO while I, predictably, argue for it. One thing you can’t miss in that video is my desire to oust most attorneys from the scene. To help explain, I’ll adapt a quotation from John F. Kennedy (who was discussing taxation) to my own area of concern (the well-being of employees): “In short, it is a paradoxical truth that employee outcomes from increased WC protections are worse today, while economic results suffer, and the soundest way to create higher and better standards of living for employees is to eliminate these abused protections.” For philosopher kings, the theory of the OKO may not sound as good as the theory of WC, but when it comes to practical realities the results demand everyone’s attention.

To summarize my primary criticism of Insult to Injury, it simply hasn’t done enough. The story it tells is insufficient and smacks of partisanship and ideology, two biases that ProPublica’s journalists allegedly avoid. WC is substantially more complex than a corporation-out-to-exploit-its-workforce short story. Ignoring abuse in each of the communities in a five-sided WC debate demonstrates a lack of journalistic impartiality and a stunning deficiency of perception. Moreover, to my knowledge, ProPublica hasn’t crafted any relevant suggestions for legislation, simply leaving its readers with the vague and implicit notion that federal oversight is needed. If that is the goal of Insult to Injury—to provide one-sided, emotional yarns alongside a treasure trove of data, hoping it will all spur some federally elected officials to create real change at long last—then I suspect ProPublica will still be holding this subject up to the light of opprobrium upon the retirement of each of the series’ authors.

We do not aspire to win over the authors or even their followers. We will focus our energies each day on providing the best workplace accident programs for employers and employees alike. Our results should speak for themselves.

Finally, I am not an attorney, and nothing in this letter should be taken as legal advice.

Sincere regards,

Daryl Davis

Footnotes:

[1] With medical providers, overutilization is always a concern. Click here and watch the video from the 12-minute to the 15-minute mark for a detailed description of rampant WC abuse by surgeons who provide unnecessary and damaging back procedures. If the workers weren’t disabled prior to the surgeries, many were afterward. As for the legal community, simply view slide 73 of the NCCI’s 2013 Oklahoma Advisory Forum. WC disability payments, which is where attorneys get their cut, were 38% higher in Oklahoma than in neighboring states—not because jobs are 38% more dangerous in Oklahoma than in Kansas or Texas but because Oklahoma attorneys are 38% more effective at gaming the state’s WC system.

[2] Alabama SB 330—which was prompted by Insult to Injurynever got out of conference. From what I could gather, lengthy negotiations between several different interest groups led nowhere, with the Alabama Medical Association at the center of this particular stalemate. Not surprisingly, the two special sessions called by Alabama Gov. Bentley in 2015 were strictly focused on the state’s budgetary crisis; this bill was never discussed.

[3] The final Texas case study offered in CDWC deals with Billy Walker, who fell to his death while on the job. The upside to TXNS is his estate’s common law right to pursue a tort lawsuit against his employer. The employer could have been ordered to pay Walker’s estate a settlement in the millions, but the employer filed bankruptcy before any such judgment could be awarded, which is plainly an unacceptable outcome. This demonstrates a lack of surety—the single biggest problem in TXNS. OKO addresses this issue in various ways, most notably in Section 205 of Title 85A, which guarantees surety for injured workers.

[4] For the non-occupational components of your OKO program, ERISA does apply.

[5] Per Section 203.B. of the statute, compliant plans “shall provide for payment of the same forms of benefits included in the Administrative Workers’ Compensation 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, with the same statute of limitations, and with dollar, percentage and duration limits that are at least equal to or greater than the dollar, percentage and duration limits contained in Sections 45, 46 and 47 of this act.” (Emphasis mine.)

[6] Details of OKO appeals committee procedures are generally misunderstood—for now—by plaintiffs’ attorneys (and, apparently, investigative journalists). Attorneys frequently assume that, because the employer foots the bill, the employer controls the process. For a peek at how the appeals committee process really works for a majority of OKO employers, those curious should watch this video.

The Bizarre Decision on Oklahoma Option

On Friday, February 26, 2016, the Oklahoma Workers’ Compensation Commission (WCC) offered one of the most bizarre decisions in the history of any such tribunal in the world. The agency, which sits within the executive branch of the state’s government, resorted to a tactic traditionally reserved for the judiciary by pronouncing portions of a state statute unconstitutional—a move that has sent shock waves throughout the workers’ compensation (WC) industry nationwide. This essay is provided to explain how and why such an unprecedented and unexpected event took place.

Although scheduling constraints required the publication of this piece before we at WorkersCompensationOptions.com could incorporate the feedback of Attorney Mark Blongewicz (of Hall-Estill), Mark’s insights are so valuable that we have inserted them in text boxes throughout this updated version of the essay (which first appeared in Insurance Thought Leadership, without such text boxes, on 2/29/16).

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What Does a WCC Do?

The Oklahoma WCC was born in February, 2014. It employs dozens of people and performs numerous governmental agency tasks, but when its three commissioners hear appeals of occupational injury cases, they are referred to as sitting en banc. To our knowledge, all states, territories and the federal government have similar tribunals. Over the past two years, the Oklahoma commissioners sitting en banc have heard dozens of appeals. All of those cases—up until last week—were of the fact-based WC variety.[i] Prior to last Wednesday’s hearing,[ii] the WCC was never in the business of offering opinions on the constitutionality of any laws; it simply, methodically and impressively played an administrative (rather than an interpretive) role.

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Vasquez v. Dillard’s: Background

In September of 2014, Jonnie Yvonne Vasquez claimed that she had injured her shoulder and neck while moving boxes as an employee in the Dillard’s shoe department in Shawnee, Oklahoma. Ultimately, Dillard’s denied the claim, pointing to evidence of a pre-existing medical condition. The commissioners en banc routinely review such disputes to determine whether a denial should be upheld or overturned.

Under traditional WC in Oklahoma, Vasquez’ appeal would have gone first to an administrative law judge (ALJ), next to the WCC en banc and finally, if necessary, to the Oklahoma Supreme Court.

However, because Dillard’s had, prior to the claimed occurrence, become a Qualified Employer per the Oklahoma Employee Injury Benefit Act (OEIBA—think Oklahoma option), the process for appealing this denial followed a different path. One of the hallmarks of opt-out is to avoid litigation,[i] and to that end Dillard’s provided Vasquez an appeals committee—which is similar to what happens across the country in disputes regarding ERISA-governed benefits (e.g., major medical, long-term disability, etc.). The denial of Vasquez’ claim was upheld through the appeals committee process.

Section 211 of the OEIBA stipulates that the next forums for appeal after the appeals committee are the WCC en banc followed by the Oklahoma Supreme Court (mirroring the second and third steps of the appeals process under WC).[ii]

Hence, Vasquez appealed to the commissioners en banc. Dillard’s, however, relying on an ERISA argument which has long been promulgated by Bill Minick of PartnerSource,[iii] attempted to remove the case to the federal level (as ERISA is a federal law). In September, 2015, Judge Stephen Friot of the U.S. District Court for the Western District of Oklahoma remanded the case back to the WCC in no uncertain terms:

The court concludes that the [OEIBA] is part of Oklahoma’s statutory scheme governing occupational injuries and workplace liability; in other words, the OEIBA is part of Oklahoma’s statutory scheme governing workmen’s compensation.[iv]

Since this was the second of two cases that the federal court system drop kicked back to the state level, it seemed to put the argument concerning ERISA’s governance of occupational accidents under the Oklahoma option on the back burner for the foreseeable future. So after this high-profile and unnecessary federal detour, the case came back to the Oklahoma state agency known as the WCC.

The WCC Hearing

When the commissioners took on the Vasquez case, they presumably had no predisposition to offer rulings on the constitutionality of the OEIBA, since their duties do not ordinarily require them to tackle such issues. [i]

Additionally, Vasquez’ counsel stated that ERISA (a federal law) had no applicability to Vasquez’ claim under the Oklahoma option (attempting to appear consistent with the two federal judges who had declined to exercise jurisdiction over such matters). The Vasquez camp did not even believe the WCC had the authority to rule on the constitutionality of the OEIBA (a reasonable position on its face).[ii]

Dillard’s disagreed on both counts, arguing not only that ERISA governed the Vasquez claim, but that the WCC was transformed—for the purposes of this OEIBA case—into the state court of competent jurisdiction under ERISA (29 U.S.C. §1132(d)(1)) with the power to deem statutes constitutional or unconstitutional.

This argument may well have caught the commissioners off guard, as it was completely unprecedented for the WCC. I attended the hearing and estimate that over 90% of the time was spent on esoteric legal concepts mostly unrelated to the matter of whether Ms. Vasquez really did have a pre-existing medical condition that justified the denial of her claim. This was all new territory for this state agency.

As described in more detail below, the WCC granted Dillard’s a hard-fought victory when it ruled, astonishingly, that ERISA applied to Vasquez’ claim. “By golly,” Minick can finally gloat, “we now clearly have case law demonstrating that ERISA applies to the occupational accident aspects of the Oklahoma option!”

But I doubt that Dillard’s bargained for what happened next.

A Pyrrhic Victory

The commissioners accepted the powers Dillard’s argued they had and then used them to rule the OEIBA unconstitutional, simultaneously remanding the Vasquez case to an ALJ to hear within a traditional WC framework and stripping Dillard’s of the perceived advantages of leaving traditional WC to begin with.

The commissioners accomplished this with an unexpected interpretation of Section 211 of the OEIBA. That section spells out the role of the commissioners en banc when hearing appeals. This point is extremely nuanced, so please bear with me as I provide some historical context.

In 2012, the Oklahoma legislature did not pass HB 2155—a bill co-authored by Minick and clearly drafted with the intent to have ERISA as a guiding force. In fact, HB 2155 was littered with the “ERISA” acronym, creating easy fodder for opponents, who used epithets such as “Obamacomp” to strike fear into a very Republican electorate. A year later, the attitude on the Oklahoma option had consolidated: no ERISA. SB 1062 passed with flying colors without one usage of the acronym for the federal law. That cake (SB 1062) baked by the legislature in 2013 was free of any ERISA ingredients—save for one sprinkle on top. The sole remaining vestige[i] that directly points to ERISA is found in Section 211.B.5.:

If any part of an adverse benefit determination is upheld by the committee, the claimant may then file a petition for review with the Commission sitting en banc within one (1) year after the date the claimant receives notice that the adverse benefit determination, or part thereof, was upheld. The Commission en banc shall act as the court of competent jurisdiction under 29 U.S.C.A. Section 1132(e)(1), and shall possess adjudicative authority to render decisions in individual proceedings by claimants to recover benefits due to the claimant under the terms of the claimant’s plan, to enforce the claimant’s rights under the terms of the plan, or to clarify the claimant’s rights to future benefits under the terms of the plan. [Emphasis added.] 

ERISA includes 29 U.S.C.A. Section 1132.

Even so, the instructions of this subsection might appear to restrict the commissioners to focus merely on the facts of such cases and not on the constitutionality of the statutes governing the cases.

However, the commissioners—feeling their oats as a temporarily recognized court of competent jurisdiction—reasoned that Vasquez’ claims for benefits were “inextricably intertwined” with constitutional challenges, and, hence, that they must address those issues in order to determine Vasquez’ rights.

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Effectively, the commissioners accepted the ERISA arguments advanced by Dillard’s, analyzed them, and then stuffed them into a missile so that they could fire a very loud—even if potentially feckless—shot across the bow of opt-out proponents.

I do not interpret this shot as being fired from a group innately opposed to opt-out. I interpret it as a warning: “Get your $*!# together!”

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For at least three reasons, I’m grateful to the WCC for the timing and meaning of this challenge to the Oklahoma option. First and foremost, as someone who doesn’t belong to the Oklahoma option-ERISA camp, I appreciate the implication that if opt-out proponents continue to rely on ERISA in Oklahoma, they will set themselves back several years by destroying the only viable alternative to WC in the country aside from Texas nonsubscription.[i] Second, the Dillard’s legal team now has time to step back, take a deep breath, and reconsider its strategy before making its case to the Oklahoma Supreme Court. Third, if the in-session legislature so chooses, the law itself can easily be improved upon. The option works, and it is not a sign of weakness but of adaptability to acknowledge that modifications are necessary (as the WCC’s order clearly indicates).

[i] Of course, ERISA is key in Texas nonsubscription. My goal is to craft the best alternatives to traditional WC programs legally possible. More and more, PartnerSource appears to share that goal only if ERISA is involved.

Although Dillard’s appealed this decision on March 17th, we hazard no guess as to what trajectory that appeal will take. As a reminder, I am not an attorney and nothing in this essay—including the remarks of Mark Blongewicz, who has generously agreed to share his expertise for educational (rather than legal) purposes—should be mistaken for legal advice. I should also mention that I do not speak for any associations or lobbyists.

Finally, I am compelled to point out once more that when WC was initially being enacted a century ago, our society was riddled with equal protection, special law and due process concerns. I suspect the Oklahoma option will take less time than WC did in maturing and adequately addressing these issues—if that is what the people of Oklahoma want.

[1] As an example of a fact-based claim, consider the case of a truck driver who lives in one state, is employed by a company with facilities (including payroll) in another and is injured in yet a third while driving on a route. All three states have different WC systems, and an argument could be made for the claim to be handled in any of the three venues. A tribunal such as the Oklahoma WCC would simply focus on the facts of the case to establish some basis to determine which is the correct and best venue.

[2] On Wednesday, Feb. 24, 2016, the WCC en banc was scheduled to hear two appeals: Vasquez v. Dillard’s at 1:30pm, and Pilkington v. Dillard’s at 2pm. The fact that all parties agreed (just six minutes into the session) to combine both cases into a single protracted hearing was only one of many head-scratching developments. All told, the event took about one hour and 45 minutes.

[3] This hallmark is also the call to arms for attorneys, judges and support staff of all stripes who are stakeholders in traditional WC.

[4] We suspect that Dillard’s used a plan from PartnerSource that calls for an employer-designated appeals committee followed by an external appeals committee. Such a two-tiered approach might be well and good in Texas nonsubscription, but it is unproven in Oklahoma. Further, we assert that reliance on any employer-designated appeals committee is unwise based on the opinions of at least two Oklahoma Supreme Court Justices (Coates v. Fallin). I am scheduled to obtain details from the WCC on Feb. 29, 2016,  and confirm the exact procedures of the Dillard’s plan.

[5] There was some ambiguity between the original law (SB 1062) and the original rules set forth by the WCC regarding the post-appeals committee process. That process clearly and statutorily changed for all occurrences after Nov. 1, 2015, thanks to the passage of SB 767—last year’s “clean up” bill. Currently, the next steps for appeal—post-appeals committee—are ALJ, followed by the commissioners en banc and, if necessary, concluded with the Oklahoma Supreme Court (mirroring all three steps from traditional WC). While this complication is relegated to footnote status in this essay, SB 767’s due process improvements are noteworthy on a going-forward basis and a reminder of the legislature’s power to improve/modify the law where appropriate.

[6] Specifically, see pp 67-72 of The Oklahoma Option: Free Market Competition for the Benefit of Injured Workers and Employers.

[7] For details, see our more thorough analysis, An Open Postscript from Daryl Davis and Mark Blongewicz Regarding the Applicability of ERISA to the Oklahoma Option. In that article, we deliberately did not address any circuit split issues between the 5th and 10th Federal Circuits, but will be happy to help explain them to readers who are interested in alternatives to traditional WC.

[8] This is not to diminish the fact that Bob Burke, counsel for Vasquez, “raised several constitutional issues” and during the hearing spent well over 20 minutes ranting about the unconstitutionality of the OEIBA as a matter of habit. The irony of this outcome is accentuated by Burke’s remark when asked if he thought the WCC could rule on the constitutionality of the OEIBA: “No, I don’t think you can. But I wish you could, because I’ve got a number of constitutionality cases in front of the Supreme Court, and I wish I could bring them to you to decide.” To be clear, it was the Dillard’s defense team that insisted the commissioners had such powers.

[9] In its order, the commissioners substantiated those powers with the case of Dow Jones & Co v. State ex rel Okla. Tax Commission.

[10] Some may argue that “plans” and “appeals committees” are inextricably linked to each other and to ERISA. In fact, to read some of Minick’s prose on plans, one would think that any plan ever written is governed by ERISA. University of Oklahoma football coach Bob Stoops, when writing down his game “plan” against Texas next season might consider calling PartnerSource for advice on ERISA compliance. Even industry insiders are often shocked to learn that ERISA never explicitly addresses appeals committees. The reality is that ERISA incorporates several good ideas. The still-maturing OEIBA has demonstrated that it is not at all reluctant to revise, improve upon or incorporate older ideas.

[11] Of course, ERISA is key in Texas nonsubscription. My goal is to craft the best alternatives to traditional WC programs legally possible. More and more, PartnerSource appears to share that goal only if ERISA is involved.

[12] We at WokersCompensationOptions.com apologize if, in releasing this essay the first business day after the WCC’s unexpected ruling, we haven’t quite lived up to the research and editorial standards our readers have come to expect from us. We look forward to posting a better, more thoroughly vetted and substantiated version of this piece as soon as we possibly can.