Two Pear

A national campaign is underway to change how workers’ compensation is disbursed. But its backers have had difficulty gaining a foothold in the American workplace.

The Association for Responsible Alternatives to Workers’ Compensation (ARAWC) has spearheaded a national effort to pass legislation that would allow employers to opt out of state workers’ compensation systems and create their own plans.

“[These alternatives] focus on the best interest of the employees through access to more doctors, expedited medical care and better outcomes,” said Meaghan Poulin, an ARAWC representative. “Employees receive a higher percentage of wages replaced and fewer days without pay, as well as more communication and a better understanding of their benefits.”

So far, only Texas has such a program. The state has allowed employers to opt out for decades, and its Department of Insurance estimated that, in 2014, approximately one-third of employers opted left the state’s worker’s compensation program. Of those, it said, approximately one-third offered alternative benefits plans that year.

Bills and draft proposals promoting such programs have been floated in a number of states, including Georgia, Mississippi, West Virginia, Wisconsin and Illinois. Bills in Tennessee and South Carolina have stalled.

But, most recently, the Oklahoma Supreme Court struck down a two-year-old opt-out plan, ruling it unconstitutional.

Bob Burke, a workers’ compensation attorney in Oklahoma City, welcomed the decision. “‘Opt Out’ is the worst idea for the American worker I have seen in the nearly 40 years I have represented injured workers,” he said.

Burke believes these programs are meant to entrust employers who opt out with decisions that aren’t appropriate. For instance, he said, management could choose which accidents are covered under the company plan and choose doctors for employees. He even said they could decide what treatments are necessary and covered. In a typical opt-out scenario, he said, if a worker were to disagree with the outcome, an appeal would be heard by a three-person committee appointed by the employer. And if the worker were to turn down a settlement, all further benefits under the plan could be terminated.

Additionally, he said, most opt-out plans do not cover asbestosis, mold or chemical exposure. Cumulative trauma claims, such as carpal tunnel, also would go without coverage, while these same injuries are considered work-related under most state-run workers’ comp systems.

According to Burke, the movement is backed by large companies, such as Wal-Mart and Lowe’s. Burke believes these organizations want to shift the cost of their work-related injuries on to state and federal government programs, such as Social Security, Medicare, and Medicaid.

“If large companies could shift workers’ compensation cost[s], it would result in a huge additional profit for the corporations, but would result in an outrageous denial of benefits to injured workers,” he said.

But ARAWC disputes claims that these alternative programs would hurt workers, saying that all reasonable and necessary medical expenses for typical claims are paid in full. The organization also says that these programs would prevent seriously injured employees from having to pay lawyers to help them navigate the workers’ compensation system by communicating all benefit plan requirements to workers before an injury occurs.

The Oklahoma decision has not affected ARAWC’s resolve, Poulin said. “ARAWC will continue to work with state legislators and policy makers across the country to find alternatives to traditional workers’ compensation that work in their states,” she said.

But Burke believes that the Oklahoma Supreme Court decision will make employers in other states stop and think twice about opting out of the workers’ comp system. “I am hoping that Opt Out goes away and employers decide to live within the rules like every other business in a particular state is required to do,” he said.

At least one Texas pool company tried opting out of its state worker’s compensation program. Keith Zars, president/CEO of Keith Zars Pools in San Antonio, Texas, found the workers’ comp laws in his state to be so liberal that, “it was an easy $100,000 right off the bat for almost any claim,” he said.

His rates continued to increase and, as a result, his company became self-insured. But this route involved managing claims himself and working with the lawyers directly. Eventually, Zars went back to purchasing his workers’ comp insurance. He said the Texas laws have changed. “They do a better job of policing to make sure that the claims are legitimate claims now,” he said.

Additionally, he believes this was the best move considering the size of his company. “When you get larger then you’ve got more on the line,” Zars said.