Bob Wilson May Have a “Cluttered Desk;” His Prediction of Opt Out Reprise is Spot On!

What if Employers Are Willing to Give Up Exclusive Remedy Defense?

In his typically lucid and engaging style, Bob Wilson mused in his post this morning that the employer opt out movement in workers’ compensation law isn’t dead; it’s only sleeping. For what it’s worth, I agree.

It’s as if all too many in the comp world have become susceptible to a form of “Jedi mind trick.” Like the Stormtroopers who stopped Obi-Wan and Luke as the duo searched for a starship, only to be side-tracked when Ob-Wan waved his hand, saying, “He can go about his business,” many in the comp arena heard about the Oklahoma Supreme Court holding last year in Vasquez v. Dillard’s, Inc., and numbly repeated to ourselves, “You can go about your business.”

Obi-Wan waves that hand again and continues, “Move along.” All too many of us nod quietly and say, “Move along …, move along.”

In Next Round, Opt Out Employers Might Not Have Exclusive Remedy Defense

Indeed, “out of sight, out of mind,” but as Bob reports, the opt out pitch is undergoing change. He posits that the Achilles heel of the Oklahoma Opt Out was the fact that opt out employers still enjoyed the exclusive remedy defense. That fact, Bob notes, coupled with the significant question as to whether injured employees under opt out arrangements actually enjoyed the same level of workers’ compensation benefits as those whose employers secured coverage under the “standard,” state-run system, was enough for a majority of the state’s high court to cast aside the opt out law, lock, stock, and barrel (for a quick review of Vasquez, see my September 13, 2016 post).

Employers May Be Willing to Accept the Loss of Exclusivity

Bob continues that a number of savvy employers may be quite willing to accept the loss of the exclusivity defense in order to gain some better measure of control over workers’ compensation expenses. Some employers—particularly those with large numbers of employees—contemplate that through a combination of best safety practices and liability insurance, they might more than make up the cost of a few tort lawsuits with significant costs savings on the workers’ comp side of the equation.

Bob laments that such a scheme of opt out, coupled with tort liability where the employer is truly negligent, could reintroduce fault into a system that is designed to be no-fault. Bob acknowledges, as most of us do, that an important proportion of occupational injuries are the result of employee inattention, carelessness, or other elements of employee fault. As Bob ponders, “Are we ready to return to the days before workers’ comp existed?” Bob’s question is, of course, not rhetorical. In all candor, I think many employers relish the thought of getting out from under what they see as the shackles of workers’ compensation law.

My Own Commentary: Giving Up the Exclusive Remedy Defense Won’t Be Enough to Save Opt Out Schemes, at Least as Recently Envisioned

In the interest of full disclosure, may I say that, like Bob, I am not an opt out fan, at least in the various iterations that I have reviewed within the past few years (if you are interested in my opt out views, read this post, this post, or this one). While I agree with Bob that protecting Oklahoma opt out employers from tort liability was a factor in the demise of the opt out legislation, I don’t think it was the crucial factor. As I read Vasquez, and has I had earlier argued, both in this blog, and at several national conferences, Oklahoma’s opt out law would not have passed constitutional muster even if it had not shielded Oklahoma employers. That is to say, I think more will have to be done than merely jettison the exclusivity defense, if a viable opt out arrangement is to be crafted. Here’s why:

Should I Say It Again? “Texas Isn’t an Opt Out State!”

Since the unsuccessful 2012 version of the Oklahoma Opt Out law, and throughout the short-lived opt out arrangement that was an important part of Oklahoma’s 2013 workers’ compensation “reforms,” I have argued (alongside others—perhaps most notably Bob Wilson), that much of the opt out discussion stems from a failed premise: that following the “successful” 2013 Sooner-State legislation, Oklahoma joined Texas as an “opt out” state.

May I say this one more time? “Texas is not an opt out state.” Indeed, Texas is the only “opt in” state. That is to say that if a new business is established this afternoon in the Longhorn State, with say, 20 employees, those employees are not covered by workers’ compensation law’s protection, unless the employer affirmatively chooses to purchase or otherwise secure coverage. If the employer does nothing, there is no coverage.

And while some of my workers’ compensation law colleagues think that I’m hung up on semantics here, I am not. Following the 2013 Oklahoma legislation, essentially all Oklahoma employers had a choice as to how to secure coverage. They could opt for the standard, state-run system or, alternatively, they could choose the opt out version. They had a choice, but one choice of coverage or the other had to be made. The important distinction between Oklahoma’s compulsory system and the non-compulsory system in Texas was often lost in the discussion of “opt outs.”

The opt in/opt out, compulsory/non-compulsory distinction is crucial. In Texas, an employer need not provide any sort of workers’ compensation coverage at all. If, for example, a Texas employer determines that it desires to provide some measure of coverage as long as the employee provides notice by the end of the shift, proves his or her injury by clear and compelling evidence—not a mere preponderance of the evidence—and links the continuance of benefits to the employee’s remaining employed by the employer, none of that is constitutionally suspect, because the Texas employer need not have provided any sort of benefits in the first place.

What sank the Oklahoma law was not that it allowed an opt out employer the same exclusive remedy protections afforded those employers that had secured coverage under the standard, state-run system. What sank the Oklahoma opt out law was the fact that opt out employers were “not bound by any provision of the Workers’ Compensation Act for the purpose of: defining covered injuries; medical management; dispute resolution or other process; funding; notices; or penalties” [381 P.3d at 773]. The law failed not because opt out employers were immune from tort liability, but because the law allowed “disparate treatment of injured workers simply upon the basis that the employer has opted out of the general workers’ compensation system” [381 P.3d at 774], a decision in which the employee had no say.

2015 Legislative Proposal in South Carolina Might Pass Constitutional Muster

Wondering aloud, I think the next opt out proposal might be like a bill that was introduced into the South Carolina Senate two years ago (see 2015 Bill Text SC S.B. 674). It died in committee, but had it become law, It might well have passed constitutional muster where Oklahoma’s law failed. In short, the bill would have jettisoned the entire South Carolina Workers’ Compensation Act, as currently written, and substituted in its stead a Texas-like voluntary program that, again like Texas, would have required employers to opt in if they desired to secure workers’ compensation coverage for their employers. Remember that while some states—most notably California—have provisions within their state constitutions that require most employers to provide workers’ compensation coverage for employees, South Carolina and a number of other states have no such provisions.

To move back to Bob’s non-rhetorical question: “Are we ready to return to the days before workers’ comp existed?” In the race to the bottom that seems so much the rage into today’s state houses, I fear that several states are at least willing to entertain the notion of a 19th century wrestling match as to how injured workers might be covered (or excluded) for work-related injuries and diseases.

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