Injured Workers Challenge Constitutionality of Oklahoma Opt Out Law

Two Injured Workers File Petition With Oklahoma Supreme Court

Two Oklahoma workers who were denied benefits under Injury Benefit Plans set up by their respective employers after the effective date of the Oklahoma Employee Benefit Act, Okla. Stat. tit. 85A §§ 200–213 (the “OK Opt Out Law”), have filed a petition with the Supreme Court of Oklahoma to have the entire law declared unconstitutional [see Pilkington v. State of Oklahoma, ex rel. Doak, File No. PR–113662, filed Feb. 13, 2015)]. The workers contend in relevant part that the OK Opt Out Law fails to afford them due process and that the law improperly provides differential treatment for various claimants without providing a reasonable or rational relationship to a permissible public policy or goal. 

Petitioners Challenge Two of the 33 Plans Approved So Far in Oklahoma

Petitioner Pilkington (“Pilkington”) alleges that she sustained work-related injuries on September 6, 2014, while she was employed by Dillard’s Inc. (Dillards), one of 33 employers who have had Injury Benefit Plans (“opt out plans”) approved by the office of the Honorable John D. Doak, Oklahoma’s Insurance Commissioner and respondent in the civil action. Pilkington filed a claim before the Oklahoma Workers’ Compensation Commission on November 4, 2014. Dillards removed the case to the United States District Court for the Western District of Oklahoma on December 12, 2014, and denied the claim. The removal was later dismissed but, as alleged by Pilkington, her claim “is in limbo.”

Petitioner Lee (“Lee”) claims a work-related injury occurred on September 7, 2014, while Lee was employed by Swift Transportation Co. of Arizona, LLC (“Swift”). Swift also had an opt out plan approved by the Insurance Commissioner. Lee alleges that Swift, or its agents, denied his request for benefits on September 15, 2014 and that Lee appealed the Adverse Benefit Determination but has received no response within the time allowed under the Swift opt out plan.

Opt Out Plans Approved by Insurance Commissioner

Pilkington and Lee allege that the Insurance Commissioner issued to both Dillards and Swift a CERTIFICATE OF QUALIFIED EMPLOYER” on or after February 1, 2014—the effective date of the OK Opt Out Law, that two opt out plans are nearly identical in nature and were prepared for Dillards and Swift by PartnerSource, a Dallas, Texas, firm.

Petitioners’ Contentions

Pilkington and Lee allege that the entire OK Opt Out Law is unconstitutional. Alternatively, they alleged that if portions of the law are found to be constitutional, the provisions of the OK Opt Out Law that favor complying employers with the exclusive remedy defense are separately unconstitutional. Pilkington and Lee specifically argue, inter alia, that the opt out plans established by Dillards and Swift—and approved by the Insurance Commissioner—“fall woefully short of reasonable standards of protecting Oklahoma’s injured workers.” Additionally, the petitioners alleged that the Insurance Commissioner has failed to require Dillards to post sufficient security to secure the payment of claims and that the minimal appeals process applicable to either opt out plan is improper in that there is no provision for an unbiased court or administrative agency to determine any appeals.

Due Process Argument

Pilkington and Lee argue that there is no due process protection in allowing an Oklahoma employer to opt out of the state’s workers’ compensation system, “set up its own benefit plan, make all the decisions regarding benefits, determine who and how a plan can be reviewed, and have total control of the development of the record for appeal.” They contend that the new opt out process fails to allow an Oklahoma agency or court to review the merits of the injured worker’s case, that instead, Oklahoma opt out employers “are allowed to replace a judge with a committee chosen by the employer.”

Implicit within the notion of due process, argue Pilkington and Lee, is that a complaining party be afforded a fair and impartial trial, including a neutral and detached decision-maker. According to the petitioners, there is no such impartiality in the system established by the OK Opt Out Law and utilized by their respective employers. Pilkington and Lee say that, in short, nowhere along the appeal route is an unbiased arbiter allowed to interpret the facts of the injured worker’s injury and his or her right to benefits.

Differential Treatment?

The petitioners also argue the OK Opt Out Law is unconstitutional because it provides various claimants with differential treatment that is not based upon a reasonable or rational relationship to a permissible public policy or goal. Pilkington point to at least three examples of differential treatment for claimants whose employers have opted out of the system vis-a-vis claimants whose employers remain within the system:

  1. Different rights of related to an initial adverse determination of benefits. Employees of employers who have not opted out get “full-blown” evidentiary hearings, with right of counsel, before an administrative law judge, whereas employees of an opt out employer face a system where the initial determination of compensability is made by the employer, and then appealed to an employer committee, rather than to an impartial reviewer such as a court or administrative agency.
  2. Disparate appellate rights. For an employee whose employer has not opted out, the claim is reviewed by the state’s Workers’ Compensation Commission, and later may be heard by the state’s Supreme Court. For employees of opt out employers, the initial appeals process is controlled, say the petitioners, by the employer. Thereafter, the petitioners argue, the appeal rights are limited only to matters of law.
  3. Disparate rights of entry-level access for an injury. An employee of an employer who has not opted out of the system generally has one year to file a claim before the Workers’ Compensation Commission. Petitioners contend that in the Swift plan, there is a 24-hour statute of limitations and that in the case of the Dillards plan, the time-frame is even shorter—by the end of the work shift.

Petitioners offer a hypothetical illustrating a portion of their argument:

…If a clerk at the Pottery Barn retail store, across the corridor from the Dillard’s store at Penn Square in Oklahoma City, is injured, he or she has one year from the date of the injury to file a claim for benefits before the Oklahoma Workers’ Compensation Commission because Pottery Barn has not OPTED OUT of the statutory administrative system. On the other hand, a clerk working for Dillard’s can suffer the same type of injury and not be entitled to benefits under the OPT OUT plan because the injury was not reported by the end of the workshift on the date of the injury. This attempt to drastically limit access to justice and to allow an injured worker to seek a remedy for an injury is a slap in the face of Oklahoma’s working men and women.

Petitioners also point to differences in, among other matters, medical treatment, choice of physicians, and permanent partial disability ratings for Dillards/Swift employees versus employees whose employers have not opted out of the system. The “bottom line,” say Pilkington and Lee, is that injured workers, “a single identifiable class for purposes of the workers’ compensation law,” may have their rights “reduced through no choice of their own.”

What’s Ahead

Similar petitions may soon be filed by injured employees who work for some of the other 31 Oklahoma firms who currently have approved opt out plans in place. The Pilkington/Lee petition lays the issues directly before the Supreme Court of Oklahoma. As I have said on earlier occasions, see my May 9, 2013 post and my December 17, 2013 post, I would not at all be surprised if the Oklahoma high court struck down most, if not all, the OK Opt Out Law.

This entry was posted in Issue commentary and tagged , , , , , . Bookmark the permalink.