Oklahoma Supreme Court Strikes Down State’s Opt Out Law

Earlier today (September 13, 2016), in Vasquez v. Dillard’s, Inc., 2016 OK 89, in a 7–2 decision, the Supreme Court of Oklahoma, in one of the most important workers’ compensation decisions in memory, held the core provision of the Oklahoma Employee Injury Benefit Act (the state’s Opt Out Law), Okla. Stat. tit. 85A, § 203, creates “impermissible, unequal, disparate treatment of a select group of injured workers” and, therefore, is an unconstitutional special law under the Oklahoma Constitution, art 2, § 59 [Opinion, ¶ 1].

Readers will recall that on February 26, 2016, the state’s Workers’ Compensation Commission found § 203 and 209 unconstitutional on the basis that the law denied equal protection to Oklahoma’s injured workers and denied them the constitutionally protected right of access to the courts (see my earlier post. Citing its own earlier decision in Robinson v. Fairview Fellowship Home for Senior Citizens, Inc., 2016 OK 42, 371 P.3d 477 (see my earlier discussion here), the majority indicated it had a responsibility to address the issue before it.

 Opt Out: an Unconstitutional Special Law

Speaking for the majority, Justice Watt observed that Dillard’s had contended the Opt Out law was not a “special” law, since it applied to “all employers,” rather than injured employees. The majority was unconvinced, noting the title of the Act made no mention at all of employers. Instead, it referenced “injured employees.” The majority also cast aside Dillard’s argument that the Opt Out law provided a baseline of “Core Coverage” in § 203(B), guaranteeing individual employees equal treatment, finding that position “incredible” [Opinion, ¶ 20].

The majority stressed that instead of providing employees of qualified plan employers equal rights with those of employees falling within the traditional Workers’ Compensation Act, the “clear, concise, unmistakable, and mandatory language” of the Opt Out law provided that “such employers are 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 [Opinion, ¶ 22, emphasis by the majority].

 Opt Out Not a Constitutionally Permissible Special Law

The majority also cast aside Dillard’s final contention that even if the Opt Out law was a special law, it was constitutionally permissible because it was substantially and reasonably related to a legitimate government objective. The employer-enumerated goals could not save the law from the constitutional challenge before the court. Citing Maxwell v. Sprint PCS, 2016 OK 41, 369 P.3d 1079, the majority acknowledged that the Legislature had the authority to exclude an entire class of employees from coverage under the workers’ compensation system generally. What it could not do was to exclude one group of claimants from benefits that had been accorded to others. The majority stressed, “No distinctive characteristic exists for the disparate treatment of injured workers simply upon the basis that the employer has opted out of the general workers’ compensation system.”

 Opt Out Law’s “Severance” Provision No Help

The majority also held that the suggestion that the Opt Out law could be saved by simply requiring that qualified employers treat their employees exactly as the Administrative Act required would frustrate any rational reason for an employer to go to the trouble of developing a plan mirroring the surviving statutory scheme.

 Majority’s Decision Affects Pending Disputes Before the Commission

The majority noted that there were a number of cases currently pending before the Commission that had been stayed because they concerned similar issues to those in the case at bar. The majority said its decision was to be given immediate effect, not only with regard to the current case, but also with regard to all other affected cases before the Commission and in the appellate pipeline.

 Dissenting Opinion

Justice Winchester, joined by Justice Taylor, dissented, indicating that the majority opinion had emphasized (a) that statutory provisions were presumed constitutional; (b) that the Court’s function was not to correct the Legislature; and (c) that the Court should rule on the narrowest grounds possible. According to Justice Winchester, the majority’s result violated all three. Rather than strike the law, the dissent contended the Commission should have made an inquiry into whether Vasquez had been denied the benefits she would otherwise have received under the general workers’ compensation law. The dissent also said that all new legislation needs “fine-tuning, either by legislative amendment or court direction” [Dissent, ¶ 5]. Employers whose plans had met or exceeded the provisions of the general workers’ compensation law would never get the opportunity to have the validity of their plans tested.

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2 Responses to Oklahoma Supreme Court Strikes Down State’s Opt Out Law

  1. Bill Minick says:

    Winners: The only winners in this case are the trial lawyers and workers’ comp insurance companies who are reducing competition, creating more disputes between employers and workers, and raising insurance premiums. They all closely coordinated their efforts through the same Oklahoma attorney.

    The biggest fear of trial lawyers and insurance company trade groups is that a competitive alternative to workers’ comp is a leak in their profit-making dike that could blow open in a few years. That alliance will certainly draw further scrutiny.

    Losers: The real losers are the tens of thousands of Oklahoma workers who will likely no longer receive the improved communications and higher disability benefits provided by Option programs, and are more likely to need a lawyer if they get injured at work. Oklahoma employers will also lose millions of dollars in cost savings, and taxpayers will spend more for government oversight.

    Neither the Oklahoma Workers’ Compensation Commission nor the Oklahoma Supreme Court found any harm whatsoever or any wrongful denial of benefits to Ms. Vasquez. So she won nothing from this new court decision.

    • J. Anthony says:

      This coming from the same Texas attorney leading the fight to “opt-out!” It is hubris to believe that opt-out reduces disputes between employers and injured workers and more so to believe that it offers better “benefits.”

      Insurance premiums have been declining. And that “profit-making dike” is accountability, holding businesses accountable for work-related injuries.

      Improved communication? “Sorry, your claim is denied because you didn’t report it the same day”- I’m sure injured workers will hate to see that go. The only argument with any hint of truth is that, yes, employers will not see reduced cost through the shifting of their obligations onto the state, which is the aim of 0pt-out.

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