Workers' compensation reform working

October 8, 2014

Mike Brake

The workers’ compensation reforms passed last year have been a tremendous success for this state. In 2013, Oklahoma Insurance Commissioner John Doak applauded efforts pushing for these reforms and was quoted as saying, “I don’t think it’s a coincidence that it all started with Oklahoma’s push for workers’ compensation reform.” Since its founding, OCPA had been advocating for substantial comp reforms in the hopes of easing the burden of cost on businesses. Jonathan Small, OCPA’s executive vice president, fully supported the 2013 reforms, maintaining that they would be a game changer for businesses in the state. And the facts show he and lawmakers making the change were right.

Senate Bill 1062, which Governor Mary Fallin signed on May 6, 2013, changed Oklahoma’s court-based comp system to an administrative system. Prior to these reforms, Oklahoma had been one of only two states, the other one being Tennessee, to keep such an outdated and adversarial comp system. Since 2013, the reforms have established a less adversarial, less costly, and more efficient system to get injured workers healthy and back to work.

The previous system had significant problems. Most importantly, Oklahoma had one of the highest average rates of workers’ compensation benefits, at a rate of $830 per employee. Prior to 2013, the average cost per case ran $47,000 in 2012, the highest in the central states region, where the average was only $25,000. Soon after passage of the reform, former Speaker of the Oklahoma House of Representatives T.W. Shannon added, “workers’ compensation costs are noted by employers of all sizes across the state as their top barrier to growth.” Reasons for such high costs had to do with the amount of resources devoted to litigation and the operation of the system — rather than to actual medical and rehabilitative benefits. Elsewhere in the region and country, the majority of workers’ compensation case costs went to medical and rehabilitative benefits.

Since 2013, the shift to an administrative system has caused immediate savings to the state and to employers. The National Council on Compensation Insurance recently filed an overall loss cost level decrease of 7.8 percent, making the total decrease over two years 22.4 percent. This reduction has resulted in savings exceeding $220 million. Speaker Shannon asserted, “by replacing the archaic adversarial system with a modern administrative system, we have opened the doors for employers and employees to settle claims in a fair and affordable manner.” The cost savings from the overall lower costs of each case can go a long way towards helping businesses invest in new projects, hire new employees, and expand their operations. Whereas previously high costs may have been highly discouraging, reduced workers’ compensation costs may encourage businesses to move to the state, helping boost Oklahoma’s economic prosperity. The benefits of workers’ compensation reform make us only ask one question: Why didn’t we act sooner?