Time to replace Oklahoma's broken, adversarial workers' compensation system

February 5, 2013

Yesterday, the legislative session began in full force. Policymakers have an opportunity to make this session an historic one. Policymakers can accomplish this by replacing our broken, adversarial workers’ compensation system with an administrative system that actually helps workers, families and the state achieve their greatest potential.

The results of Oklahoma’s broken, adversarial workers’ compensation system are clear. Our current system drives and rewards litigation and injury disputes instead of focusing on resolution and progress. Lt. Gov. Todd Lamb’s most recent policy report succinctly presents the dire need to replace Oklahoma’s current workers’ compensation system. According to the report:

• Oklahoma’s workers’ compensation system is the sixth most expensive in the nation.
• In 1990, our average permanent partial disability order was $12,069; in 2011, it was $33,681.
• In 1990, Oklahoma had 1.97 workers’ compensation claims filed per 100 workers; in 2011, that rate was 0.93.
• As indicated above, fewer claims are being filed; however, monetary court orders are continuing to climb.

The report also highlights more troubling data for Oklahoma’s broken, adversarial workers’ compensation system:

Oklahoma employers pay the sixth highest premiums in the nation. Texas employers pay the 38th highest.

• Average Lost-Time Claim Frequency per 100,000 Workers:
  • Arkansas: 653
  • Texas: 732
  • Oklahoma: 1,415
• Average Indemnity (non-medical) Cost per Case:
  • Arkansas: $13,000
  • Texas: $14,000
  • Oklahoma: $29,000
• Average Permanent Partial Indemnity (non-medical) per Case:
  • Arkansas: $23,000
  • Texas: $21,000
  • Oklahoma: $47,000
• Trials/Contested Case Hearings:
  • Arkansas: 4,000
  • Texas: 4,157
  • Oklahoma: 28,590
• Assuming a conservative estimate of the total workers’ compensation premiums of $900 million per year, a 20 percent savings by going to an administrative system and other changes would result in savings to state and local government, schools and hospitals of $33,300,000. That’s more than enough to offset any potential increased costs of transitioning to such an administrative system.

Based on the data and numerous accounts from employers, employees and their families, policymakers must replace Oklahoma’s broken workers’ compensation system immediately. Our system has another shocking flaw. Regionally and nationwide, medical care/costs are the larger share of total workers’ compensation benefit costs. But in Oklahoma the adversarial adjudication and processing of claims is the larger share. So, instead of a system focused on getting employees rehabilitated and fairly compensated, our system is inefficient, encourages longer claim duration, and hurts families and the economy.

The longer policymakers wait to replace our broken system, the more money employers and taxpayers must spend on a broken system instead of using that money to increase the salaries of their employees or to increase investment in the community. The longer policymakers wait to replace our broken system, the more harm that is done to employees and their families who are forced to “play chicken” in an adversarial system more concerned with interests other than those of the injured worker. The longer policymakers wait to replace our broken system, the more businesses refuse to open or relocate in Oklahoma because neighboring states have a much better and lower-cost worker’s compensation climate. The longer policymakers wait to replace our broken system, the greater constriction of future economic opportunity, potential and quality of life for Oklahomans.

Oklahoma is one of only two states that continues to hang on to a broken adversarial system. The other state is Tennessee, whose governor and legislature are looking to replace their broken system as well. Policymakers have an opportunity to make this session an historic one by replacing our broken, adversarial worker’s compensation system with an administrative system that actually helps workers, families, employers, taxpayers and the state achieve their greatest potential.