State Workers’ Compensation Lawsuit Filed

Posted July 5, 2016

Oklahoma state employees currently receive workers’ compensation coverage under a state plan, rather than contracting with an insurance company. Taxpayers have filed a lawsuit challenging the legality of the state’s insurance plan and demanding that changes be made.

Consolidated Workers’ Compensation Program

The workers’ compensation plan for Oklahoma state employees, called the Consolidated Workers’ Compensation Program, was created in 2014 after the previous insurance provider for state agencies, CompSource Oklahoma, was privatized. The legislation passed in 2014 allows state agencies to terminate their existing policies in favor of a self-insured plan. The agencies may purchase policies from the state Office of Management and Enterprise Services, which created the Consolidated Workers’ Compensation Program.

Plan Problems

But there have been problems with the state insurance plan. One issue is that it allows public employees to prosecute their workers’ compensation claims in state district court, instead of requiring them to go through the Workers’ Compensation Commission.

Another problem is that state agencies may buy workers’ compensation coverage with large deductibles. Then, when a state employee is injured on the job and has a workers’ compensation claim until the deductible is reached, the compensation will come out of taxpayer funds. For example, the Office of the Governor has a policy with a $1 million deductible. Because the office does not have funds dedicated to paying workers’ compensation claims, any claims up until the deductible amount is reached will come out of the state’s general revenue fund.

The Lawsuit

Taxpayers have brought a lawsuit alleging that the plan is illegal because the lack of a guarantee for all losses under the plan means that it is acting as an unlicensed insurance company. A private employer’s own-risk, self-insured status depends on receiving the approval of the Workers’ Compensation Commission. However, under the plan, the state is permitted to retain its self-insured status without seeking approval from the Commission.

In the lawsuit, the taxpayers ask the court to strike the plan as illegal and forbid it from being expanded to other state agencies. The suit also requests that state agencies be required to either file an application for self-insurance, purchase a traditional policy from CompSource, or set up the state plan as an insurance company, complying with statutory requirements including minimum capital and surplus.

Contact An Experienced Lawyer

If your insurance provider has acted in bad faith, please contact the attorneys at the Bennett Law Firm at 405-272-0303 to schedule a free initial consultation.