Workers’ Compensation Ruling Affects Loss CostPosted June 20, 2016
A recent court decision regarding the suspension of workers’ compensation benefits for those who return to their jobs after suffering work injuries could lead to an increase in workers’ compensation rates, warns John Doak, Oklahoma’s Insurance Commissioner.
Maxwell vs. Sprint PCS
The Oklahoma Supreme Court issued its decision in Maxwell vs. Sprint PCS in April. It concerned a Sprint PCS employee who injured her knee at work in 2014. She filed for permanent partial disability benefits, but went back to her job at Sprint three weeks after the injury, earning her pre-injury wages. An administrative law judge and the Oklahoma Workers’ Compensation Commission said that her benefits should be deferred from the date on which she returned to work.
However, the Court noted that it is unfair that those who return to work are denied permanent partial disability, while those who cannot come back receive their full amount of compensation. It held that Oklahoma’s permanent partial disability (PPD) deferral provisions are a violation of the due process rights of injured workers and that it is unconstitutional to suspend workers’ compensation benefits if an employee received workers’ compensation benefits after being injured on the job, and then went back to work.
Oklahoma’s workers’ compensation law was overhauled in 2013. The changes included a provision deferring permanent partial disability benefits and an Oklahoma state policy that PPD benefits should be directly tied to a loss of earning capacity. However, PPD compensation is awarded on the basis of and meant to compensate for a loss of function, rather than a reduction in earning capacity, and both employees who return to work and those who cannot have nonetheless lost some function as a result of the on-the-job injury.
Loss Cost Filings
The National Council on Compensation Insurance (NCCI) issues an annual loss cost filing that shows how changes in the law and loss cost trends are expected to affect future insurance loss costs and rates. It also issues supplemental filings when circumstances change and affect the annual filings.
In a recent loss cost filing, the NCCI noted that loss costs increased overall by 3.4 percent in Oklahoma. The loss cost is the portion of insurance rates that is used to pay claims and cover costs of claim adjustment. Insurance rates are then determined by estimating future loss costs and adjusting that amount for expenses, profit, and contingencies.
The NCII attributed the increase in loss costs in Oklahoma workers’ compensation insurance to the court ruling in Maxwell because insurance companies must continue paying out permanent partial disability even for workers who return to their jobs. The loss cost filing is scheduled to take effect on July 1, 2016, but may be withdrawn if legislation is passed in the current legislative session.
Contact Us For Help
If you have been the victim of insurance bad faith, please contact an Oklahoma bad faith insurance attorney at the Bennett Law Firm, at 405-272-0303 to schedule a free initial consultation.