THE NEW ERA OF WORKERS COMPENSATION IN OKLAHOMA. OIPA Fall Conference 2013 Big Cedar Lodge, Missouri October 22, 2013

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1 THE NEW ERA OF WORKERS COMPENSATION IN OKLAHOMA OIPA Fall Conference 2013 Big Cedar Lodge, Missouri October 22, 2013

2 OPENING REMARKS Gray Holden Executive Vice President and Managing Partner Willis of Oklahoma, Inc.

3 OKLAHOMA ADMINISTRATIVE PLAN - SB 1062 CREATES TITLE 85A Chris Lavigne Broker Energy & Construction Practice Willis of Oklahoma, Inc.

4 FEB 1, 2014 SB1062 WILL REPLACE CURRENT SYSTEM n Claims with date of loss prior to will be handled by Court of Existing Claims (Runoff) n Claims with date of loss after will be handled under the new Oklahoma Administrative Plan 4

5 COMMISSION OF THREE WILL BE APPOINTED BY GOVERNOR n Commission will appoint ALJ s to hear cases n No set term, can be replaced at any time by Commission n Commission will create the rules, regulations & funding and set time line for effective dates of the rules n New law sets administrative powers of Commission 5

6 CHANGES IN BENEFITS TTD n Reduced by approx. 30% as max is 70% of AWW not to exceed 70% of States AWW n Waiting period to receive TTD is 3 days n Max. of 8 weeks of TTD paid for non-surgical injuries n Max. of 104 weeks TTD benefit PPD n 350 week maximum benefit n No payment if employee returns to work at same job same pay n Medical-should remain static- PTD, Death, Disfigurement & Vocational n Similar decreases as above 6

7 COMMON SENSE CLARIFICATIONS n No PPD for body part with no treatment n No TTD if employee receives unemployment n No compensation for ordinary disease of life n Mental injury cases are limited to 26 weeks of benefits 7

8 REPORTING CLAIMS CHANGES n Employee has 3 days to report injury to employer** n Claim barred unless filed with Commission within 1 year n Occupational Disease claim barred after 2 years of last exposure ** There are conflicting elements of the new law that create some doubt about time to report injury. Employee may have up to 30 days. 8

9 FRAUD & PENALTIES n Employee who makes false statements to receive benefits is guilty of felony n Attorney General s WC fraud unit will be funded through the Commission n If employee is charged with fraud, all injury compensation will stop 9

10 HOW WILL THIS AFFECT MY WORKERS COMP. PROGRAM? n Carriers & TPAs will handle much the same with no expected increases in claims handling fees n Self-Insured s - already have an LOC or bond in place, may be required to post a 2nd to cover new law No effect to claims handling fees/process n Will see an estimated 30% savings on benefits paid due to the decreases in TTD and new rules for PPD payments. n No significant changes for medical treatment as it was not the focus of the new law n Attorney fees are reduced to 10% on TTD and fees are not allowed on uncontroverted claims. If a written offer is made and rejected, then the attorney is limited to 30% of the difference between the amount of any award and the offer 10

11 AN OVERVIEW OF THE OKLAHOMA EMPLOYEE INJURY BENEFIT ACT (OKLAHOMA OPTION) AS PART OF SB1062 Gray Holden Executive Vice President and Managing Partner Willis of Oklahoma, Inc.

12 OKLAHOMA OPTION n Senate Bill 1062 signed into law on May 6, 2013 creating the Oklahoma Employee Injury Benefit Act (Oklahoma Option) n Effective February 1, 2014 n Employers may voluntarily elect exemption from reformed administrative Workers Compensation n Combines elements of new Workers Compensation law and fragments of Texas Non-subscription approach n Employer cannot opt-out of the workers compensation system (i.e. this is NOT Texas Non-Subscription ) n Employer has to apply and be accepted as a Qualified Employer in order to participate in the Oklahoma Option 12

13 OKLAHOMA EMPLOYEE INJURY BENEFIT ACT Any employer may voluntarily elect to be exempt from the Administrative Workers Compensation Act; Designated a qualified employer if the employer: n Notifies Insurance Commissioner in writing of election and date of the election n Pays Commissioner annual nonrefundable fee of $1,500 n Is approved by the OK Insurance Commissioner n Notifies each of it s employees it is a qualified employer, that it does not carry traditional Workers Compensation n Adopts a written benefit plan as described (Likely an ERISA based plan) 13

14 WRITTEN BENEFIT PLAN n Must notify Commissioner and employees n Shall provide for payment of the same benefits (dollar, percentage and duration) as included in Administrative Workers Compensation Act (SB 1062) n May provide for lump-sum payouts reasonably determined by administrator, actuarially equivalent to expected future payments n No fees to an employee allowed 14

15 OKLAHOMA OPTION & NEW WORKERS COMPENSATION OKLAHOMA OPTION No fault/exclusive remedy Lifetime medical Statutory defined benefits NEW WORKERS COMPENSATION No fault/exclusive remedy Lifetime medical Statutory defined benefits Medical employer controlled Optimal employee communication TTD No weekly cap Wage replacement Per Plan (0 days) Injury reporting next day/end of shift TTD 85% (taxable) Medical - employer directed (per Statute) Limited employee communication TTD - $540 maximum Wage replacement 4 days Injury reporting up to 30 days** TTD 70% (non-taxable) 15

16 QUALIFIED EMPLOYER S LIABILITY n Under the benefits plan and otherwise prescribed shall be exclusive and in place of all other liability n For covered employee s occupational injury or loss of services or the spouse or dependents of covered employee n Broad exclusive remedy protection n Employer subject to liability if injury is result of intentional tort 16

17 OKLAHOMA OPTION: DENIAL OF BENEFITS n Employer shall notify of denied benefits in writing within 15 days n Claimant may appeal an adverse benefit determination to an employer appeals committee within 180 days n Further appeal to Commission, final appeal to Oklahoma Supreme Court 17

18 OK INSURANCE COMMISSIONER n Shall collect and maintain information required on employers n May require an employer to confirm its qualified employer status (see draft form) n Shall maintain a list on its official website of all qualified-employers n May design employer required notification forms (draft forms on website) Pre - Rulemaking Underway Okoption@oid.ok.gov 18

19 OKLAHOMA OPTION: EMPLOYER CONSIDERATIONS n Time & expense of program set-up n Insure or self-fund benefits n Filing fee - annual n Will law be over-turned? 19

20 DEVELOPING YOUR GAME PLAN n Controlling the vehicle by which worker s compensation benefits are paid to employees. Workers still receive the same level of benefits they would receive under the Worker s Compensation Act. This means disability ratings and open-ended claims. n The Key: aggressively managing worker injury claims. n Establishment of ERISA plan to provide coverage for occupational injury benefits to injured employees. 20

21 THE GOOD NEWS n The primary reason that Texas Non-Subscription has proven to be advantageous for Employers is their control over the work injury claim. n As a General Proposition, Control Consists of: Designating the treating physician. Requiring Employees to follow the physician s directions on care. Requiring Employees to return to work, either on light duty or regular duty, once released by the physician. 21

22 KEY FEATURES OF THE OKLAHOMA WORKER S COMPENSATION REFORM THAT EMPLOYERS CAN LEVERAGE TO THEIR BENEFIT n Employers can direct injured Employees to their designated physician. This includes General Practitioners as well as Specialists. n Employer can elect not to have chiropractors, acupuncturists, and massage therapists as part of their program. n Employees are entitled to a one-time change of treating physician, upon permission by the Oklahoma Worker s Compensation Commission. Your replacement physician selected from your list of 3 doctors provided by the Employer. n Employees must Notify Employers of an Injury Not Occupational Disease within 3 working days of the injury s occurrence, but as an item of Plan design, Employer can reduce that time to next day or end of shift. 22

23 Q&A 23