Opt-Out Act in Oklahoma… and Beyond?!

Oklahoma City, OK (WorkersCompensation.com) - In September of 2016, the Oklahoma Supreme Court ruled that the 2013 revision to the state’s workers’ compensation laws contained the Opt-Out Act, which violated the Oklahoma Constitution. Under this Act, an employer could opt out of participating in the Oklahoma workers’ compensation system and instead establish an employee benefit plan, which would be governed by federal law under the Employee Retirement Income Security Act (ERISA).

In the case of Vasquez v. Dillards, the claimant, Jonnie Vasquez, alleged an injury to her shoulder that occurred as a result of lifting boxes in the Dillard’s store where she worked. Dillard’s initially provided benefits but then stopped because it alleged she had a pre-existing condition. The claim was slated to go to a hearing before the Oklahoma Workers’ Compensation Commission, and that’s where the Opt-Out Act became important. 

Dillard’s argued that the claim should be heard in federal court as it has jurisdiction over ERISA matters. The federal court in Oklahoma disagreed and sent the case back to the Commission, which held that the Opt-Out Act violated the state constitution in part because it provided for different remedies (federal court vs. state employment commission) for claims. 

Dillard’s appealed to the Oklahoma Supreme Court, which agreed with the Commission’s conclusion and held that the Opt-Out Act “creates impermissible, unequal, and disparate treatment of a select group of injured workers.” The court continued, “Therefore, we hold that the Oklahoma Employee Benefit Injury Act …is an unconstitutional special law under the Oklahoma Constitution, art. 5, §59." 

In a recent legislative session, the Oklahoma House of Representatives appeared to try and revive the Opt-Out Act. However, according to Bob Burke, a longtime Oklahoma workers’ compensation attorney and a vocal critic of the Act, “I have spoken to many members of the legislature and I do not sense any appetite for Oklahoma to revisit Opt-Out,” he said in an email to WorkersCompensation.com.

A number of other states are considering Opt-Out Acts but as of now, Texas is the only state where it is currently the law. Burke said he believes “…that Texas is the only state in which Opt-Out will work because it is the only state that does not legally require an employer to compensate its injured employees."

"…in every other state, I believe the courts will require the same benefits and remedies to be available for employees of Opt-Out companies and employees under the statutory law of that state,” he said.  

As for Oklahoma, Burke does not “…see how the legislature could ever write an Opt-Out law for Oklahoma that would (1) provide the same benefits and same remedies as the normal workers’ compensation law, and (2) be of any economic benefit to an Oklahoma employer.”

In reference to the long-term impact of the approximately two-and-a-half years the Opt-Out Act was law in Oklahoma, Burke said it will be minimal as “...only 65 businesses opted out.”

"...from my unscientific survey of claimant lawyers, there are about 80-90 claims for injuries that would have fallen under the Opt-Out plans that frankly didn't cover much in the way of injuries and resulting benefits,” he said. “All claims have either been settled by the normal process in the Workers' Compensation Commission or are pending for trial.” 

This includes, Burke said, the case of Vazquez, “...the precious lady who was the poster child for the Opt-Out litigation.” Her case is scheduled for mediation in the coming weeks and Burke said he hopes she will finally be able to get relief for her injury.

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