The new buzz on the Workers Comp blogs is Oklahoma’s decision to pass Opt Out laws that will create a system similar to Texas. I am wondering if the process was thought through enough before implementation.
One of the better older articles on Opt-Outs is this article from 2005. I am sure that Oklahoma had thought through all of the advantages and disadvantages of an ERISA- type Workers Comp alternative system. Texas employers that “opt out” have these considerations:
- Facing e unlimited liability, including possible punitive damages, if they lose lawsuits arising from workplace accidents.
- In the event of a lawsuit, they forfeit their right to claim one of the three common law defenses
I had thought that only large organizations would see this option as a benefit due to the possibility of a lawsuit by the injured employee and the law of large numbers. However, Texas has allowed very small companies to opt out.
One of the Risk Management techniques that I have seen is for the employer to acquire an Occupational Accident (Occ-Acc) policy for their employees as a valid substitute for a Workers Comp policy. My company has handled Occ-Acc claims for years.
There are some shortcomings with an Occ-Acc policy for Workers Comp. The main concern is that in Texas it is a requirement that to bid on government contracts, an employer will need to have a valid Workers Compensation policy. Opt out companies are not considered as having a true Workers Comp policy. Trying to stack a ghost policy on top will not work either.
Article provided by James J Moore, AIC, MBA, ChFC, ARM. All articles are original content. Check out the full website at www.cutcompcosts.com.