Workers’ Compensation Reform
– SB 1X (Morgan/Hiett)
Workers’ compensation reform is frequently
a topic of discussion at the Legislature and this past session was no
exception. In May 2004, Governor Brad Henry convened a task force to study
Oklahoma’s workers’ compensation system and directed the task
force to recommend changes to the system which would increase benefits
to workers while reducing costs for employers. The bipartisan task force,
composed of legislators, business owners, attorneys, medical care providers,
and others interested in workers’ compensation, met through the
summer and fall of 2004 and submitted its recommendations in January 2005.
The task force’s recommendations were included in SB 846, which
was introduced during the regular 2005 legislative session.
Summary of Actions
SB 846 was authored by Sen. Charles Laster,
Rep. Chris Hastings and Rep. Jari Askins, and contained the recommendations
of the Governor’s Task Force on Workers’ Compensation Reform.
SB 846 passed the Senate on 3/16/2005 and passed the House with substantial
amendments on 4/28/2005. The bill then went to conference committee to
work out the differences between the 2 versions. Negotiations continued
through the end of session, with an agreement reached during the last
week of session. Due to the extremely complex nature of the legislation,
it was decided to give legislators additional time to review the bill
prior to voting on the measure, and the Governor called for special session.
The language of SB 846 was placed in SB 1X, which passed the Senate on
June 1, 2005, and the House on June 3, 2005, and was signed by the Governor
on June 6, 2005. The bill is estimated to save Oklahoma businesses $120
million and has been heralded as major workers’ compensation reform.
SECTION 1: FRAUD
- Increases penalties for fraud and requires
convicted parties to pay restitution.
SECTIONS 2-3: FILE AND USE
SECTION 2- NEW LAW
- Allows insurance companies to use rates
before filing them with the Insurance Department.
- Subjects workers’ compensation
insurance carriers to the provisions of the Property and Casualty Competitive
Loss Cost Rating Act.
SECTION 4: DRUG TESTING
- Allows an employer to drug test any employee
following an incident which injures an
employee or causes damage to equipment worth $500 or more, without requiring
reasonable suspicion of drug use or that the property damage was the
direct result of the use of alcohol or drugs.
SECTION 5: RETURN TO WORK
- Provides tax credit of eligible expenses
to modify a workplace for an injured worker on light duty, up to $1000,
not to exceed $10,000/year/taxpayer and 10% of wages of an injured worker
on light duty for 3 months, up to $5,000, not to exceed $25,000/year/taxpayer.
SECTION 6: SAFETY
- Gives a $1,000/year income tax exemption
to an employer that uses the Safety Pays Consultation Service provided
by Oklahoma Department of Labor.
SECTION 7: STATUTORY CONSTRUCTION
- Requires the Workers’ Compensation
Act to be strictly construed by the courts.
SECTION 8: ADMINISTRATION OF THE
- Allows the Governor to appoint the Administrator.
Sets the terms of appointment at 6 years.
- Allows the Administrator to be removed
SECTION 9: DEFINITIONS
- Defines “amount in dispute”,
“major cause” and “objective medical evidence.”
- Modifies definition of “injury”.
- Before permanent partial disability (PPD)
can be awarded, requires an employee to show objective evidence of a
permanent anatomical abnormality.
SECTION 10: VENUE
- Allows the parties to agree to venue.
If the parties do not agree, the Court can select venue.
- Authorizes the Workers’ Compensation
Court to hold hearings by videoconference if the parties agree.
SECTION 11: COUNSELOR PROGRAM
- Requires the Administrator to mail notice
to claimants upon the filing of Form 3s advising of the counselor program
SECTION 12: MEDIATION
- Allows the Workers’ Compensation
Court to order mediation if either party requests it or allows the Court
to order mediation if the Court believes mediation would be helpful.
- Changes procedure for certifying mediators.
SECTION 13: WRONGFUL TERMINATION
- Prohibits an employer from terminating
an employee to avoid payment of temporary total disability (TTD).
SECTION 14: EXCLUSIVE REMEDY
- Clarifies that the exclusive remedy provision
of the Workers’ Compensation Act does not abrogate rights provided
by the constitution.
SECTION 15: MEDICAL TREATMENT
- Terminates compensation for a partially
disabled employee who refuses employment suitable to the capacity of
the employee, but entitles the employee to notice and hearing before
- Allows an employer enrolled in a Certified
Workplace Medical Plan (CWMP) to select a physician for an employee
from doctors within the plan.
- Modifies how the medical fee schedule
- Requires Administrator to reduce the
medical fee schedule to save 4% on medical costs, with no single procedure
to pay less than 115% of Medicare.
- Mandates that invoices for implantables
must be reduced to reflect all rebates and discounts.
- Limits prescription costs to 90% of average
wholesale price plus $5 dispensing fee. Directs the use of generics
- Allows an employee to have one change
of physician by presenting a list of 3 doctors to employer. Employer
can choose one of the 3 doctors submitted by the employee or submit
its own list of 3 doctors. If the parties are unable to agree, the Court
selects a physician from the IME list.
- Prohibits repeating diagnostic tests
sooner than every 6 months, unless agreed to or ordered by the Court.
SECTIONS 16-17: CWMPs
- Eliminates enrollment process for CWMPs.
- Requires annual on-site inspections of
CWMPs by the Health Department.
SECTION 18: VOCATIONAL REHABILITATION
- Requires an employee to pay for a vocational
rehabilitation evaluation prior to any award for permanent total disability
- Limits TTD during retraining to 52 weeks
with 52 weeks extension possible.
SECTION 19: MEDICAL PROOF
- Creates rebuttable presumption in favor
of the opinion of the treating physician.
- If either party objects to the opinion
of the treating physician, the parties shall agree on the appointment
of an independent medical examiner (IME) or the Court appoints IME.
- IME advises if the opinion of the treating
doctor is supported by objective medical evidence. If it is, review
ends. If it is not, the IME may render an opinion. Court may follow
the opinion of treating physician or IME or establish its own opinion.
- Prohibits an IME of a claimant from also
being the treating physician of the same claimant.
- Allows the Court to remove an IME for
- Allows an employer to stop TTD payments
if the employee is released from treatment by the treating physician
and provides a procedure for objecting to such termination of TTD.
SECTION 20: BENEFITS
- Limits total payments for TTD and temporary
partial disability (TPD) to 300 weeks.
- Increases disfigurement benefits.
- Limits TTD for hernia to 6 weeks, with
6 week extension possible with surgery.
- Limits TTD for non-surgical soft-tissue
injury to 8 weeks, with a 16 week extension possible with surgery.
- Defines soft-tissue injury.
- Requires permanent anatomical abnormality
before permanent partial disability (PPD) may be awarded. In determining
if permanent anatomical abnormality exists, Court may consider wage-earning
ability of employee.
- Increases death and funeral benefits.
- Expands previous conditions for which
an employer is not responsible to compensate an employee.
SECTION 21: FORM 2S
- Makes Form 2s (Employer’s First
Notice of Injury) confidential.
SECTION 22: SETTLEMENT
- Allows settlement of a case between an
employer and unrepresented employee without filing a Form 3, with approval
by the Administrator or the Court.
- Prohibits the Court and others from considering
such settlements as PPD awards for statistical purposes.
SECTION 23: ATTORNEY FEES
- If an employer has admitted compensability
and makes an offer of settlement within a certain time frame, the claimant’s
attorney fee shall be limited to 35% of the amount in dispute, not to
exceed 20% of the PPD award.
SECTION 24: STATUTES OF LIMITATIONS
- Requires post-termination injury claims
be filed within 6 months of termination.
- Shortens time within which an injured
worker may reopen a claim for a change of condition for the worse from
5 years to 3 years.
SECTION 25: SUBROGATION
- Authorizes subrogation in death claims
against third parties but not against death benefits or life insurance
proceeds from policy procured by the employee.
SECTION 26: DEATH BENEFITS
- Increases death benefits for surviving
spouse if employee dies from causes other than the on-the-job injury
from $50/week to 50% of PTD benefits to which the deceased was entitled.
- Terminates surviving spouse benefits
SECTION 27-30: MULTIPLE INJURY TRUST
- Modifies the definition of “physically
impaired person” so that a person must have a previous adjudication
of disability in order to combine the disability with other injuries
for purposes of presenting a claim against the Multiple Injury Trust
- Reinstates PTD claims resulting from
a combination of injuries against the MITF. Such awards can only be
paid in periodic installments.
- Increases funding for safety programs
at the Department of Labor and Career Tech and for the Attorney General’s
workers’ compensation fraud unit.
- Allows CompSource Oklahoma to appear
in any case in which the Court is considering an award from the MITF.
SECTION 31: PHYSICIAN ADVISORY COMMITTEE
- Adds an occupational medicine physician
to the Physician Advisory Committee.
- Allows the appointing authorities to
change all appointments on the Committee effective July 1, 2005, with
newly appointed members serving out the terms of replaced members.
- Directs Committee to develop treatment
guidelines for all injuries and makes compliance with guidelines mandatory
without prior authorization. Provides procedure for preauthorization
review by an IME. Sets forth guidelines for payment of IME for preauthorization
- Directs Committee to develop guidelines
for prescription of Schedule II drugs.
SECTION 32: TASK FORCE
- Creates Task Force for the Study of the
Competitiveness of the Workers’ Compensation Insurance Market
and the Solvency of the Workers’ Compensation Insurance Account
of the Oklahoma Property and Casualty Insurance Guaranty Association.
SECTION 33: USE AND FILE
- Repeals 36 O.S. 2001, Section 902.1,
which required workers’ compensation insurance rates to be filed
and approved before use by insurance companies.
SECTION 34: CERTIFICATES OF NON-COVERAGE
- Repeals 40 O.S. 2001, Sections 415.1
and 415.2, which allowed the Department of Labor to issue certificates
SECTION 35: EFFECTIVE DATE
- July 1, 2005 – Sections 1-4 and
SECTION 36: EFFECTIVE DATE
- July 1, 2006 – Sections 5-6..
SECTION 37: SEVERABILITY CLAUSE
- Provides that if any part of the bill
is declared unconstitutional, the remaining parts of the bill can still
SECTION 38: EMERGENCY CLAUSE
The Oklahoma State Senate, Senate Staff
Senator Mike Morgan, President Pro Tempore