Friday, September 11, 2015
by The Oklahoman Editorial Board
Published: September 11, 2015
THE law that changed Oklahoma's workers' compensation system has been challenged in court on many fronts by those who prefer the adversarial, attorney-dominated system that was in place for so many years. Yet there are clear signs the new administrative system is working.
The clearest comes in a report from the National Council on Compensation Insurance, which filed an overall loss cost, or claim expense, decrease of 14.8 percent for Oklahoma. This marks the third straight year of declines in this important indicator — by a total of 37.2 percent according to state Insurance Commissioner John Doak.
What's that mean? The State Chamber of Oklahoma says those figures equal a savings of roughly $148 million for Oklahoma businesses in the past year, and in excess of $368 million in the past three years since the administrative system was implemented. So businesses have spent about one-third less on workers' comp costs than they would have otherwise.
The NCCI said the reductions are due to declines in market experience and market trend, in addition to recent reforms. The organization's annual report is important because it's used to figure workers' compensation insurance rates.
Gov. Mary Fallin said the news from NCCI “is a win for all Oklahomans.” That's especially true for the thousands of small businesses across the state that had been getting choked by ever-rising workers' comp costs. Fallin said a third straight year of rate reductions shows that reforms “have delivered a system that is efficient and fair to both workers and employers.”
Speaking of fairness, the Oklahoma Workers' Compensation Commission seems to be modeling that in the way it's handling financial penalties proposed against businesses that fail to carry workers' comp insurance.
The Oklahoman's Randy Ellis reported Sunday that since February 2014, the commission has issued 68 enforcement notices proposing fines totaling about $10.8 million. But it has collected only about 5 percent of that — $534,442, mostly through consent agreements or agreed orders.
Ellis noted that accepting far less than the proposed fine has been the norm in cases where the businesses have acted once notified by the commission.
The state Labor Department formerly oversaw enforcement in this area. At that time, state law limited the amount the agency could collect, with a cap of $10,000. The law creating the workers' comp commission authorized the agency to collect up to $1,000 for each day a business was out of compliance, with no cap.
The commission was criticized for sending notices to scores of small businesses saying they faced hundreds of thousands of dollars in penalties, which become final 20 days after notice is received. The agency subsequently said it would take a softer approach.
And it's not as if the agreed-upon fines are something to sniff at. For example the commission agreed on a $20,000 fine for Brown's Bakery in Oklahoma City, after originally citing the bakery for not carrying insurance on its workers for 424 days — and proposing a $424,000 fine. The president of the company, Bill Brown, said it was an oversight, a responsibility his brother had handled before passing away. Brown said he was “very happy” to pay the agreed-upon fine, “even though I don't have that kind of money.”
It's certainly more reasonable. The goal should be to ensure workers' comp insurance is in place – not put businesses out of business. Working out deals that generate a fraction of proposed amounts, but also get the employers' attention, is worthwhile and a sign of ongoing progress in this new workers' compensation age.