ProPublica

Journalism in the Public Interest

State Lawmakers to Investigate Workers’ Comp Opt Out

In response to a ProPublica and NPR investigation, the National Conference of Insurance Legislators said it will look into an effort by some of the biggest names in corporate America to opt out of workers’ comp.

Justin Volz for ProPublica

A national association of state lawmakers has announced that it will investigate a burgeoning effort to let companies opt out of workers’ compensation insurance and write their own plans for how they’ll care for injured workers.

The National Conference of Insurance Legislators, whose members serve on insurance committees and often act as gatekeepers for related bills in their states, said the decision was prompted by a ProPublica and NPR story last month that found that employers’ opt-out plans typically provide lower benefits for injured workers, more restrictions and little independent oversight. Texas and Oklahoma currently allow companies to opt out and other states are considering similar plans.

“The issues brought forward by the recent NPR/ProPublica study regarding the Texas and Oklahoma workers’ compensation programs are of significant concern to state legislators responsible for the protection of injured workers,” said North Dakota state Sen. Jerry Klein, a Republican who chairs the association’s workers’ comp committee.

Nearly every state requires employers to carry workers’ comp to provide medical care and lost wages if someone gets hurt on the job. In exchange, workers are barred from suing their employers. But Texas has allowed companies to have no insurance, sometimes forcing injured workers to go to court or arbitration to obtain benefits. And in 2013, Oklahoma passed a law allowing companies there to opt out — while still retaining their immunity from lawsuits — if they adopt an alternative benefit plan.

This year, a group founded by Walmart and several of the biggest employers in America has pushed a campaign to get laws passed in as many as a dozen states within the next decade. Tennessee and South Carolina are seriously considering such bills.

Proponents say the alternative plans save companies money by removing bureaucracy and providing better medical care.

But ProPublica and NPR analyzed the plans of 120 companies and found that the Texas programs typically cut off medical treatment after about two years, don’t compensate workers for most permanent disabilities and cap payouts for deaths and catastrophic injuries. Workers’ comp typically covers medical care for workplace injuries for life and death benefits for children until they graduate college.

In Oklahoma, companies that opt out must provide the same level of benefits as workers’ comp, but unlike workers’ comp, the benefits are subject to income and payroll taxes. In addition, in almost every plan, workers cannot choose their doctors and must report injuries within 24 hours or risk losing all benefits.

A show of support from the national association would make opt-out bills much easier to pass, while a negative assessment might cause lawmakers to try to block efforts in their states.

The group also said it would hold discussions to counter any attempts by the federal government to intervene in state workers’ comp programs.

An earlier ProPublica/NPR investigation found many states have drastically scaled back workers’ comp benefits in recent years. In response, several prominent members of Congress have called for increased federal oversight to ensure states are properly caring for injured workers.

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