Okla. Gov. Henry Unveils Workers’ Comp Plan

February 3, 2005

Saying he wants to cut costs for business and boost benefits for injured workers, Oklahoma Governor Brad Henry announced his comprehensive reform plan for the state’s workers’ compensation system.

Based on the work of a bipartisan study group of experts that he appointed last year, the reform initiative covers a variety of issues ranging from dueling doctors to workers’ compensation fraud. Gov. Henry asked the group to review workers’ comp laws around the country to determine what could improve worker benefits and reduce business costs in Oklahoma.

“This reform package will significantly reduce costs for business and give injured workers the help they need,” Gov. Henrysaid . “Small business owners and large employers alike will get much-needed relief with this legislation. That’s good news for them, the state economy and Oklahoma’s overall business climate.”

The comprehensive reform initiative would reduce medical costs through better management, discourage litigation and dueling doctors, promote mediation and early settlements, reform “sprains and strains” policies and encourage additional workplace safety efforts, among other things.

“If we can settle more cases early through mediation and continue to reduce filings, overall system costs will come down,” he said. “We can drive down costs even further by containing medical expenditures when injuries do occur. Rising health care costs are one of the biggest problems in our comp system.”

Workplace safety also plays a role in the reform package. Oklahoma Labor Commissioner Brenda Reneau recently expressed frustration that more businesses were not taking advantage of the “Safety Pays” workplace safety program, saying the initiative has a proven track record of improving safety, reducing claims and cutting comp costs. The governor agrees a greater emphasis on safety programs will cut injuries and costs.

“The best way to save businesses money and protect workers is to prevent on-the-job injuries in the first place,” said Gov. Henry. “If we can make workplaces safer, comp costs will decline dramatically while productivity increases.”

The governor will submit the reform package to the legislature for consideration when it convenes next week. Elements of the package include:

*Reduce costs by improving efficiencies, encouraging settlements and eliminating fraudulent claims:
• Strengthen penalties for workers’ compensation fraud.
• Eliminate any benefits obtained as a result of fraud.
• Increase funding for Attorney General’s fraud unit to add five new investigators.
• Emphasize mediation over litigation. Require mediation by order of the court if requested by either party or both parties.
• Reduce attorney solicitation of comp cases. Make “Form Two” paperwork for injured workers confidential to prevent unwanted solicitation from attorneys.
• Reform “sprains and strains” cases by requiring objective evidence of a permanent abnormality or a finding of permanent earnings impairment to support a permanent partial disability award, except in cases involving head injuries or corrective surgery.
• Enact reforms to address “dueling doctors” in workers’ compensation cases.

*Reduce medical costs associated with on-the-job injuries:
• Adopt mandatory utilization standards and treatment guidelines.
• Adopt an objective, medical reimbursement fee schedule tied to Medicare rates.
• Require preauthorization on specified treatments.
• Lower prescription drug costs by taking advantage of network discounts.
• Require the use of equivalent generic drugs rather than name-brand drugs.
• Enhance the availability of case management and adopt utilization review for providers.
• Encourage employees to return to work promptly after injury recovery. Provide incentives to employers to offer light duty employment to injured workers, allow temporary benefits to automatically end upon a bonafide offer of employment and automatically terminate temporary benefits upon full release by the treating doctor.
• Enhance CWMPs ability to manage and control medical costs by facilitating greater enrollment and allowing employee choice of physician within the network.

*Workplace safety and employee benefits:
• Enhance existing workplace safety outreach efforts conducted by the State Department of Labor and the Career Technology system.
• Abolish so-called “non-coverage” cards that allow contractors to hire employees without comp coverage.
• Increase burial benefits to $8,000, disfigurement benefit to $30,000 and permanent total benefits payable to a surviving spouse to one-half the injured workers’ benefit.

*Additional reforms:
• Increase competition among insurers by adopting a “file and use” system for workers’ compensation insurance.
• Reinstate Multiple Injury Trust Fund for permanent disability awards.
• Ensure solvency of the Guaranty Fund.
• Clarify statute of limitations in comp cases.
• Enhance use of independent medical examiners.
• Clarify temporary benefits period.
• Clarify law that there is no employer liability for non-work related, pre-existing condition.

Gov. Henry believes a new health insurance program for small business will work in concert with the reform package to help drive down comp costs. Approved by Oklahoma voters in November, the Oklahoma Health Care Initiative includes a premium assistance program that will help business owners provide insurance to their employees. Industry observers believe Oklahoma’s high percentage of uninsured residents increases comp claims because uninsured employees are more likely to seek medical treatment through their employer.

“The small business health insurance program is a start, but it is only a start,” the governor said. “We have to follow up with meaningful reforms that address real problems. To be successful, we will have to put aside political differences and agendas and put Oklahoma first. This issue should not become the political football of the legislative session.”

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