Restraints on Workers’ Compensation Statute Invalidated

There has been increasing movement on a national basis to reduce workers’ compensation benefits in various ways. These have taken the form of, for example, reductions in benefits, exclusions of certain conditions from coverage, more stringent reporting requirements, reduced eligibility periods, and – the most draconian – authorization for employers to opt-out entirely from the workers’ compensation system.

“Restraints on Workers’ Compensation Statute Invalidated” blog post photo.

The opt-out option permits employers to set up their own private system of eligibility and adjudication. Oklahoma recently enacted such an opt-out law providing many fewer benefits than the regular system together with hearing officers chosen by the employer. On Sept. 13, 2016, the Oklahoma Supreme Court declared this scheme unconstitutional as violating the state constitution’s ban on “special laws.”

Although little known, most state constitutions contain such bans which prohibit the legislature from enacting laws that treat similarly situated people differently. The court saw the opt-out as permitting one group of employees to receive much inferior workers’ compensation coverage compared to those covered under ordinary workers’ compensation and therefore declared the opt-out scheme unconstitutional.

Opt-out programs have been pushed nationally by employers and insurance companies and have been enacted in Texas as well as Oklahoma. In Texas, the Insurance Commissioner has reported that 38 percent of employers have opted out of workers’ compensation. Similar limitations on workers’ compensation benefits have been enacted such as limits on temporary benefits (Florida), working day requirements prior to qualifying for benefits (Oklahoma), restrictions on attorneys’ fees (Florida and Utah), and limiting conditions that qualify for benefits (Connecticut). Many of these restrictions have been challenged in litigation and some have been struck down.

If you have questions about Pennsylvania workers’ compensation, please contact one of Willig, Williams & Davidson’s certified workers’ compensation attorneys at 215-656-3600.