The Dark Side of Opt-Out Plans

A recent phenomenon has picked up steam for the past few years as companies have started opting out of state workers’ compensation plans. The International Association of Industrial Accident Boards and Commissions, an independent entity, examined the effect of these opt-out plans on employees and sought to discover what happens to workers when they are at the mercy of independent company coverage. A study, focusing on Oklahoma, did not reveal promising results.

Among other findings, the study shows that workers face “barriers to benefits,” an “inherent conflict of interest,” and “unequal treatment” under the new opt-out option; the state legislatures of South Carolina and Tennessee are considering the same type of legislation as in Oklahoma. Why are legislatures allowing companies to do this?

A History of Opt-Out Plans

As of now, more than 1.5 million workers between Oklahoma and Texas are not subject to the regulation of state workers’ compensation laws, but they fall under unregulated company plans. In general, private plans cover fewer injuries, heavily control access to medical care, and feature shorter benefit periods. An investigation conducted by NPR and Propublica found that in Oklahoma, many of these plans unabashedly violate state laws, but regulators say they do not have the power to respond.

Plan proponents say that the “nonsubscription” plans in Texas are an effort to bring efficiency to an overburdened state-run system—one where most employees end up going to court over their benefits. With a single piece of legislation, employers can now write their own workers’ compensation benefit plans, complete with a statute of limitations. Under most state plans, workers have up to 30 days to report an injury and begin the claims process. With employer claims, that number is closer to 24 hours, even by the end of the shift in some cases.

How Does This Affect Workers?

The study, conducted by the International Association of Industrial Accident Boards and Commissions, found that workers benefited less on average from employer workers’ compensation plans. NPR found some troubling statistics in Oklahoma, including:

• The country’s largest chain of assisted living facilities, Brookdale Senior Living, does not cover most kinds of bacterial infections, even though places like these experience high rates of such infections.
• Taco Bell managers can accompany workers to doctor visits—a clear conflict of interest.
• Sears denies access to all benefits if workers do not report injuries by the end of the shift.
• U.S. Foods excludes any sickness or disease “regardless of how contracted,” waiving responsibility from work hazards such as heatstroke and chemical exposure.

Employer plans also feature an average duration of only two years, while state-regulated plans hold that benefits should continue for as long as necessary. The effect on the worker is tragic, resulting in a system where the employer has complete control, even over appeals. There are no negotiations or compromises. The companies enjoy reduced claims costs (about 40% to 90% of an average state-regulated claim) while employees struggle to make ends meet.

What Happens if I Have a Workers’ Compensation Claim?

Now more than ever, workers need impassioned advocates to fight on their behalf. If your job injures you, your primary responsibility is to report it as soon as possible. Second, your best course of action is to elicit the help of an experienced law firm. The expert attorneys at DiMarco Araujo Montevideo are committed to protecting employees’ rights. If a work-related accident injures you, contact us to set up a free initial consultation. We will not let your employer force you to settle for a low-ball offer. Get in touch today to secure the compensation you deserve for your injuries.