McCullough, Peterson study explores Workers Comp reform

Oklahoma City_State lawmakers may pursue substantial changes in Oklahoma's Worker's Compensation System during the 2008 legislative session based on the results of a study requested by state Rep. Mark McCullough.

"In spite of recent reform efforts, Oklahoma's workers compensation market is still too expensive for many businesses and fails to provide proper treatment to injured workers," said McCullough, R-Sapulpa. "There is clearly room for improvement that will make Oklahoma more business-and-worker friendly."

McCullough noted that the rate of permanent partial disability payments

(PPDs) in Oklahoma is significantly higher than the rate in neighboring states.

According to Roy Wood, an official with the National Council on Compensation Insurance, PPD claims in Oklahoma are almost twice the regional average and the average lost-time claim frequency is much higher than region and nation - 60 percent higher than the national average.

According to figures in the 2006 Workers Compensation Court report and the 2006 National Council on Compensation Insurance report, there were 3,413 court-ordered PPDs in Oklahoma that year with an average payout of $22,299 per claim.

That same year, Oklahoma's workers comp system ordered vocational rehabilitation for only 4 percent of all cases.

The continuing problems with PPD claims may be one reason that Oklahoma experienced its highest payout for claims in 18 years in 2006 - $270 million, a 69 percent increase since 2000.

"Even as the total number of claims is falling, payouts are rising and the system is costing businesses more and more," McCullough said. "Medical claim severity in Oklahoma is actually among the lowest in the region, yet our partial permanent disability payments are higher than our neighboring states. That creates a very hostile environment for small businesses in Oklahoma."

McCullough said the system may be failing both workers and businesses by neglecting vocational rehabilitation in favor of litigation.

The lack of worker rehabilitation efforts may be driven by the fact that Oklahoma is one of approximately three states with a "pure adversarial system," McCullough said, noting that attorney involvement in workers comp cases in Oklahoma is 50 percent higher than the national average.

"Attorneys don't see any personal benefit from rehabilitation programs, but they do get a cut of any lump-sum PPD payments their clients receive," McCullough said. "That creates a perverse incentive for lawyers to push for cash settlements instead of effective treatment for an injured worker."

McCullough said Oklahoma's workers comp system could be improved by moving to an administrative system that reduces attorney involvement, by promoting more vocational rehabilitation or other worker benefits, by requiring independent medical treatment and diagnosis, and by providing tax incentives to encourage businesses to implement workplace safety programs.

McCullough is working closely with state Rep. Ron Peterson (R-Broken Arrow and chairman of the House Economic Development and Financial Services Committee) to develop a reform proposal.

"Representative Peterson and I have really been working on this issue," McCullough said. "We had an all star cast for the hearing this week - the speakers were some of the most knowledgeable professionals on Worker's Compensation in the state of Oklahoma."

The hearing was attended by over 30 lawmakers, legislative staff, industry experts and agency leaders.

McCullough expects to file reform legislation in the 2008 legislative session, which begins next February.

From the offices of State Rep. Mark McCullough