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Are Workers’ Compensation Opt-Out Systems Constitutional?

Regular readers of this blog know my feelings about workers’ compensation — The system is already unfair to injured workers. That’s why my law firm philosophy in workers’ compensation cases is to fight hard so our clients receive the maximum benefits possible.

On earlier occasions, I’ve criticized the completely outrageous concept in other states of opt out systems. These systems started in Texas and then spread to Oklahoma. If you want some background, you can read a few of my prior posts such as:

Workers’ Compensation Opt Out Systems — A Return To The Jungle

Basically, in opt out states, large companies can opt out of the regular workers’ compensation system and write their own plans. Ask yourself — Do you really trust Walmart to write a plan providing adequate benefits to its injured workers? I can introduce you to a large number of injured Walmart employees who had to sue the company for proper benefits.

In Alabama, workers’ compensation disputes are resolved in a trial court. I’ve tried comp cases in counties across Alabama for over two decades. In Oklahoma, an opt out system state, these disputes are heard by the Oklahoma Workers’ Compensation Commission (Commission). The Oklahoma Commission recently heard its first claim involving a denial of benefits under that State’s new opt out system.

After examining the employer’s plan and denial of benefits, the Oklahoma Commission ruled the Oklahoma opt out system was unconstitutional. In reaching it’s decision, the Oklahoma Commission made some interesting observations:

Although at first blush it appears that the Opt-Out Act requires that injured workers under an authorized benefit plan must be afforded benefits equal to or better to those under the Administrative Workers’ Compensation Act, this is decidedly not so. A closer look at the statutorily authorized plan requirements reveals that the benefit plans permitted to be used to opt-out establish a dual system under which injured workers are not treated equally, …

.  .  .

The appearance of equal treatment under the dual system is like a water mirage on the highway that disappears under closer inspection.

The entire opt out system is a mirage. It’s outrageous to believe all large employers (like Walmart) will write plans providing the same basic benefits as normal workers’ compensation systems. It’s outrageous to expect every company to protect its employers. I can tell you from sitting in courtrooms across our state that many do not.

The truth is that typical opt out plans are full of loopholes, exclusions and limitations designed to limit benefits. Some plans place arbitrary and immediate conditions upon notification of an accident. Some plans limit available treatment. The list of loopholes and limitations is long.

Our work comp system was enacted to provide basic benefits important to working families. Basic medical care. Basic benefits for permanent disabilities. When I talk to injured workers about how little the law actually provides, they are shocked. You would be too. Why would we ever let the biggest and richest corporations write their own plans to avoid paying the most basic of benefits? Opt out systems are a terrible idea. They are an idea conceived in greed and designed to harm our neighbors at their most vulnerable. Employees hurt on the job deserve better.


At the Blackwell Law Firm, we represent injured workers across Alabama. We regularly try workers compensation cases in counties across the state. Our dedication to injured workers is grounded in hard work, trial preparation, and a commitment to the long-term benefit of our clients. We are happy to answer your questions. Consultations are always free and confidential.