MuskogeePhoenix.com, Muskogee, OK

Local News

November 17, 2012

‘Workers’ comp costs jobs’

Official: State’s high rate hurts job creation

— Oklahoma ranks sixth in the nation when it comes to the costs of its workers’ compensation system, which has been an occasional target for reforms during the past two decades.

A national study released every two years by Oregon’s Department of Consumer & Business Services, shows Oklahoma employers spend $2.77 of every $100 in payroll for workers’ compensation costs. The study, released in October, “calculates rates using a standard mix of the 50 industries with the highest workers’ compensation claims costs in Oregon.

The state’s ranking improved from its fourth-place ranking in 2010, but Oklahoma businesses still pay 47 percent more than the national median cost of $1.88. Workers’ compensation costs for employers in the six contiguous states surrounding Oklahoma range from the median in New Mexico to 37 percent below the national median in Arkansas, where employers pay an index rate of $1.19 toward workers’ compensation rates.

Labor Commissioner Mark Costello said workers’ compensation costs turn off employers considering relocation or expansion plans in the state. Costello said he has made it his mission to lobby for an overhaul of a system he says is broken, but claimants’ lawyers believe works just fine.

“I took a 200-page bill and — in my simplistic way of doing things — I broke it down in seven words: It’s workers’ comp, not lawyers’ comp,” Costello said. “I sense a movement in the Legislature to put our state on parity with our neighbors ..., but to do that ... they have to fundamentally redo the adversarial system we’ve developed over the last half century.”

Costello, who bankrolled his 2010 campaign for labor commissioner to the tune of nearly $680,000, formed a tax-exempt organization to lobby for an administrative workers’ compensation system.

The system, Costello said, would remove lawyers — those who represent injured workers and the attorneys who represent the employers’ insurers — from the equation. The first-term labor commissioner said an administrative system would reduce costs and make the state more competitive in attracting new businesses.

Costello provided no specifics about how the switch to an administrative system would reduce the cost of workers’ compensation insurance premiums. Oregon’s biennial study shows the index rate in Nebraska — the only other state that employs an adversarial system —  is substantially less at $1.71 per $100 in payroll and 9 percent below the study’s median. That’s 38 percent lower than the index rate in Oklahoma.

Bret Smith, who has been representing injured employees in the workers’ compensation court for 20 years, described Costello’s proposal as a “smokescreen” for the insurance industry. Smith said Costello’s proposal would benefit insurers at the expense of employees who are injured on the job.

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