Oklahoma High Court Rejects Initial Challenge to Opt Out Law

Yesterday (December 16), the Supreme Court of Oklahoma rejected an initial constitutional challenge to the controversial overhaul of the state’s workers’ compensation system via Senate Bill 1062, which allows, among other things, employers to opt out of the state’s newly created administrative system for handling work-related injury and occupational disease claims, provided they set up private benefit plans of their own. The law had been challenged in a lawsuit filed by State Senator Harry Coates, State Representative Emily Virgin and the Professional Firefighters of Oklahoma. Oral arguments took place last week. The plaintiffs contended in relevant part that Senate Bill 1062 amounted to unconstitutional “log-rolling”– that it contained multiple subjects in violation of the state’s Constitution’s single-subject rule for legislation. The high court disagreed, indicating that all sections of the new law were interrelated and referred to a single subject: workers’ compensation.

The Supreme Court said that “the Legislature has exercised proper authority in a matter over which it has the power to act.” Passed earlier this year and signed into law by Governor Mary Fallin on May 7, Senate Bill 1062 becomes effective February 1, 2014. The bill contained three major segments. The first converted oversight over Oklahoma’s workers’ compensation claims from a judicial to an administrative system. The second contained the highly controversial opt-out provisions. The third allows employers, under certain conditions, to set up a system of binding arbitration to resolve any disputes arising under Part one of the new law.

Monday’s decision was relatively narrow; it does not block further challenge to the law. Justice Douglas Combs wrote a separate opinion, saying certain provisions of the new law “are unconstitutional because they provide for different treatment in appellate procedure for claimants and therefore violate the special law prohibitions” in the Oklahoma Constitution. Justice John Reif also wrote separately, indicating that future challenges should be decided by the new Workers’ Compensation Commission before they reach the courts. The latter point is interesting; courts in most other states have held that a state’s administrative body (e.g., Industrial Commission, Workers’ Compensation Board) lacks the authority to pass on constitutional issues.