The real story behind big businesses wanting to opt out of state workers’ compensation insurance

This past May in the South Carolina legislature a bill was introduced that would allow businesses, primarily big businesses, to opt out of the state workers compensation system. The promised results sound great—businesses would save money, injured workers would have the same benefits as under the state system and would get back to work faster, there would be fewer complaints and less attorney involvement.

Wow! Who can complain about more satisfied injured workers and employers?

So much for the sales pitch.

The South Carolina Small Business Chamber of Commerce (SCSBCC), which has the most extensive experience with workers’ compensation of any general business group in the state, instinctively knew that enabling big businesses to opt out of the state workers’ compensation system would hurt small businesses for three reasons:

  1. It would increase workers’ compensation premiums for small businesses.
  2. Small businesses would be less competitive against big businesses that reduced their workers’ compensation costs.
  3. Taxpayers would pick up the costs of the healthcare for injured workers that big businesses didn’t pay.

Thus the SCSBCC opposes the South Carolina Opt-Out legislation (H.4197).

But what about those promised more-satisfied injured workers?

This past week an investigative report by ProPublica answers that question by looking at the record and opt-out plans of businesses in Texas and Oklahoma that have taken advantage of such legislation in their states (the only two in the nation that have opt-out legislation).

The list of what the plans don’t cover runs for pages. They typically won’t pay for wheelchair vans, exposure to asbestos, silica dust or mold, assaults unless the employee is defending “an employer’s business or property,” chiropractors or any more than 75 home health care visits. Costco won’t cover external hearing aids costing more than $600. The cheapest external hearing aid Costco sells? $900.

The plans in both Texas and Oklahoma give employers almost complete control over the medical and legal process after workers get injured. Employers pick the doctors and can have workers examined — and reexamined — as often as they want. And they can settle claims at any time. Workers must accept whatever is offered or lose all benefits. If they wish to appeal, they can — to a committee set up by their employers.

Want more?

The fine print of opt-out plans contains dozens of opportunities for companies to deny benefits. Employers can terminate workers’ benefits for being late to doctors’ appointments, failing to check in with the company or even consulting their personal doctors. . . .

Some plans have restrictions that read like the terms of criminal probation. While they’re healing, injured workers at W. Silver, a steel products manufacturer in El Paso, are prohibited from leaving the area, even temporarily, or engaging in any “pleasure” that may delay recovery. . . .

For nearly 40 years, every state has covered occupational diseases and repetitive stress injuries, recognizing medical research that some conditions develop over time. But in Texas, a number of companies, including McDonald’s and the United Regional Health Care System, don’t cover cumulative trauma such as carpal tunnel. U.S. Foods, the country’s second largest food distributor, also doesn’t cover any sickness or disease “regardless of how contracted,” potentially allowing it to dodge work-related conditions such as heat stroke, chemical exposures or even cancer.

Since its beginning, workers’ comp has paid benefits regardless of whether the employer or worker was at fault. But several companies, including Home Depot, Pilot Travel Centers and McDonald’s, exclude injuries caused by safety violations or the failure to obtain assistance with a particular task.

Under workers’ comp, employees can’t be fired in retaliation for a claim. But employers that opted out argued that their workers weren’t entitled to that protection, and in 1998 the Texas Supreme Court agreed.

The ProPublica report interviews numerous injured workers who have horror stories of their treatment, or lack of treatment, under the opt-out plans of their employers.  There are too many to recite here but suffice it to say, these are not satisfied injured workers.

But at least one of the promised benefits of the proponents of workers’ compensation opt-out legislation can be found. According to the consultant firm that benefits financially from opt-out plans (a BIG red flag), the Texas and Oklahoma businesses that have opt-out plans for their injured workers are happy with the reported 40-90 percent lower costs per workers’ compensation claim.

Unfortunately, it is at the expense of the injured workers, the taxpayers and small businesses.

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