Tennessee Latest State to Introduce Workers’ Comp Opt-Out Bill

Tennessee Introduces Workers’ Comp Opt-Out Bill

Tennessee Senator Mark Green (R-Clarksville) in mid-February introduced Senate Bill 721 to the state legislature that would allow many employers to opt-out of the state’s traditional Workers’ Compensation system. Coverage would be provided with private benefit plans similar to what some Texas employers choose for their employees. This is called the Tennessee Employee Injury Benefit Alternative.

The basic provisions of the opt-out bill would:

  • Apply only to employers with five (5) or more employees;
  • Exclude construction services providers as well as those types of employment—g., casual labor, domestic servants, farm or agricultural laborers and employers, or other employment arrangements set out in Tenn. Code Ann. § 50–6–106(1)-(7);
  • Require the employer to adopt a written benefit plan providing at least the following:
    • Medical expense coverage for at least 156 weeks and $300,000 per employee;
    • Temporary Total Disability benefits of at least 70% of AWW up to 110% of the state AWW for at least 156 weeks;
    • Death and scheduled dismemberment benefits of up to $300,000 per employee:
    • A combined single limit for all benefits payable due to an occupational injury; provided, that the combined limit is at least $750,000 per employee and $2,000,000 per occurrence.
  • Not generally limit the right of the employee or the employee’s personal representative, dependents, or next of kin to recover under a cause of action for employer negligence.

“The core focus of the Tennessee Option is to help injured employees get back to work faster,” Senator Green said in a statement. “Making that happen requires good benefits, strong communication, and will lead to higher employee satisfaction. An Option will also give job creators a way to save more than 50% on Workers’ Comp costs, so they can invest in growth and more employees.”

Other States with “Option” Legislation

Oklahoma passed “Option” legislation in 2013 allowing employers to opt out of the state’s Workers’ Comp system by providing alternative coverage. But just recently a petition was filed by attorneys representing two injured workers, requesting that the Oklahoma Supreme Court declare the state’s Workers’ Comp Option, known as the Employee Injury Benefit Act,” unconstitutional. The petition argues the Oklahoma law is unconstitutional because it includes no due process protections. “Under the opt-out scheme, the initial determination of compensability is made by the employer, and then appealed to an employer committee, rather than to an impartial reviewer such as a court or administrative agency,” according to the workers’ suit,” stated Trey Gillespie, Austin, Texas-based senior workers comp director with the Property Casualty Insurers Association of America, in an article in Business Insurance.

Moreover, in the Business Insurance article, Gillespie stated that it’s hard to speculate on whether “the legislature in Tennessee will be reluctant to pass legislation based on what’s currently going on in Oklahoma. We’re not even sure at this point if the Oklahoma Supreme Court is even going to grant the petition and hear the case yet.”

Texas has allowed alternative injury benefit programs for nearly a century. An employer has three options—to do nothing at all, to procure Workers’ Compensation insurance (or self-insurance) under the state comp act, or to provide some measure of benefits under an employee benefit plan. Texas employers enjoy the exclusive remedy defense only if they choose to come in under the “traditional” Workers’ Compensation law.

At Caitlin Morgan, we specialize in providing Workers’ Compensation solutions including self-insurance programs. We will continue to keep you updated on the progress of the proposed Tennessee Option as well as other Workers’ Comp developments around the country. For more information about our programs, please call us at 877.226.1027.

 Sources:  Business Insurance, ProgramBusiness.com, Comp Writer