Wednesday, April 3, 2019

Arkansas Reviving Frankenstein's Monster -- the Return of Workers' Compensation Opt-Out

I've just caught wind today that a bill, SB673, has been filed in the current Arkansas legislative session that would (as far as I can tell on first inspection) revive the workers' compensation opt-out "experiment." The proposed system is termed, "the Universal Workers' Compensation Act" (apparently because the plans provided under it would be multi benefit in scope).

As in the Oklahoma model, the phrase opt-in may be a more apt description. [On re-reading, I have changed my mind - this seems to be opt-out because the default position appears to be that an employer is "in," but I may change my mind again.] And, actually, the bill seems to want to dispense with the causation element in workers' compensation altogether (A 24-hour plan? They must be pretty sure of tremendous cost savings elsewhere):

11-16-102. Purpose and intent. 

(a) The purpose of this chapter is to establish a statutory alternative authorizing and encouraging employers to secure coverage for compensation for injury or death of employees without regard to work-relatedness under the authority granted to the General Assembly by Arkansas Constitution, Article 5, § 32.

Furthermore, the bill concedes that it purports to authorize plans governed by ERISA:

(b) To accomplish the purpose described in subsection (a) of this section, it is the intent of the General Assembly that this chapter provide comprehensive plan design for employees within a plan under the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq., as it existed on January 1, 2019, to be unencumbered by state laws that impact the 11 plan design and financing of this chapter.

The "ERISA as it existed on January 1 language" is interesting. Does someone know something I don't about coming changes to ERISA -- probably someone does. Concern about Medicare for All?

Ordinarily I would make a series of points here explaining various ERISA preemption problems under the bill. And that will come when I have had a chance to study the bill more closely (though rumor has it it may be passed and signed before I have a chance to do so). Extremely curiously, Section 8 of the bill suggests that Arkansas may be conceding that the bill would be preempted by ERISA in the absence of federal approval. It strikes me as a very odd provision:

SECTION 8. EMERGENCY CLAUSE. It is found and determined by the General Assembly of the State of Arkansas that there is a need for federal approval; that Section 5 of this act mandates the state seek federal approval to implement; and that Section 5 of this act is immediately necessary because the state needs time to seek federal approval. Therefore, an emergency is declared to exist, and Section 5 of this act being immediately necessary for the preservation of the public peace, health, and safety shall become effective on: 
(1) The date of its approval by the Governor; 
(2) If the bill is neither approved nor vetoed by the Governor, the expiration of the period of time during which the Governor may veto the bill; (3) If the bill is vetoed by the Governor and the veto is 1 overridden, the date the last house overrides the veto.

The compensation rate under the bill appears to be 75% of the claimant's average weekly wage capped at 2x the "National Average Weekly Wage."  I will have much more to say later. (I'm confident).

Michael C. Duff

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