In Falling Hare (Warner Bros. 1945), our protagonist Bugs Bunny runs into a gremlin who is striving to set off a bomb by striking it on the head with a mallet. After calmly observing for a moment, Bugs queries: "What's the hubbub ... bub?" No sense of urgency or alarm, but a simple inquiry. Often, I hear of conversations, prognostications, and conclusions, and I sometimes think of old Bugs. Unflappable did not describe him.
So, did you "hear the one about opt-out?" The one about "Texas opt-out coming to Florida?" The opt-out "that was passed in South Carolina and declared unconstitutional a few years back?"
Well, first of all, "No." and then "No." But, as to the final question, simply, "No."
First, as to Texas, I was once misinformed about it having an "opt-out." See Is there a spoon? Or are we bending? (June 2013). I corrected myself after some research, later explaining that Texas is an "opt-in" state in The Baby with the Bathwater (August 2016). See, in Texas, workers' compensation is not mandatory. Employers can choose to be covered by workers' compensation or can choose not to be. The presumption is employers there are not covered. If they do not "opt in," then they may elect instead to nonetheless provide benefits using an alternate plan.
Third, as to South Carolina, there is no Carolina "opt out," nor has there ever been. I have it on very good authority that there was legislation introduced for such an effort, but it did not pass. That was a few years back. Anyone wanting to gossip with you about South Carolina may have misinterpreted something along the way. To be clear, similar conversations, likewise without legislation passing, have occurred elsewhere, such as in Tennessee.
Before you get too comfortable with the South Carolina reference, think instead of a state easy to confuse with South Carolina: Oklahoma. These two have so many similarities that the confusion is understandable (they are both states, and people live and work in both places. The similarities go on and on - sarcasm, apologies).
Oklahoma passed an "Opt-Out" in 2013. By 2016, it was no more, having been declared unconstitutional. This is discussed in Statute Declared Unconstitutional (February 2016); see also Opt out experiment is progressing in OK State (April 2014). But, Florida? Look no further than the legislative discussion here in Legislative Seismic Shift in Florida (December 2016), which described a proposal to make workers' compensation elective here.
For More on Oklahoma, Tennessee, and opt-out, see
A Florida Constitutional Update (February 2015);
What is Hot in Workers' Compensation? At SAWCA 2015 (July 2015);
Workers' Compensation Legislation 2015 (February 2015);
Staffing, Compensation, and Opt Out (4) (November 2017); and
The Gig Economy - Can it be Socialized? (March 2018);
I have spent significant time studying and educating on the "opt-out" idea. I have spoken with the architects, advocates, and critics. That includes many of the people quoted in news stories about the Oklahoma Commission rejecting opt-out and the chair of the commission that wrote that opinion.
Now comes the point of today: "Texas opt out coming to Florida?" (ignore the whole "Texas is opt-in" fact for the moment).
There are parallel Florida bills that have been introduced this year to allow employers to elect not to be part of workers' compensation. That was, though most do not acknowledge it, the way workers' compensation was when it came to Florida in 1935. See sections 5966(3) and (4)(yes, the Florida law has not always been in Chapter 440, and in the beginning, it was voluntary).
And, before we go too far, let's remember for clarity that not all Florida employers must participate in Florida today.
Those with three or fewer employees are not mandated. They may, in effect, "opt in" as employers do in Texas. But that is at their discretion.
Similarly, employers of any size may elect not to be bound by Florida workers' compensation, to "opt-out" under section 440.211 if its employees are in agreement through a "collective bargaining agreement." There are some Florida employers who, in fact, have made such agreements.
But, again, now comes the point of today: "Texas opt out coming to Florida?" (Keep ignoring the whole "Texas is opt-in" for the moment.)
The two bills in Florida this year are House Bill (HB) 1069 and Senate Bill (SB) 1426. Each would provide an amendment to the definition of "employee" in section 440.02, excluding:
"14. A person employed by a qualified compensation alternative employer," meaning someone working for a "(33) "Qualified compensation alternative employer" or " QCARE employer" (which) means any employer who elects coverage for its employees under s. 440.06."
Section 440.06 would delete "failure" to secure compensation and instead become an "election" to secure. Thus, a clear choice between securing compensation for workers' compensation or being a qualified compensation alternative employer," labelled "QCARE."
Presumably, an employer could be a QCARE employer one moment, and abandon that posture for workers' compensation the next. Much like the current issues with which carrier is responsible for a particular date, or whether managed care applies to a given date, there could be challenges with which alternative applied to a particular accident date.
QCARE employers would enjoy some similar parameters, such as the workers' compensation constraints on occupational disease and major contributing cause. It would include similar prohibitions on the employee being charged a fee or premium for coverage under either QCARE or workers' compensation.
The QCARE employer would only be compelled to provide medical care and indemnity benefits for 156 weeks (3 years) by law but could extend that coverage as it wished beyond 156 weeks (in the QCARE plan it adopts). The indemnity due under QCARE would likely be less robust (the 156 minimum) in duration than workers' compensation but more robust in weekly amount: "at least 75 percent of the average weekly wages" rather than workers' compensation's 66 and 2/3.
The bills each specifically state that those benefits would be "deemed amounts received under a workers' compensation" to protect the worker from federal tax liability. Whether that statute would bind the federal government, the IRS, would be a question perhaps of interest to some. If it is workers' compensation, then how, and if it is an alternative to workers' compensation then how is it nonetheless still workers' compensation? Such an analysis is way above my paygrade, but intriguing nonetheless.
In cases of pre-existing injury that is combined with a work accident/injury, the QCARE employer would not be liable for benefits where the "original injury" is not "the major contributing cause of the subsequent injury." Also, the QCARE employer is not liable if the accident/injury is covered by Longshore, Defense Base Act, Jones Act, and Migrant ... Worker Protection Act."
At this stage, there may be a few in the audience thinking this is all a reduction in the rights of injured workers. However, in the QCARE plan, some employees may take the benefits and still file a tort claim for damages:
"An employee of a QCARE employer may bring a cause of action against the QCARE employer for negligence in causing an injury; however, there may be no QCARE employer negligence for an ordinary disease of life to which the general public is exposed. In the cause of action, the employee must prove the QCARE employer negligent. The QCARE employer may use any defense available to an alleged tortfeasor under general law."
Thus, there is a major distinction between the current Florida discussion and the Oklahoma Opt-Out in which a defined benefit plan was substituted for workers' compensation with no change in the existing tort immunity for employers.
Thus, on a given street intersection in Florida, with employees injured at while working identical jobs on the four corners, but for different employers, there might be:
- an employee subject to workers' compensation because the employer is over 4 employees and has not elected QCARE.
- an employee not subject to either QCARE or workers' compensation because the employer is 3 employees (not in the construction industry).
- an employee subject to a QCARE plan that provides the minimum benefits (156 weeks).
- an employee subject to QCARE with a benefit package that far exceeds the minimum.
- (I know we cannot have five corners) an employee with a collective bargaining agreement opt-out recovery.
If each employer is not culpable in negligence, then the recovery for each of the four is different. If each employer is accused of negligence (not "gross negligence," "virtually certain to result in injury or death," section 440.11), then the #1 employer would be immune and likely the #5; the #2, #3, and #4 employers would be potentially liable in tort, or at least would perhaps spend some time and money demonstrating that they were not liable or settling the tort allegations out of court.
In fairness, the same might be said for employers under the current law, with the small employer, workers' compensation covered employer, and opt-out collective bargaining employer. Today, there might be discussions of the insured and self-insured employer. Today, there is already the Longshore, Jones Act, and other coverage exclusions. There is arguable disparity and inequal protection of employers and employees. Would more alternatives make that more or less likely?
The QCARE employer found responsible in tort would be entitled to a credit for the QCARE benefits provided. Those would be offset against any verdict or settlement. But, any QCARE employer might find itself defending tort allegations in any injury. Defense and payment of workers' compensation allegations are covered by workers' compensation insurance.
However, negligence allegations would instead be covered by general liability insurance. An employer might also elect to be self-insured for either. The concepts of insurance are potentially somewhat complex in all scenarios. In all, the potential scenario assortment increases for both workers and employers with QCARE.
A more ready question is likely what issue QCARE remedies or ameliorates. There will be discussions of faster medical care provision. There may be discussions of relief from some state regulations and reporting for QCARE employers. Some may cite the distinction in the litigation process. The bills provide that
"all claims and appeals for benefits must be adjudicated by the claims administrator in accordance with the applicable fiduciary, enforcement, reporting and disclosure, and claims administration laws and regulations of the Employee Retirement Income Security Act of 1974, as amended."
Some suggest that this means any challenge or dispute over QCARE benefits would be a federal case, with the attendant filing fees, dockets, procedures, timelines, and more. Would an injured worker have any entitlement to attorney fees for prosecuting a claim for QCARE benefits? Would any attorney take on such representation on a contingency?
