November 7, 2015

“Thank you” to those who reached out with support for my 10/31/15 open letter. My general take-away from that effort is: i) fans want more and ii) haterz gonna hate. The latter I expected; the proportion of the former was a pleasant surprise.

My biggest challenge right now is time. I simply cannot offer such prose regularly for the foreseeable future. Instead, I am spending my time responsibly writing option business. Of course, I achieve a direct financial gain in writing business as opposed to writing articles. But this is about more than money. Transitioning employers and employees from WC to alternatives demands diligence. The occasional article can be expected, but I’m focused on practical results. Results will continue to persuade those who have the slightest of open minds. I did write prolifically in the Newsletter section of our website ( until earlier this year, when we really hit our stride in Oklahoma. That quarterly effort has been neglected in deference to producing business. However, I will commit to being more diligent on my blog postings going forward.

My nose is already back to the grindstone. Between OKC, Tulsa, El Paso, Houston, Austin and back home to Dallas, I spend plenty of time behind the windshield and am only a phone call away (405.543.7733). Client employees, prospects and curious bystanders should call. For haterz, I request you not call and instead keep writing the hate—it helps more than you realize.

January 14, 2015

There was a great article today in the Wall Street Journal reviewing the manufacturing revival we have seen in the U.S. over the past 5-10 years.  This revival is well documented, but the article today offered a great factoid about the multiplier effect on our economy from manufacturers' sales.  Each $1 in manufacturers' sales in turn "yields $1.37 of output in other parts of the economy."  This is quite significant compared to retail sales, which yields 64 cents.  Of course, we are a service-heavy econony, so the retail/manufacturing multiplier disparity catches the mind's attention.  

While is here for all industries, we pay particular attention to manufacturing because of its outsize exposures to workplace accidents.

November 16, 2014

Before the end of this month, we will release our Winter edition of the Workplace Guardian.  Here are some items to look forward to:

* Part II of our interview with the new Oklahoma Workers' Compensation Commission;

* Part III of the Occupational Accident -- What's in a Name series;

* SuperScriber;

* Diligence Due -- The e-mods Relevance in the Oklahoma Option and Texas Nonsubscription;

* Quarterly Advance -- Compliance in Texas Nonsubscription; and

* Gathered Hither and Yon -- links to relevant articles from around the web.

Have a great November!

August 17, 2014

This past week, we saw an incredible opinion offered by Florida's 11th Circuit Court.  Here is a link to the actual opinion.  While this case is limited to Florida, the opinion goes a long way in questioning various aspects of WC around the various states.  More to come on this breaking news.

July 16, 2014

From the Legal Information Institute:

en banc -- French for "on the bench." The term is used when all judges of a particular court hear a case. See e.g. Calderon v. Thompson, 524 US 965 (1998).

July 6, 2014

Here is the list of the 12 companies that the Texas Department of Insurance Division of Workers' Compensation approved to be certified self-insurers for their respective workers' compensation programs:

·        ABF Freight System, Inc., Fort Smith, AR

·        Baker Concrete Construction, Inc., Monroe, OH

·        Baptist Hospitals of Southeast Texas, Beaumont

·        Driver Pipeline Company, Inc., Irving

·        General Motors Corporation, Southfield, MI

·        Johns Manville, Denver, CO

·        Kiewit Corporation, Omaha, NE

·        MasTec, Inc., Coral Gables, FL

·        MeadWestvaco Corporation, Richmond, VA

·        Starbucks Corporation, Seattle, WA

·        Superior Energy Services, Inc., New Orleans, LA

·        Trinity Mother Frances Health System, Tyler


See my blog post from February of this year for more thoughts/details on the significance of such information.


See here for the state's official news release.

June 1, 2014

Most buyers of commercial property and casualty insurance policies have an inadequate grasp of the differences between a self-insured retention (SIR) and a deductible.  Even more regrettably, few sellers of these policies appreciate the differences.

I want to focus here on the significance of Oklahoma's allowance of limited uncollateralized SIRs for the new Oklahoma option (OKO) from a surety standpoint.  This focused perspective will shorten the discussion below, but readers who need more general background information on the deductible/SIR distinction should consult this great article written by Donald Malecki.

In the world of workers' compensation (WC), deductible policies are far more common than SIRs.  The primary reason for this is that states prefer financially stable insurance carriers to provide the surety that injured workers' claims will be paid.  Don't forget that "lifetime medical benefits" is a potential multi-million dollar liability for any injured worker.  States don't want to trust employers--who may be on the verge of insolvency at a moment's notice--to bear that burden.  Consequently, each state's WC system is set up to shift that burden to financially stable insurance carriers.  Standard WC policies are not the only solutions states allow, but alternatives are usually more onerous for employers.  When insureds decide to take on some of their own risk (e.g., by buying loss sensitive policies), the system ushers them toward deductibles. The major reason for this is that even though the carrier and insured may establish terms on how that deductible will work, the carrier is still on the hook for a loss (in case it doesn't work).  This conservative proclivity has been inherent in WC for decades.  For example,  if an insured agreed to pay the first $250,000 on a catastrophic loss but goes bankrupt before paying that out, the carrier is still responsible.  Hence, carriers (not states) frequently require collateral from insureds when setting up a deductible.  Regardless of any such arrangement, the states look at WC carriers to provide the ultimate safety net for their respective WC systems.

SIRs are quite different in this respect.  When a carrier and insured set up an SIR, the carrier typically has no responsibility until the SIR has been satisfied.  For example, sticking with WC, if an insured carries a $250,000 SIR (leaving the carrier to handle all exposures beyond that threshold) and the insured can't pay that full amount--for whatever reason--the carrier doesn't have to pay anything.  Because of this technical difference between deductibles and SIRs, states (not carriers) lead the way in requiring collateral from SIR employers to ensure they can meet their fiduciary obligations.  Once these obligations are met, the ultimate safety net of financially solvent insurance carriers is in place.


Now let's leave traditional WC.  

One of the most amazing aspects of Texas nonsubscription is the complete lack of collateralization of SIRs.  The state does not police this area AT ALL.  And carriers, for the most part, don't really care if insureds (employers) can't provide any type of financial warranty that an SIR can be met.  It is my opinion that this discrepancy--the lack of surety for injured workers--is the worst component of an otherwise phenomenal alternative to WC in the Lone Star State.

Enter the Oklahoma option.  Oklahoma is trying to thread the needle here.  Employers who choose to opt out of traditional WC have some unique options when it comes to setting up a loss sensitive program.  The Oklahoma Insurance Department is allowing a "safe harbor" for all employers who choose an SIR up to $25,000.  This means that any employer in the state who wants to take advantage of the OKO--even if that employer is on the verge of bankruptcy--is able to carry up to a $25,000 SIR without providing any surety that such a financial commitment can be met.  There are other options above that $25,000 threshold, but just think about that opportunity for a moment.


The most expensive dollars to insure for any loss are the first dollars.  The first $25,000 worth of exposure for any loss is far more expensive to insure than the $25,001-$50,000 layer.  And, actuarially speaking, insureds pay less (dollar for dollar) for all retained losses than they would if they outsourced those losses by buying insurance from a bulky carrier with lots of overhead.  So OKO employers can make a serious impact on their insurance costs by bearing the most costly dollars--the first ones--of their risks without going through the time, energy and costs of offering collateral.  An ameliorative effect of such a structure is that employers are then incentivized to get more serious about loss prevention.  Of course, the least expensive loss is the one that never happens.

How is this magic accomplished?  Well, keep in mind that we're talking about a relatively small corridor of potential trouble.  Unlike Texas, where anything goes, Oklahoma is still policing this relatively small SIR area and relying on financially solvent carriers to provide the safety net for the OKO system.  The state is simply offering a little wiggle room.  If the employer fails to meet its financial obligations within its retention (say the last $12,345 of its $25,000 commitment), then Section 205 of the new WC law comes to the rescue.  That section created the Oklahoma Option Self-insured Guaranty Fund, which is funded, effectively, by two sources: a) fees paid by carriers doing business in the state; and b) assessments on self-insureds collectively.  

So the first effort to clear the SIR hurdle belongs to the employer who established the SIR to begin with.  After that, it is left to the Self-insured Guaranty Fund to fulfill an SIR obligation (say the last $12,345 of the employer's $25,000 commitment).  Again, in order for the carrier to provide the ultimate surety on any given claim, the SIR simply needs to be met.  The vast majority of employers can meet the financial obligations of the vast majority of workplace injury claims.  If an OKO employer can't meet its financial obligation, then the Oklahoma Option Self-insured Guaranty Fund helps bridge that gap to put the ultimate responsibility where it can best be handled: in the financially solvent carrier's lap.

This is just another unique solution afforded by an unprecedented law, drafted by a state legislature and enacted by a governor who are determined to put Oklahoma at the forefront of innovation in workplace accidents.

May 4, 2014

“I wouldn’t opt out of workers’ compensation…how could I do that to our employees?  It would be unethical.”


That response—or something similar—is not unusual for me to hear when I posit this question: “Would you like to learn more about how opting out of WC might be a better solution for your company?”  That question works just as well in Texas as it does in Oklahoma these days.   Most people are curious.  I meet with them, or send them informational materials or, if they are insomniacs, will even point them to various articles on this website.  There is frequently an education process involved—I expect that, and even look forward to it.  Granted, I understand that in asking the above question I will surprise many folks who don't even know that opting out of WC is a legitimate option.  “Yes,” I’m in sales, and such a slap-you-in-the-face question can sometimes be an effective portion of an “elevator spiel.”


Whenever I get the “unethical” response, I am initially entertained.  Just think about:  I didn’t suggest the company neglect injured employees.  Heck, I almost always look for ways to improve benefits for employees.  Anybody with a slightly open mind will learn this soon enough.  Instead, it seems that the priggish assumption is that I’m suggesting the company simply stop paying for WC and hang their injured employees out to dry.


So after I wipe the initial smirk off my face, I transition from salesman to educator, “Why do you say that?  Did you know that you have the legal freedom to craft your own workplace safety program, outside of WC?  You can customize it so that it fits your particular workforce—and likely save money in the process, even if you choose to offer employees bigger benefits.” 


How can that not be compelling for any executive who is interested in taking care of his/her employees?


But what I’ve found, interestingly enough, is that when people take what they perceive as the moral highroad in this conversation, they rarely turn around.  In fact, they tend to bow up.  Which is a shame, because if they really want to take the higher road, they should look to build that road themselves, not blindly accept a monolithic, statutorily bloated system filled with red-tape that frequently brings harm (opioid abuse is one example) to their workforce.  Don’t get me wrong, I love workers’ compensation.  It has done wonders for our society and is often the best road for a company to choose.  But times, they are a changin’.  There are options available.  It’s my job to get the word out.


Hey, today’s Sunday.  I can get on my soapbox every once in a while.

April 27, 2014

Before the first week of May is over, we will have released our next edition of the Workplace Guardian.  We are especially excited about this edition because of the exclusive interview we got with the new Oklahoma Workers’ Compensation Commission.  Here is how our next edition shapes up:

·        * Exclusive Interview with Oklahoma’s new Workers’ Compensation Commission

·        * Occupational Accident – What’s in a name, Part two of three, with a focus on Texas nonsubscription

·        * SuperScriber article featuring renowned Texas nonsubscription attorney Gary Sarles


·        * Various updates on Oklahoma Title 85a

February 18, 2014

Q: If my company already self-insures its workers’ compensation (WC), is the Oklahoma option (OKO) a viable alternative?


A: Self-insurers in Oklahoma’s WC system may have the most to gain by choosing the OKO.  A company that has taken the time, energy and money to self-insure in WC is able to reap the benefits of a more controlled program that, in all likelihood, costs less money than fully insuring it.  Those beneifits, however, still leave self-insureds in WC bound to the strictures of the WC system.  For companies that self-insure their WC in Oklahoma, the single biggest headline for the OKO might be:More Freedoms and Free-Market Solutions in OKO!  If control and savings are the goal, the OKO’s framework is more conducive to self-insurance than WC.


See here for more on self-insuring.  For more details on the freedoms and free-market solutions found in the OKO, contact us.