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Are Workers' Compensation 'Alternative Benefit Plans' Authorized by State Opt out Schemes Covered by ERISA?

The Brief, Publication of the American Bar Association Tort Trial and Insurance Practice Section, Vol. 45, No. 3, Spring 2016

13 Pages Posted: 30 Jan 2017  

Michael C. Duff

University of Wyoming College of Law

Date Written: March 1, 2016

Abstract

There is continuing interest by employers in providing workers' compensation benefits through ERISA-governed employee benefit plans. States have authority under Shaw v. Delta Airlines (S.Ct. 1983) to allow employers to comply with state workers' compensation laws through use of alternative, ERISA-governed employee multibenefit plans. This is a judically-created exception to Section 514(a) of ERISA ― the statute's sweeping field preemption provision. But what if a state allowed compliance with its workers' compensation law by creating a law ― an opt-out law ― that in essence said employers did not have to comply with its workers' compensation law? Is such a non-compliance law a "workers' compensation law" of the type contemplated by the Court in Shaw or by Congress in attempting to save workers' compensation laws from preemption under Section 4(b)(3) and Section 514(a) of ERISA? Herein I argue that it is not. Although the Oklahoma Supreme Court has recently struck that state's opt out law on state constitutional "special law" grounds ― a surprising enough result since it is questionable whether the state courts had jurisdiction over a controversy concerning a plan created by a law that was likely facially preempted by ERISA ― I doubt we have seen the last of "opt-out" given dissimilarities in state constitutions and the corresponding likelihood that an opt-out law would be upheld on state constitutional grounds, bringing the ERISA questions front-and-center.

Suggested Citation

Duff, Michael C., Are Workers' Compensation 'Alternative Benefit Plans' Authorized by State Opt out Schemes Covered by ERISA? (March 1, 2016). The Brief, Publication of the American Bar Association Tort Trial and Insurance Practice Section, Vol. 45, No. 3, Spring 2016. Available at SSRN: https://ssrn.com/abstract=2907348

Michael C. Duff (Contact Author)

University of Wyoming College of Law ( email )

P.O. Box 3035
Laramie, WY 82071
United States

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