The ‘Tennessee Option:’ Take Two UPDATE


By Joan E. Collier

The Tennessee Legislature convenes on Jan. 12, 2016, and the “Tennessee Option”—an opt-in, opt-out workers’ compensation proposal—appears high on the agenda, judging by the press it is getting.  

In the last few days, The Tennessean and the Commercial Appeal have published guest columns from supporters on both sides of the issue.

Back in February, Republican Tennessee State Sen. Mark Green and State Rep. Jeremy Durham introduced Senate Bill 721 and House Bill 0997, respectively. The Tennessee Employee Injury Benefit Alternative sought to amend the state’s current workers’ compensation requirements through a “free-market alternative to traditional workers’ compensation insurance offerings in the state,” according to the Association for Responsible Alternatives to Workers’ Compensation (ARAWC). ARAWC has been a driving force behind this and similar initiatives in other states.

In essence, the proposal would allow private employers to opt-out of private insurance plans and implement their own either fully insured or self-insured occupational injury benefit plans for their employees.

Even after several tweaks to the companion legislation, it died in 2015. (The Tennessee’s Workers' Compensation Advisory Committee voted 6-0 against SB 721/HB 0997.)

Supporters and opponents have taken to the media to broadcast their positions prior to the battle expected in the 2016 legislative session.

Jack Spann III, Esq., the commercial insurance manager and general counsel at Spann Insurance, Inc. writes in The Tennessean: “There has been broad agreement that the current plan works and fits Tennessee’s needs. Due to the 2013 reforms and our state’s competitive marketplace, professional independent insurance agents like me are able to deliver workers’ comp rates to employers cheaper than at any time in recent memory. Any changes to the program must be addressed with caution. Change certainly should not be dictated by out-of-state companies who want to profit from a new program.”

The Commercial Appeal offers an opinion piece from Ron Gant, president of Insurance Associates of Tennessee, and Portis Tanner, president of Westan Insurance Group of Union City: “Business is booming. …Why is there a push to scrap the state workers' comp program that is considered fundamental to the positive business climate? The Workers' Compensation Reform Act of 2013, supported by business and labor stakeholders, and approved near unanimously by the General Assembly, has yielded a 20 percent decrease in loss costs. That's a terrific result worth praising, not a red flag for change.”

The bill’s sponsors are equally adamant of their rightness of their position. Also in The Tennesseean, one day after Spann’s article, Rep. Durham made his case: “We believe this opportunity will save employers money and provide employees with better, faster medical care and get them back to work sooner. …It is important to note that Sen. Green and I do not suggest allowing employers to simply "opt out" of providing any form of workers’ compensation coverage altogether. …An approved plan would require businesses to provide the same level of state-mandated benefits available to private sector workers today, legitimate financial requirements to ensure claims are paid and an employer qualification process managed by the Tennessee Department of Commerce and Insurance.”

One a side note: Rep. Durham may not be around for the vote. He was the subject of a prescription fraud investigation (although ultimately, he was not charged) and wrote a character reference for a youth pastor convicted on child pornography charges. Some are calling for his resignation, questioning his judgement.

So, the “option” sides are lining up predictably: Insurance agents on one side, Republican lawmakers on the other. What cannot be predicted is the outcome. Currently, only Texas and Oklahoma offer optional programs, and they have significant differences. While options cannot be categorized yet as a new “wave” of change in the workers’ compensation arena—on its website, ARAWC currently lists only Tennessee as a target state for its ideas—they are a trickle that bears watching.

UPDATE: More coverage from The Tennessean on this in the newspaper's Dec. 17 Letters to the Editor.

(Read more Work Comp Nation blogs here.)

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