Oklahoma Supreme Court Upholds CompSource Conversion

The Oklahoma Supreme Court has upheld a plan to convert the state-backed workers’ compensation insurance provider into a mutual company.

The decision affirms legislation adopted last year to convert CompSource Oklahoma into the CompSource Mutual Insurance Co. The new company would be organized under state law, but independent of the state. The change goes into effect on Jan. 1.

A lawsuit filed by Tulsa Stockyards Inc., alleged the measure was unconstitutional and that CompSource is a state agency whose money and other assets, valued at about $265 million, belong to the people of Oklahoma. Among other things, the suit alleged that converting CompSource from a department of the state to an independent, licensed mutual insurance company without providing that the state retain ownership of CompSource’s assets violates the Oklahoma Constitution’s prohibition against gifts of public money and the prohibition against money being paid out of the state treasury except by legislative appropriation.

But the Court ruled that CompSource’s assets are held in trust for the benefit of employers and employees protected by CompSource policies. “The Oklahoma Constitution does not prohibit the Legislature from placing CompSource’s money and other assets in trust with a domestic mutual insurer,” the decision states.

An attorney for Tulsa Stockyards, former state Senate President Pro Tem Stratton Taylor of Claremore, did not immediately return a telephone call seeking comment.

The legislation requires CompSource, which writes about a third of the workers’ comp policies in the state, to be regulated like private insurers and be required to pay insurance premium taxes.

Topics Legislation Oklahoma