In a recent ruling, the Oklahoma Attorney General has clarified the status of the Option Funds created under the now-repealed Oklahoma Employee Injury Benefit Act. This decision, issued on October 14, 2026, affects the handling of funds that were previously designated for workers' compensation claims. The ruling is significant as it determines the future of these funds, which have been in limbo since the Act's repeal in 2019.
The Attorney General's opinion, identified as 2026 OK AG 15, addresses two main questions posed by the Honorable Jordan Russell, Chairman of the Oklahoma Workers' Compensation Commission. The first question was whether the remaining funds are still held in trust following the Act's repeal. The second question, contingent on the first, concerned how the Legislature could utilize any remaining funds if they are no longer in trust.
The ruling concluded that the remaining funds in the Option Funds are no longer held in trust due to the repeal of the Act. This decision marks a significant shift in the management of the funds, which were originally designed to provide compensation for employees in cases where insurers or self-insured employers became insolvent.
Background
The Oklahoma Employee Injury Benefit Act was enacted in 2013 as part of a major reform of the state's workers' compensation system. The Act provided an alternative option for employers to manage workers' compensation claims outside the traditional administrative system. This was known as the “opt-out plan.” The goal was to reduce costs and expedite the resolution of claims for both employees and employers.
To protect employees from potential losses due to insurer insolvency, the Act established the Option Funds. These funds were intended to ensure that injured workers could still receive benefits even if their employers could not meet their compensation obligations. However, in 2016, the Oklahoma Supreme Court deemed the Act unconstitutional, leading to its eventual repeal in 2019.
After the 2019 repeal, the Oklahoma Workers' Compensation Commission sought guidance on the status of the Option Funds, which had been created under the now-defunct Act. The Commission's inquiry led to the Attorney General's opinion, which aimed to clarify what should happen to the funds that had been sitting unused for years.
The Ruling
The Attorney General ruled that the funds remaining in the Oklahoma Option Insured Guaranty Fund and the Option Self-insured Guaranty Fund are no longer considered trust funds. The opinion stated, "The remaining comingled monies in the Oklahoma Option Insured Guaranty Fund and Option Self-insured Guaranty Fund created by the Act are no longer funds held in trust as a result of the 2019 repeal of the Oklahoma Employee Injury Benefit Act."
This ruling means that the funds, which were once protected for specific purposes under the Act, can now be treated differently by the state. The opinion emphasized that the repeal of the Act dissolved the legal authority for the Option Funds, effectively removing their purpose under Oklahoma law.
The Attorney General also noted that the Legislature should exercise sound judgment regarding the disposition of these funds. While the opinion did not provide specific directives, it suggested that transferring the funds to a different program, such as the Self-insurance Guaranty Fund, could be a fair solution for employers who had participated in the opt-out plan.
Impact
This ruling has significant implications for Oklahoma's workers' compensation system. By determining that the Option Funds are no longer held in trust, the Attorney General's opinion opens the door for the state to reallocate these funds. This could affect a wide range of stakeholders, including employees who might have relied on these funds for compensation, as well as employers who participated in the opt-out plan.
The decision also sets a precedent regarding how similar funds might be treated in the future. It clarifies that funds established for specific purposes can lose their protected status if the legislative framework supporting them is repealed. This could influence how lawmakers approach the creation and management of such funds in the future.
What's Next
As of now, there is no indication that this ruling will be appealed. The opinion provides a clear directive on the status of the Option Funds, and it remains to be seen how the Legislature will act on the Attorney General's recommendations. Details were not available in the court filing regarding any related cases pending.