Tulsa Stockyards, Inc. v. Clark
| Decision Date | 11 March 2014 |
| Docket Number | No. 112240.,112240. |
| Parties | TULSA STOCKYARDS, INC., Petitioner, v. Jason CLARK, as President and Chief Executive Officer of Compsource Oklahoma, Respondent. |
| Court | Oklahoma Supreme Court |
OPINION TEXT STARTS HERE
ORIGINAL PROCEEDING FOR DECLARATORY RELIEF AND WRIT OF PROHIBITION OR MANDAMUS.¶ 0 In this original proceeding, petitioner seeks declaratory relief and an extraordinary writ. Petitioner challenges the CompSource Mutual Insurance Company Act, 2013 Okla. Sess. Laws, ch. 254 (codified at 85 O.S.Supp.2013, §§ 375.1 et seq.), as being contrary to the Oklahoma Constitution, Article X, § 15(A) (), Article II, § 15 (), and Article V, § 55 (). The challenged legislation requires that CompSource Oklahoma be restructured to do business as a domestic mutual insurer under the name of CompSource Mutual Insurance Company effective January 1, 2015, and vests all of CompSource Oklahoma's assets in CompSource Mutual Insurance Company. We previously assumed original jurisdiction.
EXTRAORDINARY WRIT DENIED.
R. Stratton Taylor and Mark H. Ramsey, Claremore, Oklahoma, for petitioner.
Robert G. McCampbell, Klint A. Cowan, and Travis V. Jett, Oklahoma City, Oklahoma, for respondent.
Patrick R. Wyrick, Solicitor General, and Cara N. Rodriguez, Assistant Solicitor General, Oklahoma City, Oklahoma, for the Oklahoma Attorney General.
Sam Fulkerson and Elizabeth Bowersox, Oklahoma City, Oklahoma, for the State Chamber of Commerce, amicus curiae.
¶ 1 In this original proceeding, Tulsa Stockyards, Inc. (petitioner) challenges the constitutionality of the CompSource Mutual Insurance Company Act (Act), 2013 Okla. Sess. Laws, ch. 254 (codified at 85 O.S.Supp.2013, §§ 375.1 et seq.). The Act requires that CompSource Oklahoma (CompSource) be restructured to do business as a domestic mutual insurer without capital stock or shares under the name of CompSource Mutual Insurance Company (CompSource Mutual) effective January 1, 2015. Petitioner contends that CompSource is a state agency and its money and other assets, valued at approximately Two Hundred Sixty-five Million Dollars ($265,000,000.00), are assets of the people of Oklahoma. It contends that converting CompSource from a department of this State to an independent, licensed mutual insurance company without provision for the State to retain ownership of CompSource's assets is contrary to the prohibition against gifts of public money, Okla. Const., art. X, § 15(A); the prohibition against interference with contracts, Okla. Const., art. II, § 15; and the prohibition against money being paid out of the State Treasury except by appropriation, Okla. Const., art. V, § 55.1 CompSource responds that its money and other assets belong to its insured employers and their employees and that its money is not State money under Moran v. State ex rel. Derryberry, 1975 OK 69, 534 P.2d 1282.
¶ 2 We assumed original jurisdiction to revisit the nature and ownership of CompSource's money and other assets, to consider the continued efficacy of our Moran opinion, and to determine whether our constitution prohibits the Oklahoma Legislature from transferring CompSource's money and other assets to a domestic mutual insurer. We conclude that CompSource's money and other assets are held in trust for the benefit of the employers and employees protected by the insurance issued by CompSource, our Moran opinion remains sound law, and the Oklahoma Constitution does not prohibit the Legislature from placing CompSource's money and other assets in trust with a domestic mutual insurer.
¶ 3 The Oklahoma Legislature created the State Insurance Fund (Fund) in 1933 to provide workmen's compensation insurance to public employers and to private employers who were unable to secure insurance from private insurers. 1933 Okla. Sess. Laws, ch. 28 (). The Legislature established the Fund as a revolving fund 2 in the State Treasury that consisted of any specific appropriation 3 made to it, all insurance premiums received, and all property, securities, and interest acquired through the use of the money in the revolving fund. 1933 Okla. Sess. Laws, ch. 28, art. 2, § 1(a) (). The Legislature directed that the Fund's money shall be applicable to the payment of losses sustained on account of the insurance contracts issued by the Fund and to the payment of expenses to administer the Fund.1933 Okla. Sess. Laws, ch. 28, art. 2, § 1(b) (). The Legislature made the State Treasurer the custodian of all monies in the Fund and required a separate bond from the State Treasurer for the faithful performance of the duties of custodian of the Fund.1933 Okla. Sess. Laws, ch. 28, art. 2, § 5 (codified at 85 O.S.1941, § 135).
¶ 4 From its inception, state officials controlled the Fund expressly without liability on the part of the state beyond the money in the revolving fund. 1933 Okla. Sess. Laws, ch. 28, art. 2, § 1(a) (). Initially, the State Industrial Commission administered the Fund.1933 Okla. Sess. Laws, ch. 28, art. 2, § 2. In 1937, the Legislature created a Board of Managers to supervise the operation of the Fund and authorized the Board of Managers to appoint a State Insurance Fund Commissioner to administer the Fund.1937 Okla. Sess. Laws, ch. 72, art. 3, §§ 1 and 2 (codified at 85 O.S.1941, §§ 131a and 131b). The five members of the Board of Managers were the Governor, the Chairman of the State Industrial Commission, the Secretary of the State Insurance Board, the Insurance Commissioner, and the State Highway Commissioner.4Id. § 131a. The Legislature authorized the Board of Managers to fix the premium rates to be charged by the Fund for insurance. 1937 Okla. Sess. Laws, ch. 72, art. 3, § 4 (codified at 85 O.S.1941, § 132). The Legislature authorized the State Insurance Fund Commissioner to conduct the insurance business as a private carrier might do, id., but limited the Commissioner's power to refuse to issue insurance. 85 O.S.1941, § 134(2) (currently codified at 85 O.S.2011, § 382(A)(2)). The Legislature also authorized the Commissioner to sue and be sued, to make and enter into contracts of insurance, and to invest and reinvest monies belonging to the Fund.1937 Okla. Sess. Laws, ch. 72, art. 3, § 5 (codified at 85 O.S.1941, § 133). The Legislature expressly directed that the Fund shall be fairly competitive with other insurance carriers and that the Fund shall become neither more nor less than self-supporting. 1933 Okla. Sess. Laws, ch. 28, art. 2, § 1(c) ().
¶ 5 The purpose of the Fund and the duties, responsibilities, and restrictions imposed upon the Commissioner, now the President and Chief Executive Officer, 5 and the Board of Managers were prescribed in the 1941 codification of the workers' compensation statutes. Even though the statutes have since been amended many times, the substance of the 1941 codification has remained the same. Importantly, the legislative application of the money in the Fund to the payment of losses sustained on account of the insurance policies and to the payment of expenses to administer the Fund has remained the same. 85 O.S.1941, §§ 131(b) and 139 (). In 2001, the Legislature amended §§ 131, 131a and 131b to change the Fund's name to CompSource Oklahoma. 2001 Okla. Sess. Laws, ch. 378, § 1. In renaming the Fund, the Legislature made no changes to the operation and management of and expenditures from the revolving fund. The most recent codification of the CompSource statutes is 85 O.S.2011, §§ 375– 401. In section 53 of the challenged Act, the Legislature has directed the repeal of 85 O.S.2011, §§ 375– 401, with exceptions.6 2013 Okla. Sess. Laws, ch. 254, § 53. Section 53 will not be effective until January 1, 2015. Id.§ 55.
¶ 6 Our early jurisprudence recognized that the Fund, a statutory creature engaged in the insurance business under the control of state officials, was a department of the State engaged in a private enterprise to fulfill a public need for workers' compensation insurance. In O.K. Constr. Co. v. Burwell, 1939 OK 248, 93 P.2d 1092, the Fund appealed an award of the State Industrial Commission but did not post an appeal bond. The Court viewed the Fund as a department of the State and did not require an appeal bond.
It is observed that no legislative, judicial, or governmental functions are authorized by the terms of the act, but the powers granted are administrative in character and may be terminated at any time at the will of the Legislature. The powers and duties are exercised by elected and appointed state officers who perform said functions without added compensation. We are not here dealing with an independent corporate entity or a governmental agency created by law and vested with a measure of governmental power, but a mere department created for a fixed and limited purpose, over which the state, through its Legislature and its officials, retains absolute domination and control. The State Insurance Fund, therefore, is a department of the state of Oklahoma within the meaning of that term as used in section 514, supra, and is not required to give an appeal bond.
Id. at ¶ 10, 93 P.2d at 1094.
¶ 7 However in deciding whether the statute of limitations ran against the Fund in a contract action, the Court viewed the Fund as a private insurer. State Ins. Fund v. Taron, 1958 OK 282, 333 P.2d 508. The Taron...
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