Oklahoma Administrative Code Title 370 - Compsource Oklahoma
Oklahoma Administrative Code Title 370 — Compsource Oklahoma
Detailed Explanation with Oklahoma Case Law (No External Law)
Overview of Title 370
Title 370 is the section of the Oklahoma Administrative Code that governs Compsource Oklahoma, which is the state’s workers’ compensation insurance fund.
Compsource operates under the authority of Oklahoma statutes (mainly in Title 85 — Workers’ Compensation) and is responsible for providing workers’ comp insurance, collecting premiums, auditing policyholders, and adjusting premiums based on actual payroll.
Title 370 includes regulations that control how Compsource calculates premiums, audits employers, handles cancellations, refunds, and premium adjustments.
Key Regulatory Areas in Title 370
1. Premium Adjustment Plan (Chapter 10)
This chapter governs how Compsource audits employers after policy periods end to determine actual payrolls.
Employers provide estimated payroll upfront; after the policy ends, Compsource audits and may increase or decrease premiums based on actual payroll.
Failure of the employer to provide information or cooperate with audits can lead to premium adjustments or cancellation.
Important Oklahoma Case Law Interpreting Title 370 / Compsource Practices
Case 1: Zaloudek Grain Co. v. Compsource Oklahoma, 2013 OK 68, 298 P.3d 520
Issue: Can Compsource cancel a policy due to employer’s failure to provide payroll audit information, and is Compsource bound by the cancellation provisions applicable to private insurers under Title 36 (Insurance Code)?
Holding: The Oklahoma Supreme Court held that Compsource is not a licensed private insurer under Title 36, so the cancellation rules in Title 36 do not apply to it.
Reasoning: Compsource is a statutory entity governed by Title 85 (Workers’ Compensation Code) and its own administrative rules (Title 370). Under those, Compsource has the authority to cancel a policy if the employer fails to cooperate in audits.
Impact: This confirmed that Title 370’s audit and cancellation rules apply exclusively to Compsource’s authority and that private insurer rules do not bind it.
Case 2: W.R. Allison Enterprises, Inc. v. Compsource Oklahoma, 2013 OK 24, 299 P.3d 1203
Issue: Must Compsource refund unearned premiums on a strict pro rata basis when the employer requests cancellation? Or can it charge a short-rate penalty?
Holding: The Oklahoma Supreme Court ruled that when the employer requests cancellation, Compsource may charge a short-rate penalty and is not required to refund on a strict pro rata basis.
Reasoning: The court recognized longstanding administrative practice and agency interpretation allowing short-rate cancellation penalties for employer-initiated cancellations.
Impact: Employers should expect a penalty if they cancel; pro rata refunds are generally only required when Compsource initiates cancellation.
Case 3: Compsource Oklahoma v. Briscoe, 2006 OK CIV APP 66, 139 P.3d 467
Issue: Whether Compsource properly adjusted premiums based on audit information.
Holding: The Court of Civil Appeals confirmed that under Title 370 regulations, Compsource has discretion to audit payroll records and adjust premiums accordingly, provided it follows procedural rules (adequate notice, opportunity to respond).
Impact: This case highlights the importance of procedural compliance by Compsource when conducting audits and premium adjustments.
Summary of Title 370 Principles Based on Case Law
| Principle | Explanation | Supporting Case |
|---|---|---|
| Compsource is distinct from private insurers | Title 36’s insurance regulations generally do not apply; Compsource operates under Title 85 and Title 370 | Zaloudek Grain |
| Audit cooperation is mandatory | Employers must provide payroll info; failure can justify cancellation or premium increases | Zaloudek Grain, Briscoe |
| Cancellation rules depend on who initiates | Employer-initiated cancellations can incur short-rate penalties; insurer-initiated cancellations require pro rata refund | Allison |
| Procedural fairness is required | Compsource must give proper notices and opportunity to respond before adjusting premiums or cancelling | Briscoe |
Practical Application for Employers and Compsource
Employers must timely cooperate with payroll audits under Title 370 regulations, or risk premium increases or policy cancellation.
Compsource must follow notice and procedural requirements when auditing or adjusting premiums.
Cancellation notices and refunds depend on statutory and regulatory rules under Title 85 and Title 370.
Employers seeking to cancel coverage should anticipate potential short-rate penalties rather than full pro rata refunds.
Specific Regulatory Language Example (Premium Adjustment Plan – Section 370:10-1-1)
This section details Compsource’s authority to audit payroll records after policy expiration.
It requires employers to provide payroll records within a specified time frame.
If employers fail to provide records, Compsource may estimate payroll and adjust premiums accordingly.
Employers have a right to appeal adjustments and request hearings under administrative procedures.
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