TULSA STOCKYARDS, INC. v. CLARK
2014 OK 14
| Okla. | 2014Background
- CompSource Oklahoma (formerly the State Insurance Fund) is a statutory, revolving workers’ compensation insurer established in 1933 to insure employers unable to obtain private coverage; it has been administered under state control while operating as a nonprofit, self‑supporting insurer.
- By statute the Fund’s revenues were to be applied to pay policy losses and administrative expenses; the Fund’s monies have long been treated in Oklahoma jurisprudence as held for benefit of insured employers and employees rather than as general state funds.
- The Oklahoma Legislature passed the CompSource Mutual Insurance Company Act (2013), requiring CompSource to convert into a domestic mutual insurer (CompSource Mutual) effective Jan. 1, 2015, and vesting all CompSource assets in the new mutual company.
- Tulsa Stockyards filed an original action seeking declaratory relief and extraordinary writs, arguing the Act violated multiple Oklahoma Constitution provisions (gift of public money, impairment of contracts, and treasury‑appropriation limits) by transferring state assets to a private entity.
- CompSource and the State contended CompSource’s monies are not State funds but trust funds belonging to insured employers and employees (per Moran), and that the Legislature may place those trust assets with a domestic mutual insurer.
- The Supreme Court assumed original jurisdiction, revisited Moran, and considered whether the Constitution prohibits transferring CompSource’s assets to CompSource Mutual.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Legal status/ownership of CompSource funds | Funds are State money (CompSource a state component unit); Legislature cannot transfer State assets without compensation | Funds are not State funds but trust funds held for insured employers and employees (per Moran) | Funds are trust funds for policyholders/employees; Moran remains controlling law |
| Validity of converting a state department into a private mutual insurer | Legislature may not convert a state entity and its assets into a private entity (violates gift/clawback prohibitions) | Legislature may restructure CompSource and vest its assets in a mutual insurer while preserving trust purposes | Constitution does not prohibit placing CompSource’s trust assets in a domestic mutual insurer; transfer permitted so long as trust continues |
| Impairment of contracts (Art. II, § 15) | Transfer impairs insurers’ and insureds’ contractual rights by changing statutory regime and protections | Existing law and Moran protect insureds’ interests; Act preserves continuation and trust purpose | Court did not resolve detailed contract‑impairment claims here (plaintiff did not fully brief some constitutional arguments); held Act does not violate constitutional prohibition on gift of public money and transfer is permissible given trust preservation |
| Continued validity of Moran v. State ex rel. Derryberry | Moran is outdated given changes (sovereign immunity, personnel, state accounting) | Moran’s core holding that Fund monies are trust funds remains sound | Moran reaffirmed: CompSource monies are not State funds but held in trust; Moran remains sound precedent |
Key Cases Cited
- Moran v. State ex rel. Derryberry, 534 P.2d 1282 (Okla. 1975) (funds of the State Insurance Fund are trust funds for employers and employees and not State funds)
- Fehring v. State Ins. Fund, 19 P.3d 276 (Okla. 2001) (recognized Fund’s hybrid nature and applied GTCA while acknowledging Moran’s trust‑fund holding)
- State v. Bone, 344 P.2d 562 (Okla. 1959) (treated State Insurance Fund as a business enterprise subject to suit)
- O.K. Constr. Co. v. Burwell, 93 P.2d 1092 (Okla. 1939) (early characterization of the Fund as a state department under legislative control)
- Zaloudek Grain Co. v. CompSource Oklahoma, 298 P.3d 520 (Okla. 2012) (discussed CompSource’s statutory nature and the paradox of state control versus non‑state funds)