The legislation goes back to the Senate for its agreement, which state government officials consider a formality because the bill easily passed through that body the prior week.

If the proposal passes the Tennessee legislature and is signed into law, it would leave Oklahoma and Alabama as the only states remaining with court-based dispute resolution systems for workers' compensation claims.

Oklahoma's legislature is considering a similar proposal for the second straight year. A bill revising the system passed the state House last week, but a provision allowing companies to opt-out of the system is likely to delay final action for some time. The insurance industry strongly opposes such a provision, which is law only in Texas.

And, in Texas, companies which opt out of the system can't do business with federal, state and local governments, according to an official of the Texas Mutual Insurance Co., a state-controlled insurer.

The insurance industry broadly supports the change in Tennessee, contending that court-based dispute resolution systems delay payment of claims and are costlier.

"We strongly believe that moving to an administrative system will improve the efficiency of the Tennessee workers' compensation system," says Ron Jackson, vice president of state affairs for the American Insurance Association, in a statement.

Trey Gillespie, senior workers' compensation director for the Property Casualty Insurers Association of America, says an administrative system "would create a more efficient process for the timely resolution of disputed issues between parties than can be afforded by the Tennessee courts."

Workers, union officials and plaintiffs' lawyers oppose the changes, although they acknowledge that passage is just a matter of time in a state that has become more conservative recently and where the governor is strongly promoting it.

Democrats railed against the bill. House Democratic Caucus Chairman Mike Turner of Nashville derided the new system as a "Tennessee kangaroo court."

The Tennessee AFL-CIO said it was "deeply disappointed" in the measures. Wil Hammond, communications director, says state lawmakers "put the wants of the governor and his big-business friends ahead of the welfare of over 2.6 million working Tennesseans."