Friday, April 20, 2018

The Colorado Gig Bill – An Idea in Partial Retreat?

I have been reading some very good pieces of late on Gig deregulatory laws authored by Judge David Langham, here, Brandeis Dean David Weil, here, and, and author and policy analyst Peter Rousmaniere, here. I think a sustained critique of these laws is emerging. (I will say in passing that I partially disagree with Peter’s thesis that people Gig because they like it; I think they convince themselves they like the "freedom" of gigging because no real work is available).

It is possible that state Gig bill drafters are hearing the dialogue. How else to explain the very curious Colorado iteration of a Gig bill? (for purposes of this discussion I refer exclusively to Senate Bill 18-171, here). I will say at the outset that as of the time I am writing this is merely a bill and has not yet been enacted as law. But what a curious bill. To start off with, the bill replaces the ten-factor Restatement Second Section 220 of Agency test with a ten-factor independent contractor test of its own (I will omit some of the threshold Handy, Inc.-drafted definitions, which I have explained at length elsewhere on this blog). A Gig “worker” does not perform “employment,” under 8-70-140.9 of the proposed Senate bill, if:

(a)  The services performed by the contractor are governed by a written contract executed between the contractor and a marketplace platform that states that the marketplace contractor is providing services as an independent contractor and not as an employee;

(b)  All or substantially all of the payment made to the marketplace contractor is based on the performance of services or other output;

(c)  The marketplace contractor is allowed to work any hours or schedules the contractor chooses; except that, if the contractor elects to work specified hours or schedules, the contract may require the contractor to perform work during the selected hours or schedules;

(d)  The marketplace contractor is able to perform services for other parties;

(e)  The marketplace platform does not provide on-site supervision during the performance of services by the marketplace contractor;

(f)  The marketplace platform does not require the marketplace contractor to obtain training;

(g) The marketplace contractor bears all or substantially all expenses that the contractor incurs in performing the services;

(h)  The marketplace platform does not require the marketplace contractor to use specific materials, supplies, or equipment in performing services, other than the marketplace platform's online-enabled application, software, website, or system;

(i)  The marketplace contractor does not perform service requests at or from a physical business location that is operated by the marketplace platform; and

(j) The written contract between the marketplace platform and the marketplace contractor states, in a conspicuous manner, that the marketplace contractor is not entitled to unemployment benefits under articles to of this title, and that the marketplace contractor is responsible for paying applicable taxes on income the contractor earns pursuant to the contract relationship.

I do not have much to say about these factors other than to ask the reader to consider how much a contested hearing over employee-status would begin to resemble a traditional employee-status hearing under this test. Just looking over the list casually I can quickly imagine fact disputes on almost every factor.

But that is not what I find most interesting about the bill. Consider the following language at 8-40-301(10)(b) of the bill:

(b) (I) Notwithstanding any other provision of this subsection (10), an individual marketplace contractor that performs services for pay for a marketplace platform shall be deemed to be an employee, regardless of whether the common-law relationship of master and servant exists, unless:

(A)  The individual is free from control and direction in the performance of the service, both under the terms of the contract for performance of service and in fact; and

(B)   The individual is customarily engaged in an independent trade, occupation, profession, or business related to the service performed.

(II)   For purposes of this subsection (10)(b), the degree of control exercised by the marketplace platform for whom the service is performed over the performance of the service or over the individual performing the service must not be considered if the control is exercised pursuant to the requirements of any state or federal statute, rule, or regulation.

(C)  Compliance by the parties with the conditions specified in subsection (10)(a) of this section creates a rebuttable presumption of an independent contractor relationship between the marketplace platform and the marketplace contractor that may be overcome only by clear and convincing evidence.

This is very odd language. First, in b(I), there is some suggestion that an individual, if not determined to be a “market contractor,” could be deemed an employee even if not a common law servant. Perhaps that is current Colorado law, but it is, in any event, expansive. I wonder if that is what the drafter intended.

Second, (b)(I)(A) states that notwithstanding any other provision of the Gig bill, the “contractor” will be deemed an employee unless: the individual is free from control and direction in the performance of the service, both under the terms of the contract for performance of service and in fact. Does that not simply return us to the control test? Perhaps the drafter seeks to avoid that outcome, in (b)(II), by writing “the degree of control exercised by the [putative employer] . . . must not be considered if the control is exercised pursuant to the requirements of any state or federal statute, rule, or regulation.” Translation: if the Gig employer is compelled to exercise control by law, it is not “real” control. While I do not know what the courts will make of that language, I am confident that it does not work to undo (b)(I)(A).

Finally, (b)(I)(B) suggests that “notwithstanding” the Gig law, the individual is an employee unless engaged in an independent trade, occupation, profession, or business related to the service performed. Frankly, that seems to hyper-prioritize on of the Restatement 220 factors. Section 220(2)(b) provides, as only one factor for the fact-finder to consider, “whether or not the one employed is engaged in a distinct occupation or business.” Thus, if working for a "marketplace platform," without having a separate business related to the task at hand, one "shall be" deemed an employee (?!)

In short, this is a curious, odd bill. Fortunately, some of my former Wyoming law students are practicing workers’ compensation attorneys in Colorado. I am confident they can help straighten this out should it come into law. What the prior Gig bills, upon which I have previously commented, lacked in morality they made up for in clarity. This bill seems an attempt to pay lip service to a bad idea. It is a partial retreat, whether intentional or unintentional.

Michael C. Duff

April 20, 2018 | Permalink | Comments (0)

Wednesday, April 18, 2018

New ERISA Disability Benefit Claims Rules and Their Relevance to Workers’ Compensation

During the Oklahoma workers’ compensation opt-out debate of a few years ago, one of the major objectionable features of the opt-out law was the design of the benefit determination “hearings” that employees could be forced into. Opt-out employers, whose “alternative benefit plans” would be governed by ERISA, were at liberty to select benefit eligibility fact-finders, and to pick and choose between competing medical opinions, when disability for work was at issue, with only a vague guarantee that the employee’s treating doctor’s opinion would be considered. This structure was recognized to be in sharp contrast with public workers’ compensation systems governed by state administrative procedure acts and constrained by constitutional notions of procedural due process.

But ERISA administrative hearing procedures (exhaustion of such procedures is required before a court case may be brought) may have just marginally improved, and it is important to maintain contact with developments in ERISA because, whether folks realize it or not, nearly all employee benefits are provided through exclusively-federally-regulated employee benefitplans.” And unless such a plan is a government plan, a church plan, or a plan “maintained solely for the purpose of complying with applicable workmen’s compensation laws or unemployment compensation or disability insurance laws,” it is governed by ERISA. So, whenever you hear of any state-based design to compensate injured workers that “sorta, kinda” sounds like workers’ compensation, but isn’t, you have likely entered the realm of ERISA without realizing it (and, as an aside, it is tax law and the Supreme Court’s opinion in Nationwide Mutual Ins. Co. v. Darden that will determine whether the workers covered by such an alternative scheme are “employees”).

The rationale for the historical license afforded ERISA benefit determinations by plan claims administrators is two-fold. First and foremost, with respect to employee welfare benefit plans (as distinguished from pension plans), ERISA contains no substantive requirements for the content of the plans, which can be terminated and amended at will by employers/plan sponsors. Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73 (1995).  An employer-provided disability plan, for example, may lawfully provide a beneficiary with $5 per month or $5000 per month. All ERISA requires is that an employer provide what it promised to provide in a required written plan instrument (we’ll somewhat dubiously pretend for purposes of this discussion that the employee knew what the plan provided and that this is a good-faith issue of contract).

Second, because the provision of benefit plans in the United States is entirely voluntary—employers provide them to attract talent and gain tax benefits—the concern has been that if one makes the granting of benefits sufficiently onerous, employers will simply stop providing them.

All of this would be well and good were employment not the welfare benefit (especially medical care) delivery vehicle mechanism of first resort for most people. A benefit denial machine—which is the way some commentators have effectively conceived of the structure—possesses diminished social utility.

There has been one caveat to the unfettered control of claim (denial) procedures by plan sponsors (denial occurs administratively either internally, by the Plan, or externally post-denial, if the claimant opts for administrative rather than court review). Under ERISA §503, every employee benefit plan shall—

(1) provide adequate notice in writing to any participant or beneficiary whose claim for benefits under the plan has been denied, setting forth the specific reasons for such denial, written in a manner calculated to be understood by the participant, and

(2) afford a reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair review by the appropriate named fiduciary of the decision denying the claim.

Department of Labor regulations interpreting Section 503 are located at 29 CFR 2560.503-1 and, on April 2, amended regulations, originally promulgated in 2015, were finally implemented. Among the new regulations is this item:

In the case of a plan providing disability benefits, the plan must ensure that all claims and appeals for disability benefits are adjudicated in a manner designed to ensure the independence and impartiality of the persons involved in making the decision. Accordingly, decisions regarding hiring, compensation, termination, promotion, or other similar matters with respect to any individual (such as a claims adjudicator or medical or vocational expert) must not be made based upon the likelihood that the individual will support the denial of benefits. 29 C.F.R. 2560.503-1(b)(7)

That a rule had to be included explicitly requiring that Plans ensure independence, impartiality, and that various employment and retention decisions relevant to adjudicators and experts not be biased is astonishing. It is, indeed, hard to read the rule as other than a tacit admission that the attributes associated with fair hearings have been broadly found wanting.

My workers’ compensation textbook devotes discussion to the issue of whether purported neutral medical structures, in workers’ compensation, are neutral-in-fact. One thing seems clear. If you allow interested parties to structure adjudication, you are likely to wind up with what any reasonably sophisticated citizen might predict. A full review of the new ERISA review regulations suggests that, even allowing for the risk of employers terminating disability benefit plans, a bridge-too-far may have been reached.

Michael C. Duff

April 18, 2018 | Permalink | Comments (0)

Saturday, April 14, 2018

A Few Reflections on Cumulative Trauma in Workers’ Compensation Cases

Last week, WorkCompCentral ran a story on cumulative trauma claim-filing in California (behind a paywall here). The story, and readers’ comments following the story, revealed the sharp differences of opinion on whether and why there have been increases in cumulative trauma claims in that state. I do not want to wade into the empirical debate. Rather, I want to share some thoughts about why cumulative trauma cases are simply legally hard.

When (and how) did the straw break the camel’s back? The truth of the matter is that in many instances we simply cannot know. One has arthritis in one’s joints. One also works with one’s hands over a period of years. At a certain point, disability for work manifests itself. One doctor says that work made a major/substantial/significant contribution to the present disability. Another doctor says the present disability is completely unrelated to work

The truth is often somewhere in the middle. I, for example, was a heavy laborer for 15 years before heading off to law school. I hurt my back several times. If I can’t get out of bed tomorrow to teach my workers’ compensation class, could I prove that my disability that day “arises out of” my present employment? I’m a law professor – not exactly a contact sport. Are there times when standing in one spot while teaching aggravates my back pain (which has never completely gone away since my first injury at age 23)? Certainly. Do I have a preexisting, non-occupational back condition? Probably. Would any of my present symptoms be in existence were it not for my prior occupational injuries from decades ago. Probably not. The point is – it is complicated. And a legal system’s evaluation of disability considering these complexities will be unpredictable. No “evidence-based science” can tell me my back does not hurt.

I cover joint causation—as we would term this problem in tort vocabulary—with my students every year in first-year torts class. Two negligently created fires (often caused by locomotives in the early cases) descend simultaneously upon a lonely farmhouse and burn it to the ground. Under a traditional “but for” causation test, who would pay for the resulting damage? Surprisingly, possibly no one. If we remove the conduct of negligent actor #1, does the harm still occur? Yes – because of the negligence of actor #2: it cannot be said that “but for” the negligence of actor #1, the harm would not have occurred to the plaintiff/owner of the farmhouse. But negligent actor #2 may make the same argument: it cannot be said that but for the negligence of actor #2, the harm would not have occurred. One was left with the scarecrow from Wizard of Oz pointing in both directions. In the meantime, we have a burned-out farmhouse. What can we do? Some say the harm must fall on the farmer: better he or she bear the loss than that unfairness results. But wait a minute. We had two negligent actors (which we assume for this hypothetical). How can there be no recovery?  Talk about unfairness! Because of this “but for” result—a wrong being left completely unremedied—some “jurisprudents” came up with a different solution. If either actor’s negligence was a “substantial factor” in bringing about the plaintiff’s harm, each would be jointly and severally liable for plaintiff’s harm. (They could decide in a separate action how to apportion damages between themselves, but the plaintiff was only required to pursue one of the joint tortfeasors for all the damages).

From the perspective of a defendant, this is an unfair outcome, especially if the definition of “substantial” is unclear, or too easy for plaintiffs to establish. But, from a plaintiff’s perspective, in the absence of such a rule, negligent actors—those who have breached a standard of care or legal duty—would otherwise be let off the hook completely. Then, the entirety of the loss would fall on the plaintiff. From the plaintiff’s perspective it is sour grapes for defendants to be heard complaining about paying for the costs of harms they (at the least) helped to create.

Back to cumulative trauma in workers’ compensation cases. (Workers’ compensation is a no-fault but not a no-causation system). Assume we have cause #1 of disability, work-related microtrauma over potentially a long period of time, and cause #2 of disability, non-work-related trauma (or, even more simply, aging or degeneration). Someone is going to pay for the disability in this joint (or multiple) cause situation. When we construct legal rules—say we insist that the disability will not be covered by workers’ compensation unless the major contributing cause to its manifestation is one or more identifiable work events—we are making a policy choice that cause #2 will be responsible for the costs of disability. That is, the costs will be borne by the disabled individual (or the public at large) rather than by the industry employing the worker. The problem is that legal rules often operate “covertly.” It is often not clearly seen by the casual observer in which direction liability is being tossed. I think it would be far better to hold cost-allocating discussions out in the open. We all know that is not what happens.

I will conclude by noting how prescient was the German Workers’ Compensation Act of 1884. Although that act is sometimes cursorily described as “social insurance,” that description hardly does the statute justice. It was in fact a law establishing an intricate unitary system taking up explicitly, in three separate headings, “Sickness,” “Accident,” and “Disability.” To me, the benefit of such a structure is the explicit way it insures various types of incapacity for work. One would not spend time in high-stakes (and expensive!) finagling over whether an “accident” has occurred or what, precisely, “caused” the incapacity. Different expenses were charged to the appropriate categories, and the entire expense—whether privately insured or paid by the state (both approaches were used within the same statute)—was considered at the front end of the process.

I suppose I might have some objection under such a system to the loss of any concept of a “wrong” that produced the worker’s incapacity in the first place. I do not mean “wrong” in an individual case, of course—we abandon that idea within America workers’ compensation, in any event.  No—I mean the notion that, in the abstract, a worker was surrendering a valuable civil cause of action premised on commission of a wrong in exchange for participating in the system.  Still, the structure is somewhat reminiscent of 24-hour wraparound plans that were under much discussion in the 1990s. Ultimately, in present times, one would have to do a very careful cost-benefit analysis to determine if such an idea would pass the straight face test. But I doubt the problem of cumulative trauma would seem quite as intractable as it sometimes does now.    

Michael C. Duff

April 14, 2018 | Permalink | Comments (0)

Wednesday, April 11, 2018

Final Wyoming Workers' Compensation Symposium

This Friday, April 13, 2018, in Room 178 at the University of Wyoming College of Law in Laramie, Wyoming, attorney George Santini, a fellow of the College of Workers' Compensation Lawyers, and I will be conducting the final Wyoming Workers' Compensation Symposium of the year, concluding the 4-event series. The program is entitled  "Select Workers’ Compensation Administrative and Evidentiary Issues."

We will keep video and materials from the symposia up on the event site. I'd appreciate hearing from those who have streamed or attended live any of the symposia. Classroom space is scarce and I'll have to decide very soon whether to run similar programs next year.

Screenshot-2018-4-11 Workers' Compensation Symposia(1)

April 11, 2018 | Permalink | Comments (0)

Monday, April 9, 2018

Mandatory Arbitration Expanding

As I have been arguing for some time, there is no doctrinal reason employers could not subject workers' compensation claims to mandatory arbitration. Alexander Colvin has just updated his 2017 report on the expanded general use of mandatory arbitration agreements by employers. He argues in an executive summary to the report, "Under such agreements, workers whose rights are violated—for example, through employment discrimination or sexual harassment—can’t pursue their claims in court but must submit to arbitration procedures that research shows overwhelmingly favor employers." The key findings of the report are:

  • More than half—53.9 percent—of nonunion private-sector employers have mandatory arbitration procedures. Among companies with 1,000 or more employees, 65.1 percent have mandatory arbitration procedures.
  • Among private-sector nonunion employees, 56.2 percent are subject to mandatory employment arbitration procedures. Extrapolating to the overall workforce, this means that 60.1 million American workers no longer have access to the courts to protect their legal employment rights and instead must go to arbitration.
  • Of the employers who require mandatory arbitration, 30.1 percent also include class action waivers in their procedures—meaning that in addition to losing their right to file a lawsuit on their own behalf, employees also lose the right to address widespread rights violations through collective legal action.
  • Large employers are more likely than small employers to include class action waivers, so the share of employees affected is significantly higher than the share of employers engaging in this practice: of employees subject to mandatory arbitration, 41.1 percent have also waived their right to be part of a class action claim. Overall, this means that 23.1 percent of private-sector nonunion employees, or 24.7 million American workers, no longer have the right to bring a class action claim if their employment rights have been violated.
  • Mandatory arbitration is more common in low-wage workplaces. It is also more common in industries that are disproportionately composed of women workers and in industries that are disproportionately composed of African American workers.
  • Among the states, mandatory arbitration is especially widespread in California, Texas, and North Carolina, but in all of the 12 largest states by population over 40 percent of employers have mandatory arbitration policies.

I was especially struck by the finding that the growth of mandatory arbitration has been accelerating in the last five years.

For employers who have adopted mandatory arbitration, the survey asked them how recently they had adopted this policy. Among the employers with mandatory employment arbitration, I find that 39.5 percent of them had adopted their policies within the last five years, i.e., from 2012 to 2017, whereas 60.5 percent had adopted their policies more than five years ago. This cut-off date is important because it was in 2011 that the Supreme Court issued its decision in AT&T Mobility LLC v. Concepcion, ruling that class action waivers in the mandatory arbitration agreements were broadly enforceable. This means there was a substantial growth in the adoption of mandatory employment arbitration during this five-year period following the Supreme Court giving a green light to the use of mandatory arbitration clauses to bar class actions.

It is also interesting to note the density of mandatory arbitration by state (see below). I find it unsurprising. What readers should consider is why this trend would stop at the hallowed gates of workers' compensation. All I can say is that I find no legal reason it would do so. The FAA preempts all sorts of state law very broadly. And though it is useful to follow the tea leaves for reversals of policy, I am perpetually alarmed that the workers who are not transformed into independent contractors as "Gig" workers, will be swept into arbitration by the FAA. 

Screenshot-2018-4-9 The growing use of mandatory arbitration Access to the courts is now barred for more than 60 million Am[...]

Michael C. Duff

April 9, 2018 | Permalink | Comments (0)

Sunday, April 8, 2018

Workers’ Compensation Deregulation in Iowa: Why State Gig Laws Now?

Iowa has joined the race-to-the-bottom parade by enacting (the bill was sent to the Governor last Monday, April 2) a Gig law of startling facial applicability to almost any employer dispatching employees from a remote location utilizing online technology. I would not want to be one of these “contractors.” 

As in the other laws previously discussed, here, and here, “marketplace contractors” are treated as independent contractors, and not employees of a “marketplace platform,” for all purposes under state or local law. A marketplace contractor is “a person or organization, including an individual, corporation, limited liability company, partnership, sole proprietor, or other entity, that does all of the following”:   

(1)  Enters into a written agreement with a marketplace platform to use the marketplace platform’s digital network to connect with individuals or entities that seek to obtain services from the marketplace contractor.
(2)  Performs services for individuals or entities upon connection through a marketplace platform’s digital network in exchange for compensation or payment of a fee.
(3)  Does not perform the services offered by the marketplace contractor at or from a physical business location that is operated by the marketplace platform in the state.

A “market platform” . . .   “means a person or organization, including an individual, corporation, limited liability company, partnership, sole proprietor, or other entity, that operates a digital network to connect marketplace contractors to individuals or entities that seek to obtain the type of services offered by marketplace contractors.”

A market contractor shall be treated as an independent contractor if the “The marketplace contractor and marketplace platform agree in writing that the marketplace contractor is engaged as an independent contractor;” “The marketplace platform does not unilaterally prescribe specific hours during which the marketplace contractor must be available to accept service requests submitted through the marketplace platform’s digital network;” “The marketplace platform does not prohibit the marketplace contractor from engaging in outside employment or performing services through other marketplace platforms;” “The marketplace contractor bears its own expenses incurred in performing services.”

Few words. Much damage.

There are relatively unimportant carveouts and caveats for freight operators (I am not sure who won this exemption, but I have a guess or two), governmental entities, Native American tribes (jurisdictional concerns), and religious entities (constitutional concerns). Interestingly, “contractors” previously required to possess a license under Iowa law for performance of a service before the Gig law must continue to do so. This inclusion reflects that legislators fully understand just how expansive the law may become. The company that formerly sent its electrician “employees” to your house may now be tempted to send much cheaper “independent contractors” instead—but at least those “contractors” will be licensed to do electrical work. Thank goodness for small favors, but, if fires break out, I hope the “platforms,” and not the contractors, are held responsible for non-possession of the license. As has been the case in other states, I will be interested to learn if special laws challenges ensue if it turns out that the legislation specially benefits a narrow swath of identifiable commercial actors, arguably discriminating against other commercial actors in the state, potentially in violation of Article III, Section 30 of the Iowa Constitution.

I now have an operating theory for the timing of these laws. It momentarily appeared that John Thune’s ceaseless quest for a national Gig law was about to conclude successfully with inclusion of an explicit independent contractor provision in the new Tax Act. Many understand that ensconcing such a provision in federal tax law could act as a driver, exporting a disintegrated employee definition to other realms of state and federal law. However, the current administration, while expanding tax breaks to “independent contractors,” did not supply the radical redefinition of employee status some had desired, apparently preferring to make Gig employment more attractive to Gig employees. (A move that strikes me as authentically “conservative”). I suspect that state legislators, understanding the volatility of the political landscape in a mid-term election year, decided to strike while the iron was hot. More’s the pity . . .

I’m disappointed that my law school classmate, Secretary of Labor Alex Acosta (we both graduated from Harvard Law School in 1995), appears now to be complicit in the “new economy” canard. Previously, I knew him at the National Labor Relations Board as a reasonably straight shooter. (I have defended him publicly from unfair broadsides in that regard). But regulatory capture is a dark game. Having been unable to reliably win on the merits of "classical" employee arguments in federal courts, weak state governments have been commandeered to change the playing field entirely by altering the law, even as the federal government withdraws guidance on employee misclassification. Policy makers in the 19th and 20th centuries rejected a bleak world of wholly unprotected contractors. Welcome to the 21st century.  

Michael C. Duff

April 8, 2018 | Permalink | Comments (0)

Friday, April 6, 2018

Workers’ Compensation Futurism: Bedlam, Bargaining, and Boundaries

Upton Sinclair once remarked, “It is difficult to get a man to understand something, when his salary depends upon his not understanding it.” I have that quote in my mind as I marvel at the onslaught of Gig laws that morphed, right before our eyes, from devices required to relax employment status in aid of “new” employers in a “new” economy to excuses to mandate independent contractor status be applied to obvious employees who have been dispatched to a job site “online” by some supervisor sitting back at the office. This deregulatory episode, like the Oklahoma opt-out fiasco that preceded it, is simply a species of bedlam propagated by those who have a financial interest in tearing things apart but, in the end, have little actual “skin in the game.” (Just look for the shadows in the background).   

There have been some interesting articles over the last couple of weeks on the future of workers’ compensation. I was especially struck by Andrew Simpson’s piece, in the Insurance Journal of March 26, reporting on remarks by Richard Victor, Senior Fellow at Sedgewick Institute, made at the Workers’ Compensation Research Institute Annual Meeting in Boston last month. I assume for purposes of this discussion that those remarks were accurately recounted. I understand Mr. Victor to have argued that the magnitude of current external pressures is such that the internal workers’ compensation “system” may not have the resiliency to endure. He mentioned the meta-issues as being centered on labor shortages, immigration policy, and health care policy. Because labor shortages may prompt employers to hire less than their ideal candidates as employees, injury rates may go up (although the mechanism is not entirely clear); we could alleviate labor shortages with a sensible immigration policy that replenishes our work force in historically familiar ways, but may lack the political will to do so; because our health care policy appears to be increasing, rather than reducing, costs for many in vulnerable populations, we may have created a moral hazard: those who cannot obtain health care in the general market may attempt to (expensively) use workers’ compensation for that purpose. The upshot, according to Mr. Victor, is:

The effects of all these trends, including the labor shortage, an aging workforce, more case-shifting, growing cost-sharing, a larger uninsured population will introduce a doubling of what the number of injuries would have been had none of these things happened into a world where injury frequency has been dropping every year . . . Then he adds to those factors the growth in the average cost per claim that just happens normally because prices and wages go up, throws in the likely growing duration of disability, and accounts for a few other forces at play, to arrive at his scenario for 2030: “You end up with a 300 percent increase in workers’ compensation costs without increasing benefits to injured workers.”

To this tension I feel compelled to add, as a teacher of ERISA, the rather startling fact “that 66 percent of working Millennials have nothing saved for retirement, and the situation is far worse for working Millennial Latinos. Some 83 percent of Latinos in this generation have nothing saved for retirement.” The original policy justification for an all-preempting pension and benefits ERISA regime was that it would ensure employers continued to voluntarily provide retirement plans. With the spread of 401(k) plans, to which millennials (and others) cannot afford to contribute, I suspect the political appetite for preemption (and the brake that it places on state-level health care innovation) may wane. Perhaps we were once willing to trade a weak health care regime for a strong pension regime, but that is no longer the contemporary choice offered. Bear in mind that in 2016 17.5 trillion dollars of benefit assets from employer-sponsored plans were under management. Now imagine that money shifting elsewhere. That prospect explains resistance to structural change. But the resistance cannot go on forever. And once states are fully free to innovate in health care, it is inconceivable that the workers’ compensation regime would continue to look as it does today.

The ancient Greek philosopher Heraclitus is reputed to have said that nothing endures but change, and certainly Mr. Victor’s remarks persuade that change is coming. But what I have always loved about the story of workers’ compensation—some history, some no doubt lore—was that during the stupefying change occasioned by the industrial revolution, adaptation was bargained, not imposed. I do not fear change so much as I fear loss of social negotiation to cram-down techniques. Thus, I was heartened to hear recently of Kansas’s proposed increase to workers’ compensation death benefits and Wisconsin’s against-the-present-current enforcement of appropriate worker classification. These developments bespeak remembrance of rights’ boundaries set a century ago by those who believed in fairness and in a society where all stakeholders had skin in the game. Evasion simply won’t do.     

Michael C. Duff 

April 6, 2018 | Permalink | Comments (0)

Monday, April 2, 2018

New Scholarship on Nurse Case Managers and Workers' Compensation by Attorney Justin D. Beck

            The talented Pittsburgh attorney Justin D. Beck (Thomas, Thomas & Hafer LLP), has authored a new analysis addressing the law and ethics of disability management, with a focus on the activities of nurse case managers.  Little seems to be written about this issue, even though the involvement of nurse case managers in the system has increased over the decades and is a frequent point of contention.

            The 2008 ABA Workers’ Compensation Sections CLE in Tucson, for example, featured a rare panel on nurse case managers. I recall being mortified when a veteran injured workers’ lawyer barked at a nurse on the panel, from the audience, that she and her colleagues were nothing but “spies” for the carrier, and that they would never be participant in the claim of any his clients.    

            Mr. Beck, in his essay, has been thorough, examining codes of conduct, interviewing system players, studying state laws that govern the issue (Pennsylvania, our state, has none), and analyzing select cases where nurse case managers have been sued.  He seems persuaded (I think) that when nurse case managers hew to their ethical codes and enjoy the cooperation of claimants’ counsel, a constructive relationship can develop, with potentially better outcomes for seriously injured workers. 

            To read the complete article, see  


April 2, 2018 | Permalink | Comments (0)

Thursday, March 29, 2018

A Major Event: Complete Papers from Rutgers Law Symposium, "Demise of the Grand Bargain" Published, Available Free Online

            The complete papers of the September 23, 2016 Rutgers Law School Symposium, “The Demise of the Grand Bargain: Compensation for Injured Workers in the 21st Century,” have now been published. They appear in the Rutgers University Law Review, Volume 69, Issue 3 (Spring 2017) a quarterly which can also be read free online:

            I have already summarized the lead article, by Professor Emily Spieler, and noted my effort in this blog. That article, (Re)assessing the Grand Bargain: Compensation for Work Injuries in the United States, 1900-2017, is a tour de force and shouldn’t be missed. (See my summary at

            The other major articles, which follow that of Professor Spieler, are:

• Alison Morantz, Julia Bodson, Sarah Michael Levine, & Marcus Vilhelm Palsson, Economic Incentives in Workers’ Compensation: A Holistic, International Perspective;
• Robert F. Williams, Can State Constitutions Block the Workers’ Compensation Race to the Bottom?; and
• Robert L. Rabin, Accommodating Tort Law: Alternative Remedies for Workplace Injuries.

            Commentaries featured in the issue include:

> George W. Conk, Deadly Dust: Occupational Health and Safety as a Driving Force in Workers’ Compensation Law and the Development of Tort Doctrine and Practice; and 
> Charles R. Davoli, Challenges of the Changing Legal Structure of Workers’ Compensation and the Changing Workforce

            This special Symposium issue also includes four shorter commentaries and two transcripts of remarks – one by Professor Mike Duff, who heads this blog.

March 29, 2018 | Permalink | Comments (0)

Tuesday, March 27, 2018

More Contractual Opt-Out: The Gig Race to the Bottom Rolls on to Georgia and Back to the 19th Century

Updated: I have learned from Georgia attorney Tom Holder that this legislation was not brought to the floor. It appears there was the right kind of pressure at the right time. In this lawyer's opinion, this is a very good outcome.


I have recently analyzed a Tennessee statute purportedly originated by Handy, Inc. and currently enacted in almost identical form in five other states throughout the country: Indiana, Utah, Kentucky, Florida and Iowa. Tennessee made six.  And now Georgia is about to be seven. I will not bother analyzing the Georgia bill (it is essentially the same as the other transparently coordinated laws), but you will find its text here.

Reduced to its essence the situation boils down to this. Suppose I run my business “online” and direct workers to a customer. If those workers agree in writing that they are independent contractors, and if I am not personally on site to supervise the workers, the workers are deemed independent contractors as a matter of law.

The impact of the laws is obvious. Given the fast and loose way in which they are written, any company that dispatches workers and supervises them remotely has effectively been permitted to opt out of workers’ compensation regulation. To confirm my claim, simply imagine any company that uses online dispatching (of virtually any kind) to route workers to customers. Then read any of these statutes and tell me why all such workers of that company could not be classified as independent contractors.

Proponents of such legislation say the laws will simplify the independent contractor analysis. They sure will!  As an aside, I doubt very much that the spread of these laws is being funded by a handyman company. So, I invite my readers to “follow the money.”  Let me know what you find out.

The universal salve for the wounds occasioned by this species of de-regulation seems to be that the employer and employee have agreed to a de facto waiver of rights. Freedom of contract, it seems, cures all ills. It was precisely struggles over “contracting out” that lead to abandonment of employer liability statutes and establishment of the English Workmen’s Compensation Act of 1897. The labor movement of that day, having only recently obtained the widespread right to vote (the U.K.'s embrace of anything resembling democracy came later than many imagine), would only agree to allowance of contracting out under the liability laws if an employee received adequate additional consideration beyond mere employment. David G. Hanes, The First British Workmen's Compensation Act, 1897 37-41 (Yale University Press 1968). So fractious were the debates over contracting out that the door to workers’ compensation was opened and has remained open in Anglo-American law for almost 120 years. Remarkably, we are having--under the guise of opt-out, compulsory arbitration, independent contractors, and gig laws--a debate that raged, and was apparently not resolved, in the late 19th century.

Mark my words – if the pulverizing of the expanding class of contract workers continues, large consequences will follow. This is a bona fide race to the bottom.

Michael C. Duff

March 27, 2018 | Permalink | Comments (3)

Monday, March 26, 2018

The Road to Workers’ Compensation: How Vicarious Liability Killed the Fellow Servant Rule in 1893

In the 1880s, English tort law had a doctrinal problem. A third-party could sue an employer vicariously for the tort of the employer’s employee committed within the scope of employment, a rule so familiar now it is nearly ubiquitous to us. But the rule was relatively new in the late 19th century and, what is more, the employer’s employee did not have, in the same manner, a vicarious cause of action against his or her employer for the negligent acts of a second, co-employee, committed within the scope of that employee’s employment.  American lawyers recognize this principle as the “fellow-servant rule,” a major historical spoke in the “unholy trinity” wheel of employer affirmative defenses that routinely defeated negligence cases filed by employees in the mid-19th to early-20th centuries. What is less familiar to American lawyers is how the fellow-servant rule emerged under tort law in the first place. 

By the mid-19th century, the English courts had fashioned a doctrine known as “common employment.” If the employer-principal worked among his employees, he was able to commit a negligent act because he was working with them. But if the same employer-principal was not physically present at the workplace, he could not be negligent. Why? Because he could not “directly” act negligently. In other words, vicarious liability did not apply in the workplace in the context of the master-servant relation. The fellow-servant (co-employee) effectively acted as a superseding cause blocking attribution of negligence to the employer-principal. “Common employment” was the doctrinal support for the fellow-servant rule. Ultimately, the doctrine probably derived from Priestly v. Fowler, decided in 1837, but its origins are not clear and it was confusingly mixed, even in Priestly itself, with elements of assumption of the risk. It is interesting that that Priestly’s author, Lord Abinger, failed to cite a single opinion in support of the rule. Wilson & Levy, Workmen’s Compensation (Oxford University Press 1938), Vol. I, p. 25, n.2.

In the debates preceding enactment of the English Employers Liability Act of 1893, Henry Asquith, then-Home Secretary and future Prime Minister, advocating on behalf of the Gladstone Government’s proposed bill, utilized to great effect the rhetoric of non-discrimination. Employees were not, as some contended, being afforded preferential treatment by the stripping of the employer “common employment” defense. On the contrary, employees were being placed in the same position as third-parties by preventing the unfair denial to them of a cause of action premised on vicarious liability. Asquith, in other words, argued for non-discrimination. Opening-up of workplace vicarious liability necessarily decimated what we would call the fellow-servant rule. But events need not have moved in this direction. Many lawyers were opposed to the entire concept of vicarious liability, and it, rather than the doctrine of common employment, might have been eliminated. But as injury occasioned by intensifying industrialism expanded—inside and outside of the workplace—constriction of liability was already, by the early 1890s, broadly politically unacceptable.

It is also interesting to note that at the time of the practical elimination of the fellow-servant rule there was not (yet – it would come a mere four years later with passage of the first English workers’ compensation act) a broad movement for eliminating contributory negligence or assumption of the risk (volenti non fit injuria). These, of course, were the other two defenses making up the unholy trinity. The reason seems to have been that English employers had been voluntarily contributing (often significantly) to worker “friendly societies,” cooperative organizations created and run by employees – a kind of collective, but private, self-insurance (a very interesting subject in its own right). The Government (and others) were concerned that ramping up liability by eliminating defenses would cause employers to stop contributing to these societies. (The lines of argument sound, to my ears, much like arguments that are made against subjecting voluntary employee benefit plans to excessive regulation: employers might drop the plans altogether in response—the risk, of course, is that something mandatory might fill the gap).

Thus, the evisceration of the unholy trinity was underway under Anglo-American tort law before workers’ compensation arrived in the United States. And even before workers’ compensation arrived in England.     

Michael C. Duff

March 26, 2018 | Permalink | Comments (0)

Thursday, March 22, 2018

Kentucky’s Proposed Assault on Permanent Partial Disability Benefits

Many readers will know of the significant workers’ compensation reforms being proposed in Kentucky. I would characterize the suggested modifications, when viewed in the aggregate, as significantly retractive. What most quickly caught my eye, as someone who is not a Kentucky lawyer, were the following provisions (this is just a sampling—though an important one—of the proposals):

  • All indemnity benefits would normally terminate when an injured worker reaches the age of 67
  • Employees would have the burden of proving that intoxicants did not cause their accidents
  • Permanent Partial Disability benefits would be capped at 15 years, but injured workers would be allowed to file for an additional 104 weeks of benefits with the Kentucky workers’ compensation agency, within 75 days before termination of the 15-year period. As I read the bill, the injured worker would also have to convince an administrative law judge that medical treatment remains necessary at the end of the permanent partial disability period, whether that be 15 or 17 years. In other words, medical benefits could be cut off.

With respect to the third bullet point (I think the first two speak for themselves), one does not have to be especially adept to imagine a 25-year old who is very seriously injured on the job. Again, stupendous sophistication is not required to understand that the same 25-year old, although very seriously hurt, may not be totally disabled in the sense of being physically incapable of doing anything. I repeat that I am not a Kentucky lawyer. But I can see clearly enough that “permanent total disability” means, under Kentucky law, “the condition of an employee who, due to an injury, has a permanent disability rating and has a complete and permanent inability to perform any type of work as a result of an injury.” Kentucky Revised Statutes §342.0011(11)(c) (emphasis mine). That sounds pretty demanding to this Maine lawyer. (As an aside, some quick research suggests to me that the odd lot doctrine has been cited only once ever in the reported Kentucky cases). This all seems to lead to the conclusion that the 25-year old worker may be in serious trouble at age 42. Not to worry, one might suppose – the cost of the injury after age 42 will simply be shifted to the Social Security Administration. (An approach that placed the Kentucky Supreme Court and the Kentucky legislature at loggerheads in the not distant past).

Tyler White, the president of the Kentucky Coal Association, asserts, in defense of the proposed law:

“The workers’ compensation system is designed to compensate injured workers in [an] attempt to get them back to work, benefiting themselves and their employer, . . . The system is not designed to sustain claims that extend well beyond the career span of an injured worker.”

Leaving to one side the questionable absoluteness of the effective claim that the career span of a worker is a mere 17 years, I am inclined to protest (with due respect) that Mr. White fails to make mention of the actual legal and constitutional basis of the workers’ compensation quid pro quo. As readers of this blog well know, workers in the U.S. originally obtained workers’ compensation rights, about a century ago, in exchange for foregone tort rights. The system was “designed” in such a way that the exchange of rights was to be reasonable. Kentucky courts took full cognizance of the arrangement a long time ago. Phil Hollenbach Co. v. Hollenbach, 181 Ky. 262 (1918). This bill does not from my vantage point look reasonable. One can only hope that the Kentucky Supreme Court will subject the bill – should it unadvisedly become law – to the scrutiny it deserves. My late grandfather, a Harlan County Kentucky coal miner, who suffered with and died from black lung in Kentucky, would expect no less.  

Michael C. Duff

March 22, 2018 | Permalink | Comments (0)

Tuesday, March 20, 2018

New Tennessee "Gig" Law: “Handyman Special” or New Flavor of Opt-Out

Tennessee has just passed a law (HB 1978/SB 1967) that will undoubtedly make it significantly easier for companies to classify their workers as independent contractors rather than employees, thereby lowering their operating costs and creating a class of individuals with fewer legal protections when suffering on-the-job injuries. Although styled a law applicable only to retired handymen, and similar part-time workers, the text is much broader than this innocuous characterization suggests.  When many employees may be excised from a workers’ compensation statute, it is hard for me not to see the innovation as a species of “opt-out”–a law that, as a practical matter, allows de facto employers to avoid, or opt out of, background law of general applicability.

Under this so-called “gig” law, a “marketplace contractor” working for a “third party” at the direction of a “marketplace platform” is an independent contractor as a matter of law if (1) the platform and contractor agree that the contractor is an independent contractor; (2) the platform does not unilaterally prescribe specific hours of work (if the platform posts the contractor’s hours of work—at an unspecified location—that is not prescribing hours of work); (3) the platform does not prohibit the contractor from using other platforms; (4) the platform does not restrict the contractor from engaging in any other occupation or business; (5) the platform does not require contractors to use specific supplies or equipment; and (6) the platform does not supply on site supervision to the contractor.

(1) For purposes of this bill "Marketplace contractor" means any individual, corporation, partnership, sole proprietorship, or other business entity that:

(A) Enters into an agreement with a marketplace platform to use the platform's online-enabled application, software, website, or system to be given an assignment, or otherwise receive connections, to third-party individuals or entities seeking its services in this state; and

(B) In return for compensation from the third-party or marketplace platform, offers or provides services to third-party individuals or entities upon being given an assignment or connection through the marketplace platform's online-enabled application, software, website, or system; and

(2) "Marketplace platform "means a corporation, partnership, sole proprietorship, or other business entity operating in this state that offers an online-enabled application, software, website, or system that enables the provision of services by marketplace contractors to third-party individuals or entities seeking the services.

Now, imagine a situation in which a contractor is subject to discipline if he or she does not comply with a work schedule “voluntarily” posted (somewhere); imagine a contractor who does not in fact use other “platforms”; imagine a contractor who does not in fact engage in any other occupation or business; imagine a contractor who in fact uses platform-provided supplies or equipment; and imagine a platform that in fact supplies offsite supervision to the contractor. Is the contractor described in this paragraph an “employee” for purposes of traditional workers’ compensation law if he or she suffers on-the-job injury (as will inevitably happen)? He or she very well might be—especially if the (handyman?) company is providing “off-site” supervision (a.k.a, control)—if one was utilizing a traditional control test, or an economic realities test, or the relative nature of the work test. But it seems almost certain that the individual would not be deemed an employee under the new Tennessee test, which would be applicable to workers’ compensation cases (and as I read the text of the law is not limited to “handymen” despite the protests of legislators to the contrary), and which media accounts suggest may be in the process of being implemented in other states. Hence, we encounter the latest in a series of race-to-the-bottom gambits meant to facilitate employers’ opting-out of the workers’ compensation regime.

I think of “opt-out” as any mechanism allowing the employer the choice of whether to be bound by workers’ compensation legislation. Opt-out can be statutorily or contractually based. Statutory opt-out, as I conceive it, occurs when a state passes a law authorizing, and even facilitating, employers not to participate in workers’ compensation. It is jurisdictional in nature. Once an employer is “approved” for release the employer is de facto no longer under the jurisdiction of the state workers’ compensation agency. Oklahoma was the prime example of this model. It is somewhat puzzling to onlookers why a state would both maintain a workers’ compensation system and provide employers with the legal means of escaping it. My suspicion is that it is simply not feasible, even in the 21st century, for a legislature to announce that it is abandoning a workplace injury system that has been continuously on the books in the Western World since 1884.     

Contractual opt-out is easier for a legislature to defend. The argument here is that the government is simply honoring the mutual desire of parties not to be bound by background law. It is an argument based on waiver, not jurisdiction, and is nothing more than warmed-over Lochner. Appeal to freedom of contract is why the Tennessee law solemnly recites that the “contractor” and “platform” agree that the contractor is an independent contractor. Such “agreements” have been looked upon with suspicion since the late 19th century. (I’ll discuss that fact in a later post).

One might see stautory independent contractor directives as a hybrid of the stautory and contractual opt-out model: it is created by statute but derives energy from a fictional contractual relationship.

Paring the Tennessee law down to its essence leads to the realization that any business providing virtually any service by way of “online-enabled application, software, website, or system that enables the provision of services” is exempted from workers’ compensation regulation. This is no longer a “gig” law. The breadth of the bill betrays either its expansive intentions or its frightening mis drafting. In either event, we have come a long way from Silicon Valley coders and putatively unclassifiable tech workers. I can classify a handyman

According to some media accounts (paywall), the law was drafted at the request of Handy, Inc. This makes me wonder whether it may at some point be challenged by some unfortunate injured workers under the Article XI, Section 8 of the Tennessee constitution:

The Legislature shall have no power to suspend any general law for the benefit of any particular  individual, nor to pass any law for the benefit of individuals inconsistent with the general laws of the land; nor to pass any law granting to any individual or individuals, rights, privileges, immunitie  [immunities], or exemptions other than such as may be, by the same law extended to any member of the community, who may be able to bring himself within the provisions of such law. No corporation shall be created or its powers increased or diminished by special laws but the General Assembly shall provide by general laws for the organization of all corporations, hereafter created, which laws may, at any time, be altered or repealed, and no such alteration or repeal shall interfere with or divest rights which have become vested.

I sense the potential for a substantial Special Laws argument of the type that toppled a different flavor of opt-out in Oklahoma.

Michael C. Duff

March 20, 2018 | Permalink | Comments (0)

Monday, March 19, 2018

Driverless Cars and Workers’ Compensation: Into the Wild Blue Yonder

Very early in the morning today, Monday, March 19, a vehicle operated by an Uber driver struck and killed 49-year-old Elaine Herzberg, who may have been walking, or riding, a bicycle across a major road. The colliding vehicle was, according to Tempe, Arizona police, in “autonomous” mode at the time of the crash, but a vehicle operator was nevertheless behind the wheel. Uber apparently began experimentation with autonomous, driverless cars in Arizona following a ban in California (pending further study). The Governor was reportedly elated at their arrival.

Workers’ compensation issues in connection with the tragedy quickly surface. Was the Uber driver an employee of Uber or an independent contractor?  While that’s also a torts question, it is certainly possible to imagine a non-driving, working “driver” being injured in such circumstances. Perhaps the bicyclist/pedestrian was on her way to work (it was 5 a.m.).  What is the significance of the car having been in autonomous mode?

I read about this sad incident just after reading a story at WorkCompCentral (paywall) about an increase in traffic fatalities over the last decade. According to the story,

Motor vehicle fatalities in the U.S. surged to 40,327 in 2016, then dropped about 1% last year to 40,100, the National Safety Council reported. The 2016 total was 7% higher than in 2015, which in turn was 7% higher than 2014.

About 4.57 million people were injured seriously enough to require medical attention in motor vehicle crashes in 2017, according to NSC. That figure that was down about 1% from 2016.

At the same time, transportation incidents were the leading cause of work-related deaths in 2016, accounting for 40% of fatalities, the U.S. Bureau of Labor Statistics reported.

The Brookings Institute has opined that “automation will dramatically increase safety on the highways by reducing both the number and severity of accidents.” On the other hand, some worry that, for those who are injured, manufacturer-mandated compulsory arbitration (agree, or buy your car elsewhere) may result in dramatic under-compensation of victims. Brookings argues that, with respect to products liability, significant modification of substantive tort law would be unwise. One wonders whether states like Arizona will agree.  

As injury lawyers realize, compensation of traffic accidents involves a complicated bundle of remedies. It is very hard to predict whether driverless cars will be safer than human-piloted automobiles, especially when they achieve very high volumes on the highways. I think driverless cars very likely will be safer. One thing is certain: the mixes of liability are going to change dramatically. If car crashes are handled to any substantial degree in arbitration, recovery for injury is likely to be quite limited (which is why safety advocates are concerned). It stands to reason that when third-party recoveries are limited, the stakes will rise in workers’ compensation litigation.

None of us can be sure where all this is going. It reminds me very much of the history of the emergence of railroads in the 19th century. Somewhat surprisingly, for much of the latter part of that century, railroads were in bankruptcy. Train engines burnt down towns. Workers were grievously injured. Railroad labor and management disputes led to the Great Upheaval of 1877. Courts thereafter became much more involved in labor disputes. In other words, railroads changed everything. None of the episode was foreseeable. Much of it is difficult to comprehend even in hindsight.

My 12-year-old son—who is, as he will eagerly tell you, deeply knowledgeable of futuristic trajectory—would probably insist that it is the flying cars that will matter (he assures me they are just around the corner, so to speak), and he may be right. But every workers’ compensation specialist will feel compelled to acknowledge that “something” big seems to be coming—a something that may have a tremendous impact on the workplace. I will repeat the statistic: transportation incidents were the leading cause of work-related deaths in 2016, accounting for 40% of fatalities.

Michael C. Duff

March 19, 2018 | Permalink | Comments (0)

Friday, March 16, 2018

Before American Workers’ Compensation Law: We Were Not the First

According to a document published by the Department of Labor, Bureau of Labor Statistics, in 1917 (there were a couple of earlier versions), the following countries and/or their provinces enacted workers’ compensation prior to any U.S. states having done so (Wisconsin enacted the first such U.S. state law in 1911):


Germany:1884                                                Austria: 1887                                                 

Norway: 1894                                                 Finland: 1895                                                 

Great Britain: 1897                                         Denmark: 1898                                              

Italy: 1898                                                       France: 1898                                                  

Spain: 1900                                                     New Zealand: 1900                                       

South Australia: 1900                                     Netherlands: 1901  

Greece: 1901                                                   Sweden: 1901                                                            

Luxemburg: 1902                                           Western Australia: 1902                                

British Columbia: 1902                                  Russia: 1903   

Belgium: 1903                                                Queensland: 1905                    

Cape of Good Hope: 1905                              Mexico-Nuevo Leon: 1906  

Venezuela: 1906                                             Hungary: 1907

Transvaal: 1907                                              Newfoundland: 1908

Alberta: 1908                                                  Bulgaria: 1908

Quebec: 1909                                                  Manitoba: 1910

Nova Scotia: 1910                                          Liechtenstein: 1910

Serbia: 1910                                                    New South Wales: 1910


At some point in the not distant future I intend to create a chart comparing the major vital features (exclusivity, forms of benefits, etc.) of these laws.

Michael C. Duff

March 16, 2018 | Permalink | Comments (0)

Wednesday, March 14, 2018

White May Not be the Case to Cite for the Workers’ Compensation Quid Pro Quo; but it was All About the New York Act

I (and many others) have argued that, in the Supreme Court’s decision, New York Central Railroad Company v. White, 243 U.S. 188 (1917, the Court implicitly held that a state’s workers’ compensation benefits regime must be “reasonable” to avoid triggering heightened constitutional scrutiny. More narrowly, the Court said that what was not at issue in the case was the sweeping away of common law tort remedies in exchange for unreasonable workers’ compensation benefits. Logically, of course, that meant (and appears still to mean) that inadequate benefits might not pass constitutional muster. But it also seems to mean that the workers’ compensation system the court had before it in White—the version of the New York statute reenacted in 1914—was reasonable and adequate. Before looking at what the New York Act provided, however, it is worth mentioning that participation in that iteration of the Act was entirely voluntary both for “nonhazardous” employers and for many employees. Thus, it is difficult to say whether the limited scope of the scheme then at issue influenced the Court’s view of it. The same can be said of the Court’s companion opinion in Mountain Timber Co. v. State of Washington, 243 U.S. 219 (1917). Thus, I think the case to cite for the “signing off” on the quid pro quo may be Ward & Gow v. Krinsky, 259 U.S. 503 (1922), decided under a later version of the New York Act. Krinsky is the first Supreme Court case of which I am aware approving a broad compulsory workers’ compensation scheme (binding all employers employing more than four employees). And Krinsky cited White with approval. So, implicitly, the question is why the White court deemed the 1914 Act adequate or reasonable with respect to the employee benefit side of the equation. (Virtually all forms of compulsory workers’ compensation were upheld against employers against 14th Amendment challenges under the theory that the laws were within a state’s “police powers.”)

So, you say, what did the New York Act provide? I’m glad you asked:

Here is a brief summary: 

Total permanent disability: 66 2/3% of average weekly wages during the continuance of total disability. Loss of both hands, or both arms, or both feet, or both legs, or both eyes, or of any two thereof generally constituted permanent total disability. In all other cases permanent total disability was determined in accordance with the facts.

Temporary total disability: 66 2/3 % of the average weekly disability wages during the continuance thereof, but not in excess of $3500. (about $88,000 in 2018 dollars).

Permanent partial disability: 66 2/3% of the average weekly wages paid to the employee for a period of time named in the schedule as follows (most but not all scheduled injuries reflected here). For loss of a:

Thumb. 60 weeks; First finger. 46 weeks; Second finger. 30 weeks; Third finger. 25 weeks; Fourth finger. 15 weeks; Phalange of thumb or finger. One-half of the amount above specified for those digits. Great toe. 38 weeks; Other toes. 16 weeks; Hand. 244 weeks; Arm. 312 weeks; Foot. 205 weeks; Leg. 288 weeks; Eye. 128 weeks.

Loss of use. Permanent loss of the use of a hand, arm, foot, leg, eye, thumb, finger, toe, or phalange was considered as the equivalent of the loss of such hand, arm, foot, leg, eye, thumb, finger, toe, or phalange.

Amputations. Amputation between the elbow and the wrist was considered as the equivalent of the loss of a hand. Amputation between the knee and the ankle was considered as the equivalent of the loss of a foot. Amputation at or above the elbow was considered as the loss of an arm. Amputation at or above the knee was considered as the loss of the leg.

In case of an injury resulting in serious facial or head disfigurement the commission could, in its discretion, make an award not exceeding $3500. ($88,000 in in 2018 dollars).

Benefits for non-scheduled injuries were calculated by multiplying 66 2/3% times the difference between average weekly wages and wage-earning capacity thereafter in the same employment or otherwise payable during the continuance of the disability, but subject to reconsideration without explicit textual limitation.  

Temporary partial disability: Calculated in the same manner as for permanent non-scheduled injuries with the caveats that any combination of earnings from work and disability payments could not exceed the average weekly wage at the time of injury and maximum partial benefits were limited to $3500.

In most cases, the maximum weekly benefit obtainable under any species of disability was $15. ($377.26 in 2018 dollars). 

Death Benefits. An abbreviated account of death benefits is that the surviving widow received 30% of the average wages of the deceased until remarriage.  Each surviving child received 10% of the average wages until attaining the age of 18.

Medical Benefits. The employer was required “to promptly provide for an injured employee such medical, surgical, or other attendance or treatment, nurse, and hospital service, medicines, crutches, and apparatus as may be required or be requested by the employee, during 60 days after the injury.

One of the more notable aspects of this scheme was that, outside the contours of specific scheduled benefits, there was no time limitation for receipt of permanent partial benefits. With respect to scheduled benefits, however, the amount provided was the sole remedy. The 60-day window for provision of medical benefits is striking to our eyes. It seems clear enough, however, that the employee was unlikely to get a better deal elsewhere.  A tort suit, even if theoretically available, would take much too long.

Thus, the quid pro quo question (to the extent it is historically couched in terms of White and its progeny) boils down to an assessment of the degree to which any proposed modification of workers’ compensation benefits is worse than the New York scheme (The Supreme Court has never commented on the question of adequacy since White).  

Michael C. Duff

March 14, 2018 | Permalink | Comments (0)

Tuesday, March 13, 2018

Historical Investigations: The English Workmen’s Compensation Act of 1897

I have had the great pleasure of exploring this morning Bradbury’s Workmen’s Compensation Treatise of 1917 (a rare book – the Larson’s-type treatise during the period of workers’ compensation’s revolutionary expansion). The purpose of my investigations is to get a better understanding of what the U.S. Supreme Court of 1917 might have had in mind when concluding that the negligence-for-workers’ compensation quid pro quo was acceptable, if reasonable. I intend to assess all the major statutes in existence up to that time to create a kind of historical res gestae touching on “reasonableness.”

This morning I also detoured from Bradbury a bit to read a Seldon Society compilation of English law, included in which is the English Workmen’s Compensation Act of 1897. As a former law clerk at the Massachusetts Department of Industrial Accidents, it did not take me long to note striking similarities between the original English Act and Massachusetts law. Extended discussion on that point is for another day. But I thought I would take a moment to comment on a few items that caught my eye.

First, under Section 2(1) of Chapter 37 of the English act, notice of “accident” was to be provided “as soon as practicable after the happening thereof and before the workman has voluntarily left the employment in which he was injured . . .” In the same provision, it is stated that claim was required to be filed within six months but  “any defect or inaccuracy in such notice shall not be a bar to the maintenance of such proceedings, if it is found in the proceedings for settling the claim that the employer is not prejudiced in his defence by the want, defect, or inaccuracy, or that such want, defect, or inaccuracy was occasioned by mistake or other reasonable cause.” This strikes me as a surprisingly forgiving notice and claim provision.

Also, under the 1897 Act, which applied solely to enumerated hazardous employments, indemnity benefits equaled 50% of weekly wage loss—this was clearly a wage-loss statute—capped at 1 pound per week (after all conversions amounting to $167.80 in 2017 dollars). First Schedule, Section 1(b). Death benefits were the greater of the preceding’ three years wages or 150 pounds ($25,000 in 2017 dollars). Under Section 2 of the same schedule, there did not appear to be any limit on the length of time a wage-loss benefit could be received, though under Sections 11 and 12 it appears that continued incapacity for work could be tested by the employer at any time (and of course, the cap was also continuous). Under Section 11, the employee had the right to get second opinions from physicians appointed by the Secretary of State and paid by Parliament. Second Schedule, Section 13. Moreover, “the certificate of that medical practitioner as to the condition of the workman at the time of the examination shall be given to the employer and workman, and shall be conclusive evidence of that condition.” First Schedule, Section 11. Employers and employees could settle cases by lump sum settlement and public officials could order employees to deposit the lump sum proceeds in a (one presumes conservative) Post Office Savings Bank. Weekly benefits were not subject to the claims of creditors. First Schedule, Sections 13 and 14. It appears that the nitty-gritty details of workers’ compensation cases were decided by court-appointed “arbitrators” under an interesting arbitration system that I intend to discuss in a later post.  Second Schedule.

My preliminary impressions are that indemnity benefits have been set historically at between 50% and 60% of wage loss, and that trial-by-jury was not a feature of the English system. Importantly, however, my investigations have not yet persuaded me that any durational limit on receipt of partial benefits was a feature of early workers’ compensation systems.  Finally, IME structures have been with us for a long time. More to come.   

Michael C. Duff

March 13, 2018 | Permalink | Comments (2)

Saturday, March 10, 2018

The Interplay Between Vicarious Liability and Workers’ Compensation in Independent Contractor Debates

What do employers fear more, being bound by the costs of paying workers’ compensation premiums, or being potentially liable for the tortious acts of their employees committed against third parties while within the scope of employment? I found myself musing over this question while reading a very entertaining volume on the origins of the first British workers’ compensation Act. David G. Hanes, The First British Workmen’s Compensation Act, 1897 (Yale University Press 1968). This little volume of a hundred pages or so is a treasure trove of fascinating analyses and accounts of the legal doctrine of personal injury leading to enactment of the first workers’ compensation statute in Britain. As an aside, I should mention that approximately twenty international workers’ compensation statutes pre-dated the c. 1910-11 statutes emerging in the United States.   

As many readers will know, employers are, with certain important limitations, liable for the negligent acts of their employees committed against third parties while in the scope of employment under a principle of vicarious liability known as respondeat superior. Thus, if a delivery driver negligently (or in some cases even intentionally) injures me, I, at least in the abstract, have a legal cause of action against both the driver and the “dispatcher” of that driver, if the two of them are indeed in an employer-employee relationship. Recent news demonstrates that such a fact pattern is not beyond the realm of the imagination.

It is interesting to note that the whole idea of vicarious liability was hotly contested by common law judges throughout the 19th century. Indeed, the earliest English precedents fail to cite authority for the proposition that vicarious liability exists; and no less a luminary than Oliver Wendell Holmes thought the construct a fiction derived from Roman law: if my servant (a chattel) harmed you, you had the right to kill or maim my servant. To avoid this result, I could pay you compensation. Over time, some links in the chain were lost, and it became the rule that I could simply approach you for compensation, even though you were in no sense at fault. Hanes, supra., at 9. Fascinating.

The rather large microeconomic question at play is whether modern companies resisting the Restatement Second of Agency analysis of employee versus independent contractor status do so primarily to avoid tort liability or rather to avoid labor/employment/Tax/ERISA statutory liability (including workers’ compensation obligations). I know that in the real world the answer is probably “both,” but it is simply not the case that modification of the employee definition in one statutory regime will resolve questions, once and for all, in every legal regime. Thus, beware piecemeal proposals for reform. For example, I can virtually guarantee that enactment of a partial “portable benefits” regime—where certain protected industries may, in effect, designate their workers as quasi-employees—will complicate, rather than simplify, the issue of what happens when quasi-employees injure or kill third parties.  One hopes that quantitative analysis could make even a brief appearance in legislative deliberations.

Michael C. Duff

March 10, 2018 | Permalink | Comments (0)

Sunday, February 25, 2018

Bob Wilson and Tom Robinson Address Predicted Resurrection of Opt-out in New LexisNexis Annual

            The editor of the Larson treatise, Thomas A. Robinson, has once again published his essential compendium of articles which he has written and/or published throughout the past year. 

            The first two articles Robinson offers (now six months old, I believe) are addressed to the for-now defeated opt-out scheme.  The first is by Bob Wilson and the second by Robinson himself.  Of course, under opt-out, large employers can opt out of the workers’ compensation system, yet retain tort immunity. They do so by setting up their own purportedly ERISA-governed plans, which need not necessarily provide the same benefits as the state’s workers’ compensation law, with any disputes being handled via compulsory arbitration – the arbitrators being picked by the employer.

            Of course, in the renowned case Vasquez v. Dillard’s, the Oklahoma Supreme Court struck down the law as unconstitutional, since it gave special treatment to the large employers who sought its sanctuary.  See David B. Torrey, The Opt-out of Workers’ Compensation Legislation: A Critical Briefing and the Vasquez v. Dillard’s Case, 52 Tort Trial and Insurance Practice Law Journal 39 (2017),

            On this topic, the popular Sarasota blogger, Bob Wilson, reports that “opt-out is going to return.”  He was writing in response to the announcement by opt-out guru, Bill Minick, at the WCI Orlando Conference (August 2017), that he was going to be promoting a new manifestation of opt-out.  Wilson reports that, in light of Vasquez, “the backers of opt-out seemed to have learned a lesson…, and are now proposing an opt-out scheme that operates without the layer of protection afforded by the exclusive remedy provisions.” 

            Opt-out is to be resurrected, Wilson admonishes, and “we should pay attention.”

            Wilson believes, like others, that workers’ compensation is over-regulated - and poorly so to boot.  He says that opt-out will return in legislative proposals because of these facts and because the “system … cannot seem to respond to other external stimuli.”  “Employers,” he submits, “will eventually look to escape an overly complex system where regulators cannot even agree on a simple standardized reporting form….  Opt out will again soon be an issue we are debating, but with a change in focus on their side, it will be a concept worthy of a larger debate.”

            Mr. Robinson, for his part, opines that giving up the exclusive remedy defense won’t be enough to save opt-out schemes, at least as recently envisioned. He points out that what sank Oklahoma opt-out was not freedom from tort liability, but the constitutional defect of the law treating certain constituencies in a special, more advantageous manner.  In the end, however, Robinson (who is not, like Wilson, sympathetic to opt-out), worries that opt-out may return: “In the race to the bottom that seems so much the rage in today’s state houses, I feel that several states are at least willing to entertain the notion of a 19th century wrestling match as to how injured workers might be covered (or excluded) for work-related injuries and diseases.”

            Wilson, in his otherwise insightful essay, makes a remarkable statement by asserting that the system “cannot seem to respond” to external stimuli except for threats of its very overthrow.  Such a claim flies in the face of twenty-five years of business-friendly, retractive reform of workers' compensation laws.  Didn't the U.S. Department of Labor start to mobilize in the last days of the Obama Administration with an eye to addressing injured worker complaints about retraction?  (As a player, I do agree with Mr. Wilson that the system is imperfect; I blanch daily at episodes of inefficiency and utter waste.)  As an example of system responsiveness, when physician-office dispensing of narcotic medication surfaced as a problem in Pennsylvania, interest groups in short order won a change to the law (December 2014), which brought the unsatisfactory situation under control.     

            Neither Wilson nor Robinson, meanwhile, mention the real force behind opt-out: the desire for profits fueled by unrestrained market forces.  Wilson and Robinson do not comment at all on this phenomenon.  The cause and effect is obvious.   

            First, since 1980, retraction, for the most part, has been the major feature of legislation in state workers’ compensation laws. Opt-out, a complete rejection of the social compact, is the most dramatic manifestation of this trend. 

            Second, opt-out efforts is another manifestation of tort reform, as has been current in products liability.  All agree, in this regard, that the main drivers of opt-out proposals are, as in other insurance fields, reducing costs to business and eliminating litigation.

            Third, retrenchment in workers’ compensation, of which opt-out is a prime example, is another example of a larger, pervasive, attempt by employers to escape the public system and avoid traditionally acknowledged social responsibilities. Arbitration clauses increasingly found in employment contracts are another example. Opt-out lacks the communitarian spirit that imbued the National Commission report, with its admonitions that all be bound by the law. Opt-out casts this idea aside in favor of pure self-interest.

            Fourth, opt-out proposals reflect an ultimate negation of rights. Opt-out, in fact, considers work injury recovery as not a right, but as just another employee benefit which can be pared off at will - one where costs can be reduced via the employer’s complete control over medical care, restricted compensation triggers, and freedom from challenges in disputed cases. The idea that a worker’s injury recovery possesses an element of justice, one that derives from the Constitution, the common law, and social concerns, is forgotten.

            In any event, Professor Michael Duff seems to have a most insightful legal perspective.  Writing (like Wilson and Robinson) in August 2017, after Mr. Minick’s proposals were floated, he wrote, on this blog:

One is still at a loss to know what “opt-out without exclusive remedy” means. If it means merely that employers have the choice not to participate in workers’ compensation without a state attempting to dictate the details of ERISA-governed plans, that will return us to 1911. Why might employers be willing to do this? I have had a continuing sense that it has a lot to do with the Federal Arbitration Act….  Employers going bare in Texas can compel their employees to sign arbitration “agreements” as a condition of employment, and the evidence has become very clear how poorly employees do in such a regime.

[S]till, opt-out without exclusive remedy in this sense could avoid many of the state constitutional problems that plagued the Oklahoma model, particularly if both employers and employees were able to elect participation (no exclusive remedy). As a matter of state law, that would leave employees with the historical common law remedy for injury. Whether this would be good for employees in the long run is a separate question. While it is true that many states have significantly weakened, or eliminated, the affirmative defenses that originally led to the Grand Bargain, it is also true that prima facie cases are not easy to establish (especially the nature of the employer’s duty of care) and court-based litigation is a long and expensive process.

See Michael C. Duff, Workers' Compensation Opt-Out, Opt-In, Exclusivity, and State Constitutionality, (blog post, Aug. 14, 2017).

February 25, 2018 | Permalink | Comments (0)

Wednesday, February 21, 2018

Is This a Rubber-Stamp World?: Did Aetna’s Former Medical Director Never Look at Patient Records?

According to CNN, Aetna’s former medical director, Ken Iinuma, admitted in a deposition that “he never looked at patients' records when deciding whether to approve or deny care” surprises me for reasons that I suspect are different from the reasons the public seems shocked (California has reportedly opened an investigation). The public may shake its collective head in disbelief that life and death decisions regarding insurance coverage (or the lack thereof) could be made in a paper-review. Those of us who have been involved in medicolegal practice of one kind or another realize this is probably the rule rather than the exception. Because of the sheer volume of insurance-coverage determinations made within large organizations, it is not surprising that individual medical records are not made by top decision makers. Aetna will no doubt argue to California that its internal administrative process ferrets out bad decisions (or at least highlights questionable front-line decisions) long before the file makes its way to a top decision maker. This is, after all, the way that legal organizations like workers’ compensation commissions reach decisions. Deep scrutiny of all files would be expensive and time consuming. True, one might hope that a doctor (with due respect to you nurses) would take the time to at least peek at underlying records when denial of treatment will likely lead to death.

But that is not what surprises me. I am surprised by the nakedness of the admission of the doctor (perhaps unsurprisingly no longer an employee of Aetna), though I would have to read the entire deposition transcript to learn if things were really as stark as they seem. Sometimes the most damning admissions emerge because an inside player has lost the ability to discern when things look bad to the outside world. This method of paper denial had apparently become so routine to the doctor that he, perhaps momentarily in a moment of fatigue, failed to appreciate the perception of decisions under such processes as mere rubber stamps.

At another level, the public might be shocked because it believes a doctor is a doctor first and an employee of an organization only secondarily. Surely, the doctor would not sacrifice his professional ethics at the altar of crass employment.

I think that the potential for relinquishment of professional judgment undergirds much of what workers’ compensation has become. Were the late 19th-century architects of workers’ compensation naïve in believing that the ADR-system they apparently thought workers’ compensation would become could operate without lawyers? My profession takes a lot of heat for its perceived unfettered embrace of adversarialism. But as all of you in “the business” know, acquisition of medical evidence can be a de facto arms race. There is plenty of blame to go around for the present state of affairs. Perhaps the public will now have to wake up to a reality that many of us have long known.

Michael C. Duff         

February 21, 2018 | Permalink | Comments (0)