Friday, July 29, 2016

Florida: Testing the Limits of the Grand Bargain

The Grand Bargain at the heart of workers’ compensation law survived a constitutional challenge by employers in 1917.  The U.S. Supreme Court in New York Central Railroad Co. v. White, held that the trade-off embodied in New York’s no-fault statute did not violate the Fourteenth Amendment’s guarantee of due process, writing: “The statute under consideration sets aside one body of rules [tort] only to establish another system [no-fault limited benefits] in its place . . . Viewing the entire matter, [the statute] cannot be pronounced arbitrary and unreasonable . . .”  

But not every workers’ compensation trade-off that a state might fashion would pass constitutional muster. The Court continued, “This, of course, is not to say that any scale of compensation, however insignificant on the one hand or onerous on the other, would be supportable.” 

A century later, the question of exactly where that constitutional line should be drawn is resurfacing. This time, the test may come from Florida. Like many states, Florida has amended its workers’ compensation statute frequently in the years since its adoption in 1935. The amendments are typically designed to incrementally limit workers’ compensation benefits or tweak the administrative scheme, all with an eye on the bottom line for employers. The justification offered for these reforms is that workers’ compensation premiums are growing too large and must be reduced to keep state businesses competitive. An emerging constitutional theory is that these incremental reforms have so eroded the initial Grand Bargain that the state’s workers’ compensation scheme is no longer a fair trade-off—especially given developments in modern tort law, such as comparative negligence, that have largely undercut the “Unholy Trinity” defenses. Similar theories support state-specific challenges based on the Florida Constitution’s own due process and “access to courts” provisions. Co-editor Michael Duff explains why Constitutional challenges sometimes seem to arise in Florida more easily than in some other states in Part III.C of this forthcoming article. For an academic case that the Grand Bargain has been undermined in Florida, see this article by a former student of mine.  

The constitutional challenges are gaining traction. In April, Florida’s Supreme Court held that a restrictive statutory formula for capping claimant’s attorneys’ fees deprived claimants of due process, violating both the Florida and U.S. Constitutions. Castellanos v. Next Door Co.  In June, the court ruled another part of the statute unconstitutional under Florida’s constitution. Westphal v. City of St. Petersburg.  The provision at issue limited temporary total disability benefits to 104 weeks, even if the injured worker had not yet reached “maximum medical improvement,” potentially creating an indefinite “gap” period before the worker could recover permanent disability benefits. This feature meant that the statute “no longer functions as a reasonable alternative to tort litigation.” Justice Lewis authored a separate concurrence casting doubt on the entire statutory scheme: “Florida needs a valid Workers’ Compensation program, but the charade is over. Enough is enough, and Florida workers deserve better.”

Now a broad constitutional challenge to Florida workers’ compensation statute is being advanced in a petition for certiorari to the U.S. Supreme Court in Stahl v. Hialeah Hosp. The Florida Supreme Court heard oral arguments in Stahl, but subsequently decided to discharge jurisdiction, possibly believing the record inadequate to consider claimant’s broad facial attack on the statute. Although claimant has specifically pointed to two particular provisions of the statute (eliminating permanent partial disability benefits and requiring a co-pay for certain medical benefits), the basic theory of the petition for certiorari is that the constitutional line drawn by the Court in White in 1917 has been crossed in Florida.  

Business groups have launched a task force “to foster ideas” for a legislative response to the Florida Court’s rulings.  Stay tuned for developments and further analysis.

Jason Bent

July 29, 2016 | Permalink | Comments (0)

Tuesday, July 26, 2016

The First Principles in Any Discussion of Workers' Compensation Law

Workers’ compensation benefits are neither “welfare” benefits nor discretionary fringe benefits. They are benefits paid to workers by employers as part of a “Grand Bargain” struck by various stakeholders in society (employers, workers, and others). Under the terms of the bargain, workers injured or killed on the job receive statutory benefits: a percentage of the gross wages they were earning at the time of injury or death (usually about 50% to 66 2/3%), for a statutorily pre-determined number of weeks, plus payment for reasonable and necessary hospital, medical, and rehabilitation treatment expenses occasioned by work-related injuries. Whether the employer or the worker is at fault in causing a work-related injury is usually irrelevant. If an injury “arises out of and in the course of employment” it is covered, or compensable, under workers’ compensation law.

Once upon a time, in a very dangerous, early-industrial world, workers were not covered by such a no fault system. To recover damages for work-related injuries workers had to prove in court that their employers were negligent. In other words, workers had to prove that their employers owed them a duty of care, breached that duty, and that the workers’ injuries were in fact and proximately caused by their employers’ negligence. Then, even if workers could prove these things—could establish a prima facie case—their employers could nevertheless escape liability. If workers were contributorily negligent, had assumed the risk of injury, or had been injured by the conduct of a co-worker, they were completely precluded from receiving damages. This “unholy trinity” of affirmative defenses often doomed workers’ court cases, and left them, and any dependent family members, destitute. These circumstances offended the collective moral judgement of many social observers during the first decade of the 20th century.

At the same time, employers could, on occasion, lose negligence cases in court, and could unpredictably be subjected to significant, or even ruinous, negligence damages. Also, courts were beginning to more closely examine the affirmative defenses that had been so lethal to employee negligence lawsuits. Given the development of tort law during the 20th Century, employers were shown to have been right to be concerned in 1910 that the risk of negligence liability might be increasing.     

Thus, the Grand Bargain was born. Workers relinquished their right to tort suits; employers paid workers a sum-certain for work-related injuries, which, while substantial, ended the high-stakes, Russian roulette risk of damages employers had been guarding against since the last decades of the 19th century.  Workers’ compensation became the “exclusive remedy” for work-related injuries in the vast majority of cases. In short, both workers and employers relinquished something. (A concept we now know as "the Quid Pro Quo"). In early U.S. Supreme Court cases upholding the Grand Bargain, the adequacy or reasonableness of workers’ compensation benefits formed a significant part of the rationale of the decisions upholding the new legal arrangements.

As law professors, it is our hope to explain to students, legislators, and the general public our understanding of this underlying narrative of the workers’ compensation system.  Of course, as good academicians and law teachers we also hope to explain and critique the letter of existing workers’ compensation doctrine.

July 26, 2016 | Permalink | Comments (0)

Saturday, July 23, 2016

Welcome to the Workers' Compensation Law Professors Blog

The editors of the Workers' Compensation Law Professors' Blog welcome you to our new initiative. The Blog will be academically (but not merely theoretically) focused. While interested in noting and discussing important news in the United States and international workers’ compensation communities, the primary mission of the blog will be to analyze carefully significant workers’ compensation doctrinal and policy developments of interest to law school teachers and researchers of workers’ compensation law. The co-editors and contributing editors all teach workers' compensation law in American Law Schools. A hallmark of the blog will accordingly be a depth of reflection and analysis that will be of greatest benefit to our students and to the craft of teaching and writing formally about workers' compensation law. Most, if not all, of the law teacher-editors on board here are, or have been, directly involved in the practice of workers' compensation law. We are excited to discuss the theory, doctrine, and practice of workers' compensation law and believe deeply that workers' compensation law is wonderfully suited to the experiential method of teaching that has become so important to law schools in recent years. We deeply appreciate your regularly checking in on our endeavors. 

July 23, 2016 | Permalink | Comments (0)