Wednesday, October 12, 2016

Listen, then speak

During the last month or so there has been a remarkable amount of deep thinking going on about the condition of workers’ compensation in the United States. On September 23, I had the privilege of participating in an academic conference at Rutgers Law School titled, “the Demise of the Grand Bargain.” It was quite a thrill to have the opportunity to share a stage with academic luminaries John Burton, Emily Spieler, Robert Rabin, Alison Morantz, Adam Scales, Bob Williams, George Conk, and Price Fishback. This blog’s own David Torrey also ably provided a judicial-academic perspective, while Workers’ Injury Law & Advocacy Group (WILG) official Chuck Davoli represented a perspective from the claimants’ Bar.

Then, on the September 26, I was privileged to address WILG’s annual convention on ERISA/workers’ compensation opt-out issues. The audience was gracious enough not to get up and walk out as I droned on discussing very long (too long!) statutory passages from ERISA.

Finally, last week, the Department of Labor gave a presentation and released a report on the state of workers’ compensation. Since that time, I have been asked repeatedly whether I thought workers’ compensation was likely to be “federalized.”

I have tried hard to say as little as possible in the wake of this activity in order to allow as much as possible of what has transpired to “sink in.” I find that at the end of this activity I have come away with the following points:    

  • I do not believe that workers’ compensation is on the verge of being taken over by the federal government. I simply do not buy that there is sufficient political will in the country to accomplish something of that magnitude. The amount of legislative resources to accomplish such a task would be larger than many imagine. Large sections of ERISA and the Affordable Care Act would have to be rewritten. It is not clear to me who would (or could) do the writing.
  • Related to the foregoing, to the extent that the Grand Bargain continues to be any kind of actual negotiation, I am at a loss to understand how the winners in the current status quo could be forced to the bargaining table. Who bargains when they are winning?
  • I think much more likely than the dramatic scenarios that have been under discussion is an ongoing (agonizing) state-by-state challenge of an in-progress race to the bottom that will be tightly focused on individual states’ constitutions. The state challenges will take different forms: special laws (as in Oklahoma); equal protection (as in New Mexico), state due process; access to courts; right to a remedy, & etc. These challenges will center on rights analyses because, at the state level, it is much less easy to obscure the original bargain of tort for workers’ compensation rights and remedies.
  • In connection with the previous point, I do think that the Department of Labor (and others) will increase their investigative focus on the adequacy of workers’ compensation benefits and, to the extent increased study demonstrates persuasively the inadequacy of benefits, I think it could influence the state-law challenges I referenced above.  
  • Cost shifts to federal programs will be difficult to measure because they presume stable Federal-State baselines that have in fact been deeply influenced by state-based causation standards. In other words, it is sometimes very difficult to say that a shift to the federal system would have occurred in the absence of changes to state-based causation standards (my thanks to Rutgers Law Professor Adam Scales for helping me to understand this point).
  • The opt-out phenomenon is not over. Shaw v. Delta Airlines very clearly provides states with the ability to allow compliance with workers’ compensation statutes through ERISA-governed plans. I suspect Oklahoma’s statute was a first draft; we are likely to see others. Moreover, not every state’s constitution will allow for the kind of “special law” or equal protection analyses that scuttled opt-out in Oklahoma.

Michael C. Duff

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