Workers’ Compensation Law Prof Blog

Healthy California Act, IRA Auto-Accounts, and Workers’ Compensation: Please Don’t Say ERISA Preemption

The interesting thing about ERISA preemption is that we have had relatively little Supreme Court guidance over the last decade or so. When I read a story in WorkCompCentral last week (behind a paywall) about how the proposed Healthy California Act (the “California bill”) could have workers’ compensation implications, my first thought had nothing to do with those implications. Rather, as an ERISA teacher, I wondered how the California-state single payer system can survive ERISA preemption. For followers of ERISA doctrine, it will be recalled that the Supreme Court initially decided, in Shaw v. Delta Airlines, a 1983 case, that a state law “related to” ERISA-covered plans (triggering displacement of the state law) if it had a “connection with” or made a “reference to” those plans. In essence the law in this area has moved from metaphysical discussion of how anything “relates to” everything to the less than clear observation that maybe there are state laws having only an “indirect economic impact” (under Travelers, a 1995 case) on ERISA plans, so as to save the laws from “connection with” preemption. Perhaps, also, a state law does not trigger ERISA preemption merely because it “references” employee benefit plans (under Dillingham, a 1997 case). The Supreme Court, however, has never overruled cases stating rather forcefully that a mere reference is enough. To say that ERISA preemption represents a region of indeterminacy is a pretty respectable understatement.

On the precise question of whether a state or local government can mandate single-payer health care we have, so far as I can discern, only two federal circuit court opinions, and they are diametrically opposed: in the 9^th Circuit, Golden Gate Restaurant Association v. City and County of San Francisco, 546 F.3d 639 (2009) (“Yes”); and in the 4^th Circuit, Retail Industries Association v. Fielder, 475 F.3d 180 (2007 – the notorious “Walmart” case) (“No” – finding preemption despite having the benefit of Travelers and Dillingham opinions, cases supposedly militating against preemption). While single-payer is being considered in other states, for example in Massachusetts, no challenges have percolated up to the federal appellate level. It would take time to enact such statutes and no one knows how such a case would come out, at least outside of the 9^th Circuit. (The California bill may for that reason survive preemption if it becomes law, but what would happen next is anyone’s guess). After passage of the ACA, states may have been disincentivized to pass single-payer laws. (A possible reversal of ACA may have much to do with sponsorship of the California bill and other brewing initiatives).

Meanwhile, the Senate’s recent vote to kill a Department of Labor rule that would have authorized state-sponsored IRA “auto accounts” (originally a Heritage Foundation idea) falls squarely into the ERISA-preemption thicket. The DOL rule, a “safe harbor,” said that ERISA-covered plans “do not include an IRA established and maintained pursuant to a state payroll deduction savings program if that program satisfies all of the conditions set forth in the proposed rule . . . In the Department’s view, courts would be less likely to find that statutes creating state programs in compliance with the proposed safe harbor are preempted by ERISA.” Opponents contended, among other things, that employers could "inadvertently establish ERISA-covered plans.” The DOL rule would not have meant that the state plans would survive preemption, it merely provided a non-binding DOL opinion that courts may or may not have respected. Opponents nevertheless persuaded the Senate to kill the rule under the CRA. Thus, while ERISA-preemption holdings may seem to have budged from sweeping preemption to a presumption of non-preemption, in vaguely-defined “traditional” areas of state regulation, the current Congress may be creeping towards reasserting federal preemptive authority. This development may exert subtle influence on courts pondering murky federal-state boundaries.

Which brings me back to workers’ compensation. ERISA preemption does not apply to employee benefit plans (as very broadly defined) “maintained solely for the purpose of complying with applicable workmen’s compensation laws or unemployment compensation or disability insurance laws.” But what about a state law that entangles workers’ compensation benefits with other kinds of health care benefits? As the WorkCompCentral piece noted, the California bill would have requested a “study” of how workers’ compensation could be included in a single-payer system, but even that halting iteration was excluded. The rejected Colorado single-payer bill would have included coverage of workplace injuries. Although now (temporarily?) a moot point, my suspicion is that such entanglement could create ERISA-covered, multi-benefit plans. Such bills would have to be carefully analyzed under Shaw v. Delta Airlines to assess ERISA preemption problems unique to multibenefit plans. It is conceivable that a single-payer state law could survive first-level “facial” ERISA preemption challenges only to later encounter “as applied” preemption challenges. Those preferring state control over workers’ compensation should proceed with caution given the general volatility of ERISA preemption.          

Michael C. Duff   

Seminal Pennsylvania Case on the Definition of "Injury" Approaches its 30th Anniversary, is Commemorated by Pitt Law Student

            My comp judge colleagues from the Virginia system always leave judges from other jurisdictions (like me) gasping when they tell us of the large percentage of workers who appear at hearings self-represented.  As it turns out, however, many of these pro se claimants have sustained repetitive motion injuries, which are not compensable under the Virginia Act.  It's the Virginia Deputy Commissioner's job to deliver the unhappy news that the worker has no rights.  (Mike Duff reviews this issue nicely in Chapter Four of his textbook; it is important to note, however, that carpal tunnel, given an amendment to the Virginia statute, is now compensable in certain instances.) 

            Under the Pennsylvania Act, we don't have this problem.  This is so given our liberal definition of "injury," the statute's designation of the compensable event.   

            In our state, we're reminded of this fact by the approaching 30^th Anniversary of the seminal Pennsylvania case on this precise issue, Pawlosky v. W.C.A.B. (Latrobe Brewing Co.), 525 A.2d 1204 (Pa. 1987).

            My research assistant (and student), Justin Beck, a 2017 graduate of Pitt Law School, has written a top-notch documentary retrospective on this case.  I've posted this brilliant young man's essay on the website www.davetorrey.info.

            In summary, the Pawlosky case clarified that all injuries, including repetitive motion injuries, aggravations of pre-existing conditions, and disease maladies, are covered by our state’s law. 

            The full story: following liberalizing amendments in 1972, an employee in Pennsylvania was no longer obliged to prove an “accident,” but merely that an “injury” had occurred. In the context of occupational diseases, however, the injured worker was still obliged to show that the claimed pathology had a greater incidence in his or her occupation than in the general population.  In 1987, the Pennsylvania Supreme Court, in Pawlosky, addressed this issue.  The court expanded the compensable event, declaring that, as long as competent proofs showed that the ailment arose in the course of employment, and is medically related to the same, the worker possesses a valid claim.  Under the Pennsylvania system, the issue of legal causation has been settled.  What we are always litigating is medical causation.

             Mr. Beck, in his essay, recounts the story behind this pivotal litigation, which centers on the occupationally-aggravated asthma of a brewery worker.

            The importance of the Pawlosky decision has only been strengthened as the years have passed. Workers’ compensation practitioners and judges know, instinctively, that defenses resting on the theories that the injury was “not due to an accident”; was “due to a pre-existing condition”; or was not “peculiar to the worker’s occupation,” are not cognizable. Civil lawyers, meanwhile, are (or should be) aware that work injury claims asserted by workers against their employers in tort will almost invariably be dismissed on the basis of the exclusive remedy, with the trial court citing Pawlosky as authority.

            Notably, just as Mr. Beck completed his essay, our middle-level appeals court, on May 4, 2017, held that a worker, employed as a paper plant electrician for many decades, had a cognizable claim of injury for his fatal metastatic bladder cancer. Before the court did anything else, it invoked Pawlosky, confirming that all work-related harm, including an unlisted disease, can indeed constitute an injury. Kimberly-Clark Corp. v. W.C.A.B. (Bromley), 2017 Pa. Commw. LEXIS 175 (Pa. Commw. 2017). 

10th Amendment as Race to the Top?: National Tort Reform, the Federal Arbitration Act, and Workers’ Compensation

Workers’ compensation is an area of traditional state sovereignty. I have become increasingly concerned about the onslaught of what I term “empty preemption,” the supersession of substantive state law by substantively empty federal statutes. Because of my ongoing concern about what I see as the undervaluation of a remedy for negligent infliction of injury on the human body, I find it especially alarming when empty preemption works against state remedies for physical injury. At the very root of workers’ compensation opt-out, for example, is the project to utilize substance-less federal law (ERISA) to preempt substantive state law. The substance of law to which I refer is sometimes called “rights.” And in my mind, rights matter.

Last week the Supreme Court continued its underwriting of a states’-rights-eviscerating machine known as the Federal Arbitration Act. The Kentucky-based case—Kindred Health Centers—involved a fairly simple fact pattern. Two close family members of nursing home admittees unwittingly signed arbitration agreements at the time of admission. When the admittees died, the family members attempted to bring wrongful death suits. The nursing homes raised the arbitration agreements as a subject matter jurisdiction defense and sought compulsion of arbitration. The Kentucky courts—all the way to the Kentucky Supreme Court—said “no”: with respect to waivers of access to jury trials (a fundamental right under Kentucky law), a clear statement is required for release. The U.S. Supreme Court overturned on the theory that the “clear statement” requirement served as back-door discrimination against the federal policy strongly (much too strongly, in my opinion) favoring arbitration.

Arbitration is empty preemption because judicial review of arbitration awards under the Federal Arbitration Act (the “FAA”) is virtually non-existent. My students’ collective eyebrows raise whenever I compare an arbitration to a governmental proceeding protected by due process. If you are somehow consigned to arbitration as a “plaintiff,” you are in deep trouble, and all of the statistics show it. Kindred suggests that a state measure need not even take aim at arbitration directly, it can be found by implication. Suppose there was a movement to require employees to assent to arbitration of workers’ compensation cases subject only to FAA review. How could a state enact a law forbidding the practice without suffering FAA preemption? 

I have recently been very concerned (and have written on this blog previously) about looming empty preemption in the realm of national tort reform. Members of the House of Representatives have been very interested in federal preemption of state tort law. This has implications for workers’ compensation, too, since the whole question of “adequacy” of workers’ compensation benefits was originally tethered to tort damages. Quid pro quo may mean less if torts damages are sufficiently reduced. Federally imposed tort damage ceilings, in other words, beg the question of other kinds of top-down federal mandates.

Which brings me to the 10^th Amendment. There is strong opposition to national tort reform coming from conservative scholars. What business is it of the national government to dictate to states what their tort ceilings will be? Of course, the argument is easily turned around. If you want the Feds out of the business of ceiling-setting, you had better be prepared to extend the thinking to damage floors. The distinction here, though, is that at a certain point the reduction in damages (or workers’ compensation benefits) may call into question the very existence of a right. In any event, I do not think that I am willing to concede that large, generous states are incapable of driving a benefits race to the top, especially if ERISA preemption is loosening, as some have been arguing.

Michael C. Duff       

Workers’ Compensation and Undocumented Workers: Coverage versus Retaliation

Our own Judge David Torrey has done an excellent job on this blog bringing readers up to speed on the scope of workers’ compensation coverage of undocumented workers in the United States. To repeat Dave’s findings:

As far as I can tell, 32 states now have authority holding that an undocumented worker can be an employee for purposes of WC laws, 1 state has authority to the contrary (Idaho), 18 are officially undecided, and 1 (Wyoming) considers such workers employees if the employer believes the worker was documented.  The total is 52, as I am including D.C. and the LHWCA.

Since Dave wrote, the Ohio House of Representatives passed a bill that would, among other things, deny workers’ compensation benefits to undocumented workers. As of this writing that bill has not yet been acted upon by the state Senate.

A different type of undocumented worker/workers’ compensation story has been circulating recently. An injured worker in the Boston metro was apparently arrested by immigration officials. A public radio depiction of the unfolding of events suggests that, after a worker had been injured on the job, his bosses “set him up” by directing him to “lawyers.” He was met instead by ICE. I have no idea whether these events transpired in the manner related; but the alleged facts provide a terrific vehicle for discussing the distinction between statutory coverage of an employee and protection of that employee’s employment for exercising a statutory right.

Imagine that an acknowledged employee files a claim for benefits and is fired for doing so. A number of jurisdictions would hold such a discharge unlawful, either under their governing workers’ compensation statutes, or under a judicially created public policy exception to the employment at will doctrine. A customary remedy would be reinstatement of the employee to his or her job plus mitigated backpay. Now imagine that the fired employee is an undocumented worker. You see the problem? How could a unit of the government (whether a court or an administrative agency) reinstate an employee to unlawful employment? It is one thing to say that the undocumented worker should receive compensation for an injury sustained during employment which—unlawful or not—occurred. It is another thing altogether to say that the government should restore an unlawful working arrangement. On the other hand, and as Justice Oliver Wendell Holmes might say, let’s look at the situation through the eyes of a “bad man.” Might not an employer with an undocumented injured worker simply fire the worker or contact ICE? ICE will not reveal tipsters (as a former NLRB attorney I can attest to the fact). Without a reinstatement remedy, the undocumented worker filing a claim may risk his or her employment. Would the worker do it? It would depend on the quality of the job and the severity of the injury. A partially disabled worker, while entitled to benefits despite the discharge, could be hard-pressed to earn a living.

This simply puts us back in the position debated in the National Labor Relations Act case, Hoffman Plastic Compounds, Inc. v. N.L.R.B. Justice Scalia’s majority opinion argued that reinstatement and backpay remedies undermined the policy of federal immigration law. Justice Breyer, in dissent, argued that not providing recovery to statutory employees incentivized employers to hire these workers who, in effect, possess rights without remedies. The same policy questions are at issue in workers’ compensation cases. I would be quite comfortable, in all jurisdictions save Idaho, arguing that an undocumented injured worker was entitled to workers’ compensation benefits. I would be much less comfortable arguing that an undocumented injured worker discharged in retaliation for filing a workers’ compensation claim should be reinstated. I am also not clear on what disincentive exists to prevent employers from reporting undocumented injured workers to ICE, though I suppose if the employer had knowingly employed the worker without proper credentials that unlawful conduct would create a disincentive to report.

One final point – I continue to be of the view that states should consider explicitly insulating attorneys representing undocumented workers covered under various state employment statutes (including workers’ compensation) from professional responsibility charges.

Michael C. Duff        

More on Attorneys’ Fees – (Mistaken?) Development in Oklahoma

As a follow-up to my recent posts on Clower (which, as an aside, has been unsurprisingly indefinitely stayed), I had meant to say more about attorneys’ fees issues. As readers may recall, the judge in Clower found that a 15%-of-benefits cap on attorneys’ fees was unconstitutional. But a new situation just surfacing in Oklahoma strikes me as an even better vehicle for discussing attorneys’ fees. To refresh everyone’s recollection, the “American Rule” concerning attorneys’ fees provides that each side to a dispute is responsible for paying its own attorneys’ fees. One time-honored method for a plaintiff’s (or workers’ compensation claimant’s) counsel to get paid is to reach a “contingency” agreement with a client: if the client wins his or her case (the qualifying contingency), the attorney is entitled to a percentage of the damages (or, in the case of a workers’ compensation case, of accrued workers’ compensation benefits). For fairly obvious public policy reasons, the percentage recovery allowed the attorney is often limited—we want the workers’ compensation claimant, for example, to receive “adequate” benefits to accomplish the policy objectives of workers’ compensation. Much of the litigation over sufficient attorneys’ fees obscures the distinction between contingency and hourly arrangements.

Other methods for paying counsel exist, however. One well known model requires the losing party in a dispute to pay the hourly attorneys’ fees of the prevailing party. Oklahoma appears to have recently (and, one might say, radically) shifted to a prevailing party structure. Despite some recent snarky commentary suggesting that the shift was completely intentional, I am not yet clear about what happened—it may have been a mistake. The discussion around a change—erroneous or otherwise—nevertheless provides a teaching opportunity.

 From a policy perspective, it is often contended that “loser pays” structures discourage plaintiffs from pursuing cases—a penniless plaintiff may be stuck with a big bill. Perhaps that is true, but it seems to me the important consideration is the impact that the approach would have on the risk-calculus of plaintiffs’ lawyers working with cases in the aggregate. If you are a plaintiff or claimant’s lawyer who believes that there are a large number of clearly-meritorious cases that cannot be pursued (especially in their early stages) because of contingency arrangements, you might be attracted by the opportunity to take on “loser pays” cases. Furthermore, since contingency structures usually limit recovery to a percentage of retained indemnity benefits, a plaintiff’s or claimant’s lawyer might welcome the opportunity to litigate a greater universe of issues that do not concern indemnity benefits (think entitlement to vocational rehabilitation or to special equipment).

In addition to these fairly well-known kinds of “loser pays” problems, there is an Oklahoma-workers’ compensation-specific conundrum to consider. In light of the “equal protection” or “special laws” provisions of the Oklahoma constitution, how can courts apply one attorneys’ fees rule to civil case plaintiffs and a separate rule to workers’ compensation claimants (assuming that is the plan)? There may be a simple answer to this question, but it is not immediately apparent to me.

It is not always clear to casual observers how anything regarding attorneys’ fees implicates the constitution (federal or state). In this regard, there seem to be two strands of national conversation. First, limiting attorneys’ fees available for litigation of fundamental rights may interfere as a practical matter with the vindication of those rights on a systemic level. (The Florida courts, at the moment, hold that such interference violates the Florida constitution). Second, who gets to regulate attorneys’ fees—the courts pursuant to their inherent powers to regulate attorneys; or the legislature pursuant to, for example, a workers’ compensation statute? (The Utah courts at the moment hold that courts are the exclusive regulators). At its heart this is a separation of powers issue that will not be easily resolved and will be closely tailored to a particular state’s constitution. The premise underlying both categories of attorneys’ fees cases is that at a certain point limitation of attorneys’ fees unlawfully pushes claimants with arguably meritorious cases out of the system.

Michael C. Duff          

Do State Lower-Court Decisions on Workers’ Compensation Matter?

I have a special appreciation for the questions of rising 3L law students – those who have completed their second year of law school but not yet started their third. They possess just enough knowledge to begin asking sharp legal questions, but do not yet possess the regrettable fear of asking “dumb” questions that seems, for inexplicable reasons, to settle upon third year students. One such “rising 3L” asked about my two recent posts on the Clower case (see this blog below).  Why, she queried, does it matter—in national terms—what a state court judge in Alabama thinks about the application of “open courts” provisions or substantive due process analysis to workers’ compensation benefit adequacy?

I was first absolutely thrilled that one of my students noticed the posts and picked up on common themes from my workers’ compensation course (and from my thinking and writing about workers’ compensation). My answer to her centered on two distinct strands of thought. First, appellate cases must come from trial decisions like Clower. This is almost universally true of the United States system. Questions of law cannot, consistent with our judicial system founded on cases and controversies, magically emerge from the Mt. Olympus of a state supreme court. A party must first attempt to prove a concrete and particularized harm in a trial court or administrative agency. Now it is quite true that a given trial decision would be reviewed in a particular state’s appellate system. But I am hard-pressed to predict, before the fact, which state’s supreme court would necessarily impact national workers’ compensation thinking. I told my student about my early career working as a trial attorney in the Philadelphia regional office of the National Labor Relations Board. One never knew which case was likely to make a splash. My office colleague took to trial a seemingly innocuous case which became Allentown Mack, one of the lead Supreme Court cases (authored by Justice Scalia) on judicial review of agency adjudication. We never saw it coming. Closer to home, who could have predicted a three-year-long national discussion on workers’ compensation opt-out in Oklahoma? Not me.

The second and related strand I emphasized for my student is that lower-court state decisions can speak to the permeation of national discussions. Clower appears to draw upon a national due process critique of the adequacy of workers’ compensation remedies. I am of the opinion that the mode of analysis employed by the judge in Clower will become more commonplace, particularly if national disability systems are disrupted in the current political environment (as I expect them to be). I find it remarkable that a lower-court judge in Alabama felt on sufficiently solid legal ground to render such an opinion. Seen in this light, it is not the sole measure of importance whether his decision is ultimately upheld by other courts or responded to by the Alabama legislature. These ideas have currency. I am currently studying the history of the development of the substantial evidence rule in administrative law and find myself, once-again, thoroughly impressed by the complexity and incrementalism of legal movements culminating in principles that we “moderns” now take for granted.

Michael C. Duff

 

More on Clower v. CVS Caremark (The recent Alabama case)

In  Clower v. CVS Caremark the plaintiff challenged the Alabama cap on both indemnity benefits and attorneys’ fees. This post deals exclusively with the indemnity benefits question. (I’ll address attorneys’ fees in a later post).

Nora Clower appears to have been limited to (the decision is lean on facts) a permanent partial disability payment of $220 per week. A 1980s-era Alabama law, still in effect, says that permanently partially disabled workers are limited to the lesser of $220 per week or the average weekly wage. Thus, the most a permanently partially disabled worker can receive per week is $220. On the other hand, under the same provision compensation for other categories of disabled workers “shall be not less than, except as otherwise provided in this article, 27½ percent of the average weekly wage of the state as determined by the secretary, rounded to the nearest dollar, pursuant to subsection (b) of this section and, in any event, no more than 100 percent of the average weekly wage.”  

Judge Pat Ballard highlighted two distinct problems with the statutory scheme. First, categories of workers are being treated differently—arguably not receiving the equal protection of the law—in two distinct ways. To begin with, different categories of permanently partially incapacitated workers are being differently. Whether one was earning $100,000 per year or $20,000 per year at the time of injury, the most the weekly benefit can ever be is $220 per week. Next, permanently partially disabled workers are being treated from other categories of workers because they do not receive a benefit tied to annual increases in Alabama’s average weekly wage (the value of $220 obviously declines over time). The Judge found a violation of the Equal Protection Clause of the U.S. Constitution.

The Judge also took aim at the overall level of benefits, contending that $220 per week offends Alabama’s “open courts” provision and its underlying premise (the argument goes) of the “quid pro quo.” Under the open courts provision of Article I, Section 13 of the Alabama constitution, “all courts shall be open; and that every person, for any injury done him, in his lands, goods, person, or reputation, shall have a remedy by due process of law; and right and justice shall be administered without sale, denial, or delay.” The Judge concluded that under Alabama law, this “right to a remedy” language means that legislation abolishing common law actions is “automatically suspect.” The legislation may be upheld if 1) rights are relinquished by possessors in exchange for “equivalent benefits” or protection; or 2) if the legislation eradicates or ameliorates a perceived social evil and is a valid exercise of state police power. Drawing on this framework, the Judge first found a lack of equivalency because, unlike the permanent partial disability benefit structure, common law remedies contained no “cap.” Next, the Judge found, the exercise of Alabama’s police power must be “reasonable,” but the cap on permanent partial benefits, “meets the very definition of being arbitrary, capricious, irrational, and attenuated.”

My prediction is that the Judge will be reversed on his Equal Protection holding. Pursuant to the 14^th amendment of the U.S. Constitution, the federal courts have steadfastly held that a legislative classification “must be upheld against equal protection challenge if there is any reasonably conceivable state of facts that could provide a rational basis for the classification.” To mount a successful rational basis challenge, a party must “‘negative every conceivable basis’” that might support the disputed statutory disparity. I doubt the Alabama courts would find that this standard has been satisfied.

The quid pro quo analysis under the Alabama constitutional “open courts” provision is in a completely different posture.  It is very difficult to say how that issue would be decided by the Alabama appellate courts. Frankly, it lays the issue of benefit adequacy bare. My suspicion is that a court may say that, even assuming arguendo that benefits are no longer sufficiently “equivalent,” operation of the workers’ compensation system continues to be a legitimate exercise of Alabama’s police power. Furthermore, most of the cited “common law abolishment” cases were decided in the 1980s. I would be surprised if there have been no refinements of the cases since that time. At a minimum, though, the law surrounding “open courts” seems sufficiently persuasive to require serious judicial consideration and to provoke legislative consideration of amendments. Perhaps more importantly the decision continues to refine emerging legal critiques centered on workers’ compensation benefit adequacy, or the lack thereof.

Michael C. Duff

Alabama State Circuit Court Judge Strikes Down Alabama Workers' Compensation Act as Unconstitutional

An Alabama state circuit court judge today, in the case Nora Clower vs. CVS Caremark, struck down the Alabama Workers' Compensation Act as unconstitutional on two grounds. First, Judge Pat Ballard found that the $220 per week benefit cap on benefits was unconstitutional. Second, Judge Ballard struck Alabama's 15% cap [of accrued benefits] on attorneys' fees. Because the statute was struck on multiple grounds it appears the Act has been completely nullified. I would not expect that result to stand for long -- the appellate courts will soon intervene notwithstanding Judge Ballard's additional decision to stay implementation of the decision for 120 days.

I have not yet had a chance to analyze the decision, but it appears the judge questioned the $220 per week figure both because it was deemed too low and because, as applied, he thought it irrational. Quoting from the story to which I linked above, the judge said:

"There is little credibility in telling two injured workers, both of whom are 99 percent disabled due to work injuries, that they both get $220 per week... when one earns $8.50 per hour for a 40-hour work week, and the other earns an annual salary of $125,000."

The issue of attorneys' fees has been a hot one of late in workers' compensation circles, appearing to have single-handedly grounded Florida workers' compensation reform initiatives. 

The judge's finding on the benefit cap is somewhat curious. It is one thing to argue that the benefit amount is too low -- the plaintiff argued that the $220 per week figure dated from 1987, when she claims the figure was "above the minimum wage level and the poverty level." Writers on this blog have discussed on several occasions the issue of whether there is, or should be, some constitutional floor to workers' compensation indemnity benefits. I have argued at length that inadequate benefits should trigger heightened Constitutional scrutiny. Whether such an argument could make headway in Alabama depends entirely on that state's constitutional law.

On the other hand, all states tie benefit maximums to some percentage of the state average weekly wage and this universally has the effect of capping benefits to the detriment of high earners.

I hope to read the decision soon and will likely have more to say about it. 

Michael C. Duff

The Separation of Powers Restoration Act and Workers’ Compensation

The interesting aspect of some Federal law dramas playing out this spring is that they are likely to have impact on State law, though one is not quite sure how. Take the issue of judicial review of administrative agencies. This is a topic of interest to workers’ compensation lawyers because nearly all contested workers’ compensation cases are initially decided by administrative agencies. Administrative agencies make factual findings in adjudicated cases and apply the facts they find to existing law. When law on a particular subject is ambiguous, as the agency is attempting to apply law to facts it must also interpret the law in question. The degree to which courts, in the course of appeals of agency decisions, should recognize these agency “statutory interpretations” has been a matter of ongoing debate. Some commentators (and courts) hold that courts should “defer” to agency interpretations; some hold that such interpretations should merely be “respected,” a weak form of deference. Others contend that courts should be exclusively responsible for engaging in statutory interpretation, deeming any deference to agencies to be a form of (unconstitutional?) judicial abdication.

In January, the U.S. House of Representatives passed a Bill—the Separation of Powers Restoration Act of 2017, docketed in the Senate in March, but not yet acted upon by that body—that would abolish the deference standard applied by federal courts since the 1980s, so called Chevron deference as set forth in the Supreme Court’s famous Chevron opinion. Chevron directs courts to uphold agency interpretations of their “organic” statutes where 1) a statutory ambiguity in fact exists; and 2) the interpretation is “reasonable.” The language of the House Bill——states that courts, when reviewing agency action under Administrative Procedure Act, shall:

“. . . decide de novo all relevant questions of law, including the interpretation of constitutional and statutory provisions, and rules made by agencies. Notwithstanding any other provision of law, this subsection shall apply in any action for judicial review of agency action authorized under any provision of law. No law may exempt any such civil action from the application of this section except by specific reference to this section.”

In a nutshell, this provision would abolish both Chevron deference and the Auer/Seminole Rock line of cases by which courts afford deference to administrative agencies’ interpretations of their own rules. Should the Bill become law, Congress will have shifted power from the executive branch to the judiciary, a separation of powers determination that Congress is probably at liberty to make, but one that may lead to surprising results depending on the particular reviewing court and the agency action (or inaction) under consideration.

In any event, the States are obviously not bound by Federal separation of powers rules. In a 2014 article, Professor Aaron Saiger of the Fordham University School of Law contended that only a single state—Maine—followed Chevron more or less verbatim. As Professor Saiger’s review of prior surveys of state application of Chevron-like standards revealed, some states’ courts seem to defer to agency statutory interpretations strongly, some weakly, and some not at all. Nevertheless, Chevron has been generally contentious because of its implicit underwriting of the administrative state. And just as cases like Universal Camera and Overton Park introduced a “movement” of judicial insistence that agencies take a “hard look” at facts, the House Separation of Powers Act suggests a broader policy retreat from the concept of affording deferential review to agency statutory interpretations. For workers’ compensation practitioners and policy makers the bottom-line question is whether you would prefer that statutory ambiguities be resolved in the short term by administrative agencies or courts. I suspect that is not an easy question for most readers to answer.    

Michael C. Duff