Wednesday, May 10, 2017

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 14th 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

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