Monday, August 28, 2017
Veteran Longshore Act practitioners have authored a new article which provides us with a crash course on the history and legislative/judicial highlights of the law. See Kathleen K. Charvet, Heather W. Angelico, & Michael T. Amy, Gilding the Lily: The Genesis of the Longshoremen’s and Harbor Workers’ Compensation Act in 1927, the 1972 Amendments, the 1984 Amendments, and the Extension Acts, 91 Tulane Law Review 881 (May 2017), available (for $5.00), at https://tlsstore.law.tulane.edu/Product/gilding-the-lily-the-genesis-of-the-longshoremens-and-harbor-workers-compensation-act-in-1927-th.
The authors explain how the law was first enacted in 1926 in the wake of intransigent problems in making the new state workers’ compensation laws fit cases of injuries sustained by longshoremen and similar occupations. They further explain that the law has been interpreted several times over the decades. As they set forth their explanation, they highlight the key U.S. Supreme Court decisions that have interpreted the law.
Of note is the authors’ observation that, originally, the law was intended even to cover seamen. However, organized maritime labor opposed any bill that would eliminate the possibility of damages for negligence, so that plan was dropped. And, of course, in the modern day such claims are governed by the FELA-like Jones’ Act.
Reflecting on the many jurisdictional complexities that have existed over the years, the authors conclude their much-appreciated lecture by positing, “In light of Supreme Court decisions regarding status and situs and the various diverse federal statutes incorporating the LHWCA, it may be time to consider if principles of federalism and uniformity might be advanced by a single comprehensive federal workers’ compensation system for all maritime, offshore, and overseas employees….”
Some things never seem to change.
One of those is the determination of Congress to keep lawyers away from representing injured federal workers who are seeking benefits under the Federal Employees Compensation Act (FECA).
In a new article, a Chicago lawyer who represents such workers briefs us on how that goal is achieved. See Michael P. McCready, Why do so Few Lawyers Handle Federal Workers’ Compensation Cases?, 77-June Oregon State Bar Bulletin 34 (June 2017).
Before setting forth a helpful briefing on the law and procedure of initial FECA claims, McCready proceeds through the four principal means: First, contingent fees are disallowed. Second, and as a result, the lawyer must charge a retainer, which most injured workers find laughable as a request. Third, even if the claim is successful, the injured worker must still approve the bill. Fourth, the compensation owed is sent directly to the injured worker (without deduction of any fees), hampering collection efforts from one’s own client.
The federal government voices reasons for this paternalistic approach, but the author, characterizing FECA as a sad system, asserts that “what they have done is essentially cut lawyers out of the federal system and deprived federal workers the ability to have legal representation for their injuries.”
In his conclusion, the author asserts, “In our practice only 1 in 10 injured federal employees who contact our office retain us for representation. If federal compensation lawyers were able to charge a contingency fee and have the check mailed to their office, that number would be closer to 9 in 10.”
Monday, August 14, 2017
Workers’ compensation commentators have again been discussing the possible (or probable) revival of workers’ compensation opt-out, a development that I predicted in 2016 (more accurately, I have argued there is no reason to believe that national supporters of opt-out would be permanently deterred by a single “loss” on narrow Oklahoma state constitutional grounds).
The current discussion appears to center on the revival of opt-out without an exclusive remedy provision. That, of course, would simply mark a return to the predominant workers’ compensation model from 1911 to 1917. Most systems were “elective.” (see here at page 93). Employers were permitted to decline participation, but in event of declination were liable in negligence and unable to avail themselves of the affirmative defenses contributory negligence, assumption of the risk, and the fellow servant rule.
The actual national legal problem with “opt-out” was not resolved in the Oklahoma constitutional case. The original elective systems—like the current Texas system—were “opt-in.” Employers were presumptively “out” unless they wanted to be “in.” The defunct Oklahoma system was “opt out.” Employers were presumptively “in” unless they wanted to be “out.” The problem was that in telling employers how to be “out” the Oklahoma “opt out” statute created a hybrid workers’ compensation/employee benefits regime that creates a very difficult ERISA preemption problem. With due respect to the Oklahoma Supreme Court, I continue to think that it never properly had jurisdiction of the case (my Fed Courts professor would be proud of me for sticking to my guns!). In any event, future challengers of opt-out on ERISA grounds are very likely to utilize declaratory judgment mechanisms rather than a sloppy removal and remand process (think of the Airline Deregulation cases). Such challengers would have a much cleaner appeal of a federal court’s determination that an opt-out law was just a plain old workers’ compensation law (and therefore not covered by ERISA). I realize that federal district judges don’t want to hear workers’ compensation cases, but the decision about ERISA coverage will be made over their heads.
If “opt-out” is addressed solely on state-law grounds, the determination of its viability on state constitutional grounds would depend heavily on the details of individual state constitutions. (see here at pp. 161-184). The lawfulness of the differential treatment of opt out versus non-opt out employers and employees will turn on the structure of states’ equal protection, due process, right to remedy, access to courts, and special laws’ constitutional provisions. There is tremendous variability with respect to these provisions, but the key point has to do with the level of scrutiny applied to an opt-out law: does the enacting state or the challenger have the burden of persuasion in justifying/challenging the statute and what level of explanation will be required by courts? For example, if a state claims that opt-out is more “efficient,” will the challenger have to demonstrate the claim is untrue, or will the state have to prove the claim is true and show that there was no better way to achieve the efficiency? If heightened constitutional scrutiny is imposed, the latter will be true.
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. (see here at page 3). 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. Still, 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.
It goes without saying that I continue to think that opt-out relating to employee benefit plans (with or without exclusive remedy) would be in great jeopardy of violating ERISA.
Michael C. Duff
Thursday, August 10, 2017
I am deeply indebted to my Harvard torts professor, David Rosenberg, for instilling in me early-on the notion that no legal rule has been so ineluctably established that it can't be challenged. It is in that spirit that I have questioned the coherence of the substantial evidence "regime" under which Wyoming courts review workers' compensation cases. The article is here, and the abstract follows:
In Wyoming, as in almost all states, facts in contested workers’ compensation cases are developed within an administrative agency. When agency factual findings are challenged in court, the level of judicial deference applied to the agency is important and may be outcome determinative. Wyoming courts claim to apply the “substantial evidence” standard of review, often expressed as evidence that a “reasonable mind could accept” as supporting an agency determination. The Wyoming Supreme Court, however, also sometimes upholds workers’ compensation agency decisions that are deemed “not contrary to the overwhelming weight of the evidence.” It is unclear whether this latter formulation is an odd version of the substantial evidence, or is another standard altogether.
The U.S. Supreme Court’s landmark opinion in Universal Camera stands for the proposition that the decision of an administrative agency should be supported by more than just any evidence. While most agree that courts are not authorized to substitute their judgment for the decision of administrative agencies, Universal Camera established a court should not be required to acquiesce to an agency when it cannot in good conscience agree with it. The “overwhelming weight” standard seems in significant tension with this latter principle because it has at times been applied extremely deferentially by Wyoming courts. This article demonstrates, however, that the overwhelming weight standard was mistakenly adopted by the Wyoming courts in the nineteen-seventies based to a substantial degree on an outdated administrative law encyclopedia entry. The article argues that the standard should either be abandoned or much more clearly explained, especially in light of its questionable origins. The overwhelming weight standard, the article contends, is inconsistent with a contemporary legal understanding of substantial evidence. Furthermore, the overwhelming weight standard threatens to routinely deprive injured workers of benefits. Such an outcome is especially inappropriate in Wyoming, the constitution of which ensures that labor has “just protection” under law; provides citizens a fundamental right to access courts to assert claims for personal injury; forbids laws limiting damages for injury and death; and voids any agreement by an employer with an employee waiving a right to recover damages for death or injury. The article underscores that highly deferential judicial standards of agency review shift power to the executive branch, a policy choice should be made cautiously and explicitly, not arrived at accidentally.
Michael C. Duff
Saturday, August 5, 2017
It is one thing for a federal law containing federal remedies for wrongs to preempt state law. It is quite another for a federal law containing no substantive remedies to supplant state law containing substantive remedies. ERISA preemption poses problems in the legal world precisely because so many forms of employee welfare benefit plans cannot be substantively regulated by the states. As a result of ERISA’s substantive emptiness in this respect, employee welfare benefits go substantively unregulated. ERISA preemption is one of the underappreciated reasons (except by “insiders”) for the United States’ inability to achieve modern health care regulation. But except for some esoteric scenarios – such as those in play in the Oklahoma opt-out scenario – ERISA does not cause workers’ compensation regulators too many headaches. The reason? Plans created solely for the purpose of complying with state workers’ compensation laws are not covered by ERISA, and therefore may be regulated by the states.
The Airline Deregulation Act covers air ambulance services. It emptily preempts attempts by state workers’ compensation regulators to set rates—any rates—applicable to the ambulance carriers, who are apparently under the ADA’s jurisdiction. The ADA provides that states “may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of an air carrier ...” 49 U.S.C. § 41713(b). (The “related to” phraseology is reminiscent of ERISA’s preemption provision). In keeping with the Airline Deregulation Act's (ADA’s) aim to achieve maximum reliance on competitive market forces, Congress sought to ensure that the states would not undo federal deregulation with regulation of their own by including a preemption provision prohibiting states from enacting or enforcing any law related to a price, route, or service of an air carrier. Dan's City Used Cars, Inc. v. Pelkey, 569 U.S. 251 (2013). Thus, the ADA’s purpose is explicitly de-regulatory, while it might be argued that ERISA’s preemption of employee welfare benefit plans was less deliberately de-regulatory and motivated more by a desire to avoid conflict between regulatory regimes.
Although the recent air ambulance controversy in Texas, the Air Evac EMS matter, was temporarily grounded in state immunity questions, it underscores two pivotal points respecting all preemption litigation. The first pivotal point has to do with courts’ grappling with preemption provisions that are occasionally startlingly broad. It is interesting to observe avowed judicial textualists arguing that courts should not greet clear statutory language with an “uncritical literalism.” I thought the whole point of textualism is that text should be given its literal meaning if it can be ascertained. One may be perplexed by the phrase “related to,” but the consternation comes from knowing exactly what the words mean.
The second pivotal point has to do with the forum for the resolution of preemption questions. I think it is fair to say that one who intends to rely on preemption as a defense to the imposition of a substantive state remedy would prefer that a federal court decide the case. After all, state courts do not routinely hear preemption cases and may have great respect for their state legislatures’ policy objectives. The problem is that with very few exceptions (one of which is ERISA) preemption claims are “defensive” and may not be used offensively as a vehicle to create federal jurisdiction where none would otherwise exist. Thus, under the “well-pleaded” complaint rule, the plaintiff is master of both the complaint and the forum (federal-state) in which the controversy will be heard. Accordingly, a state court may be placed in the position of deciding (to borrow from a recent example) whether federal immigration law preempts state law. The defendant will not be surprised to hear that the state court’s answer is “no.” (Echoes of the Erie Doctrine here?). So, there is a struggle by the defendant to get into federal court and no effective, predictable way to appeal a determination that the matter must be heard in state court. (The primary exceptions to the rule are ERISA and section 301 LMRA preemption).
But what if one is not the defendant? The gambit in the Air Evac EMS case was for the plaintiff-parties to seek federal preemption by way of declaratory relief in federal court under the authority of Shaw v. Delta Airlines. Does this mean that in every case in which a party would be disallowed a federal court forum as a defendant, it could escape the outcome by becoming a plaintiff in a declaratory action? If so, I am left wondering if the same course might have been followed by Dillard’s. In any event, no doubt to the confusion of many onlookers, the preemption question in Air Evac EMS has not even been reached. There was simply resolution of a threshold jurisdictional question of whether the out-of state plaintiffs could sue state officials under the 11th Amendment. The answer is yes. To explain why will require another post, however, and I have miles to go before I sleep.
Michael C. Duff