Sunday, February 25, 2018

Bob Wilson and Tom Robinson Address Predicted Resurrection of Opt-out in New LexisNexis Annual

            The editor of the Larson treatise, Thomas A. Robinson, has once again published his essential compendium of articles which he has written and/or published throughout the past year. 

            The first two articles Robinson offers (now six months old, I believe) are addressed to the for-now defeated opt-out scheme.  The first is by Bob Wilson and the second by Robinson himself.  Of course, under opt-out, large employers can opt out of the workers’ compensation system, yet retain tort immunity. They do so by setting up their own purportedly ERISA-governed plans, which need not necessarily provide the same benefits as the state’s workers’ compensation law, with any disputes being handled via compulsory arbitration – the arbitrators being picked by the employer.

            Of course, in the renowned case Vasquez v. Dillard’s, the Oklahoma Supreme Court struck down the law as unconstitutional, since it gave special treatment to the large employers who sought its sanctuary.  See David B. Torrey, The Opt-out of Workers’ Compensation Legislation: A Critical Briefing and the Vasquez v. Dillard’s Case, 52 Tort Trial and Insurance Practice Law Journal 39 (2017), https://www.americanbar.org/content/dam/aba/publications/tort_insurance_law_journal/tips_vol_52_no1/tips_52_1_02_torrey.authcheckdam.pdf.

            On this topic, the popular Sarasota blogger, Bob Wilson, reports that “opt-out is going to return.”  He was writing in response to the announcement by opt-out guru, Bill Minick, at the WCI Orlando Conference (August 2017), that he was going to be promoting a new manifestation of opt-out.  Wilson reports that, in light of Vasquez, “the backers of opt-out seemed to have learned a lesson…, and are now proposing an opt-out scheme that operates without the layer of protection afforded by the exclusive remedy provisions.” 

            Opt-out is to be resurrected, Wilson admonishes, and “we should pay attention.”

            Wilson believes, like others, that workers’ compensation is over-regulated - and poorly so to boot.  He says that opt-out will return in legislative proposals because of these facts and because the “system … cannot seem to respond to other external stimuli.”  “Employers,” he submits, “will eventually look to escape an overly complex system where regulators cannot even agree on a simple standardized reporting form….  Opt out will again soon be an issue we are debating, but with a change in focus on their side, it will be a concept worthy of a larger debate.”

            Mr. Robinson, for his part, opines that giving up the exclusive remedy defense won’t be enough to save opt-out schemes, at least as recently envisioned. He points out that what sank Oklahoma opt-out was not freedom from tort liability, but the constitutional defect of the law treating certain constituencies in a special, more advantageous manner.  In the end, however, Robinson (who is not, like Wilson, sympathetic to opt-out), worries that opt-out may return: “In the race to the bottom that seems so much the rage in today’s state houses, I feel that several states are at least willing to entertain the notion of a 19th century wrestling match as to how injured workers might be covered (or excluded) for work-related injuries and diseases.”

            Wilson, in his otherwise insightful essay, makes a remarkable statement by asserting that the system “cannot seem to respond” to external stimuli except for threats of its very overthrow.  Such a claim flies in the face of twenty-five years of business-friendly, retractive reform of workers' compensation laws.  Didn't the U.S. Department of Labor start to mobilize in the last days of the Obama Administration with an eye to addressing injured worker complaints about retraction?  (As a player, I do agree with Mr. Wilson that the system is imperfect; I blanch daily at episodes of inefficiency and utter waste.)  As an example of system responsiveness, when physician-office dispensing of narcotic medication surfaced as a problem in Pennsylvania, interest groups in short order won a change to the law (December 2014), which brought the unsatisfactory situation under control.     

            Neither Wilson nor Robinson, meanwhile, mention the real force behind opt-out: the desire for profits fueled by unrestrained market forces.  Wilson and Robinson do not comment at all on this phenomenon.  The cause and effect is obvious.   

            First, since 1980, retraction, for the most part, has been the major feature of legislation in state workers’ compensation laws. Opt-out, a complete rejection of the social compact, is the most dramatic manifestation of this trend. 

            Second, opt-out efforts is another manifestation of tort reform, as has been current in products liability.  All agree, in this regard, that the main drivers of opt-out proposals are, as in other insurance fields, reducing costs to business and eliminating litigation.

            Third, retrenchment in workers’ compensation, of which opt-out is a prime example, is another example of a larger, pervasive, attempt by employers to escape the public system and avoid traditionally acknowledged social responsibilities. Arbitration clauses increasingly found in employment contracts are another example. Opt-out lacks the communitarian spirit that imbued the National Commission report, with its admonitions that all be bound by the law. Opt-out casts this idea aside in favor of pure self-interest.

            Fourth, opt-out proposals reflect an ultimate negation of rights. Opt-out, in fact, considers work injury recovery as not a right, but as just another employee benefit which can be pared off at will - one where costs can be reduced via the employer’s complete control over medical care, restricted compensation triggers, and freedom from challenges in disputed cases. The idea that a worker’s injury recovery possesses an element of justice, one that derives from the Constitution, the common law, and social concerns, is forgotten.

            In any event, Professor Michael Duff seems to have a most insightful legal perspective.  Writing (like Wilson and Robinson) in August 2017, after Mr. Minick’s proposals were floated, he wrote, on this blog:

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….  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.

[S]till, 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.

See Michael C. Duff, Workers' Compensation Opt-Out, Opt-In, Exclusivity, and State Constitutionality, http://lawprofessors.typepad.com/workerscomplaw/2017/08/workers-compensation-opt-out-opt-in-exclusivity-and-state-constitutionality.html (blog post, Aug. 14, 2017).

https://lawprofessors.typepad.com/workerscomplaw/2018/02/bob-wilson-and-tom-robinson-address-predicted-renaissance-of-opt-out-in-new-lexisnexis-annual-.html

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