Sunday, April 29, 2018

Workers’ Compensation in Kansas: A Pedagogically-Useful “Quid Pro Quo” Case

I realize that cases do not emerge from life to serve as teaching exemplars for the students in my workers’ compensation or torts classes. Nevertheless, such a case, Endres v. Creekstone Farms et al., --- P.3d ---- 2018 WL 1883918, was recently decided in Kansas on April 20. It is a case that squarely presents core considerations of the essence of the workers’ compensation-for-tort quid pro quo.

In Endres, a high-ranking employee, Steven Endres, suffered what may have been the beginnings of a heart attack at work. He was treated and returned to work by a company nurse, who allegedly misdiagnosed his condition as “gastroesophageal reflux disease.” Later, after work, Endres suffered a heart attack on the golf course and was pronounced dead in an emergency room. All legal practitioners will note the causal difficulty of this “ticking time bomb” case, and additionally appreciate the rigors of proving medical causation in workers’ compensation heart attack cases. But what makes this tragic case conceptually challenging is that, because of recent, drastically limiting changes to the Kansas Workers’ Compensation Act (cases have become harder for employees to establish), Endres never would have had an opportunity to prove workers’ compensation causation.

When Endres’s widow filed a negligence complaint in a Kansas trial court, in connection with the nurse’s alleged misdiagnosis (I omit here discussion of the dual capacity doctrine: was the nurse acting as a medical professional or as “the employer”?), that court predictably (for most of us) dismissed the complaint on a motion-to-dismiss/demurrer under the expected theory that the civil action was barred by the workers’ compensation exclusive remedy. (Dismissal at this stage is significant because all the reviewing court was left with on appeal were bare pleadings). On appeal, an intermediate Kansas appellate court remanded. First, the appellate court concluded that it could not on the pleadings (i.e., as a matter of law, on a motion to dismiss) be established that Endres had suffered a workers’ compensation-eligible injury due to recent substantial changes in Kansas workers’ compensation law. Second, the appellate court decided that, because Endres’ estate could not apparently recover under workers’ compensation, the negligence claim could not be dismissed as a matter of law. In the words of the court, “If there can be no recovery under the [Workers’ Compensation] Act, then the exclusive remedy provision of the law does not apply and the motion to dismiss should not have been granted.”

But what was the implicit reason the negligence claim could not be dismissed? Because it would leave the plaintiff without an argument for any remedy. I ask my students, every year, if a state could simply eliminate all causes of action for personal injury: suppose a state decided to eliminate both tort and workers’ compensation remedies because, overall, it found the costs of any such remedies (in terms of suppression of business activity) to exceed their benefits. Each year, my students respond, “no, of course not.” But courts have said that “no one has a vested right in any rule of the common law.” Thus, if a workers’ compensation claim were unavailable, it is far from logically axiomatic that a tort claim must necessarily be allowed. After all, the U.S. Supreme Court has said, in Duke Power Co. v. Carolina Env. Study Group, “it is not at all clear that the Due Process Clause, in fact, requires that a legislatively enacted compensation scheme either duplicate the recovery at common law or provide a reasonable substitute remedy.”

But it might first be asked how the Kansas Workers’ Compensation Act was modified to such an extent that the Endres appellate court was confident that a workers’ compensation claim was likely not maintainable. The court mentioned several alterations. The Kansas Act now excludes liability for preexisting conditions when the injury is “solely an aggravation” of a preexisting condition. A “prevailing factor” requirement was added to the Kansas Act, which now provides that “‘[p]revailing’ as it relates to the term ‘factor’ means the primary factor, in relation to any other factor. If the primary factor causing Endres' cardiac arrest, acute myocardial infarction, or death was not Nurse Young's misdiagnosis—but rather Endres' preexisting coronary condition—then the Plaintiffs’ claim is not compensable under the Act.”  Most importantly, the Kansas legislature significantly changed the definition of “accident.” Under the 2015 version of the Kansas Act,

Accident means an undesigned, sudden and unexpected traumatic event, usually of an afflictive or unfortunate nature and often, but not necessarily, accompanied by a manifestation of force. An accident shall be identifiable by time and place of occurrence, produce at the time symptoms of an injury, and occur during a single work shift. The accident must be the prevailing factor in causing the injury.

The old workers’ compensation conundrum. Point to the precise moment when the injury occurred? Very often it simply cannot be done. To complicate matters, the Kansas legislature has also added a “heart amendment” to the Kansas Act requiring that “claimants must demonstrate that their coronary and cerebrovascular injuries arose out of something more than the exertion required of their usual work in the course of their regular employment.”

In the interest of space, I omit additional discussion of the appellate court’s excellent analysis. The court’s penultimate conclusion was that,

if the Plaintiffs’ claims are not compensable under the Kansas Workers Compensation Act, then the [trial] court erred when it granted the Defendants’ motion to dismiss on the pleadings. The Defendants have not met their burden to show that that Act provides for the Plaintiffs’ recovery. We cannot reasonably hold that Plaintiffs’ claim is compensable under the Act based on the allegations in the petition.

The court’s ultimate conclusion:

Within its four corners, the Plaintiffs' petition [that is, the original negligence claim – ed.] states a claim for which relief may be granted. Kansas common law recognizes a claim for “loss of chance to survive” when a plaintiff was already suffering from some injury or illness and a misdiagnosis is alleged to have diminished the plaintiff's chance of surviving from that preexisting injury or illness. The claim is similar to an ordinary medical malpractice claim, but with a reduced standard of proof of causation.

Thus, the case was remanded and either the defendant-employer (oddly enough) will have to prove the viability of a workers’ compensation claim; or the plaintiff-employee will be permitted to commence discovery on the wrongful death claim.   

As I ceaselessly tell my torts and workers’ compensation classes, someone will pay for the costs of injury. If a legislature wants to write entire classes of injuries out of its workers’ compensation statute, one can hardly fault a reviewing court for employing the avoidance canon to duck the cosmic question of whether legislatures may eliminate damages for injury. While it may be true that “[a] person has no property, no vested interest, in any rule of the common law,” I sleep easier at night knowing that many courts continue to respect ancient boundaries. In my opinion, effective retraction of a workers’ compensation remedy must (at a minimum) lead to “reactivation” of tort, if the rule of law is to mean anything at all.

Michael C. Duff

April 29, 2018 | Permalink | Comments (2)

Friday, April 20, 2018

The Colorado Gig Bill – An Idea in Partial Retreat?

I have been reading some very good pieces of late on Gig deregulatory laws authored by Judge David Langham, here, Brandeis Dean David Weil, here, and, and author and policy analyst Peter Rousmaniere, here. I think a sustained critique of these laws is emerging. (I will say in passing that I partially disagree with Peter’s thesis that people Gig because they like it; I think they convince themselves they like the "freedom" of gigging because no real work is available).

It is possible that state Gig bill drafters are hearing the dialogue. How else to explain the very curious Colorado iteration of a Gig bill? (for purposes of this discussion I refer exclusively to Senate Bill 18-171, here). I will say at the outset that as of the time I am writing this is merely a bill and has not yet been enacted as law. But what a curious bill. To start off with, the bill replaces the ten-factor Restatement Second Section 220 of Agency test with a ten-factor independent contractor test of its own (I will omit some of the threshold Handy, Inc.-drafted definitions, which I have explained at length elsewhere on this blog). A Gig “worker” does not perform “employment,” under 8-70-140.9 of the proposed Senate bill, if:

(a)  The services performed by the contractor are governed by a written contract executed between the contractor and a marketplace platform that states that the marketplace contractor is providing services as an independent contractor and not as an employee;

(b)  All or substantially all of the payment made to the marketplace contractor is based on the performance of services or other output;

(c)  The marketplace contractor is allowed to work any hours or schedules the contractor chooses; except that, if the contractor elects to work specified hours or schedules, the contract may require the contractor to perform work during the selected hours or schedules;

(d)  The marketplace contractor is able to perform services for other parties;

(e)  The marketplace platform does not provide on-site supervision during the performance of services by the marketplace contractor;

(f)  The marketplace platform does not require the marketplace contractor to obtain training;

(g) The marketplace contractor bears all or substantially all expenses that the contractor incurs in performing the services;

(h)  The marketplace platform does not require the marketplace contractor to use specific materials, supplies, or equipment in performing services, other than the marketplace platform's online-enabled application, software, website, or system;

(i)  The marketplace contractor does not perform service requests at or from a physical business location that is operated by the marketplace platform; and

(j) The written contract between the marketplace platform and the marketplace contractor states, in a conspicuous manner, that the marketplace contractor is not entitled to unemployment benefits under articles to of this title, and that the marketplace contractor is responsible for paying applicable taxes on income the contractor earns pursuant to the contract relationship.

I do not have much to say about these factors other than to ask the reader to consider how much a contested hearing over employee-status would begin to resemble a traditional employee-status hearing under this test. Just looking over the list casually I can quickly imagine fact disputes on almost every factor.

But that is not what I find most interesting about the bill. Consider the following language at 8-40-301(10)(b) of the bill:

(b) (I) Notwithstanding any other provision of this subsection (10), an individual marketplace contractor that performs services for pay for a marketplace platform shall be deemed to be an employee, regardless of whether the common-law relationship of master and servant exists, unless:

(A)  The individual is free from control and direction in the performance of the service, both under the terms of the contract for performance of service and in fact; and

(B)   The individual is customarily engaged in an independent trade, occupation, profession, or business related to the service performed.

(II)   For purposes of this subsection (10)(b), the degree of control exercised by the marketplace platform for whom the service is performed over the performance of the service or over the individual performing the service must not be considered if the control is exercised pursuant to the requirements of any state or federal statute, rule, or regulation.

(C)  Compliance by the parties with the conditions specified in subsection (10)(a) of this section creates a rebuttable presumption of an independent contractor relationship between the marketplace platform and the marketplace contractor that may be overcome only by clear and convincing evidence.

This is very odd language. First, in b(I), there is some suggestion that an individual, if not determined to be a “market contractor,” could be deemed an employee even if not a common law servant. Perhaps that is current Colorado law, but it is, in any event, expansive. I wonder if that is what the drafter intended.

Second, (b)(I)(A) states that notwithstanding any other provision of the Gig bill, the “contractor” will be deemed an employee unless: the individual is free from control and direction in the performance of the service, both under the terms of the contract for performance of service and in fact. Does that not simply return us to the control test? Perhaps the drafter seeks to avoid that outcome, in (b)(II), by writing “the degree of control exercised by the [putative employer] . . . must not be considered if the control is exercised pursuant to the requirements of any state or federal statute, rule, or regulation.” Translation: if the Gig employer is compelled to exercise control by law, it is not “real” control. While I do not know what the courts will make of that language, I am confident that it does not work to undo (b)(I)(A).

Finally, (b)(I)(B) suggests that “notwithstanding” the Gig law, the individual is an employee unless engaged in an independent trade, occupation, profession, or business related to the service performed. Frankly, that seems to hyper-prioritize on of the Restatement 220 factors. Section 220(2)(b) provides, as only one factor for the fact-finder to consider, “whether or not the one employed is engaged in a distinct occupation or business.” Thus, if working for a "marketplace platform," without having a separate business related to the task at hand, one "shall be" deemed an employee (?!)

In short, this is a curious, odd bill. Fortunately, some of my former Wyoming law students are practicing workers’ compensation attorneys in Colorado. I am confident they can help straighten this out should it come into law. What the prior Gig bills, upon which I have previously commented, lacked in morality they made up for in clarity. This bill seems an attempt to pay lip service to a bad idea. It is a partial retreat, whether intentional or unintentional.

Michael C. Duff

April 20, 2018 | Permalink | Comments (0)

Wednesday, April 18, 2018

New ERISA Disability Benefit Claims Rules and Their Relevance to Workers’ Compensation

During the Oklahoma workers’ compensation opt-out debate of a few years ago, one of the major objectionable features of the opt-out law was the design of the benefit determination “hearings” that employees could be forced into. Opt-out employers, whose “alternative benefit plans” would be governed by ERISA, were at liberty to select benefit eligibility fact-finders, and to pick and choose between competing medical opinions, when disability for work was at issue, with only a vague guarantee that the employee’s treating doctor’s opinion would be considered. This structure was recognized to be in sharp contrast with public workers’ compensation systems governed by state administrative procedure acts and constrained by constitutional notions of procedural due process.

But ERISA administrative hearing procedures (exhaustion of such procedures is required before a court case may be brought) may have just marginally improved, and it is important to maintain contact with developments in ERISA because, whether folks realize it or not, nearly all employee benefits are provided through exclusively-federally-regulated employee benefitplans.” And unless such a plan is a government plan, a church plan, or a plan “maintained solely for the purpose of complying with applicable workmen’s compensation laws or unemployment compensation or disability insurance laws,” it is governed by ERISA. So, whenever you hear of any state-based design to compensate injured workers that “sorta, kinda” sounds like workers’ compensation, but isn’t, you have likely entered the realm of ERISA without realizing it (and, as an aside, it is tax law and the Supreme Court’s opinion in Nationwide Mutual Ins. Co. v. Darden that will determine whether the workers covered by such an alternative scheme are “employees”).

The rationale for the historical license afforded ERISA benefit determinations by plan claims administrators is two-fold. First and foremost, with respect to employee welfare benefit plans (as distinguished from pension plans), ERISA contains no substantive requirements for the content of the plans, which can be terminated and amended at will by employers/plan sponsors. Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73 (1995).  An employer-provided disability plan, for example, may lawfully provide a beneficiary with $5 per month or $5000 per month. All ERISA requires is that an employer provide what it promised to provide in a required written plan instrument (we’ll somewhat dubiously pretend for purposes of this discussion that the employee knew what the plan provided and that this is a good-faith issue of contract).

Second, because the provision of benefit plans in the United States is entirely voluntary—employers provide them to attract talent and gain tax benefits—the concern has been that if one makes the granting of benefits sufficiently onerous, employers will simply stop providing them.

All of this would be well and good were employment not the welfare benefit (especially medical care) delivery vehicle mechanism of first resort for most people. A benefit denial machine—which is the way some commentators have effectively conceived of the structure—possesses diminished social utility.

There has been one caveat to the unfettered control of claim (denial) procedures by plan sponsors (denial occurs administratively either internally, by the Plan, or externally post-denial, if the claimant opts for administrative rather than court review). Under ERISA §503, every employee benefit plan shall—

(1) provide adequate notice in writing to any participant or beneficiary whose claim for benefits under the plan has been denied, setting forth the specific reasons for such denial, written in a manner calculated to be understood by the participant, and

(2) afford a reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair review by the appropriate named fiduciary of the decision denying the claim.

Department of Labor regulations interpreting Section 503 are located at 29 CFR 2560.503-1 and, on April 2, amended regulations, originally promulgated in 2015, were finally implemented. Among the new regulations is this item:

In the case of a plan providing disability benefits, the plan must ensure that all claims and appeals for disability benefits are adjudicated in a manner designed to ensure the independence and impartiality of the persons involved in making the decision. Accordingly, decisions regarding hiring, compensation, termination, promotion, or other similar matters with respect to any individual (such as a claims adjudicator or medical or vocational expert) must not be made based upon the likelihood that the individual will support the denial of benefits. 29 C.F.R. 2560.503-1(b)(7)

That a rule had to be included explicitly requiring that Plans ensure independence, impartiality, and that various employment and retention decisions relevant to adjudicators and experts not be biased is astonishing. It is, indeed, hard to read the rule as other than a tacit admission that the attributes associated with fair hearings have been broadly found wanting.

My workers’ compensation textbook devotes discussion to the issue of whether purported neutral medical structures, in workers’ compensation, are neutral-in-fact. One thing seems clear. If you allow interested parties to structure adjudication, you are likely to wind up with what any reasonably sophisticated citizen might predict. A full review of the new ERISA review regulations suggests that, even allowing for the risk of employers terminating disability benefit plans, a bridge-too-far may have been reached.

Michael C. Duff

April 18, 2018 | Permalink | Comments (0)

Saturday, April 14, 2018

A Few Reflections on Cumulative Trauma in Workers’ Compensation Cases

Last week, WorkCompCentral ran a story on cumulative trauma claim-filing in California (behind a paywall here). The story, and readers’ comments following the story, revealed the sharp differences of opinion on whether and why there have been increases in cumulative trauma claims in that state. I do not want to wade into the empirical debate. Rather, I want to share some thoughts about why cumulative trauma cases are simply legally hard.

When (and how) did the straw break the camel’s back? The truth of the matter is that in many instances we simply cannot know. One has arthritis in one’s joints. One also works with one’s hands over a period of years. At a certain point, disability for work manifests itself. One doctor says that work made a major/substantial/significant contribution to the present disability. Another doctor says the present disability is completely unrelated to work

The truth is often somewhere in the middle. I, for example, was a heavy laborer for 15 years before heading off to law school. I hurt my back several times. If I can’t get out of bed tomorrow to teach my workers’ compensation class, could I prove that my disability that day “arises out of” my present employment? I’m a law professor – not exactly a contact sport. Are there times when standing in one spot while teaching aggravates my back pain (which has never completely gone away since my first injury at age 23)? Certainly. Do I have a preexisting, non-occupational back condition? Probably. Would any of my present symptoms be in existence were it not for my prior occupational injuries from decades ago. Probably not. The point is – it is complicated. And a legal system’s evaluation of disability considering these complexities will be unpredictable. No “evidence-based science” can tell me my back does not hurt.

I cover joint causation—as we would term this problem in tort vocabulary—with my students every year in first-year torts class. Two negligently created fires (often caused by locomotives in the early cases) descend simultaneously upon a lonely farmhouse and burn it to the ground. Under a traditional “but for” causation test, who would pay for the resulting damage? Surprisingly, possibly no one. If we remove the conduct of negligent actor #1, does the harm still occur? Yes – because of the negligence of actor #2: it cannot be said that “but for” the negligence of actor #1, the harm would not have occurred to the plaintiff/owner of the farmhouse. But negligent actor #2 may make the same argument: it cannot be said that but for the negligence of actor #2, the harm would not have occurred. One was left with the scarecrow from Wizard of Oz pointing in both directions. In the meantime, we have a burned-out farmhouse. What can we do? Some say the harm must fall on the farmer: better he or she bear the loss than that unfairness results. But wait a minute. We had two negligent actors (which we assume for this hypothetical). How can there be no recovery?  Talk about unfairness! Because of this “but for” result—a wrong being left completely unremedied—some “jurisprudents” came up with a different solution. If either actor’s negligence was a “substantial factor” in bringing about the plaintiff’s harm, each would be jointly and severally liable for plaintiff’s harm. (They could decide in a separate action how to apportion damages between themselves, but the plaintiff was only required to pursue one of the joint tortfeasors for all the damages).

From the perspective of a defendant, this is an unfair outcome, especially if the definition of “substantial” is unclear, or too easy for plaintiffs to establish. But, from a plaintiff’s perspective, in the absence of such a rule, negligent actors—those who have breached a standard of care or legal duty—would otherwise be let off the hook completely. Then, the entirety of the loss would fall on the plaintiff. From the plaintiff’s perspective it is sour grapes for defendants to be heard complaining about paying for the costs of harms they (at the least) helped to create.

Back to cumulative trauma in workers’ compensation cases. (Workers’ compensation is a no-fault but not a no-causation system). Assume we have cause #1 of disability, work-related microtrauma over potentially a long period of time, and cause #2 of disability, non-work-related trauma (or, even more simply, aging or degeneration). Someone is going to pay for the disability in this joint (or multiple) cause situation. When we construct legal rules—say we insist that the disability will not be covered by workers’ compensation unless the major contributing cause to its manifestation is one or more identifiable work events—we are making a policy choice that cause #2 will be responsible for the costs of disability. That is, the costs will be borne by the disabled individual (or the public at large) rather than by the industry employing the worker. The problem is that legal rules often operate “covertly.” It is often not clearly seen by the casual observer in which direction liability is being tossed. I think it would be far better to hold cost-allocating discussions out in the open. We all know that is not what happens.

I will conclude by noting how prescient was the German Workers’ Compensation Act of 1884. Although that act is sometimes cursorily described as “social insurance,” that description hardly does the statute justice. It was in fact a law establishing an intricate unitary system taking up explicitly, in three separate headings, “Sickness,” “Accident,” and “Disability.” To me, the benefit of such a structure is the explicit way it insures various types of incapacity for work. One would not spend time in high-stakes (and expensive!) finagling over whether an “accident” has occurred or what, precisely, “caused” the incapacity. Different expenses were charged to the appropriate categories, and the entire expense—whether privately insured or paid by the state (both approaches were used within the same statute)—was considered at the front end of the process.

I suppose I might have some objection under such a system to the loss of any concept of a “wrong” that produced the worker’s incapacity in the first place. I do not mean “wrong” in an individual case, of course—we abandon that idea within America workers’ compensation, in any event.  No—I mean the notion that, in the abstract, a worker was surrendering a valuable civil cause of action premised on commission of a wrong in exchange for participating in the system.  Still, the structure is somewhat reminiscent of 24-hour wraparound plans that were under much discussion in the 1990s. Ultimately, in present times, one would have to do a very careful cost-benefit analysis to determine if such an idea would pass the straight face test. But I doubt the problem of cumulative trauma would seem quite as intractable as it sometimes does now.    

Michael C. Duff

April 14, 2018 | Permalink | Comments (0)

Wednesday, April 11, 2018

Final Wyoming Workers' Compensation Symposium

This Friday, April 13, 2018, in Room 178 at the University of Wyoming College of Law in Laramie, Wyoming, attorney George Santini, a fellow of the College of Workers' Compensation Lawyers, and I will be conducting the final Wyoming Workers' Compensation Symposium of the year, concluding the 4-event series. The program is entitled  "Select Workers’ Compensation Administrative and Evidentiary Issues."

We will keep video and materials from the symposia up on the event site. I'd appreciate hearing from those who have streamed or attended live any of the symposia. Classroom space is scarce and I'll have to decide very soon whether to run similar programs next year.

Screenshot-2018-4-11 Workers' Compensation Symposia(1)

April 11, 2018 | Permalink | Comments (0)

Monday, April 9, 2018

Mandatory Arbitration Expanding

As I have been arguing for some time, there is no doctrinal reason employers could not subject workers' compensation claims to mandatory arbitration. Alexander Colvin has just updated his 2017 report on the expanded general use of mandatory arbitration agreements by employers. He argues in an executive summary to the report, "Under such agreements, workers whose rights are violated—for example, through employment discrimination or sexual harassment—can’t pursue their claims in court but must submit to arbitration procedures that research shows overwhelmingly favor employers." The key findings of the report are:

  • More than half—53.9 percent—of nonunion private-sector employers have mandatory arbitration procedures. Among companies with 1,000 or more employees, 65.1 percent have mandatory arbitration procedures.
  • Among private-sector nonunion employees, 56.2 percent are subject to mandatory employment arbitration procedures. Extrapolating to the overall workforce, this means that 60.1 million American workers no longer have access to the courts to protect their legal employment rights and instead must go to arbitration.
  • Of the employers who require mandatory arbitration, 30.1 percent also include class action waivers in their procedures—meaning that in addition to losing their right to file a lawsuit on their own behalf, employees also lose the right to address widespread rights violations through collective legal action.
  • Large employers are more likely than small employers to include class action waivers, so the share of employees affected is significantly higher than the share of employers engaging in this practice: of employees subject to mandatory arbitration, 41.1 percent have also waived their right to be part of a class action claim. Overall, this means that 23.1 percent of private-sector nonunion employees, or 24.7 million American workers, no longer have the right to bring a class action claim if their employment rights have been violated.
  • Mandatory arbitration is more common in low-wage workplaces. It is also more common in industries that are disproportionately composed of women workers and in industries that are disproportionately composed of African American workers.
  • Among the states, mandatory arbitration is especially widespread in California, Texas, and North Carolina, but in all of the 12 largest states by population over 40 percent of employers have mandatory arbitration policies.

I was especially struck by the finding that the growth of mandatory arbitration has been accelerating in the last five years.

For employers who have adopted mandatory arbitration, the survey asked them how recently they had adopted this policy. Among the employers with mandatory employment arbitration, I find that 39.5 percent of them had adopted their policies within the last five years, i.e., from 2012 to 2017, whereas 60.5 percent had adopted their policies more than five years ago. This cut-off date is important because it was in 2011 that the Supreme Court issued its decision in AT&T Mobility LLC v. Concepcion, ruling that class action waivers in the mandatory arbitration agreements were broadly enforceable. This means there was a substantial growth in the adoption of mandatory employment arbitration during this five-year period following the Supreme Court giving a green light to the use of mandatory arbitration clauses to bar class actions.

It is also interesting to note the density of mandatory arbitration by state (see below). I find it unsurprising. What readers should consider is why this trend would stop at the hallowed gates of workers' compensation. All I can say is that I find no legal reason it would do so. The FAA preempts all sorts of state law very broadly. And though it is useful to follow the tea leaves for reversals of policy, I am perpetually alarmed that the workers who are not transformed into independent contractors as "Gig" workers, will be swept into arbitration by the FAA. 

Screenshot-2018-4-9 The growing use of mandatory arbitration Access to the courts is now barred for more than 60 million Am[...]

Michael C. Duff

April 9, 2018 | Permalink | Comments (0)

Sunday, April 8, 2018

Workers’ Compensation Deregulation in Iowa: Why State Gig Laws Now?

Iowa has joined the race-to-the-bottom parade by enacting (the bill was sent to the Governor last Monday, April 2) a Gig law of startling facial applicability to almost any employer dispatching employees from a remote location utilizing online technology. I would not want to be one of these “contractors.” 

As in the other laws previously discussed, here, and here, “marketplace contractors” are treated as independent contractors, and not employees of a “marketplace platform,” for all purposes under state or local law. A marketplace contractor is “a person or organization, including an individual, corporation, limited liability company, partnership, sole proprietor, or other entity, that does all of the following”:   

(1)  Enters into a written agreement with a marketplace platform to use the marketplace platform’s digital network to connect with individuals or entities that seek to obtain services from the marketplace contractor.
(2)  Performs services for individuals or entities upon connection through a marketplace platform’s digital network in exchange for compensation or payment of a fee.
(3)  Does not perform the services offered by the marketplace contractor at or from a physical business location that is operated by the marketplace platform in the state.

A “market platform” . . .   “means a person or organization, including an individual, corporation, limited liability company, partnership, sole proprietor, or other entity, that operates a digital network to connect marketplace contractors to individuals or entities that seek to obtain the type of services offered by marketplace contractors.”

A market contractor shall be treated as an independent contractor if the “The marketplace contractor and marketplace platform agree in writing that the marketplace contractor is engaged as an independent contractor;” “The marketplace platform does not unilaterally prescribe specific hours during which the marketplace contractor must be available to accept service requests submitted through the marketplace platform’s digital network;” “The marketplace platform does not prohibit the marketplace contractor from engaging in outside employment or performing services through other marketplace platforms;” “The marketplace contractor bears its own expenses incurred in performing services.”

Few words. Much damage.

There are relatively unimportant carveouts and caveats for freight operators (I am not sure who won this exemption, but I have a guess or two), governmental entities, Native American tribes (jurisdictional concerns), and religious entities (constitutional concerns). Interestingly, “contractors” previously required to possess a license under Iowa law for performance of a service before the Gig law must continue to do so. This inclusion reflects that legislators fully understand just how expansive the law may become. The company that formerly sent its electrician “employees” to your house may now be tempted to send much cheaper “independent contractors” instead—but at least those “contractors” will be licensed to do electrical work. Thank goodness for small favors, but, if fires break out, I hope the “platforms,” and not the contractors, are held responsible for non-possession of the license. As has been the case in other states, I will be interested to learn if special laws challenges ensue if it turns out that the legislation specially benefits a narrow swath of identifiable commercial actors, arguably discriminating against other commercial actors in the state, potentially in violation of Article III, Section 30 of the Iowa Constitution.

I now have an operating theory for the timing of these laws. It momentarily appeared that John Thune’s ceaseless quest for a national Gig law was about to conclude successfully with inclusion of an explicit independent contractor provision in the new Tax Act. Many understand that ensconcing such a provision in federal tax law could act as a driver, exporting a disintegrated employee definition to other realms of state and federal law. However, the current administration, while expanding tax breaks to “independent contractors,” did not supply the radical redefinition of employee status some had desired, apparently preferring to make Gig employment more attractive to Gig employees. (A move that strikes me as authentically “conservative”). I suspect that state legislators, understanding the volatility of the political landscape in a mid-term election year, decided to strike while the iron was hot. More’s the pity . . .

I’m disappointed that my law school classmate, Secretary of Labor Alex Acosta (we both graduated from Harvard Law School in 1995), appears now to be complicit in the “new economy” canard. Previously, I knew him at the National Labor Relations Board as a reasonably straight shooter. (I have defended him publicly from unfair broadsides in that regard). But regulatory capture is a dark game. Having been unable to reliably win on the merits of "classical" employee arguments in federal courts, weak state governments have been commandeered to change the playing field entirely by altering the law, even as the federal government withdraws guidance on employee misclassification. Policy makers in the 19th and 20th centuries rejected a bleak world of wholly unprotected contractors. Welcome to the 21st century.  

Michael C. Duff

April 8, 2018 | Permalink | Comments (0)

Friday, April 6, 2018

Workers’ Compensation Futurism: Bedlam, Bargaining, and Boundaries

Upton Sinclair once remarked, “It is difficult to get a man to understand something, when his salary depends upon his not understanding it.” I have that quote in my mind as I marvel at the onslaught of Gig laws that morphed, right before our eyes, from devices required to relax employment status in aid of “new” employers in a “new” economy to excuses to mandate independent contractor status be applied to obvious employees who have been dispatched to a job site “online” by some supervisor sitting back at the office. This deregulatory episode, like the Oklahoma opt-out fiasco that preceded it, is simply a species of bedlam propagated by those who have a financial interest in tearing things apart but, in the end, have little actual “skin in the game.” (Just look for the shadows in the background).   

There have been some interesting articles over the last couple of weeks on the future of workers’ compensation. I was especially struck by Andrew Simpson’s piece, in the Insurance Journal of March 26, reporting on remarks by Richard Victor, Senior Fellow at Sedgewick Institute, made at the Workers’ Compensation Research Institute Annual Meeting in Boston last month. I assume for purposes of this discussion that those remarks were accurately recounted. I understand Mr. Victor to have argued that the magnitude of current external pressures is such that the internal workers’ compensation “system” may not have the resiliency to endure. He mentioned the meta-issues as being centered on labor shortages, immigration policy, and health care policy. Because labor shortages may prompt employers to hire less than their ideal candidates as employees, injury rates may go up (although the mechanism is not entirely clear); we could alleviate labor shortages with a sensible immigration policy that replenishes our work force in historically familiar ways, but may lack the political will to do so; because our health care policy appears to be increasing, rather than reducing, costs for many in vulnerable populations, we may have created a moral hazard: those who cannot obtain health care in the general market may attempt to (expensively) use workers’ compensation for that purpose. The upshot, according to Mr. Victor, is:

The effects of all these trends, including the labor shortage, an aging workforce, more case-shifting, growing cost-sharing, a larger uninsured population will introduce a doubling of what the number of injuries would have been had none of these things happened into a world where injury frequency has been dropping every year . . . Then he adds to those factors the growth in the average cost per claim that just happens normally because prices and wages go up, throws in the likely growing duration of disability, and accounts for a few other forces at play, to arrive at his scenario for 2030: “You end up with a 300 percent increase in workers’ compensation costs without increasing benefits to injured workers.”

To this tension I feel compelled to add, as a teacher of ERISA, the rather startling fact “that 66 percent of working Millennials have nothing saved for retirement, and the situation is far worse for working Millennial Latinos. Some 83 percent of Latinos in this generation have nothing saved for retirement.” The original policy justification for an all-preempting pension and benefits ERISA regime was that it would ensure employers continued to voluntarily provide retirement plans. With the spread of 401(k) plans, to which millennials (and others) cannot afford to contribute, I suspect the political appetite for preemption (and the brake that it places on state-level health care innovation) may wane. Perhaps we were once willing to trade a weak health care regime for a strong pension regime, but that is no longer the contemporary choice offered. Bear in mind that in 2016 17.5 trillion dollars of benefit assets from employer-sponsored plans were under management. Now imagine that money shifting elsewhere. That prospect explains resistance to structural change. But the resistance cannot go on forever. And once states are fully free to innovate in health care, it is inconceivable that the workers’ compensation regime would continue to look as it does today.

The ancient Greek philosopher Heraclitus is reputed to have said that nothing endures but change, and certainly Mr. Victor’s remarks persuade that change is coming. But what I have always loved about the story of workers’ compensation—some history, some no doubt lore—was that during the stupefying change occasioned by the industrial revolution, adaptation was bargained, not imposed. I do not fear change so much as I fear loss of social negotiation to cram-down techniques. Thus, I was heartened to hear recently of Kansas’s proposed increase to workers’ compensation death benefits and Wisconsin’s against-the-present-current enforcement of appropriate worker classification. These developments bespeak remembrance of rights’ boundaries set a century ago by those who believed in fairness and in a society where all stakeholders had skin in the game. Evasion simply won’t do.     

Michael C. Duff 

April 6, 2018 | Permalink | Comments (0)

Monday, April 2, 2018

New Scholarship on Nurse Case Managers and Workers' Compensation by Attorney Justin D. Beck

            The talented Pittsburgh attorney Justin D. Beck (Thomas, Thomas & Hafer LLP), has authored a new analysis addressing the law and ethics of disability management, with a focus on the activities of nurse case managers.  Little seems to be written about this issue, even though the involvement of nurse case managers in the system has increased over the decades and is a frequent point of contention.

            The 2008 ABA Workers’ Compensation Sections CLE in Tucson, for example, featured a rare panel on nurse case managers. I recall being mortified when a veteran injured workers’ lawyer barked at a nurse on the panel, from the audience, that she and her colleagues were nothing but “spies” for the carrier, and that they would never be participant in the claim of any his clients.    

            Mr. Beck, in his essay, has been thorough, examining codes of conduct, interviewing system players, studying state laws that govern the issue (Pennsylvania, our state, has none), and analyzing select cases where nurse case managers have been sued.  He seems persuaded (I think) that when nurse case managers hew to their ethical codes and enjoy the cooperation of claimants’ counsel, a constructive relationship can develop, with potentially better outcomes for seriously injured workers. 

            To read the complete article, see  


April 2, 2018 | Permalink | Comments (0)