Thursday, October 11, 2018

Facial Challenges to Workers’ Compensation Statutes and the “No Set of Circumstances” Test

While we are in a relative national workers’ compensation constitutional-challenge lull (there may be other things going on in the world), it is worth mentioning an important threshold point. It is one thing to argue that a provision of a workers’ compensation statute is unconstitutional as applied to a particular workers’ compensation claimant. It is quite another thing to launch a facial challenge against such a provision. A facial challenge to a legislative act is the most difficult to mount successfully, since it is customarily said that the challenger must establish that there is no set of circumstances in which the provision could be constitutionally applied. In Castellanos v. Next Door – the 2016 Florida attorney’s fee case – the fight over the constitutional adequacy of the attorney’s fees, as applied to the case at hand, was only one aspect of the dispute. A second (and threshold) aspect concerned whether, assuming the fees were inadequate, it could be said that there was “no set of circumstances” in which the fees would be adequate (this formed, in my view, the core of the dissent's position). In that regard, the Court essentially concluded that the risk of due process deprivation occasioned by inadequate attorney’s fees exceeded the utility of applying the “no set of circumstances” principle. In the language of the Court, the Florida statute had created an irrebuttable presumption that attorney’s fees were reasonable and “the constitutionality of irrebuttable presumptions . . . is a distinct body of case law that differs from the typical ‘facial’ versus ‘as applied’ cases cited by [the] dissent.” (The Court could reach that conclusion in Florida because, for complicated state-law reasons, workers’ compensation rights have elevated constitutional importance in Florida in comparison to most other states).

The “no set of circumstances” test, first announced in U.S. v. Salerno by Justice Rehnquist, bears some resemblance to the problem of litigation standing. “A facial challenge to a statute requires the challenger to establish that no set of circumstances exists under which the statute would be valid. See U.S. v. Salerno, 481 U.S. 739, 745 (1987).” Our adversarial legal system disdains abstract challenges of laws, and almost exclusively authorizes disputes involving imminent “concrete and particularized” harms. When a litigant makes a facial challenge, she is arguably asserting claims on behalf of others who are similarly-situated. This does not sit well with many courts.

But this is a very tough-minded and, I would contend, unfair stance to take when it is as plain as the nose on your face that in many or even most instances application of the unconstitutional-as-applied statutory provision (say, use of the 6th Edition of the AMA Guides to the Evaluation of Permanent Impairment to calculate permanent partial benefits) is likely to harm a claimant. In fact, the idea sounds somewhat backwards. Maybe, once a given law has been found unconstitutional as applied, it should be presumed unconstitutional in other contexts. That might incentivize legislatures to get rid of the law, because it is apt to be successfully challenged in future litigation. If, for example, workers’ compensation benefit calculation is found to lead to an unconstitutionally-low benefit amount in a given case, why must the entire universe of workers’ compensation claimants wait until there are no instances in which a benefit calculation could be performed constitutionally before scrapping the law? (A proof of a negative that will always be very difficult to carry out).

And the truth of the matter is that in various kinds of cases, courts (often sub silentio) simply do not apply the “no set of circumstances” principle because it would be unacceptably harsh and inimical to broader legal values. Chief among the cases are those involving abortion restrictions and restrictions on speech. Typically, courts do not simply leave “bad” state laws in those areas “on the books” waiting, as it were, to inflict more unconstitutional harm. Rather, courts craft and refine overbreadth doctrine, allowing a litigant to challenge the constitutionality of a statute on the basis that the statute is overbroad: in permissibly restricting the constitutional rights of some the law impermissibly restricts other persons’ constitutionally-protected rights, which the litigant before the court will be allowed to vindicate, for purposes of efficiency and justice. Similarly, in Castellanos, the Florida Supreme Court, without being completely explicit about what it was doing, concluded that the risk of overly-broad constitutional deprivation of claimant access to attorneys outweighed the benefits of “concreteness” and justified not (in effect) severing the as-applied attorney’s fee dispute from future theoretical disputes (which may or may not have had merit). This is an overbreadth analysis, and it is of a type I would expect claimants to pursue in future workers’ compensation cases.

Although Salerno has not been cited with great frequency in recent workers’ compensation cases, that may simply evince recognition on the part of litigants of the difficulty in bringing facial challenges. I think the principle, though often Draconian in effect, is alive and well, whether cited in claimant or employer/carrier challenges. In the very interesting 2017 Colorado case, Dami Hospitality v. Industrial Claims Appeals Office, for example, a Colorado appeals court accepted a (small, Korean-owned) employer’s claim that imposition upon it of a fine of $841,200 for not carrying workers’ compensation insurance over several years violated Colorado and federal constitutional protections against governmentally-imposed “excessive fines.” Tellingly, unflinchingly citing Salerno (a federal case, after all, decided in the context of federal, criminal-context, due process law), the court rejected a facial challenge to the applicable Colorado statute and regulations explicitly authorizing the fines. Salerno is alive and well in both state and federal contexts and will have to be contended with in any future facial constitutional challenges of workers’ compensation laws.

Michael C. Duff

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As soon as a state changed from contributory negligence standards in tort to comparative negligence, if WC benefits didn't improve substantially, the WC law was facially invalid. The Grand Bargain was a trade of rights under contributory negligence rules. It needed to be renegotiated after comparative negligence became the rule.

Posted by: Mark Zientz | Oct 12, 2018 7:02:10 AM

Mark -- I certainly understand the argument. But, as I say, many courts will not easily accept it as a matter of procedure. And there is, of course, on the federal side the Supreme Court's substantive response in Duke Power Co. v. Carolina Environmental Study Group, Inc., 438 US 59, 88 (1978): "[I]t 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." I'm not sure I'd want to put the same question before the current court, so I'm happy to see the principle fought out in Florida where it has some chance of succeeding.

Posted by: Michael C. Duff | Oct 12, 2018 7:17:22 AM