Wednesday, January 9, 2019

Empty Preemption of Workers’ Compensation: Parallels Between the Hanford Nuclear Facility and Air Ambulance Disputes

I am interested in conflicts between federal and state law in the context of workers’ compensation. And I am especially interested in a phenomenon I have called “empty preemption”: when federal law with little or no substance displaces state law possessing substance. Empty preemption was at the heart of the Oklahoma opt-out drama and is playing a role in the recent Hanford and Air Ambulance disputes – though in reality the overall Hanford controversy is far from “recent.”

The federal government’s newly-filed complaint against the State of Washington alleges that state law impermissibly discriminates “against the Federal Government and its contractors and [its] purported direct regulation of the Federal Government violate[s] the Supremacy Clause.” The law in question, Washington statute 51.32.187, states that “[f]or United States department of energy Hanford site workers, as defined in this section, who are covered under this title, there exists a prima facie presumption that the diseases and conditions listed in [another part of] this section are occupational diseases [within the meaning of Washington law].” As with all disease presumption laws (such as, for example, firefighters’ presumption laws), the effect is to make it easier to establish compensability in a very difficult area of disease causation: but for the relaxation of typical causation standards, a significant number of employees will not be compensated in circumstances where work “probably” caused incapacitating disease. But—and this is the important part—what does the federal government propose in lieu of the Washington approach to this obvious disease causation problem? For that matter, what does the Airline Deregulation Act provide substantively in exchange for stripping states of the right to regulate air ambulances? What does ERISA provide substantively in exchange for stripping states of the ability to regulate employee benefits? The answer is essentially “nothing.”

In many fields of law the purpose of federal preemption seems to have been to prevent states from lowering regulatory floors (although it is also certainly true that disuniformity has been a powerful factor as well). Traditional labor law, which I also teach, ushered in the era of especially aggressive federal preemption under Section 301 of the Labor Management Relations Act (the NLRA, as amended). But the (probably antiquated) theory of that preemption is that labor and management, as co-equal antagonists, may rely on their potent, lawful economic weapons, as determined exclusively by federal labor law, to produce acceptable/reasonable compromises – and states should not be allowed to interfere for their own narrower policy reasons.  

Empty preemption, on the other hand, provides no mechanism of pushback to prevent descent beneath reasonable regulatory floors. It has the effect of removing regulatory floors altogether. (This has a great deal to do with why we cannot achieve state-level health care reform – ERISA preemption is always getting in the way because two-thirds of health care is provided through employee benefit plans). This is why I am so leery of the prospect of federal involvement in state workers’ compensation systems. Do you really want an environment in which states have no say with respect to air ambulance reimbursement or disease causation standards (to name only the most recent issues)? My ten years as a federal lawyer coupled with almost as many years as a federal administrative law professor have done nothing to raise my confidence in federal white knights. All of this is in tension, of course, with the notion that federal constitutional rights have a role to play in protecting baseline injury rights, but I nevertheless think they do.   

The federal government’s suit in Hanford—which I, for one, ascribe to structural ticking timebombs rather than to naked political partisanship—is especially hard to swallow. The federal government (through excruciatingly convoluted mechanisms) cedes its sovereign immunity to allow for state workers’ compensation regulation, but apparently only on its terms. I would imagine some thought is being given in Washington legislative circles to crafting a more neutral occupational disease provision that does not expressly apply only to Hanford employees. Then we can expect arguments that the nominal general applicability of that law is a pretext and/or has the effect, if not the purpose, of directly regulating the federal government. At that juncture, of course, the bloom will be off the rose: it will become baldly apparent that the federal government simply does not want to pay.

One lesson both Washington and Wyoming legislators have no doubt learned is that it is unwise to explicitly reference in state legislation a federal law one is trying to work around. That provides some pretty low hanging fruit for federal lawyers (or other parties invoking federal policies) to pluck. It is also interesting to note that both Washington and Wyoming are monopolistic states, so the dormant federalism problems existing in workers’ compensation generally appear amplified.

Michael C. Duff

| Permalink


Post a comment