Thursday, August 15, 2019

What does Vosberg v. Putney Have to do with Horseplay in Workers’ Compensation Law?

I am scrambling with intensity trying to convert a 5-credit, two-semester torts course to a 4-credit, one-semester torts course.  Occasionally, the mind wanders . . .

A long, long time ago, in late 19th century Wisconsin, 12 year old Putney kicked 14 year old Vosberg in the leg within their classroom. Why?  Perhaps it was a “boyish prank.” It turned out that Vosberg’s leg had a “preexisting condition” and experienced unexpectedly bad symptoms as a result of the kick. We use the case in law school as an early example of courts formally invoking the “eggshell-skull” rule. “You take your plaintiff as you find her.” After a mere three trips to the Wisconsin Supreme Court (grappling with, among other things, whether a physician should have been allowed to testify by deposition where facts already proven were excluded from the physician’s consideration in a hypothetical question),  it was determined that—yes—Putney was liable in battery.

This got me thinking about the horseplay rules in workers’ compensation (because even though the kick was adjudged a “battery” the majority suggested it might have been deemed “horseplay” had it been delivered in the schoolyard, though it was muddy about how that would have changed the outcome). As many readers of this blog will know, horseplay in workers’ compensation is most frequently treated as a “course of employment” problem. That is, it is most often seen as a potential disqualifying “deviation” from employment that is assessed (as the Larson’s treatise explains) by considering:

(1) the extent and seriousness of the deviation, (2) the completeness of the deviation, (3) the extent to which the practice of horseplay had become an accepted part of the employment in question, and (4) the extent to which the nature of the employment may be expected to include some such horseplay. (In Wyoming, our lead case involves two minors scuffling in a Burger King).

As Larson’s also notes, in early workers’ compensation law non-participating victims of horseplay were uniformly denied coverage. Yet this denial is perfectly consistent with the traditional conception of workers’ compensation as a quid pro quo for negligence (not intentional tort) cases. As the treatise observes, “[j]ust as malicious assaults by co-employees were ruled out [of coverage] as intentional and personal, so sportive assaults were treated as something foreign to the inherent risks of the employment.” This is, of course, quite correct, but, more macroscopically, horseplay involves intentional conduct by somebody. Intentional conduct is not negligence (and it is obviously not accidental). It makes perfect sense that early workers’ compensation statutes, observing close fidelity to the precise quid pro quo scheme, would not have awarded compensation in what were essentially battery scenarios (at least seen from the perspective of the non-instigator). It also may explain in part why, even where horseplay has been determined an “incident of employment,” several jurisdictions continue to maintain the workers’ compensation rule that, only non-instigators of horseplay are covered. In a tort-battery regime, the instigator could have been the perpetrator of a battery. Awarding compensation to non-instigators on an “incident of employment” theory may, initially at least, have been a kind of compromise necessary to maintain the integrity of the system.

It may also be worth mentioning that the continued instigator/non-instigator split on horseplay in workers’ compensation corresponds interestingly with developments concerning the tort liability of employers for the intentional acts of their employees. The general rule historically has been that an employer is almost categorically not vicariously liable for the intentional tort of an employee who is not actuated by a purpose to serve the employer and motivated solely by a desire to satisfy the employee's own purposes. (For example, an employee's intentionally criminal conduct typically indicates a departure from conduct within the scope of employment). But under a more holistic “characteristic activities” standard several courts have concluded that some otherwise intentional employee conduct can be attributed to employers. “Sure, it looks like an intentional tort but this person does stuff like this all the time, and the employer knew it.” (Think of the bar room bouncer). This idea expands the potential for employer liability for intentional torts like batteries, and it makes sense that where employer liability for battery expands some courts/jurisdictions might respond by attempting to cover obviously “intentional conduct” within the workers’ compensation rubric (by, for example, requiring super-duper intentional conduct to remove an injury from the workers’ compensation lockbox). I would also note that Wyoming’s statute has always explicitly conferred immunity on employers for all tortious conduct, which makes for good sport for this workers’ compensation/torts prof: my employer comes into work one day and intentionally shoots me in the leg. Discuss.

It also makes sense that states with expanded battery liability would be more likely to include horseplay instigators as well as non-instigators into the workers’ compensation fold.

The moral of the story? Hypothetical questions are cool! No, that’s not it. I know. Be careful when you kick: you may set off an entire chain of legal history!

Back to course prep!

Michael C. Duff

August 15, 2019 | Permalink | Comments (0)

Sunday, August 4, 2019

How Low Can You Go? Mandatory Workers’ Compensation Covers only 61% of Wyoming’s Workers

My work on a Wyoming workers’ compensation treatise (submitted to the publisher two weeks ago) has emphasized a fairly stark reality: while 90% of Wyoming workers are covered by workers’ compensation only 68% of that 90% work for employers required to provide workers’ compensation coverage. From the official Wyoming report tracking these numbers: “Ninety percent (90%) or 235,278 are covered by workers’ compensation. 175,455 employees are working in required coverage or extra-hazardous occupations, with 59,823 employees working in optional coverage positions.” Furthermore, “Currently, there are 22,629 employers in Wyoming . . . 16,322 or approximately 72% of those employers are registered with Workers’ Compensation (WC) as policyholders. Of the 16,322 employers who are registered, 11,027 or 68% have required coverage and 5,295 or 32% have optional coverage.”

So 68% of 90% yields a figure of 61% of employees working for employers that are required to carry workers’ compensation (monopolistic) coverage.

Like the situation in Texas, employers not covered by workers’ compensation are usually liable in tort. Also like in Texas, there are significant groupings of employees employed by companies utilizing alternative benefit plans (Walmart is the major example). Those plans are covered by ERISA and thus generally cannot be sued by employees who have elected to participate in them (and many employees will choose participation once they realize their employer is not covered by the state workers’ compensation system). Employees working for an employer that is not covered by workers’ compensation, and has not established an alternative benefit plan, find themselves in “Texas-land.” (Texas has operated an elective, opt-in system since the inception of workers’ compensation). The difficulty of pursuing tort claims is, of course, why we have workers’ compensation in the first place and, to add insult to injury, employees routinely find themselves required to arbitrate workplace injury tort disputes, even assuming they can find a theory to evade ERISA preemption.

Much of the coverage outcome in Wyoming has been driven by the narrowed statutory jurisdiction of the Wyoming statute, which applies, uniquely, only to “extrahazardous” employment (though Illinois also still technically possesses such a statute). Explicitly included extrahazardous “employments” are rather non-transparently defined with reference to the North American Industry Classification System. It takes a good deal of digging to come to the 61% coverage figure. But, as I have said in my treatise, any workers’ compensation system—however unusual—has little to recommend it if it excludes the largest employer in the state (Walmart). As the Larson’s treatise discusses, at 6 Larson's Workers' Compensation Law § 77.01, in the context of analyzing the Wyoming Supreme Court’s opinion in Araguz v. State, ex rel. Wyoming Workers’ Safety and Comp. Div., 2011 WY 148, 262 P.3d 1263 (Wyo. 2011):

Wal-Mart had been assigned [NAICS] code 452910, indicating “Warehouse Clubs and Supercenters.” Because such classification was not defined by Wyoming statute as “extrahazardous,” Wal-Mart [is] not required to participate in the state fund. Wal-Mart maintain[s] its own privately funded workers’ compensation fund, the Wal-Mart Plan, for the benefit of its employees who are injured on the job. The employees contend that the State’s failure to provide benefits was unconstitutional and improper as a matter of law. The court indicated that it would not address the appellants’ constitutional argument as the appeal was not an appropriate avenue for resolution of such an issue.

The entire structure is evocative of the path-breaking 2012 article by Professors Spieler and Burton, “The lack of correspondence between work‐related disability and receipt of workers' compensation benefits.” In Part II of the article, Spieler and Burton observed:

. . .[W]hile exclusions mean that the common law tort system is not supplanted by workers' compensation, exclusion also means that these workers can obtain benefits only through tort litigation (in which there must be proof of actual negligence), from private sources such as employment‐based health and disability plans, or from public programs, including SSDI, SSI, Medicaid, and Medicare. Some injured workers experience “dual denial”—they are eligible neither for damages from civil litigation nor benefits from alternative programs.

An elective workers’ compensation system like Wyoming’s may not expressly exclude (non-extrahazardous) employment from coverage; but Wyoming’s current economic downturn may ultimately render the distinction academic for a worker employed by an employer deciding to rescind its election to be covered by workers’ compensation. When profit margins become razor thin, an operator (now short term because of the onrush of events) may be willing to take a chance on a tort suit, especially if it figures out the arbitration gambit and the Supreme Court continues its FAA jurisprudence of arbitration uber alles.

Michael C. Duff  

August 4, 2019 | Permalink | Comments (4)

Monday, June 24, 2019

Workers’ Compensation and Intentional Conduct: The Scope of the Quid Pro Quo in Oklahoma

Thomas Robinson has a good post up on a recent Oklahoma Supreme Court opinion, Wells v. Oklahoma Roofing & Sheet Metal. The wrongful death opinion, very simply stated, holds that the Oklahoma workers’ compensation statute does not encompass intentional conduct. In other words, an intentional tort action against an employer for workplace injury is not foreclosed as a matter of law. I’ll broach the concept of “intentional” in a moment but will note at the outset that when state courts take on such a case, there are two basic approaches they tend to utilize. One is to take on the question of legislative supremacy directly: could a legislature constitutionally make intentional tort actions against employers unavailable to their injured employees? That approach triggers the expected equal protection, due process, remedies/open courts and special laws analyses. Another approach, however, is to employ some kind of constitutional avoidance canon: “we need not reach the constitutional question if the legislature did not intend to impinge on the right in question.” Mr. Robinson seems to think (at least my reading of his post suggests this to be his view) that the Oklahoma Supremes somewhat weakly opted for avoidance where the evidence firmly suggests the legislature “intended” to place the legislative supremacy question front and center. I’m inclined to agree with him. The conclusion of the opinion states, at ¶24:

We hold that the willful, deliberate, specific intent of the employer to cause injury, and those injuries that an employer knows are substantially certain to occur, are both intentional torts that are not within the scheme of the workers' compensation system or its jurisdiction. Plaintiff's additional constitutional arguments are thus not necessary to adjudicate this appeal. For the reasons expressed herein, the district court's order is reversed and the matter is remanded to the district court for further proceedings consistent with today's pronouncement.

As to intent generally, in law school tort classes we customarily begin our discussion of the concept of intentional conduct with the case of Garratt v. Dailey (whose holding was essentially later incorporated in various restatement formulations), in which a child pulls a chair out from under a descending woman, the woman thereafter making harmful contact with the ground. The case stands for the proposition that one is liable for an intentional tort where one engages in conduct with the purpose of causing a harmful or offensive contact with another, or where one acts with knowledge to a substantial certainty that such a contact will occur (and where the conduct does actually occur). The workers’ compensation quid pro quo is normally conceived as applying only to negligence (careless rather than intentional conduct) under the simple rationale that an intentional act, by definition, cannot be an accident. If workers’ compensation is meant to cover only “injuries by accident” then intentional torts would appear exempted. The problem with this analysis is, first, that not all statutes define workers’ compensation eligible injuries in terms of “accident” (Maine, Massachusetts, and Wyoming are examples). Second, whether an actor (in this case, an employer) “knew to a substantial certainty” that a harm would occur is a product of inference, and with inference (think, the “totality of the circumstances”) comes uncertainty and unpredictability.

Historically, the English Act allowed for employee election of a tort action in all cases (Ch. 37, 2(b) (1897)), so there was no question that workers’ compensation remedies under the original English statute were elective (and that an intentional tort court case remained available). Closer to home, the Wisconsin Act of 1911 excluded from workers’ compensation coverage the willful misconduct of the employer (Sec. 2394-4(3)), and the prototypical New York statute (shopped around the country in 1910, see my article here) upheld by the Supreme Court in 1917 covered under workers’ compensation only accidental injuries (Ch. 41, Art. 1, Sec. 3(7)). I have not fully researched all of the early statutes on the point but have reasonable suspicion that exclusion of intentional and willful conduct from coverage by the early workers’ compensation acts was the clear majority rule.

This does not address the question of whether a state could constitutionally simply eliminate intentional torts for injured workers (or anyone else, for that matter). I think the answer is “no,” though Ohio may have effectively done so by defining the “substantially certain” concept as an act “with deliberate intent to cause an employee to suffer an injury, a disease, a condition, or death.” The circularity of the definition is at once apparent to a practitioner of logic (intent=substantial certainty=deliberate intent), and I think the Oklahoma statute under consideration was trying to adopt something like the Ohio approach. But here is the thing: courts will resist, as long as they can, having to answer these legislative supremacy questions, reading the statutory text in some (any?) manner that leaves the intentional tort theory possible. It is like the White dicta, “it may be doubted whether the legislature could sweep away all such actions, but we do not think in any event that is what happened here.” Workers’ compensation itself was originally substantially upheld, after all, as a matter of federal constitutional law, under the avoidance canon. (“We assume without deciding remedies are adequate.”) There is a welter of state jurisdictional definitions of the scope of the exclusive remedy rule which, considered broadly, suggests little enthusiasm for sweeping intentional tort completely into the exclusive remedy rule. Legislatures seem generally to accept such an evisceration could lead to underdeterrence of dangerous behavior.

Michael C. Duff

June 24, 2019 | Permalink | Comments (2)

Thursday, June 20, 2019

The Employees of No One? More Dystopian Jungles

"Bodies in Seats" is the apt title of a chilling recent article in The Verge. The next time I hear debates about social media purges meant to make me safe from "speech," I'll try to remember that workers (not corporate executives) are doing that work. And, repeat after me: "FACEBOOK IS NOT THE EMPLOYER." The story is already a lead candidate for my torts and workers' compensation final exams next year. How many fact patters do you see? Workplaces are getting safer and safer? Well,welcome to the Jungle:

February, I wrote about the secret lives of Facebook contractors in America. Since 2016, when the company came under heavy criticism for failing to prevent various abuses of its platform, Facebook has expanded its workforce of people working on safety and security around the world to 30,000. About half of those are content moderators, and the vast majority are contractors hired through a handful of large professional services firms. In 2017, Facebook began opening content moderation sites in American cities including Phoenix, Austin, and Tampa. The goal was to improve the accuracy of moderation decisions by entrusting them to people more familiar with American culture and slang.


Cognizant received a two-year, $200 million contract from Facebook to do the work, according to a former employee familiar with the matter. But in return for policing the boundaries of free expression on one of the internet’s largest platforms, individual contractors in North America make as little as $28,800 a year. They receive two 15-minute breaks and a 30-minute lunch each day, along with nine minutes per day of “wellness” time that they can use when they feel overwhelmed by the emotional toll of the job. After regular exposure to graphic violence and child exploitation, many workers are subsequently diagnosed with post-traumatic stress disorder and related conditions.


Three former moderators for Facebook in North America agreed to break their nondisclosure agreements.


My initial report focused on Phoenix, where workers told me that they had begun to embrace fringe views after continuously being exposed to conspiracy theories at work. One brought a gun to work to protect himself against the possibility of a fired employee returning to the office seeking vengeance. Others told me they are haunted by visions of the images and videos they saw during their time on the job.


Conditions at the Phoenix site have not improved significantly since I visited. Last week, some employees were sent home after an infestation of bed bugs was discovered in the office — the second time bed bugs have been found there this year. Employees who contacted me worried that the infestation would spread to their own homes, and said managers told them Cognizant would not pay to clean their homes.


“Bed bugs can be found virtually every place people tend to gather, including the workplace,” Cognizant said in a statement. “No associate at this facility has formally asked the company to treat an infestation in their home. If someone did make such a request, management would work with them to find a solution.”


Bed bug ticking time bombs? Even after 13 years of teaching and 11 years of practice my hypothetical fact patterns can't keep up with the real world. The full piece can be accessed here.

Michael C. Duff

June 20, 2019 | Permalink | Comments (0)

Tuesday, June 18, 2019

Joshua Freeman's "Behemoth" (2018): The Great Factories ... and Their Workers

            Workers' compensation specialists can, in my opinion, benefit by a grounding in, or a refresher on, the industrial and organized labor histories which were, and are, so formative to our field and the larger system of which we’re a part. Behemoth, written by CUNY history professor Joshua Freeman, is a book which assists in providing such education and, likely, filling in gaps in the learning of most of us.  Behemoth: A History of the Factory and the Making of the Modern World (W.W. Norton & Company 2018).

            Freeman's book is an account of the rise and partial fall of the great factories which were, for so many years, the centers of international – and Pennsylvania – industrial growth.  

            The manufacturing facilities treated by the author range from the early cotton mills of Britain and New England to those of the Ford Motor Company, its Soviet imitators, and the modern mega-factories of mainland China. The latter, particularly the factories of manufacturer Foxconn, are those that produce cellphones, other electronic devices, and their constituent parts. Significant Pennsylvania connections exist in the realm of factory history, and the author addresses such gigantic factories as those of Carnegie and Frick in Pittsburgh and the Cambria Ironworks in Johnstown. Indeed, the Cambria Ironworks, the first in the U.S. to use the Bessemer furnace innovation, is a constant touchstone for Freeman.

            Freeman's book, while presented chronologically, is not simply a linear history. The book instead treats what he calls “industrial giantism” in socio-cultural terms as well. Indeed, the author, on multiple occasions, talks about giant factories and the visual arts. Such references come up in both discussions of steel mills and auto manufacturing facilities. Even Diego Rivera and Frida Kahlo make an appearance in Behemoth – in this regard, Rivera painted a series of frescoes for Henry Ford in the early 1930s at the immense River Rouge plant that Ford built in Michigan.

            The role of the worker, meanwhile, is constantly addressed, be it as a disempowered cog in a machine – or a proud union member contributing to war efforts.  

            The book is not a labor history per se, nor one that focuses on industrial safety. Still, given the book’s pervasive treatment of the history of factories, both of these critical aspects of industrialism are treated.

            One such item was new to this reader. In the realm of how unions were received, the author observes that at first, municipal leaders were largely hostile to organized labor. This attitude changed over the decades. Indeed, Freeman includes in his book an April 1946 aerial photographic view of Pittsburgh Mayor David L. Lawrence addressing, from the steps of our courthouse, a crowd of striking Westinghouse workers.

            It’s notable that every single man is wearing a hat.

            I have been quite enthused about this book and, I engifted two of my top students (now lawyers) with it.  A definite must-read for those who desire a holistic understanding of industrial and labor history.

June 18, 2019 | Permalink | Comments (0)

Has Workers’ Compensation Ever Been Adequate?

In follow-up of Judge David Torrey’s kind review of my historical article on workers’ compensation adequacy (see two posts below this one on this blog), I note that workers’ compensation benefits were originally set at about 50% of the preinjury average weekly wage, with no provision for medical benefits beyond first aid for a number of days post-injury. The omission of ongoing medical benefits for work-related injuries was not broadly fixed until about 1930, and unlimited “reasonable and necessary” medical benefits were not uniformly available until about 1953. All of this is nicely chronicled in Somers and Somers, Workmen’s Compensation 83-87 (1954). But note the contemporary dissatisfaction of the same authors on the state of affairs by the mid-1950s (at page 191):

At present, even when a claimant litigates, the liability of the employer is, of course, limited to the benefits allowed under workmen’s compensation. Labor has been showing increasing restiveness with the “exclusive remedy” principle, which except in a few instances prevents the injured worker who is eligible for workmen’s compensation from suing, no matter how grave the employer’s negligence or how inadequate, or even non-existent, the compensation benefits.

This has been particularly distressing in States where permanent-total and death benefits are still rigidly limited, or in cases involving disfigurement or occupational diseases in some States, where workmen’s compensation coverage prevents common-law action without providing any corresponding benefit. The benefits of compensation recipients are now, in certain circumstances, so inadequate that they have clearly lost more than they gained by giving up the right of legal damage suit.

The authors go on to note (see Somers and Somers pages 191-193) that commentators of the day were proposing a kind of tort-workers’ compensation hybrid of a type I’ve heard proposed fairly recently.

Although, as Professor John Burton interpreting old NCCI data has explained, statutory benefits significantly increased in the 1960s, 1970s, and the first half of the 1980s, we also know that the very reason the OSH Act created the National Commission in 1970 (headed by Professor Burton) in the first place was that workers’ compensation benefits had become “inadequate” throughout the 1960s. According to the Congressional findings (see "transmittal letter" here at page 3):

[I]n recent years serious questions have been raised concerning the fairness and adequacy of present workmen's compensation laws in the light of the growth of the economy, the changing nature of the labor force, increases in medical knowledge, changes in the hazards associated with various types of employment, new technology creating new risks to health and safety, and increases in the general level of wages and the cost of living.

Perhaps to no one’s surprise, the Commission found, as stated on the cover letter of its report to the President and to Congress, “the protection furnished by workmen's compensation to American workers presently is, in general, inadequate and inequitable. Significant improvements in workmen's compensation are necessary if the program is to fulfill its potential.”

Many of the readers of this blog know the story from there: some improvements (as defined by the National Commission) on the national scene for a decade—probably under threat of feared federal intervention—followed by ongoing retrogradation. I think we have just knocked out a number of decades in which workers’ compensation might have been thought (by modern readers) to be adequate but was probably not. The Supreme Court has never defined adequacy, and I suspect readers of this post would have differing opinions as to what the concept even means. Perhaps we ought to get that straight first. The conversation has been going on for a long time.

I will note in passing that I have always doubted the possibility of federal intervention (whether judicial or legislative) as a guarantor of whatever political consensus of adequacy may develop among the states. More plausible, it seems to me, is a reworking of the current federal-state balance on employee benefits in which ERISA preemption will be substantially scaled back. The state “laboratories” that will emerge may be thought of as better or worse, though this writer has some clues as to where he (at any rate) might prefer to be a rat. Will the labs have any legal boundaries? That question continues to define my research agenda.

Michael C. Duff

June 18, 2019 | Permalink | Comments (0)

Monday, June 17, 2019

A New "Intermediary" Theory of Joint Employment in the Realm of the Franchisor-Franchisee Relationship

            In a renowned 2015 Pennsylvania case, a Philadelphia franchisee of the fast-food chain “Salad Works” had failed (illegally) to insure, and its employee, having sustained an accident, was unable to secure workers' compensation benefits.  He sought, as a result, to cast the franchisor as his "statutory" employer.  While the Pennsylvania Appeal Board accepted that argument, and imposed such liability, the Commonwealth Court (the appellate court which takes state agency appeals) reversed.   

            The court declared, with some irony, that Salad Works, as franchisor, “is not in the restaurant business or the business of selling salads.” Salad Works, LLC v. WCAB (Gaudioso & UEGF), 124 A.3d 790 (Pa. Commw. 2015).

            I was intrigued by the dispute (not to mention the court's ironic, and perhaps unsatisfactory, declaration), especially in light of Dean Weil's characterization -- in his illuminating 2014 book -- of franchising as often reflecting a type of "fissuring of the workplace" that leaves highly leveraged those at the bottom of the employment hierarchy.  The injured worker in the Gaudioso case seemed to be such a person.  See generally David Weil, The Fissured Workplace: Why Work Became So Bad for So Many and What Can be Done to Improve It (Harvard 2014) (Chapter 6).   

            In a new article, the author, like the injured worker's lawyer in Gaudioso, is interested in a legal argument that would cast what she calls “the all-powerful brands – the franchisors” as employers – in her case with responsibilities under the Fair Labor Standards and National Labor Relations Acts.  She asserts, in this regard, that “franchisor brands, not their franchisees, set industry-wide standards and, thus, have the ability to offset rising wage inequality and improve working conditions.” Kati L. Griffith, An Empirical Study of Fast-Food Franchising Contracts: Towards a New “Intermediary” Theory of Joint Employment, 94 Washington Law Review 171 (March 2019).  See also

            The author, a professor at Cornell Law School, has studied forty-four contracts between fast-food franchisors and their franchisees. She asserts that her “contractual analysis reveals a new theory of joint employment via franchisor influence over franchisees’ managers. Unlike prior foci on franchisor-franchise relations, and franchisor-crew member relations, [I bring] a new party to light: franchisees’ supervisorial managers.”

            She concludes, “In sum, the theory developed from this rare dataset postulates why some Goliaths of fast food may indeed be ‘employers’ with legal obligations to the workers in their franchised restaurants….”

June 17, 2019 | Permalink | Comments (0)

Sunday, June 16, 2019

Professor Duff on Adequacy of Benefits, in Historical Aspect

            Recent court cases have highlighted how some states, in this era of business-friendly workers’ compensation  reform, have cut back on disability benefit levels.  In Alabama, Florida, and Kansas, courts have all reviewed benefit levels (duration limits are frequently an issue as well), and declared them inadequate. Other courts, however, reflecting a traditional hands-off-economic-legislation approach, have indicated that benefit levels are instead appropriately addressed by the legislature.

            A pervasive inquiry surrounding benefit adequacy is whether a compensation program is constitutionally legitimate if the benefits provided are so miserly that they cannot be said to fairly substitute for workers’ surrender of their tort rights.

            In a recent article, stylish and in rich prose, Professor Michael Duff goes back to the origins of the system and tries to determine what the founders of state systems of compensation believed was adequate.  Michael C. Duff, How the U.S. Supreme Court Deemed the Workers’ Compensation Grand Bargain “Adequate” Without Defining Adequacy, Workers’ First Watch, p.27 (WILG Winter 2018),

            More importantly, he examines the benefit levels which were a feature of the New York act, upheld by the U.S. Supreme Court in the landmark case New York Central R. Co. v. White (U.S. 1917).  That case, of course, recognized the quid pro quo of the workers’ compensation scheme, and famously suggested that a law abolishing a cause of action is only legitimate if the replacement is a reasonably just substitute.

            Duff establishes that the progenitors of U.S. workers’ compensation laws were highly influenced by the European models of the program, especially those of industrial powerhouses Germany and Great Britain.  (In this portion of his article, he reviews the role of lawyer/lobbyist P. Tecumseh Sherman – yes, son of the Civil War general – who was to be a major commentator on the nascent Pennsylvania legislation.) 

            Germany and Great Britain, notably, established less-than-full-wage replacement for weekly disability payments, brief waiting periods, and caps on the duration of benefits.  Groups in the U.S., having studied these laws, proposed weekly benefit levels ranging from 50% to 2/3 of weekly wages for both total and partial disability benefits, subject to a weekly maximum.

                It was such a law that was under consideration by the U.S. Supreme Court in the White case.  Of course, the pivotal issue in that case was whether the imposition of no-fault liability on employers constituted a denial of due process.  The court held that it did not, but along the way at least suggested (in a doctrinal tease that has endured for over a century) that a system which abolished common law rights was only valid if the remedy placed in its stead was reasonable.  Duff suggests that perhaps the benefit levels provided by the New York law under consideration might be regarded as a “floor” to what was, at least at the time, reasonable.  Still, his more definitive opinion is that the court was aware of the expert consideration which had informed the creation of the law, and that it in effect deferred, to these creators of the system, the determination of what was reasonable – and adequate.

            Importantly, Duff comments, “The difficulty with the Court’s approach is that little has been left to posterity explaining what scale of employee benefits the Court might have deemed inadequate or unreasonable as an exchange for employee tort damages. The pregnant silence on federal constitutional boundaries continues to impact current discussions on limits to legislative reductions of workers’ compensation benefits.”

            Duff makes the point that the issue of what was adequate and fair was alive and well at the time workers’ compensation laws were created.  This proposition is overwhelmingly supported by the experience of the Pennsylvania system.  In our state, our original 1915 enactment was notoriously miserly, a point immediately identified by national leaders, and thereafter debated for decades.  When benefit levels were increased in 1937, the law was struck down, in Rich Hill Coal Co. v. Bashore (Pa. 1939), as violative of the state constitution’s admonition that a workers’ compensation law must only provide for “reasonable” benefits.  Only in 1972, when benefit levels were raised above poverty levels, did inadequacy cease to be an issue.  (Inadequacy is still a practical issue for those workers permanently disabled with a less-than-35% impairment; such workers are limited to a maximum of 11.6 years of disability payments.)  In any event, taking the long view of the Pennsylvania experience, Duff’s analysis of adequacy, in its historical context, rings familiar and true.

            Recent commentaries, and another Florida challenge, have raised the question of whether maximum compensation payable, a ubiquitous feature of state laws, are constitutional under the quid pro quo/White analysis.  On this point, Duff seemingly answers the related inquiry – where did maximum compensation payable come from in the first place?  The answer apparently lies in the German and British examples.  In Germany, under the 1911 law, temporary and permanent total disability was subject to a cap of 3 marks (71 cents) per day; and in England, under the 1907 law, weekly disability was subject to a cap of £1 ($4.87) per week.  Maximum compensation payable may be unfair and leave high-paid workers in the lurch, but Professor Duff’s adequacy article establishes that it is profoundly historical.     


June 16, 2019 | Permalink | Comments (2)

Tuesday, June 11, 2019

An Articulate Reprise to Opt-out: Daniel Walker's "Fourth Era of Workers' Compensation"

            Any member of the workers' compensation community who missed the intriguing saga of the Oklahoma “opt-out” law – which culminated in the 2016 demise of the innovation – would be well-served by reading a newly-published account.  Daniel E. Walker, Opt-Out and the Fourth Era of Workers’ Compensation: Has Industry Left the Bargaining Table?, 41 Western New England Law Review 111 (2019),  It's a brisk, readable, and accurate review of the affair.  

            The author, a lawyer for the Oregon State Fund, creatively characterizes the lobby of large companies, particularly retailers, for opt-out, as reflecting the “fourth era” of workers’ compensation.
            What were the first, second, and third? The first, he says, was the early 20th century reform period when virtually all states enacted such laws. The second, meanwhile, was the 1970s and early 1980s, as the National Commission recommendations that states update their laws with liberalized coverages and rates above the poverty line led to increased premiums and other enhanced system costs. The third was the reaction to the second – to wit, nationwide retractive reform during the 1990s and onward, aimed at lowering the costs of the system.  

            Even as such retractive reforms have generally achieved their goals, the fourth (and current) era of workers’ compensation reflects employers seeking to completely escape regulation by opting-out of state-run programs via the device of setting up internal, ERISA-governed plans – and obliging injured workers to arbitrate any dispute.

            The fourth era unfolded with the convergence of at least two factors. Texas, on this point, played, and plays, a significant role. There, workers’ compensation has never been mandatory and employers have long been able to decline to opt-in to the system. They could, and can, avoid coverage and, as a result, expose themselves to potential tort liability. Such avoidance of workers’ compensation costs was seemingly never a popular strategy until large Texas employers discovered the innovation of creating their own work accident plans, seemingly governed by ERISA (a complex concept, as ERISA excepts workers’ compensation-like programs), and, cunningly, obliging workers to arbitrate any disputes over the same.

            By this device, large employers could avoid workers’ compensation liability and tort liability at the same time. The author explains:

[T]hese arbitration agreements are possible in Texas because the Texas courts have held that "when [what amounts to] a pre-injury waiver of common law claims is included in an arbitration agreement, the [Texas] statutory prohibition against pre-injury waivers is preempted by the Federal Arbitration Act (FAA)."

            As the popularity of opt-out in Texas spread, employers in Oklahoma, particularly, became intrigued by the idea of freedom from both workers’ compensation and tort liability in the event of employee injury. Soon, the legislature had passed a law authorizing an opt-out system which explicitly preserved in the employer the protections of the exclusive remedy.

            Walker, after explaining this genesis, effectively recounts Vasquez v. Dillard’s, Inc., 381 P.3d 768 (Okla. 2016), the legal action which spelled the downfall of the statute. The Oklahoma Supreme Court in that case, of course, struck down the entire opt-out structure as violative of the “special law” prohibition of the state constitution.

            The author correctly states that the Vasquez drama took the winds out of the sails of the opt-out movement. He believes, however, that the fourth era of workers’ compensation – as heralded by the Texas development and its stunted Oklahoma spawn – will continue. He is, in this regard, impressed that employers are no longer interested in making workers’ compensation operate fairly through the traditional horse-trading between interest groups that was thought to generate balanced systems.

            Instead, as foreshadowed by the title, industry, which has such powerful leverage in the present day, may well have permanently “left the bargaining table.”    

June 11, 2019 | Permalink | Comments (1)

Sunday, June 9, 2019

New Law Review Article Argues for Mental Stress/Mental Disability Claims of Slaughterhouse Workers

            In a new article, appearing in the review Animal Law, the author argues that workers in slaughterhouses should have access to workers’ compensation benefits if they fall victim to the mental trauma of killing animals all day.  Vanessa Hemenway, The Wages of Blood, 24 Animal Law 457 (2018).

        The author correctly explains that in many states, mental stress causing mental disability cases are not cognizable, as physical animus must always precipitate mental disability.  In other jurisdictions, however, like California, Colorado, and New York, such claims may be cognizable.  Even in those states, however, workers with repeated mental trauma from work in slaughterhouses would face an uphill battle with their claims.  For example, she identifies California as a state where “actual” emotionally-traumatic events must be “predominant as to all causes combined [regarding] the psychiatric injury ….” Meanwhile, court precedent establishes that “predominant as to all causes” means “50% or more causation.”

            These roadblocks to relief are, in the author’s view, unfortunate.  She sets forth the findings of research that show that slaughterhouse workers are at risk for mental issues arising out of the uniquely distressing nature of their work.   The author’s thesis, in this regard, seems highly informed by a 2008 article by Jennifer Dillard, A Slaughterhouse Nightmare: Psychological Harm Suffered by Slaughterhouse Employees and the Possibility of Redress Through Legal Reform, which appeared in the Georgetown Journal on Poverty Law & Policy. 

            Both Dillard and Hemenway, notably, argue for recognition of a PTSD-type syndrome from which slaughterhouse workers may suffer.  “Research,” Hemenway states, “suggests that [such] workers may suffer from ‘Perpetration-Induced Traumatic Stress (PITS) as a form of [PTSD]’ which occurs in situations where the perpetrator inflicts violence that causes PTSD in his victims.  PITS sufferers include ‘people such as combat veterans, executioners, and Nazis.’  Dillard frames [the] constant killing as ‘creating an employment situation ripe for psychological problems.’” 

            Hemenway concludes her article with a call for more research on the mental health of slaughterhouse workers.  

            The author of this passionate note identifies herself as an attorney for the Bronx, NY Family Court – and adds to her brief biography that, as to diet and lifestyle (no surprise) she is Vegan.  Her essay is short on establishing that any crisis in this area of recovery exists, but it is valuable for identifying this overlooked issue and providing footnotes full of the critical research references.  If this writer (an ALJ) is assigned a slaughterhouse-worker mental disability claim, I’ll be ready.

June 9, 2019 | Permalink | Comments (0)

Friday, June 7, 2019

Gardyloo!: Immigration Status Disclosure on Workers’ Compensation Applications (Can They Do That?)

I’m back and mostly recovered from a family vacation in Edinburgh, Scotland, UK. While walking through the cemetery where Adam Smith was interred, my family was surprised to see homeless persons encamped there. A lively discussion with my teens ensued. We also explored the ruins of tenements in the “old town,” where a cry of Gardyloo! (watch out for the “water”) was once required of residents before launching garbage and excrement from the upper floors of tenement houses, where it would remain in the streets long enough to generate odors and disease. Imagine such a thing – human excrement in the streets! Lamentably, we can perhaps once again more than imagine it. The highlight of the trip for me was to have access to materials on, and to visit some of the haunts of, my intellectual hero, David Hume, to my mind one of the clearest thinkers who has ever lived.

Gardyloo! Watch out for legislative “water” events. In Ohio, a recent bill would, among other things, require workers’ compensation applicants to disclose their immigration status as a condition of benefit eligibility. (see here behind paywall). Advocates attack the requirement. It sounds like bad policy, for a number of reasons that are being articulated by advocates: workers won’t apply; the risk pool is shrunk; there is under-deterrence of dangerous workplace practices. You know all these arguments. And in fact similar arguments were advanced and countered (in a different statutory context) in the still-seminal Supreme Court case, Hoffman Plastic Compounds. The problem is that Hoffman Plastic involved conflict between federal laws, which makes it a tenuous precedent when considering the interplay between state law implicating immigration and federal law. It is a problematic opinion for all parties in such cases if used either as a sword or a shield. This does not mean that parties (and courts) don’t try to do so; it just renders the attempts clunky, unpersuasive, and vulnerable. The issue has too much federalism in it to be resolved so easily.

Ultimately, the discussion starts where it always must: the limits of legislative power. What prevents a legislature from doing whatever it wishes? What renders a legislature “non-supreme”? The answer, of course, is a constitution—whether federal or state. To crystallize the specific question here, as a matter of law (not policy), why can’t a state legislature require a workers’ compensation applicant to disclose immigration status in order to be eligible for state benefits? Is it, for example, an illegal search? Perhaps the requirement violates the Doctrine of Unconstitutional Conditions attached to benefits. If a claimant with standing were to challenge the requirement on unconstitutional conditions grounds, I’d probably suggest beginning with Sherbert v. Verner. (I don’t think it is “just” a religious exercise case).

The answers to the “what prevents” question, if there are any other than “nothing,” are probably to be found in the 14th Amendment of the U.S. Constitution or, in this case, the Ohio constitution. I have written recently on why the Equal Protection clause of the 14th amendment is almost always a non-starter, and I think that is probably true here. What about substantive due process? Next week, I’ll write a little about substantive due process and review the difficulty posed by the “No Set of Circumstances” test. One thing is clear, a judge (and eventually a group of them) will want someone to point to something in a constitution that says the legislature can’t do what it just did. Elementary? Certainly. But occasionally I find it useful for someone to explain things to me like I’m a two year old.

Michael C. Duff  

June 7, 2019 | Permalink | Comments (0)

Tuesday, May 21, 2019

Reflections on a Maine Workplace Manslaughter Case

Last summer, well-known podcaster Joe Rogan debated fellow podcaster, and sometimes-libertarian, Dave Rubin about the necessity of having and enforcing building code regulations. (see the 6 minute YouTube video here – salty language alert). Rogan, who is not generally unsympathetic to libertarian positions, reacted with incredulity when Rubin suggested that high-tech apps (Yelp was the particular flavor mentioned), and rapid dissemination of a contractor’s non-compliance with best building practices, would be sufficient (for market-competitive reasons) to deter risky building practices. Why was Rogan incredulous? Because he has had family involved in the construction industry (apparently inter-generationally) and knows better (at a visceral level).

As a Maine lawyer, I was horrified to read last December of the death of 30-year-old Alan Loignon, who fell from the third-story roof of a home in the Munjoy Hill section of Portland, Maine (not far from where I first handled cases as a new workers’ compensation lawyer many years ago). According to the Portland Press Herald, in a story on May 20, the responsible contractor on the job, one Purvis,  

argued that he is not an employer and instead hires independent subcontractors, and while he encourages workers to use the extensive collection of safety gear he provides, he cannot force them to comply. Purvis said he has battled OSHA for a dozen years over this point, and has refused to pay the roughly $44,000 in fines the safety agency has tried to levy against him.

Purvis further lamented,

Every single day, I show up at the job site … and I tell them, please, be safe, everything you need is here . . . I can’t sit there 24/7 and watch subcontractors. It’s either they’re going to wear (the safety gear) or they won’t. It’s like wearing a seat belt, it’s either you do it or you don’t . . .  I can supply everything to be OSHA approved, but I can’t sit there and watch these guys all day long. That’s their job. They’re self-employed.

In addition to being wrong as a matter of both Maine law and OSHA regulation, Purvis’s account runs counter to my experience. Like Rogan, I’ve been around the block a time or two. In a prior life, when my boss required me to put something on, I put it on. But that perhaps was not really the way it happened – when my boss did not really care if I put safety equipment on, I was much less likely to put it on – especially if it took a few minutes to do so. Frankly, fairly or unfairly, I don’t believe Purvis’s account, and it doesn’t sound like anyone else does, either..

For an exercise in frustration, I would again direct the reader to a book I’ve mentioned previously: Bartrip & Burman’s, The Wounded Soldiers of Industry. The first three chapters of the book chronicle all the things we knew by 1830 didn’t work in deterring workplace injury: voluntary compliance, regulation without teeth, inspectors without authority. Oh yes – it was also claimed, back in the day, that it was the workers’ failure to provide for their own safety that was the true cause of workplace injury. One can perhaps sympathize with the decision of my former home state of Maine to conclude that some disregard of workplace safety by contractors is simply beyond the pale and rises to the level of actionable manslaughter (Maine Title 17-A §203).  

Michael C. Duff

May 21, 2019 | Permalink | Comments (0)

Friday, May 17, 2019

Wyoming’s Next Air Ambulance Gambit Falls Outside of the Confines of Workers’ Compensation

Last legislative session the Wyoming legislature decided to fight the air ambulance dispute out on a broader front. It sensibly abandoned the attempt to limit workers’ compensation reimbursement of air ambulance services and began wrestling with air ambulance expense on a universal, state-wide basis by passing a new law. There are a number of interesting features to the effort.  

First, air ambulance matters are to be administered through the state Department of Health (the Department). The Department is authorized to apply to make coverage of air ambulance transport services through Medicaid available to all Wyoming residents, an interesting form of limited Medicaid expansion (Interestingly Wyoming has rejected ACA Medicaid expansion). I do not know enough about CMS regulations to opine whether such a limited expansion is legally possible, though it strikes me as problematic. If the model were approved by the feds, the Department would create an “air ambulance transport services program.” Under the law,

There is created the air ambulance coverage account. Premium assessments collected by the insurance commissioner and state agency reimbursements paid to the department of health under this section shall be deposited into the account and used by the department to cover air ambulance transport services under this section and to implement this section. Other funds used to provide air ambulance coverage, including federal funds, may be deposited into the account. The account may be divided into subaccounts for purposes of administrative management. Funds in the account and any amounts earned from those funds are continuously appropriated and shall not lapse at the end of any fiscal period. For accounting and investing only, subaccounts shall be treated as separate accounts.

The details are reportedly being hashed out by state officials at the moment, but overall this looks from a distance like a form of state fund that would somehow commingle federal and state monies to provide universal air ambulance coverage for state residents. Air ambulance transport services covered by any program administered by the state (including workers’ compensation) are exclusively covered under the section. Then other agencies (including the Department of Workforce Services that administers workers’ compensation) pay reimbursement to the general air ambulance coverage account. As a component of reimbursement, the Department would require state agencies to pay, on a proportional basis, administrative costs necessary to implement the program.

I think legislators are on the right track here in creating a broader coverage program outside of workers’ compensation, provided it is adequate and comprehensive. But next we run into some familiar trouble. Under the law, residents or air ambulance providers would make claims for payment of air ambulance transport services to the Department. An air ambulance provider shall provide services if the provider otherwise makes air ambulance transport services available to persons in Wyoming who are eligible for Medicaid. Under W.S. 42-4-123(c), an air ambulance provider who provides services shall accept payment under this subsection as full satisfaction of all charges, costs and fees relating to air ambulance transport services, except as provided in 42-4-123(d). That subsection, in turn, states:

An air ambulance provider shall collect a copay or other cost sharing requirement for services covered under this section, as established by the department and consistent with federal requirements, based on the following:

 (i)  For persons who are eligible for Medicaid independent of the coverage provided by this section, any copay or other cost sharing requirement shall be consistent with the copay or cost sharing requirement specified for other services under Medicaid;

 (ii)  For persons who are not eligible for Medicaid independent of the coverage provided by this section, any copay or cost sharing requirement shall be proportionate, based on income and shall not be greater than fifty percent (50%) of the allowable costs for air ambulance transport under this section, as determined by the department. 

On one reading the legislation continues to reference “rates, routes, and services of an air carrier.” Morales v. Trans World Airlines, Inc., 504 U.S. 374, 378 (1992). Indeed, this state law explicitly caps rates to 50% (of whatever—it does not matter to what the cap references). Also, tethering rates to federal reimbursement rates is still accomplished through state legislation, so I really cannot imagine a federal court analyzing preemption issues any differently than they have been doing. Indeed as a Kansas state appellate court stated last summer in EagleMed v. Travelers Ins.,

In the alternative, Travelers contends that the Division of Workers Compensation should apply the Medicare fee schedule for air ambulance providers to EagleMed's bills in order to resolve the fee dispute between the parties. In 1965, Congress enacted the Medicare program as Title XVIII of the Social Security Act to provide health insurance coverage to the elderly. Congress later expanded the Medicare program to provide health insurance coverage to certain disabled persons . . .

Based on our review of the record on appeal, we find nothing to suggest that the four injured workers are eligible for Medicare coverage either because of age or because of disability. We also find that the issue of whether to use the Medicare fee schedule to establish the amount air ambulance services may charge to non-Medicare patients is related to the prices charged by air carriers. Moreover, this appears to be a public policy decision that should not be decided by state agencies or state courts. Thus, we also find this issue to be subject to federal preemption.

Barring Supreme Court re-visitation of ADA preemption, or Congressional modification of the Airline Deregulation Act, I would expect most courts to react in similar fashion to anti-preemption arguments premised on state regulation of rates connected to federal benefit reimbursement rates. My guess is it would not take air ambulance companies’ counsel long to write the brief challenging the Wyoming law if it is implemented and applied to one of their number. It is also possible that the state is merely setting up a kind of sub-monopolistic fund meant merely to partially compensate its residents for the staggering costs of air ambulance transportation. But even if that is so, the balance will have to come from somewhere, and the legislation still references rates. This may be a good lesson to state legislatures on the meaning of reference preemption. See District of Columbia v. Greater Washington Bd. of Trade. Still, I sense progress.

Michael C. Duff

May 17, 2019 | Permalink | Comments (0)

Thursday, May 16, 2019

More Federal "Guidance" on Gig Economy Workers - Stale and Not Illuminating

As a professor of traditional labor relations law in addition to workers' compensation law (and as co-author of a labor law textbook), I took notice when people started messaging me that the law of employee status in labor law had changed. It hasn't. The National Labor Relations Board (NLRB) applied the traditional Restatement Second of Agency 10-factor test to conclude in an Advice memorandum that the particular workers analyzed in the memorandum--three separate "units" of Uber drivers were independent contractors.  The cases were consolidated in Region 20 of the NLRB (San Francisco) and the charges were filed in 2015 and 2016. The fact that it took well-nigh three years to get a "recommendation" out the door telling regional offices whether they may even pursue such cases says quite a lot. The cases were slow to coordinate (personnel shortages at the agency?) and no doubt there was a good deal of internal debate and dissension. The fact that the cases were not instantly dismissed suggests they were placed in process on the watch of the "Obama board" and difficult to perfunctorily shake.

I worked in two separate regional offices during my career with the NLRB from 1997-2006. As I tell my labor law students, to death and taxes as among life's certainties, one could perhaps add competing, irreconcilable NLRB "Advice" memoranda. (There is nothing "advisory" about Advice memos - NLRB regional offices must follow them). What are these memos? When a new political party takes power, the new General Counsel (a political appointee) and his/her coterie issue various directives to NLRB regional offices saying, in effect, to pursue/not pursue issues of interest to the new politically-motivated (elections, regardless who wins, have consequences) cast of analysts. The selected issues have usually been contested for years and the internal vacillation is anticipated by career folks (making labor law kind of a nightmare to teach in law school). Are inflatable rats protected labor speech or secondary boycott activity? Are graduate students employees? Are college football players employees? Is McDonald's headquarters a joint employer with its franchisees? The statute (in this writer's opinion, intentionally) provides no guidance.   

What then is the impact of the Uber Advice memo? Agencies' decisions not to issue complaints alleging violations of law are nearly unreviewable by the courts. So anyone alleging at the NLRB that an Uber driver was fired for engaging in union activity will not receive the benefit of the awesome remedial arsenal of the NLRB (insert wry smile here--no mitigated back pay or notice posting? A tragedy!). Similarly, anyone trying to gain governmental certification of a bargaining unit of Uber drivers may be out of luck (though there is an interesting question as to whether categorical exclusion of Gig workers under federal law would give states labor relations jurisdiction they would not otherwise possess -- maybe the drivers can be union-certified under California law: the rule of unintended consequences).  I also suppose in passing that if the NLRB takes the position the drivers are not employees it will not be able to pursue in federal court secondary boycott injunctions against the organizations representing the drivers when those organizations show up at the doorsteps of neutral employers.

In terms of black letter law the only thing worth noting is that the NLRB is predictably following the D.C. Circuit Court of Appeals and, I think, is even hyper-emphasizing “entrepreneurial” opportunity as a factor in determining employee status, a development that I and others have previously derided at some length.  

Michael C. Duff

May 16, 2019 | Permalink | Comments (0)

Tuesday, May 14, 2019

Why Federal Equal Protection Challenges to Workers’ Compensation Statutes Don’t Work

I do not believe that interference with workers’ compensation rights are subject to vindication under the equal protection clause of the United States Constitution (even when the interference is vicious or unfair) because the obstruction does not disadvantage a suspect class or impermissibly interfere with fundamental rights as currently conceived in American law. Thus, for anyone seeking to challenge a workers’ compensation law because it singles out workers’ compensation claimants for unfair treatment, I recommend either selection of a different federal theory (I’ll be discussing federal due process analysis and expanding upon 9th Amendment theory in upcoming posts) or mounting a challenge under state constitutional provisions. (I think there may be some room to argue for intermediate scrutiny, but such approaches have not yet been successful – I write about them here.) Every couple of years I feel it necessary to go through this exercise for the benefit of those healthy individuals whose hobby is not federal constitutional law.

The appropriate standard of review outside of the categories I have mentioned above is whether the difference in treatment between classifications (workers' comp/non-workers' comp) rationally furthers a legitimate state interest. In general, the Equal Protection Clause is satisfied so long as there is a plausible policy reason for the classification, see United States Railroad Retirement Bd. v. Fritz, 449 U.S. 166, 174, 179 (1980). But states are not required to convince the courts of the correctness of their legislative judgments. Rather, “those challenging the legislative judgment must convince the court that the legislative facts on which the classification is apparently based could not reasonably be conceived to be true by the governmental decisionmaker.” Minnesota v. Clover Leaf Creamery Co., 449 U.S. 456, 464 (1981); Nordlinger v. Hahn, 505 U.S. 1, 11 (1992); Armour v. City of Indianapolis, 566 U.S. 673, 685 (2012). A legislature need not “actually articulate at any time the purpose or rationale supporting its classification.” Nordlinger at 15. Rather, the “burden is on the one attacking the legislative arrangement to negative every conceivable basis which might support it.” Madden v. Commonwealth of Kentucky, 309 U.S. 83, 88 (1940); Armour at 681. A law is constitutionally valid if “there is a plausible policy reason for the classification, the legislative facts on which the classification is apparently based rationally may have been considered to be true by the governmental decisionmaker, and the relationship of the classification to its goal is not so attenuated as to render the distinction arbitrary or irrational.” Nordlinger at 11. And there is such a plausible reason if “there is any reasonably conceivable state of facts that could provide a rational basis for the classification.” FCC v. Beach Communications, Inc., 508 U.S. 307, 313 (1993). A classification is generally valid as long as a rational basis is plausible, even if the legislature did not expressly endorse it. See Beach Commc’ns at 313–15; Indiana Petroleum Marketers & Convenience Store Ass’n v. Cook, 808 F.3d 318, 322 (7th Cir. 2015). Rational-basis review tolerates overinclusive classifications, underinclusive ones, and other imperfect means-ends fits. Heller v. Doe, 509 U.S. 312, 319–320 (1993); Gregory v. Ashcroft, 501 U.S. 452, 473 (1991); Vance v. Bradley, 440 U.S. 93, 107–09 (1979). The standard also imputes “a strong presumption of validity” on the contested classification. Beach Commc’ns at 314–15. To over-come that presumption, a challenger must negate “every conceivable basis which might support” the classification. St. Joan Antida High School, Inc. v. Milwaukee Public School District, 919 F.3d 1003, 1010 (7th Cir. 2019).

My advice: Pick another theory.

Michael C. Duff

May 14, 2019 | Permalink | Comments (0)

Friday, May 3, 2019

DOL’s FLSA “Gig” Economy Letter Ignores History and is Dwarfed by 9th Circuit’s Jan-Pro Case

I have been asked a couple of times this week to comment on the apparent narrowing of the FLSA employee standard in a recent Wage and Hour Opinion letter. In a nutshell, the letter tells me nothing I did not already know. “Virtual Marketplace Companies” badly want advance governmental imprimatur for the argument that, although they employ labor, they are not employers. The letter is not really worth analyzing because it is cautiously cabined and advisory: the facts underlying the analysis were spoon-fed to the Wage and Hour analysts in a manner most likely to lead to the foreordained conclusion that the workers in question are independent contractors. It is however telling that the anonymous solicitor of the opinion frames the questions in terms of all “virtual” companies connecting “service providers to end-market consumers to provide a wide variety of services, such as transportation, delivery, shopping, moving, cleaning, plumbing, painting, and household services.” The bloom is off the rose with respect to the hegemonic designs of this deregulatory project. Silicon Valley Gig work is a quaint anachronism. And it should be remembered that is some states these marketplace contractor laws have been applied to workers' compensation.

Anyone wanting to read the actual employee-status intent of Congress in enacting the Fair Labor Standards Act (the statute at the center of the current Wage and Hour letter) would do much better reading David Weil’s Administrator’s interpretation (Weil was a former Democratic Wage and Hour administrator). While Weil’s analysis is also a political document, it contains a far more comprehensive account of the FLSA employee question, including this nugget from the Congressional history as quoted in footnote three of the Supreme Court’s opinion in U.S. v. Rosenwasser:

Sen. Rep. No. 884 (75th Cong., 1st Sess.) p. 6, states that the term “employee’ is defined to include all employees. * * *’ Senator Black said on the floor of the Senate that the term ‘employee’ had been given ‘the broadest definition that has ever been included in any one act.’ 81 Cong.Rec. 7657. (emphasis supplied)

Also from Rosenwasser,

The term ‘employee’ is defined in Section 3(e) to include ‘any individual employed by an employer,’ with certain exceptions not here pertinent being specified in Section 13, and the term ‘employ’ is defined in Section 3(g) to include ‘to suffer or permit to work.’ A broader or more comprehensive coverage of employees within the stated categories would be difficult to frame. (emphasis supplied)

All I can say is that I would feel pretty confident litigating an FLSA “virtual marketplace” employee case, even if Chevron deference were applied by the courts to the DOL interpretation. Unless the worker in question is in fact a computer (or perhaps a robot), I’d like my chances under current law.

Meanwhile, the 9th Circuit’s opinion in Vazquez et al. v Jan-Pro Franchising brought application of the ABC test to Jan-Pro franchisor-franchisee “arrangements” closer to a day of substantive reckoning. The Jan-Pro structure is an elaborate scheme which, at the end of the day, unsurprisingly classifies janitors as independent contractors who, accordingly, are denied statutory labor protection. After a tortuous procedural journey worthy of study in any first year civil procedure class (there was ancillary litigation in both Massachusetts and Georgia), the 9th Circuit concluded that none of the prior litigation was entitled to preclusive/res judicata effect (the specific litigation under review in the 9th Circuit involved California state-law plaintiffs and had been severed from earlier diversity of citizenship rounds of litigation). Accordingly, with the California-based litigation remaining “live,” the substance remaining was whether employee-status questions would be controlled by Dynamex (establishing the ABC employee standard for California wage orders), which had been decided well after the onset of the Jan-Pro litigation. The 9th Circuit answered in the affirmative. The Court first reminded readers that, “[t]he principle that statutes operate only prospectively, while judicial decisions operate retrospectively, is familiar to every law student.” The Court concluded on this point that “[g]iven the strong presumption of retroactivity, the emphasis in Dynamex on its holding as a clarification rather than as a departure from established law, and the lack of any indication that California courts are likely to hold that Dynamex applies only prospectively, we see no basis to do so either.”

The second major issue was whether applying Dynamex (the ABC employee status standard) retroactively would offend due process because, among other reasons, Jan-Pro had relied on the old standard. (An exception to the retroactively rule at times under California law). The Court found that a state court modifying common law was entitled to deference exceeding that afforded during rational basis review of a legislative enactment (that is a lot of deference). The 9th Circuit further concluded that the California Supreme Court’s reasoning was “neither arbitrary nor irrational,” a predicate finding required to establish a due process violation. The Circuit stated,

By applying Dynamex retroactively, we ensure that the California Supreme Court's concerns are respected. Besides ensuring that Plaintiffs can provide for themselves and their families, retroactivity protects the janitorial industry as a whole, putting Jan-Pro on equal footing with other industry participants who treated those providing services for them as employees for purposes of California's wage order laws prior to Dynamex. And retroactive application ensures that California will not be burdened with supporting Plaintiffs because of the “ill effects” that “result[] from substandard wages.”

Due process was not deemed offended, and the case was remanded for decision on the merits, but with a wrinkle only occasionally seen in federal circuit court cases: the Circuit offered “observations and guidance” to the district court on remand to the district court. The first interesting thing about the “guidance”—from this tort professor’s perspective—is the Court’s caution to separate carefully issues of “control” in the tort vicarious liability context from those in the employer-employee context. As I often tell my students, vicarious liability has historically possessed a “push” dynamic (push servant status away) while statutory coverage has possessed a “pull” dynamic (pull servant status in). For more, see here, and here. The second interesting thing about the “guidance” is that the Court signaled that Jan-Pro, under Prong B of the ABC test (concerning which the employer has the burden), has not under the existing record established that “it was not engaged in the same usual course of business as the putative employee.” I read the opinion as saying to the district court, develop the record more if you like, but you probably do not have to do so under Prong B. Granting MSJ in favor of plaintiffs is supportable right now.    

Given the extent of economic activity encompassed by the 9th Circuit opinion, and the non-binding nature of the DOL’s Wage and Hour Letter, it is not difficult for this writer to see that the former development has much greater impact on the so-called Gig economy than the latter. All Dynamex pipeline cases (cases currently in process that arose before Dynamex was decided) may have instantly experienced a large increase in value.

Michael C. Duff

May 3, 2019 | Permalink | Comments (0)

Sunday, April 28, 2019

The Origins and Effects of My Workers’ Compensation “Viscerality”

I am about to use a largely academic word—viscerality—to explain my atypically (for a law professor) non-academic relationship to workers’ compensation law. Please be patient with me. Viscerality is “a quality of being related to the physical as opposed to the virtual or imaginary world or reality.” For a legal academic, I have an unusual relationship to the world of work injury. I performed fifteen years (long years) of physical labor after high school before attending law school in 1992. In a nutshell, I lifted heavy things in warehouses, and in and around airplanes. I have been hurt—small breaks, deep cuts, purple bruises, vexing strains, and a balky back—and I’ve witnessed good friends getting hurt (some of them seriously). I’ve been in a warehouse when a man (not my close friend, but horrific just the same) was crushed to death by a forklift. My grandfather died of black lung when he was 52 and I was 10.

This background of viscerality rendered me a “difficult” first-year law student; and perpetually causes me to be astonished at a legal world in which it is assumed without (real) debate that a “contract” or “property” right is more important than the right to a remedy for physical injury. The places from which I hail might assign a different priority, if only they could. Because of physical injury rights’ relative unimportance (in the schema of official power), the legal boundaries within which workers’ compensation functions are only lightly policed by state courts (and really not at all by federal courts). In most places, adjustments to the workers’ compensation system need only be vaguely articulable as rational—if any legislative explanation of modification of the rules is “not irrational” it is upheld, and the burden is on the challenger to show irrationality. (I would not like the state of affairs even if legislatures more frequently represented citizens).

But in my old neighborhood such a “not irrational” standard would be unacceptable. And I’ve never really left my neighborhood (even though I now live 1800 miles away from it, as the crow flies). I continue to see the problem as someone from my neighborhood might. An intruder in my house is a threat to my personal security. I might want a gun to repel the intruder. A world in which those who could cause me grievous physical injury need incur no great cost (when all the paperwork has been completed) is a world in which I will sleep lightly. What is your definition of personal security? I fear more than guns. Personal security was the first of the absolute rights discussed in William Blackstone’s Commentaries (always close at hand to the early American lawyers). This son of East Boston, Mass (and of other working class places) would fear no dialogue with them.  I plan to take my viscerality more deeply into the 9th Amendment this summer. Wish me luck.

Michael C. Duff

April 28, 2019 | Permalink | Comments (0)

Saturday, April 13, 2019

Managing Cynicism: Teaching Law Students about Dueling Doctors in Workers’ Compensation

It does not take a law student embarked on my workers’ compensation course long to realize that, in many of the litigated cases we read, the opinions of the doctors involved are diametrically opposed. And opposed despite the underlying complexity of the medical issue under dispute—it is nearly self-evident in many of these cases that it would be impossible to determine whether disability was, for example, work-related “to a reasonable degree of medical certainty.” The second and third year law students making up my class have been exposed to talismanic expositions of the adversarial system in which they will work—“not a perfect system but the best we have,” & etc. (We’d have to ask Leibniz if it is the best of all possible worlds). But come on. Every case? Completely opposed opinions? I try to reassure them: this is not true in every case; by definition, we are reading litigated cases. Difficult cases. The problem is that so many of the litigated cases my class reads reveal absurdly opposed opinions at which all but the most sophisticated of repeat players might blush.

This, to me, is the Achilles heel of the system. We resort to expert opinion to answer what is essentially unanswerable: in many cases we cannot (in reality) disentangle work-related from non-work-related causes. We can’t do it in tort law either – we use terms like “but for” and “proximate” causation as if we know what the terms mean. As a student of David Hume, I know better. When there are multiple causes we resort to the “substantial factor” test and pretend we can say that a cause has made an “important” (“more than a mere scintilla”?) contribution to a harm. We also have incredible difficulty explaining the origins of pain. In an odd way it is actually comforting to think that unexplained pain is either the product of employee faking and malingering or is always real but denied unreasonably by the unfeeling agents of profit maximization.

In close cases involving the exercise of judgment, in connection with essentially unanswerable questions, who will make the bottom-line decision of compensability? Students understand the legislative urge (when viewed from 40,000 feet) to break free of the dueling-doctor-dyad in an attempt to achieve the holy grail of “neutrality.” It is somewhat harder to explain why the structures we pretend are neutral often aren’t. The IME, QME, Medical Panel, EMA often look from the outside like parties with allegiances (financial or otherwise), particularly from the perspective of an injured worker. And if the “neutral” opinion of that expert is binding, or may be disregarded only if there is “clear and convincing” evidence to the contrary, it is hard to explain why the selection of that individual (the de facto decision maker) must not only be actually free from impropriety but must also be free from the appearance of impropriety viewed from the perspective of a truly disinterested third-party. This is an ethical concept lawyers and judges know well, but which seems conveniently de-emphasized in “modern times” when assessing conflicts of interest in many professions (workers’ compensation is hardly alone in this regard).  

So what is a professor of workers’ compensation to say about these matters? Three thoughts come to mind at the moment. First, any time entitlement to a public benefit is being determined one must be clear-eyed about who is in reality making decisions and apply the same conflicts rules upon that person that we would impose upon any public official. Naïve? So was the notion of due process in 1215—I’m glad no one gave up on that ideal in the 13th century because it might be too hard to achieve (whether we can keep it is another question). Second, we must work hard to maintain a balanced perspective about what interests cheat. All interests cheat—but some cheating has greater impact on the system as a whole, and that is what should be focused upon. And, by the way, most people don’t cheat. If I didn’t believe that, how could I believe in the ideal of the rule of law? Because I do believe in the ideal of the rule of law, I like to think I’m a pretty good choice for a law professor. Third, we may at some point have to (again) admit that a benefits system resting upon slender reeds of causation will not work in the long run. Depending on what happens with health care in the next couple of years, the stakes of the causation determination may diminish. Thinking along these lines when considering the fatiguing spectacle of dueling doctors seems much better than descending into cynicism.    

Michael C. Duff    

April 13, 2019 | Permalink | Comments (0)

Sunday, April 7, 2019

Workers' Compensation Opt Out and Exclusivity

In a recent post on the Arkansas opt out bill (that looks like it is going away) I mentioned that the drafters had not repeated the mistake of including exclusivity in the bill, as the Oklahoma drafters had in that state's now-struck opt-out bill. A colleague wrote and asked me to expand on the point. Here was his question:    

I understand that workers cannot sue in tort for matters relating to ERISA plans. But in these Arkansas arrangements, what about suing employers for workplace injuries? If my employer has one of these proposed Arkansas plans and I am injured at my employer’s worksite, why couldn’t I sue the employer for damages related to my work-related injury?

The exclusive remedy provided under the Arkansas workers’ compensation law limits itself to “the provisions of this chapter.” Wouldn’t that language exclude the new opt out law, which has no similar language granting exclusivity to the rights of employees under the new law? So as an employee, would I have access to the benefits provided under the ERISA plan, and also the right to sue in tort?

This is an excellent question.  Here was my response:

A few points. Damages overall would be severely limited under opt-out bills purporting to establish ERISA-governed plans. Med-Mal suits against hospitals, doctors, etc., are of course immediately knocked out by ERISA. And, if the employee accepts the plan’s indemnity and medical benefits—most employees would have no choice, truncated as those benefits may be—he/she would have to reimburse the ERISA plan from any tort recovery. Even without ERISA, damages would be folded into the medical and indemnity benefits paid under the alternative plan. The employer would argue, even under state law, that all/most damages are/will be offset, rendering settlement for the plaintiff’s lawyer a nightmare.

Then we have the Texas phenomenon. In Texas, an employee can’t even get a tort recovery with which to reimburse the ERISA plan because employment is very commonly conditioned on signing an arbitration agreement that covers tort suits. As you know, the FAA preempts states from prohibiting arbitration as a condition of hire. Whatever you get in arbitration will be much less than a traditional tort recovery, and you would still have an obligation to reimburse the ERISA plan for its outlays. I’m convinced that the grand strategy here (it's already been implemented for some time in Texas) is to create an interlocking system of alternative benefit plans and arbitration agreements in every arena of labor and employment law. You may have been following arbitration closely in the context of #MeToo. Here, I discuss the phenomenon and in the first paragraph address workers’ compensation and arbitration agreements.

So—bottom line—I think the opt-out architects are starting to realize that there is no point insisting on exclusivity in an opt-out plan (and we saw from the Oklahoma experience how bad from a public relations/political perspective the optics were–not explicitly cutting off a tort right may also take away some state constitutional arguments) because tort is already so badly hamstrung. I also don’t think it is an accident that these opt-out laws appear in states where tort reform is hot. That’s why I try to keep track of tort reform developments: the less afraid you are of tort, the more willing you might be as a rational actor to risk giving up exclusivity.

I'll add one additional point that I did not mention to my colleague. When I participated on an opt-out panel at the National Press Club a few years ago, I had the good fortune of sharing a stage with erudite Workers' Injury Law & Advocacy Group official Chuck Davoli and opt-out architect Bill Minick of Partnersource. The room was a bit tense and the views of the panel participants diverged substantially, as one would anticipate. And I left out one interesting participant: Bruce Wood of the American Insurance Association, whom my blogmate Judge David Torrey featured on this blog a couple of years ago. The AIA has been sharply critical of the opt-out model, and once you understand the vastly reduced liability created by tort reform, arbitration agreements, and ERISA opt-out plans containing no substantive benefit floors, you can see why. Heck, any employer could self-insure in this environment. All you need is a low cost third-party administrator and you are good to go. And the costs that don't get covered?  They "go" somewhere else. Get the picture?

Michael C. Duff  

April 7, 2019 | Permalink | Comments (0)

Friday, April 5, 2019

Further Remarks on the Arkansas Workers’ Compensation Opt-Out Bill (That May Be Going Away)

While rumor has it the Arkansas opt-out bill, Download Ark Opt Out Bill (002), does not have time to be enacted into law, it has nevertheless provided me with a wonderful opportunity to get a look into the architects’ minds. This is a useful exercise because, as I have said repeatedly, opt-out is not going away. A section by section dissection of the bill would have you, my dear readers, heading for the exits. But I think a “moderate delve” may be tolerable.

The first major thing to note is the unusual posture of the bill. It was “dropped” into legislative session with very little time left to enact it. Under Section 5 of the bill:

(a) The state shall seek a federal waiver for regulatory authority to regulate issuance of a universal workers' compensation insurance policy under this chapter;

(b) The universal workers’ compensation insurance policy issued under this chapter shall be to one (1) company with no more than 500 employees;

(c) No additional universal workers’ compensation insurance policy shall be issued until the General Assembly grants authority to universal workers’ compensation carriers to issue universal workers' compensation insurance policies to an authorized employer.

It is hard to escape the conclusion that the drafters immediately feared the statute would not survive ERISA scrutiny (I share their assessment—I think much of the content of the bill would be preempted by ERISA, both under Section 514 and Section 502) and would not even take the chance of rolling out the system in the absence of a federal “waiver.” This is quite interesting. I am not sure what the drafters are contemplating the federal government could waive. Surely it cannot mean that the state authorities anticipate that the federal executive branch will “waive” the congressional determination that state laws “relating to” employee benefit plans are preempted by federal law. (Agencies may, of course, at times waive requirements that have been established administratively, a process roughly equivalent to prosecutorial discretion). But I would be very surprised to learn that anyone with legal training in the Department of Labor believes the agency possesses the authority to disregard a congressional directive. In any event, the drafters seem to contemplate holding the state statute in a kind of “abeyance” during which permission will be sought from the Feds—post enactment—before proceeding further (so don’t worry legislators if you don’t quite understand the details). A bit weird and this presents—uumm—a bit of a federalism tension.

The second major thing to note is that the bill is very poorly written. It is so poorly written that I feel confident it was drafted in great haste; why, I don’t know. Regardless, it is a very difficult bill to read—in sections it is impenetrable.

There are a few major substantive issues worth mentioning here.   

Direct/Indirect Consequence

Substantially fewer benefits are available to a “covered employee” for a “covered disability” that is not the direct consequence of a “covered injury” by accidental cause than for a “covered” disability that is the direct consequence of a covered injury by accidental cause. Yep, that will sure simplify the causation analysis. I refuse to scrutinize the distinction at length (there is a lot of imprecision created by overuse of the term “covered”), but anyone who imagines there would be clearer legal outcomes utilizing a direct/indirect “consequence” standard instead of the “injury by accident arising out of and in the course of employment” standard is wrong. But that is not the point. The point is that the state is purporting to authorize and regulate ERISA plans in lieu of workers’ compensation. And in an ERISA regime, it would be a Plan Administrator (not a judge or other public official) making these kinds of causation/“consequence” determinations. The private administrator’s determinations would almost always have to be challenged in federal court under an arbitrary and capricious standard of review (for you non-lawyers, that means the party appealing usually loses).

Covered/Non-Covered Medical Expenses

Although the bill lays out how rates of medical expense compensation will be determined—there is a lot of tethering to CMS Medicaid fee schedules, for example—the statute does not unequivocally state what medical conditions are covered in the first place. See Section 11-16-204. But in Section 11-16-205 there is a somewhat elaborate mechanism whereby the covered employee and “authorized medical care practitioner” together may determine that “noncovered medical care is preferred” but the provider nevertheless (despite the noncoverage of the preferred treatment) “desires compensation under this chapter.” Did I mention that the practitioner is permitted to balance bill the “covered” employee for noncovered medical care?

My admittedly jaundiced eye sees a scenario in which the doctor tells the injured worker, “look you need procedure x, but they will only pay me for procedure y under the terms of the plan. So sign this acknowledgement of financial responsibility if you want me to proceed further.” Frankly, it is a chilling prospect.  I guess you should not deliver painkiller to the injured worker until all of the correct signatures have been obtained at the scene.

Preference for Lump Summing and Actuarial Benefit Caps

Although biweekly indemnity benefits are permitted, it caught my eye that maximum benefits are frequently expressed in aggregate terms:

“Indirect consequence” injury=max of 156 weeks at the normal benefit rate (75% of preinjury AWW); all compensation (presumably also medical benefits) 234 weeks x national (Longshore) AWW

Direct consequence” injury=max of 520 weeks x normal rate; all compensation 780 weeks x the Longshore rate

Injury by co-employee=max of 2600 weeks x normal rate; 3900 weeks x Longshore rate

In short, there is a lot of math to do, and the obvious expectation is that the opt-out insurance carrier will lump sum claims at present value. It is not clear to me that under the bill injured workers could obtain legal representation to check all that math (and other things). Unless I am missing something—and it is possible that I am—there is no explicit mention of attorneys’ fees (or even attorneys) in the bill. (In a few places in the bill curious reference is made to attorneys-in-fact acting as employee representatives). Perhaps the bill means to incorporate by reference sections of the existing Arkansas Workers’ Compensation Act.

No Permanent Partial Incapacity Benefits

While 11-16-209 of the bill provides compensation for scheduled losses, I find no provision in the bill for partial benefits. None at all. If the drafters thought they were making such provision in 11-16-201, the section should be redrafted for clarity. Again, perhaps this is an incorporation issue?

I could dance all night, but will stop here. It hardly seems necessary to conclude that a system of the kind presented here (again, allowing for the possibility that I am not getting the entire intended statutory picture) is one in which employers: have control of causation determinations, have the ability to shunt significant responsibility for medical costs on to employees (and others), do not appear to assume responsibility for partial incapacity benefits at all (except arguably by proxy through use of scheduled benefits), and make it difficult for employees to ascertain to what benefits they are entitled even while making no provision for employee attorney representation. Such a system would obviously reduce employers’ operating costs substantially. I think ERISA, as currently written, would prevent wide scale adoption of such systems (seeking both to spur creation of and to regulate ERISA-governed plans). In another post, I will discuss similarities between the Arkansas and Wyoming constitutions that I think create additional state law obstacles to enactment of such systems.    

 Michael C. Duff


April 5, 2019 | Permalink | Comments (0)