Monday, June 8, 2015

Professor Burton as a Witness

There has been a lot of discussion in Florida about Padgett. The case has a lot of titles by which it is referenced, as I noted last fall in "a Rose by Any Other Name." The procedural path of that litigation is interesting. In Now We Know, I described how the case came to be pending before the Third District Court of Appeal in Dade County, Miami, Florida. In Update on Padgett, I gave a little coverage to the oral argument in the case and provided a link to the judges and the video.

Is Padgett significant? Questions like this are asked repeatedly as I run into workers' compensation professionals throughout the country. It is a difficult question because first you would have to define "significant." Understanding the context of "significant, many an attorney has pointed out to me that any benefit in workers' compensation may seem insignificant to some, but may be very significant to an injured worker seeking it. That is a fair caution to keep in mind when thinking about workers' comp. That is, "significant" may be in the eyes of the beholder. 

The Padgett analysis is getting some publicity though. WCI360 has a copy of the original order from last August. It coincidentally was issued by the Circuit Court on August 13, 2014 days prior to the annual workers' compensation conference in Orlando.  It seems probable to me that we will hear what the Third District Court has to say before the next annual conference. I recently noted that the decision could come any Wednesday.

To the substance of Padgett, one of the foundations upon which this order stands is the testimony of Professor John Burton. Professor Burton has been around workers' compensation since the National Commission in the early 1970s.  He made several points which the Circuit Court noted in its order last August. 

Professor Burton contends that the country's shift to comparative negligence instead of contributory negligence made employees more likely to recover in a civil lawsuit against her or his employer. This, he contends, changes the "value" of what has been given-up by the employee in the "grand bargain." The right to sue, he says, is now worth more than it was in the days of contributory negligence. 

He also notes that "the limited amount of benefits that are paid currently for permanent impairment are conservatively less than would have been available under the law in the seventies." He concluded that Florida's impairment benefits for permanent partial disability are "nowhere near the standards that would be consistent with the National Commission's recommendations." This argument is essentially that what the employee received in the "grand bargain" is worth less than it used to be. 

It is worth noting that few states comply with all of the recommendations made by the Commission back in the 1970s. In fact, it appears that few states have ever complied with the recommendations. So does that mean that workers' compensation was not the "grand bargain" in the 1970s? Because the Commission did its work in the early 1970s, before the reforms that have occurred throughout the country, has the level of benefits ever been sufficient from Professor Burton's perspective?

The affidavit of Richard Berman relied upon by the Judge in Padgett, describes the law becoming "unconstitutional as an exclusive remedy in stages," and notes that there was no additional benefit added in 1973 "to account for the change in the value of the 'trade'" that is workers' compensation. He seems to agree with Professor Burton's conclusion, which seems to be that the value of benefits has declined, the odds of prevailing in tort and thus the value of being able to sue in tort increased, and thus what may have been a fair trade (or Grand Bargain) is no longer such. 

Illinois struggles with workers' compensation in 2015, which has been in the news. The Illinois legislature convened a "committee of the whole," essentially a committee meeting to which the entire house of representatives was invited. It is in the committee meeting process that people other than legislature members testify and discuss topics. Professor Burton was one of the speakers. His testimony is available on Jon Gelman's blog

His testimony says the following: 

• The 1960s. Statutory benefits increase by more than 28 percent. 
• The 1970s. Statutory benefits increased by more than 50 percent. 
• The 1980s. Statutory benefits increased varied over the decade: up 18 percent in the first five years but only 5 percent in the last five years. 1985. 
•The 1990s. For the first time since at least the 1950s, statutory benefits declined during the decade, although the decline was only one percent. 
• The 2000s. Statutory benefits declined over five percent during the decade. 

• The 2010s. Statutory benefits have been essentially been flat. 

This is interesting. Workers' compensation has been in Florida since 1935. Do the statistics cited in Professor Burton's testimony mean that a dollar of benefits in the 1950s became $1.28 ($1.00 x 1.28) during the 1960s? Did that become $2.78 ($1.28 x 1.5) in the 1970s? Did that become $3.28 (2.78 x 1.18) in the early 1980s and $3.44 ($3.28 x 1.05) in the late 1980s? Does this mean that in the 1990s the decrease in benefits was to $3.40 ($3.44 x .99), and the decrease in the 2000s was to $3.23 ($3.40 x .95)?

Are these figures in actual dollars or have they been adjusted for inflation? Was there a real increase or an effective decrease due to the purchasing power of the money? If the figures are in inflation adjusted dollars, does that mean that benefits today are roughly 300% of what they were in the 1950s? Have benefits increased, or does inflation merely make it look that way? 

Effective and persuasive testimony would make these questions clear. For the bargain to remain "grand," must benefits consistently increase? Is the overall economy worthy of consideration in this regard. So many people saw decreases in the 2000s, in purchasing power of their money, in compensation, in value of their investments. It was a tough decade on many in the United States, and in fact the world at large saw economic struggle. 

Professor Burton testified in Illinois that some of the changes in workers' compensation are focused on limiting employer liability for some injuries, through what he refers to as "more restrictive eligibility standards." He itemizes such things as requiring objective medical evidence of injury, limits on stress claims, and limits on coverage for aggravation of pre-existing conditions. 

He testifies that a Major Contributing Cause (MCC) standard in Illinois could "jeopardize the exclusive remedy provision in workers' compensation." There is a lengthy discussion of Oregon's efforts with an MCC standard. He notes that Oregon's Supreme Court has concluded that the legislature cannot "eliminate both the workers’ compensation remedy and a tort remedy when the employment is not the major contributing cause of the condition." He concedes however that "similar constitutional challenges in other states have not all been successful."

The Illinois testimony is an interesting read. As is the Judge's ruling in Padgett

There seems to be a building consensus among the prognosticators and arm-chair, Monday morning quarterbacks. The general belief is that Padgett will be reversed by the Third District based upon procedural issues and sent back to the trial court. Few believe that the District Court will affirm the order or that this case will progress to the Florida Supreme Court.  

Is Padgett significant if that is the outcome? Some would argue it is not, and that it becomes a footnote in an otherwise tense year of waiting on other Florida Supreme Court decisions in more significant cases like Casellanos and Westphal. When I hear that, I always question whether either of those cases will be "significant" and remind myself that their significance depends perhaps on their outcome. Either could be a landmark case, but either could also be yet another footnote. That depends entirely upon the perception of the marketplace to the Court's decision.

Others would argue that even if Padgett is reversed, the decision and testimony quoted therein is significant in that it engendered a great deal of discussion about workers' compensation in Florida and across the country. If the propensity to generate discussion and debate equates to significance, then one might argue that Padgett is already significant. From the Circuit Court in Miami, it has been a topic of conversation in  many seminars and likely coffee shops over the last year. 

Regardless of the decision of the Third District, the debate will continue about the "grand bargain." The news might do a better job of clarifying the debate. Did American workers' compensation benefits actually rise as Professor Burton said, or were those increases inflationary effects? Did the benefits actually decrease in the 2000s or were those likewise deflationary effects? Knowing these things in context would add to the quality of the debate that now rages. 

In classic attorney fashion, I will tell you whether Padgett, Castellanos, and Westphal will be significant. The answer is "it depends." I sometimes wish that someone could be more concrete and clear. I wish that there was not so much uncertainty, but the fact remains that there is. Whether and how significant these decisions may be will depend upon them and how the marketplace perceives them. Unfortunately, no one can accurately predict. And so we wait. And the wait itself may be drawing to an end. 



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