Florida waits breathlessly for decisions from the Supreme Court regarding the constitutionality of Fla. Stat. §440.34 (Castellanos, also discussed here and here), the appropriate interpretation of temporary indemnity under Fla. Stat. §440.15 (Westphal, also discussed here and here), and whether it will revive the “grand bargain” debate in Florida Workers’ Advocates v. ? (Padgett). That case was recently reversed by the Florida Third District Court, but the plaintiffs there have asked the Florida Supreme Court to review.
A few people have asked why the Florida Court is taking so long with the decisions in Castellanos and Westphal. My unscientific (and largely incorrect) predictions of when it might rule are here. The Court has returned from the August “recess” and is issuing opinions again. Some were disappointed on September 10, 2015 when none of these three workers’ compensation cases were among those first released upon the Florida Court’s return. However, there was a very important decision clarifying that constitutional judges who wear robes should wear plain black robes without embellishments.
Meanwhile, the Commonwealth Court of Pennsylvania delivered a decision on Friday, September 18, 2015 that will be the subject of much discussion in coming days, Protz v. Workers’ Compensation Appeal Board (Derry Area School District), Case No. 1024 C.D 2014 (hereafter “Protz”). It will be meaningful in Pennsylvania, and may be an important decision elsewhere.
The Protz Court concluded that the state (or Commonwealth) has the authority to define standards by which impairment is determined, and in doing so it may adopt standards published by private groups. Statutory reliance on the AMA Guides is permitted. However, once adopted, those guidelines remain in effect as adopted even if that private group (the AMA) thereafter amends or changes them.
According to a site maintained by the Elizabethtown Pennsylvania School system, in Pennsylvania the Supreme Court is the highest state court. There are two parallel intermediate appellate courts in Pennsylvania, the Superior Court and the Commonwealth Court. Either can “issue petitions for review to the Pennsylvania Supreme Court.”
The Superior Court reviews decisions from the state’s county courts. The Commonwealth Court reviews “cases involving the state government, regulatory agencies and” a variety of lawsuits. The Commonwealth “Court is made up of nine justices.” They hear cases generally in three-judge panels, similarly to Florida’s First District Court of Appeal. The decision last week however was en banc, decided by the entire court, although only seven justices participated.
The Protz decision was a narrow victory. Three of the seven justices dissented, leaving a majority by one vote. Justice Covey wrote a dissent in which Justices Simpson and Leadbetter joined. Justice Simpson also wrote a separate dissent.
There will be those who see this as a Pennsylvania issue and leave it at that. Others will suggest that the decision has broader implications. The critical effect of the Court’s conclusion is that Pennsylvania has thus retreated in Protz from the American Medical Association (AMA) Guides to the Evaluation of Permanent Impairment (6th Edition) to a prior version, the AMA Guides 4th Edition. This is not entirely unpredictable; one Pennsylvania judge has reportedly been quietly rescuing copies of the 4th edition from the recycle bin for years in preparation for just such a potential outcome.
More on the AMA Guides. According to the American Academy of Disability Evaluating Physicians (AADEP), the AMA Guides were conceived in the 1950s and 60s, and were first published in 1971. The Second Edition came 13 years later in 1984, followed by the Third four years later in 1988. The 4th Edition was published in 1994. The Fifth followed 6 years later in 2000 and the Sixth in 2007. The concept of the AMA Guides is not yet fifty years old, and has seen significant revisions in the 44 years since the 1971 first edition.
Florida once ascribed to the AMA Guides, but took a path less travelled in 1990, electing to mandate the creation of The Florida Guides to Permanent Impairment. As an interim step, Florida used the Minnesota Guides (and the AMA Guides for conditions not addressed in the Minnesota Guides) from 1990 until The Florida Guides were completed and adopted in 1997.
Some question why Florida has its own guides, and in August 2015, at #WCEC2015 in Orlando, the Florida Division of Workers’ Compensation seemed to ask that question at a public meeting. In light of Protz and the other cases mentioned here, the wisdom of The Florida Guides, promulgated and adopted by the state and revised thereafter only by the state may be more clear.
The majority in Protz concluded that section 306(a.2) of the Pennsylvania “Act (is) unconstitutional.” It explained that a recovering worker in Pennsylvania is entitled to benefits for total disability, but this may be reduced to a partial disability “if he or she has a total impairment of less than fifty percent.” Thus, the extent of disability payment is directly impacted by the impairment delineated by the applicable Guide.
Ms. Protz was receiving benefits, when the employer obtained an “IRE,” or impairment rating evaluation. That IRE determined a permanent impairment rating (PIR) based on the AMA Guides 6th Edition (the “most current” edition). Based on the result of that IRE, the employer sought to reduce the worker’s entitlement period for benefits, and succeeded at the trial level and before the Workers’ Compensation Appeal Board.
Ms. Protz complained that if the IRE had used the AMA Guides 4th Edition, her benefit period would not have changed as her PIR would have been greater than 50%. She sought review by the Commonwealth Court asserting that Pennsylvania’s mandatory use of “the latest edition” of the Guides improperly delegated authority of the state to the AMA.
The Court distinguished a similar prior constitutional challenge. It noted that in Protz, the claimant established that use of one edition of the Guides (6th) versus another (4th) resulted in actual harm to Ms. Protz, a proof that was not adduced in the prior appeal argued as controlling by the employer (Wingrove v. Workers’ Compensation Appeal Board (Allegheny Energy), 83 A.3d 270 (Pa. Cmwlth 2014)).
The Court noted of the Guides that “each edition can change the impairment rating for the same injury.” This is inarticulately stated. The Guides are inanimate and cannot change anything. But clearly, the rating for any particular injury/outcome may be different pursuant to one edition versus another. The Court explained that section 306(a.2) requires that the “degree of impairment” shall be determined “pursuant to the most recent edition of the American Medical Association Guides to the Evaluation of Permanent Impairment.” (emphasis added).
The majority concluded that the effect of this statutory language would allow a private organization, the AMA, to determine the standards for impairment without legislative oversight. As such, this provision violates the Pennsylvania Constitution which states “the legislative power of this Commonwealth shall be vested in a General Assembly, which shall consist of a Senate and a House of Representatives.” It is the legislature that would decide on the determination of impairment, not the AMA, according to the majority. The legislative attempt to allow the AMA to do so with the publication of future editions was held to be an improper “delegation.”
Authority of the government in America comes from the people. This is not a universal truism across the globe, where a variety of totalitarian regimes thrive on the strength of military force. In America, the people have granted government its authority and in theory the government’s power is limited.
In line with that constitutional theory, powers are specifically granted to the executive, judicial and legislative branches of government. Each has a role to fulfill, and thereby obligations to the people and responsibilities to its co-equal branches.
On the subject of constitutions, it is important to remember that the U.S. Constitution is the supreme law of the land. The U.S. Constitution says so in Article 6, the “supremacy clause.” This is important to remember because that Constitution applies to and protects us all.
Through this document comes definition of national government and the protection of various rights, either stated in the Constitution itself or implied by the context of the document. As important as this document is, it does not stand alone in protecting rights and defining government power.
Each state likewise has a constitution that defines the branches of state government. States are also free to provide greater protections of rights than those found in the U.S. Constitution, but not to contradict the U.S. Constitution. A state’s treatment of persons there is therefore constrained by both the Federal and that state’s constitution.
An important point of last week’s decision in Pennsylvania is that this portion of that state’s workers’ compensation law has been deemed unconstitutional pursuant to the Pennsylvania Constitution. Specifically, the provisions which create and empower the branches of Pennsylvania government. This makes it a decision which could influence other state’s courts, but possibly not to the extent it might had the Protz decision been based on the U.S. Constitutions guarantees, such as the Due Process or Equal Protection clauses.
Much authority is invested in legislative bodies because legislatures are arguably the branch of government closest to the people. It would be inefficient however, for the legislature to manage regulation of specifics in the vast assortment of various areas in which government is expected to act. Imagine having to convene the full legislature to debate and respond to the subtle but constant changes in the world around us.
In a concession to expeditious action, many of the day-to-day needs of the people have therefore been delegated by legislative bodies to the executive branch of government. As Lawrence Tribe explains in his treatise on Constitutional Law, “under the necessary and proper clause . . . any constitutionally granted congressional power implies a power to delegate authority under it sufficient to effectuate its purpose.” (Tribe, American Constitutional Law, Second Edition, §5-17, p 362).
To this end, various familiar agencies have been created by law, with the passage of what are commonly called “enabling statutes.” With such laws legislatures create executive branch agencies, define the scope of their authority, and charge them with responsibility for various aspects of governance. This process is the heart of the existence of the familiar Environmental Protection Agency, the Internal Revenue Service, the Departments of Energy, Education, Transportation and more.
In a similar vein, state legislatures have created agencies to manage and regulate workers’ compensation. They are referred to as “Boards,” “Commissions,” “Divisions” and more. Florida’s statute creates and empowers two agencies, the Division of Workers’ Compensation (DWC) and the Office of Judges of Compensation Claims (OJCC), an agency to regulate the business of workers’ compensation and an agency to adjudicate disputes about benefits. In most other states these responsibilities are vested in a single agency.
But the point is that the powers are vested by legislation that creates the agency or agencies, and defines the power of executive government that is vested therein. After such legislation, the legislature may be relieved of the daily management, having delegated it to the executive branch.
And that in a nutshell is delegation. Delegation is critical to the concept of state agencies, and the regulation and authority vested therein. The complaint of Ms. Protz is that the Pennsylvania legislature in this instance delegated outside of government, to the American Medical Association.
Can a state legislatively adopt a set of parameters by which benefits could be measured or delimited? Presumably yes. The Florida Legislature adopted the AMA Guides, then the Minnesota Guides and finally The Florida Guides. Cannot Pennsylvania likewise adopt some guide? Pennsylvania is not the first to confront this issue, or even the specific language “most recent edition.”
Justice Simpson’s dissent in Protz notes that New Mexico rejected a similar constitutional challenge in Madrid v. St. Joseph Medical Center, 928 P.2d 250 (1996). There, the Court noted that “new developments in medical science relevant to evaluating impairments demand periodic modifications of the standard.” This reality results in the Guides being “periodically updated to encompass these new developments.” The Court concluded that those revisions by the AMA did not change the conclusion that New Mexico’s adoption of and deference to the Guides is constitutional. Note, again, that this was a conclusion that such delegation did not violate the New Mexico Constitution. Thus, while of interest in Pennsylvania and elsewhere the Madrid decision may not persuade other courts, nor may Protz.
The seminal authority on the application of the AMA Guides to workers’ compensation is Understanding the AMA Guides in Workers’ Compensation, by Steven Babitsky and James Mangraviti, Jr. In the 2015 supplement, it notes that “numerous challenges have been made to the AMA Guides as used in various workers’ compensation systems.” (§3.05). There are several of these examples that are interesting and even intriguing.
In Texas, the Supreme Court affirmed use of the Guides concluding that the Guides “albeit imperfect, was not invalid under the equal protection clause.” (a challenge under the U.S. Constitution). (Babitsky, §3.05).
This treatise also cites Davis v. B.F. Goodrich, 826 P.2d 587 (Okla. 1992), in which a dissenting justice commented on the Guides, concluding that their use is “an unconstitutional delegation of power,” and that this “vests in a purely private organization . . . the unbridled authority to set standards for permanent impairment which govern an employee’s right to collect compensation.” (Babitsky, §3.04). But this is a dissent, and reliance on the Guides has been upheld in Oklahoma.
According to Babitsky, the Courts in Tennessee, Colorado and Wyoming have concluded that the use of the AMA Guides is constitutional. These challenges address the Guides generally, but do not address the specific question in Protz.
But in North Dakota there was a more similar case. There the Court concluded that language requiring “use of the ‘most recent’ or ‘most current’ edition of the AMA Guides should be interpreted to mean the most recent edition at the time of the statute’s enactment.” (Babitsky, §3.04) (McCabe v. North Dakota Workers’ Compensation Bureau, 567 N.W. 2d 201 (N.D. 1997).
Essentially, North Dakota in McCabe reached the same outcome Pennsylvania did in Protz, i.e. that the Guides edition in effect when statutorily adopted shall control. The North Dakota Court did so through statutory construction rather than a conclusion of constitutional infirmity, as in Protz.
Babitsky says that only New Mexico and Arizona have concluded the use of the “most recent” Guides, meaning most recent when the impairment is determined, is constitutional. Justice Simpson’s dissent in Protz notes New Mexico. Babitsky clarifies that Arizona’s outcome accepting “a yet unpublished edition,” Gutierrez v. Industrial Comm’n, 249 P.3d 1095 (Ariz. 2011), is seemingly similar to New Mexico. But, it notes that the Arizona statute encourages use of the Guides, but does not mandate them. It is perhaps because of this distinction that the Protz dissents do not rely so on Gutierrez.
So, the states that have considered this delegation issue have all concluded that this reference to published guides such as the AMA Guides is an acceptable delegation, with a dissenting voice in Oklahoma. Most have concluded, however, that the delegation has to be to a set of Guides already published, except Arizona and New Mexico.
In Protz, the majority says that delegation, such as to the AMA Guides, is appropriate in Pennsylvania. However, that authority to delegate is limited: “(1) the basic policy choices must be made by the Legislature; and (2) the legislation must contain adequate standards which will guide and restrain the exercise of the delegated administrative functions.” The delegation to the AMA in this context, that is the use of future Guides as yet unwritten at the time of the legislative adoption, was seen by the court as failing to “prescribe with reasonable clarity the limits of the power delegated or if those limits are too broad it attempt to delegate is a nullity.”
The Protz Court concluded that “the General Assembly has failed to prescribe any intelligible standards to guide the AMA’s determination regarding the methodology to be used in grading impairments.” Furthermore, it noted, the statute contains no “mechanism requiring governmental review of the Guides by the promulgation of regulations.”
So, the Court was persuaded by the lack of statutory standards or guidance (telling the organization, the AMA, how to proceed), and the absence of an ongoing regulatory involvement as the Guides evolve, which proved fatal to the delegation. The AMA could revise the Guides at will without any state mandated parameters, and if it did so those new Guides would effectively become the law of Pennsylvania without further legislative or executive regulatory consideration or action. While the Court did not accept the Oklahoma dissent’s suggestion that reliance on Guides is impermissible, it concluded that the process of adopting Guides cannot be constitutionally delegated in Pennsylvania as it may be in Arizona and New Mexico.
Judge Simpson’s dissent in Protz is interesting, taking issue with the majority on multiple points. This includes seven policy safeguards that he contends the legislature included to provide structure for the delegation.
Justice Covey’s dissent in Protz is broader. She points to precedent from the Pennsylvania Supreme Court in Gima v. Hudson Coal Co., 165 A. 850 (Pa. 1933). There, the Court affirmed delegation arguably similar to the instant dispute regarding the AMA Guides. Though that decision is over 80 years old, Judge Covey notes that the Gima analysis has been reaffirmed by the Pennsylvania Supreme Court in 1973, and relied upon by the Commonwealth Court en banc “just five years ago.” Citing Pennsylvania Builders Association v. Department of Labor and Industry, 4 A.3d 215 (Pa. Cmwlth 2010). She thus asserts that the majority’s decision to disregard Gima, concluding it was “inferentially overruled,” is inappropriate.
Justice Covey reiterates the Gima rationale that “the General Assembly cannot be expected to enact laws which shall in themselves keep abreast of every advance of science and invention.” This is somewhat similar to the logic employed by the New Mexico Court in Madrid. Therefore, Justice Covey concludes it “is unreasonable to impose upon the General Assembly the burden of frequently revisiting legislation to reflect evolving, broadly-accepted changes in the medical field.”
If the Pennsylvania Supreme Court reviews Protz, that review is perhaps most likely to be based on this conflict: Justice Covey’s characterization that the majority opinion in Protz directly contradicts the same Court’s earlier decision in Pennsylvania Builders.
So the answer seems to be that delegation to a set of guides is not in itself unconstitutional. The majority in Protz takes issue with the continuing nature of the statute. With its “most recent edition” language, the legislature accomplished a delegation and absolved itself from the need to ever again revisit the analysis or debate regarding impairment determination.
Revisions thereafter, if seen as appropriate by the unelected AMA, would presumably be made. Through the broad language of the statute, Pennsylvania would remain current with the latest version of the AMA Guides over time, without the government officials charged with authority ever reviewing the impacts of those AMA changes.
Thus, it was not the delegation to the Guides generally that was found repugnant, but the delegation to the ongoing AMA process without further intervention of the Pennsylvania legislature or regulators.
The Protz Court concluded that the legislature cannot prospectively adopt future changes in the Guides. Doing so goes beyond adoption of the Guides as they exist and as they are perceived by the legislature at the time of adoption. This prospective adoption instead delegates the authority for determining the appropriateness of the Guides, in the future, to the AMA. In effect, as this private organization deems it efficacious to change the Guides, they are likewise, under the statutory language in Pennsylvania, changing the measure of benefits to which a recovering Pennsylvanian is entitled.
In effect, the language used by the Pennsylvania legislature delegated to the AMA the authority to determine the appropriate measure of benefits. It was this ongoing delegation of authority which the Protz Court found violative of the Pennsylvania Constitution. The Court could have reached the same decision through statutory interpretation as the Court in North Dakota did, but chose the constitutionality result.
The Florida workers’ compensation marketplace is accustomed to constitutional questions. Since our last reforms in 2003, we have had various challenges to the Florida workers’ compensation law, some at the appellate courts and some at the Florida Supreme Court.
To recap the saga of 21st Century attorney fee litigation in Florida, challenges to the Florida attorney fee statute (Fla. Stat. §440.34) worked through our appellate system after the 2003 statutory reforms, culminating in Murray v. Mariner Health (Fla. 2009). There the Court evaded the constitutional question of statutorily constrained "percentage recovery" fees and relied upon statutory interpretation to conclude that hourly attorney’s fees were still appropriate under the existing law, in order that fees would be “reasonable.” The Court's Murray approach thereby was more akin to the North Dakota Guides analysis in McCabe.
The Florida legislature reacted in the next session and removed the modifier “reasonable” from the statute, nullifying the Court’s Murray interpretation for cases thereafter. Since that time, the District Court of Appeal has rendered various decisions denying claims that this statute is thus constitutionally impaired on a variety of bases under the Florida and U.S. Constitutions; the court has also repeatedly certified the question to the Florida Supreme Court. These have come to be called “Castellanos and The Companion Cases.”
The Court could again resort to statutory interpretation in Castellanos, as it did in Murray and as the North Dakota Court did in McCabe. The Florida Court could also eschew the interpretation route and address the contention that Fla. Stat. §440.34 is unconstitutional either on its face or as applied. The distinction between these two concepts (“facial” and “as applied”) is explained here.
On the currently pending indemnity benefit dispute, many believe that the Florida Court will not address constitutionality in Westphal (The panel of three judges at the First District initially decided that this indemnity statute was unconstitutional as a violation of “natural law”). Prognosticators contend that the Court can avoid the constitutional questions of “natural law” and merely decide if the First District was correct with its en banc analysis in Westphal or whether it was correct with its en banc analysis a few years earlier in Matrix Employee Leasing v. Hadley.
There will likely be similar questions about Protz in days to come. Pennsylvanians may ask whether their Supreme Court might review Protz to reconcile whether the Commonwealth Court was right its en banc decision in Protz or in its en banc decision in Pennsylvania Builders. In other words, the Court could consider, as raised by Justice Covey, whether the Commonwealth Court improperly eschewed precedent in deciding Protz.
It is impossible to tell whether a pebble dropped in the pond will create a tidal wave, or if a boulder dropped in the pond will result in merely ripples. Whether Protz is a harbinger for other states will be known in time. It appears that even Pennsylvania concedes to the delegation to a set of standards, but in some context other states like Arizona and New Mexico perhaps concede more regarding delegation of the process of setting or vetting standards.
It therefore appears clear that Pennsylvania can still join the ranks of those utilizing the AMA Guides 6th Edition, but that its legislature will have to do so specifically. What that means for many Pennsylvanians with existing workers’ compensation issues is that they will now be measured by the AMA Guides 4th Edition, to their benefit or detriment, until the legislature acts or the Pennsylvania Supreme Court addresses the issue.
It is possible too that the Protz decision will be discussed in Florida should there be any proposal to retreat from The Florida Guides and a re-adoption twenty-five years later of the AMA Guides.