Thursday, June 9, 2016

Westphal is Over, Questions Remain

On June 22, 2012, injured worker Bradley Westphal tried his case against the City of St. Petersburg. The decision was appealed and the First District Court of Appeal departed from its own earlier analysis and reinterpreted Fla. Stat. 440.15(2). The specific context is FlaStat. 440.15(2)(a), titled "Temporary Total Disability." Both Westphal and the city sought Supreme Court review of the District Court decision.

This was not the beginning of the story of Fla. Stat. 440.15(2)(a). In 2011 Matrix Employee Leasing, Inc. v. Hadley was tried, a similar dispute regarding temporary indemnity benefits. The trial judge decided the case following City of Pensacola Firefighters v. Oswald (Fla. 1st DCA 1998), an appellate court decision from 1998. That is how stare decisis and the common law works in America, parties and judges look to previous decisions to guide the decision in the present case. The prior decisions perhaps make the outcome of the current litigation predictable. Predictability is beneficial on a variety of levels, not the least of which is the calculation of appropriate premiums to allow payment of projected losses. 

One party sought review of the Hadley trial outcome by the Florida First District Court of Appeal (1st DCA). The 1st DCA concluded that a different interpretation of the law was more appropriate. And in 2011 Oswald was superseded and Hadley was the law. 

It is worth noting that the majority of intermediate appellate cases are decided by three judges working together in what is called a “panel.” However, sometimes the parties seek to have the entire court consider a case, which is called an “en banc” decision. They do so because it is possible for different panels of a court, in considering different cases, to make decisions that result in inconsistency and confusion among attorneys and parties. Over the decades, this criticism has been voiced periodically regarding the 1st DCA. 

To reduce the potential for confusion, the appellate court periodically hears a particular case en banc and issues a decision that represents the conclusion of the entire court, as opposed to a panel of the court. Hadley was an en banc decision. Thus, it was viewed as representative of the whole 1st DCA’s interpretation of the temporary indemnity provisions in Fla. Stat. §440.15(2). It was thought to be solid precedent providing marketplace predictability. 

A mere two years later, a panel of the same court considered a similar indemnity question in Westphal v. City of St. Petersburg. That panel did not follow the interpretation of Hadley, and instead decided that Fla. Stat. §440.15 is unconstitutional. The 1st DCA panel concluded that this statute was inconsistent with “natural law.” This has since been referred to as the “Westphal panel decision,” because later in 2013 the entire 1st DCA rendered an en banc decision in Westphal. The DCA, as a whole, did not find a constitutional problem with the statute (receding from the Westphal panel decision). The court did however interpret Fla. Stat. §440.15 in Westphal differently than it had in Hadley. And, again, some in the market thought there was solid authority from the whole court and as a result predictability. 

The Supreme Court accepted the Westphal case for review, and held an oral argument (OA) on June 5, 2014. Recently, we celebrated the OA's second birthday. Then on June 9, 2016 the Florida Supreme Court issued its divided opinion; 1,448 days since the trial concluded (almost four years) and 735 days after the OA. The Court described its consideration of "section 440.15(2)(a)" and concluded "this portion of the worker’s compensation statute is unconstitutional under article I, section 21, of the Florida Constitution, as a denial of the right of access to courts." This is not a facial determination that the statute is unconstitutional in all cases, but only "as applied to Westphal and others similarly situated." (Emphasis added). This is perhaps a critical distinction. How similar a worker in a future case must be to Mr. Westphal may be of import. 

The Court said that the limitation in this section, to 104 weeks of temporary total disability benefits "deprives an injured worker of disability benefits under these circumstances for an indefinite amount of time—thereby creating a system of redress that no longer functions as a reasonable alternative to tort litigation." The majority decision was written by Justice Pariente, joined by Justices Labarga, Perry and Quince. Justice Lewis concurred in the outcome with a separate opinion. Justices Canady and Polston dissented with a separate opinion. 

The Internet came alive June 9, 2016 with announcements and prognostications about the import of the decision. 

The Court acknowledged the "valiant" efforts of the First District to avoid the constitutional question through statutory interpretation. Florida courts are "obligated to construe statutes in a manner that avoids a holding that a statute may be unconstitutional." Murray v. Mariner, 994 So.2d 1051, 1053 (Fla. 2008). The default, essentially, is to find an interpretation by which a statute can be valid, before resorting to the constitutionality analysis. This the 1st DCA did twice, en banc, in Hadley and in Westphal

In eschewing this "interpretation" approach in Westphal, the Court said "the judiciary, however, is without power to rewrite a plainly written statute, even if it is to avoid an unconstitutional result." The majority of the Court essentially decided that there was no interpretation of the statute which could reach a constitutional result, essentially finding that the 1st DCA was wrong, twice.  

The Court concluded that Fla. Stat. 440.15(2)(a) "cuts off a severely injured worker from disability benefits at a critical time, when the worker cannot return to work and is totally disabled but the worker’s doctors—chosen by the employer—deem that the worker may still continue to medically improve." In this manner, the Court says, the "workers’ compensation law undoubtedly fails to provide 'full medical care and wage-loss payments for total or partial disability regardless of fault.'" The suggestion at least is that such a limitation on benefits is unconstitutional in a holistic sense. Thus any limitation, 104 weeks, 260 weeks, 350 weeks or more might likewise fail. A lawyer recently lamented that many no longer look to the courts for consistency or predictability. 

The Court specifically admonished that this finding "does not render the entire workers’ compensation system invalid." And, as a result the prior statutory provision, that is before the 1994 amendments, with the 104 week limitation, is revived. The Court directed "that the limitation in the workers’ compensation law preceding the 1994 amendments to section 440.15(2)(a) is revived, which provides for temporary total disability benefits not to exceed 260 weeks—five years of eligibility rather than only two years, a limitation we previously held 'passes constitutional muster.'” 

The Court did not explain how that limitation "passes constitutional muster" under the logic of its decision in Westphal. The logic applied in Westphal concludes constitutional infirmity because a limitation is applied that deprives an injured worker of temporary total at an arbitrary moment in time, 104 weeks after an injury. The prior statue operated in the same absolure manner, but did so later, after 260 weeks. The market will wonder how a seemingly arbitrary legislative limit at 104 weeks is unconstitutional but a 260 week limit "passes constitutional muster."

Some already suggest that the distinction is the "as applied" analysis. That the 104 week limitation is unconstitutional in this case, because of Mr. Westphal's medical state at that time. If that logic is applied, then the Court's previous conclusions regarding the 260 week or even 350 week limitations may not withstand future scrutiny. The suggestion and implication are causing conversation and debate already, and the Supreme Court's decision is not yet a day old. 

Of critical note, the majority eschewed Justice Lewis' concurring logic regarding the appropriate outcome. It noted "Justice Lewis’s . . . opinion suggests as a remedy that chapter 440 should be 'invalidated where defective.'" The Court noted that the Florida Workers' Advocates advocated the "remedy of invalidating the entire workers’ compensation law," but that was not "not raised by the parties" and so not appropriately before the Court. So, the majority said that "the remedy of invalidating other sections in chapter 440 beyond section 440.15(2)(a) is not properly before us." In appellate review, it is generally accepted that the role of the Court is to determine the specific legal question(s) presented. 

"Standing" is a legal maxim that requires each party to a case have a real and personal interest in the outcome. It is interrelated with a requirement that any case is limited to a real "controversy." Essentially, constitutional analysis should occur in a setting in which the parties have a real interest and in which they debate and advocate a real and present dispute. It is thought that this paradigm brings focus and specifics to the dispute. It is these constitutional maxims that center courts on the dispute before them, and prevents expeditions into hypothetical problems unraised by the parties and lacking the focus of an actual, present dispute. 

Despite its decision not to address the arguments of broader constitutional infirmity, the Court nonetheless noted its perceptions of the stated of benefits under the law. It noted (italics are all direct quotes):

continuous diminution of benefits and other changes in the law. 

the Legislature also gave employers and insurance carriers the virtually unfettered right to select treating physicians in workers’ compensation cases. 

the right of the employee and the employer to “opt out” of the workers’ compensation law, and preserve their tort remedies, was repealed. 

a heightened standard that the compensable injury be the “major contributing cause” of a worker’s disability and need for treatment,

a requirement that the injured worker pay a medical copayment after reaching maximum medical improvement.

apportionment of all medical costs based on a preexisting condition. 

The meaning to be derived from the Court's recitation of issues it would not address has raised questions from the marketplace. There are those who are already searching for the "unwritten message" in the tea leaves of this dicta. To what end is this list published, regarding issues not before the Court, according to its ruling? Some question why the Court would mention issues which it concludes are inappropriate to address.

Interestingly, the Court noted that "both Westphal . . . and the City . . . argue before this Court that the First District’s previous construction of the statute in Hadley and Oswald was correct. Both parties advocated for the restoration of the statutory interpretation that was essentially rendered in 1998 (Oswald). Despite the parties agreement, the Court eschewed statutory construction and this almost 20 year old interpretation (1998) that arguably (to some, including the parties in this case apparently) sufficed until the 1st DCA's departure in its Westphal en banc decision. 

Without finding that the Hadley interpretation was necessarily unsupportable, the Court concluded that "the clear language of the statute simply does not allow us to agree with the First District’s interpretation." Some will question this choice of language and will argue that history over almost 20 years demonstrates there is an interpretation that would preserve the statute, respect the separation of powers, and facilitate the legislative decision and intent. They will ponder whether there is no such interpretation or whether the Supreme Court simply disagrees with such interpretation. In effect, this is not a distinction. The Court has concluded the appropriate course is the constitutional analysis, and in such questions the Florida Supreme Court has the last word.  

In 1994, Section 440.15(2)(a), which was found unconstitutional  in Westphal, provided in part as follows:

Subject to subsection (7), in case of disability total in character but temporary in quality, 662/3 percent of the average weekly wages shall be paid to the employee during the continuance thereof, not to exceed 104 weeks except as provided in this subsection, s. 440.12(1), and s. 440.14(3).[4] Once the employee reaches the maximum number

Thus, the Court concluded that under this statute "temporary total disability benefits are payable for no more than 104 weeks, after which the worker’s permanent impairment rating must be determined." And, therefore it is unconstitutional because it terminates benefits based on an absolute cap or limit of 104 weeks.  

Again, the Court has not explained how an absolute cap at 260 weeks is any more constitutional. It would arguably seem to be as arbitrary as the 104 week limit. One might argue that the higher arbitrary limit will likewise statutorily preclude such benefits in a smaller population of cases, but the effect on the worker in those cases is arguably identical in effect, though later in application? The Court as much as concedes this, noting "260 weeks of temporary total disability benefits amounts to two and a half times more benefits—five years of eligibility for benefits rather than only two—and thus avoids the constitutional infirmity created by the current statutory gap as applied to Westphal." (Emphasis added). Not "as applied to all injured workers."

This is a critical point. The Court has clearly stated that its decision "thus avoids the constitutional infirmity created by the current  (104 week) statutory gap as applied to Westphal." (Emphasis added). But the Court has also said that this determination is "as applied to Westphal and others similarly situated." (Emphasis added). Thus, one might infer that a "similarly situated" employee who reaches 260 weeks from the accident, without reaching maximum medical improvement, might likewise experience the very gap decried by the Court in this case. 

Would that hypothetical worker be instead entitled to more temporary total, that is the 350 week maximum entitlement period that was statutorily stated before the legislature reduced it to 260? Might the Court find the same infirmity in the almost 7 year cap of 350 weeks in the right factual setting? And thus, some now question whether any such cap can be constitutional as applied under Florida's constitution, as now interpreted by this Court? 

Some are already arguing that the impact of the Court's decision on June 9, 2016 is minimal. They contend that very few injured workers' reach the 104 week anniversary without actually reaching MMI. Thus, they argue the revival of the 260 week limitation is of minimal impact as far as system costs. However, the Supreme Court observed already that "Westphal’s case is not an isolated one." This, the Court seems to have concluded is an issue in some notable or significant population of cases, though the record evidence to support that arguably gratuitous conclusion is less clear. 

The Court's decision striking the 1994 version of Fla. Stat. 440.15(2)(a) "automatically revives the predecessor unless it, too, would be unconstitutional.” This is the specific finding, however, that leaves some interesting questions for another day. 

The limitation in FlaStat. 440.15(2)(a)(temporary total disability, or "TTD") is statutorily linked to another 1994 provision, FlaStat. 440.15(4)(temporary partial disability, or "TPD"). That provision provides 

Fla. Stat. 440.15(4)TEMPORARY PARTIAL DISABILITY.—
(e)Such benefits shall be paid during the continuance of such disability, not to exceed a period of 104 weeks, as provided by this subsection and subsection (2). 

Thus, the "104 week cap" has been interpreted as a combined 104 weeks of total potential entitlement to any combination of TTD and TPD under the 1994 act. That statutory interconnection was not expressed until the 1994 statute. Thus, the provision of section (4)(1994) now references a non-existent 104 week limitation in (2)(a)(1993). The limitation in (2)(a), by the Court's resuscitation or revival of the 1993 statute, is now 260 weeks. The (4) statutory nexus is now perhaps ambiguous at best. It is unclear whether the Court recognized this and chose not to address it based on the "case and controversy" limitation, or whether this internal conflict was overlooked. 

By implication, it is possible that the nexus in (4) is therefore actually broken. Broken because the destination of the reference, the 104 week limitation in (2)(a) no longer exists as a result of the Court's interpretation and revival. Depending upon the conclusion regarding this nexus, the combined entitlement to temporary benefits might today be:

260 weeks of combined benefits (preserving the spirit of the nexus language in (4) but substituting the newly revived 260 week period from 1993. Thus a combined five year potenital period of temporary indemnity entitlement. Or, 

260 weeks of TTD under the revived 1993 (2)(a) plus 104 weeks of TPD under the (by the Court) unaddressed and un discussed (4), for a total of 364 weeks or 7 years of combined potential temporary indemnity. 

Or, is the 104 weeks in (4) as invalid as the 104 weeks in (2)(a), thus reviving the 1993 version of (4) and allowing a second, independent, period of 260 weeks of TPD in addition to the TTD? if a stated limitation is constitutionally infirm based on the logic of this Court, can any such state limitation stand? Thus perhaps there is a combined ten years (520 weeks) of temporary indemnity entitlement (260 each of TTD and TPD)?

Or, ultimately, is the revival of the 350 limitation an eventuality? If so, again, is it so in only the TTD or each of TTD and TPD when and if the appropriate injured worker reaches the current limit without achieving MMI? 

Or, is the import of the Court's interesting analysis that there are simply no longer any such time periods that limit receipt of benefits, since any such limit might, in a given case, operate to terminate benefits legally in spite of facts?

And how will the market find out the answers and the parameters? There will be cases filed and arguments raised. There will perhaps be appeals filed and briefs written. What we have learned from Westphal may include the conclusion that answers could take a long time. And while the marketplace patiently awaits those answers, there may be debate as to how the insurance coverage that pays such benefits should be priced. 

The Court has taught us a great deal in Westphal, and recently in Castellanos. But questions also remain. Consistency and predictability may be in demand but short supply in coming times as a marketplace struggles to find the answers to these and similar questions. 

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