Monday, May 15, 2017

At AIS Regulator Forum 2017

Each Spring, the National Council on Compensation Insurance (NCCI) produces a three day program on workers' compensation, the Annual Issues Symposium (AIS). It has featured some outstanding presentations over the years. It was at the AIS a few years ago that I got to hear Salim Ismail. His speech inspired me to much broader consideration of the technology revolution, and where our world of work is heading, included in posts such as How Will Attorneys (or any of us) Adapt? and Universal Income - A Reality Coming?

This year, I was given a short, but coveted spot on the agenda at the Regulator Forum held on Wednesday, before the wider-audience presentations of Thursday and Friday. It will be a great opportunity to overview the perceptions of constitutional infirmity in American workers' compensation. And, because it will be a short presentation, I have prepared this post for an overview, both to reinforce for the attendees and for those who will not travel to Orlando to see it.

There are multiple constitutional challenges being litigated around the country. Certainly, Oklahoma has seen its share. A few years ago, there was a proposal to split the Florida Supreme Court into two courts, one for civil and one for criminal cases. If the trends continue in Oklahoma, they may need to split their court in two, one for workers' compensation constitutionality appeals and another for "everything else." Just last week, another challenge was announced, this time to the appointment of a new Chair of the Oklahoma Commission. 

But in the brief moments I have at AIS, I will be focusing on the constitutionality of statutory limitations, legislative delegation, and equal protection. These are based in various constitutional provisions, but include the First Amendment, the Fourteenth Amendment, the Due Process Clause, Separation of Powers and more. 

There are various cases worthy of discussion. It is imperative to remember that each may be in a variety of procedural postures. Some are trial court decisions, pending potential appellate review. Others are intermediate appellate decisions, either presently pending state supreme court review, or espousing holdings nonetheless still subject to such further review. Others are state supreme court decisions which would seemingly be the "last word," but for the somewhat alarming failure of courts to follow stare decisis, and their own pronouncements. 

The Cases:

On April 20, 2016, the Florida First District Court of Appeal rendered Miles v. City of Edgewater Police, 190 So.3d 171 (Fla. 1st DCA 2016). The Court noted Florida's statutory limitations on fees address only claimant (recovering worker) fees. The limitations did not apply to defense fees. Furthermore, the Court concluded that the limitations on fees, to protect workers' proceeds or benefits, were illusory protections if they prevented workers from retaining counsel, and thus obtaining those benefits in the first place. Some key points made by the Court:
(1) content-based speech restrictions.

(2) The interest in regulating attorney's fees” to protect “the amount of benefits secured” could not “be implicated if securing any benefits was effectively prevented by Claimant's inability to secure counsel.
(3) application of the statutes to this scenario is arbitrary and capricious, because only the attorney's fees paid to claimants' attorneys are regulated.
On April 28, 2016, the Florida Supreme Court rendered Castellanos v. Next Door Company, 192 So. 3d 431 (Fla. 2016)(SC13-2082). The Court concluded that the fee schedule in section 440.34(1) is unconstitutional. That decision was much anticipated in Florida. A decision holding that section unconstitutional as applied in that case would have yielded significant work for the state's courts. No Florida Judge of Compensation Claims can conclude something is unconstitutional, and so all future cases would necessarily have had to proceed to the courts.

The Florida Supreme Court avoided traditional constitutional analysis. Instead, it insinuated a "presumption" into section 440.34(1)(a statute that in no clause uses the word "presumption") and essentially held that any statutory limits that deprive parties of some opportunity for a judge to make exceptions are an "irrebutable presumption," and thus unconstitutional. What this ruling will eventually mean for mandatory criminal sentences and other statutory minimums and maximums remains to be seen. Some key points made by the Court:

(1) a reasonable attorney's fee has always been the "linchpin" to the constitutionality of the workers' compensation law.
(2) the "patently unreasonable" $1.53 hourly fee award.
(3) See also Castellanos is Decided by the Supreme Court, and A Procedural Progeny Potential of Castellanos.

On May 18, 2016, the Supreme Court of the State of Utah struck the "sliding scale fee schedule and an overall cap on the maximum amount of attorney fees. The schedule was created by The Utah Labor Commission, after the state legislature "delegated the authority to regulate those fees." More on delegation later, but this is an important element of the Utah decision. Injured Workers' Association of Utah v. State of Utah, 2016 UT 21. Some key points made by the Court:
(1) The regulation of attorney fees is included within the power to govern the practice of law.
(2)The Utah Supreme Court is vested with exclusive inherent and constitutional authority to govern the practice of law.
On May 8, 2017, a trial court in Alabama rendered Clower v. CVS Caremark, Case No. 01-CV-2013-904687.00 (Jefferson County, May 8, 2017)(Birmingham). This case addressed both indemnity benefits, discussed later, and attorney fees. The Alabama Code §25-5-90(a) limits claimant attorney fees to 15% of "the compensation awarded or paid.” The Court was unpersuaded by a 1921 Alabama Supreme Court case, Woodward Iron Co. v. Bradford, 206 Ala. 447, 90 So. 803 (1921), which had determined similar workers' compensation limitations constitutional. The Court was persuaded that analysis, from a time when participation in the system was voluntary, was no longer persuasive. The Alabama trial judge relied upon the decisions in Castellanos and Injured Workers' Association of Utah, as well as Minnesota and Pennsylvania decisions. Many will remember a Florida trial judge acting similarly a few years back in a case that eventually became styled Florida Workers' Advocates v. Florida, only to be procedurally reversed. Some key points made by the Court:
Alabama Code §25-5-90(a) appears to be unique in the Code of Alabama 
The other statutes in the Alabama Code which address payment of attorneys’ fees speak in terms of “reasonable attorneys’ fees.”
What constitutes reasonable compensation has “historically been a matter for judicial determination."
Clower also struck a permanent partial disability cap on the grounds that it was (1) seemingly arbitrary, and (2) had been in the statute so long that inflation had significantly changed its effect. Individuals entitled to temporary benefits and permanent total disability benefits were paid based upon a calculation from the injured worker's average weekly wage. However, those entitled to permanent partial were artificially capped at $220.00 per week. This offends the equal protection clause in the eyes of this trial court. Inflation, said the worker resulted in:
unbridled and self-perpetuating rotting away of a “remedy” has left it too infirm to qualify as a “remedy” sufficient to meet the requirement that the Workers’ Compensation Act involve adequate “quid pro quo” to pass constitutional muster. 
This outcome shared similarities with a recent Kentucky decision in Parker v. Webster County Coal, 2014-SC-000526-WC (a case that ignored stare decisis, and of which I have been somewhat critical) That April 2017 decision concluded that a reduction in entitlement, regarding permanent partial disability benefits for those also entitled to Social Security, is unconstitutional. The basis for the Court's decision there is not what the parties plead or argued. Upon those arguments and allegations, the statute would stand firm following long-established Kentucky precedent. Instead, the Court created its own argument and then agreed with itself. 

The Court found that a small minority of individuals are not entitled to Social Security as a result of their occupations. And as such, those individuals would receive more workers' compensation than workers of certain ages that were entitled to Social Security. Thus, though not plead or argued by the parties, the Court found a path to illuminating unequal treatment that it concluded was a violation of the equal protection clause. 

Finally, recent analysis has been interesting regarding delegation. That concept of delegation is mentioned in authorities cited by Clower, and was the foundation of Protz v. WCAB (Derry Area School District), 124 A.3d 406 (Pa. Commw., 2015), a decision by the Pennsylvania interemediate appellate court. That court was asked to interpret a statute that required impairment rating assignment pursuant to the "most current" version of the AMA Guides to Permanent Impairment. The Court took no issue with the Legislature adopting such standards. However, by purporting to allow those standards to be periodically updated without further legislative action ("most current"), the Court concluded the statute impermissibly delegated legislative adoption authority to the AMA. 
See also, As Florida Waits, Commonwealth Court Holds Pennsylvania Statute Unconstitutional.
That analysis will reportedly be reviewed by the Pennsylvania Supreme Court, which has been pondering the facts and law for well over a year. I say reportedly, because a Court that accepts jurisdiction may just as easily later dismiss jurisdiction, see Stahl v. Hialeah Hospital. It seems possible however that a final decision regarding constitutionality could be rendered at any time. As described in the post linked above, other courts have addressed similar statutory language and reached appropriate results without the constitutional analysis employed in Pennsylvania. It is important to remember that courts have an obligation to find solutions through statutory interpretation first, and resort to constitutional analysis only when all else fails. Some see the trend toward constitutional challenge intriguing from that perspective. 

So, where does that leave workers' compensation? Well, Florida tried in 2017 to make legislative adjustments to temporary partial disability, attorney fees and more. That effort failed on the last day of the 2017 session. See, Turn out the Lights, the 2017  Session is Over. The Alabama trial judge in CVS has stayed his ruling, in order that the state's legislature might react either in the remainder of its regular session or in a special session. But, it appears more likely that an appeal of his order would occur first. There have already been some critical analyses of the trial court's conclusions. 

Critics have asserted that the current climate demonstrates judicial activism. They point to the Pennsylvania court's impulsive leap to constitutionality, Kentucky's abandonment of stare decisis and Florida's insinuation of words ("presumption") into statutes. Others, disagree, contending instead that legislative and regulatory process have failed the "Grand Bargain," and that courts are left with no alternative but to create justice in the spirit of constitutional analysis and the protection of fundamental rights. 

My conversation at AIS 2017 will be brief, but hopefully spirited. The state of American workers' compensation is certainly as interesting, confusing, and challenging as it has ever been. Several years ago, I penned There's No Other Place I Wanna Be, and frankly my feelings on that have not changed. 

I look forward to seeing you at AIS in Orlando. 

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