Wednesday, September 30, 2015

One Year to Insolvency

The image I cannot get out of my head while writing this is the quartet playing calmly on deck as the Titanic slowly sinks into the sea.?

The National Journal reported in July that a hand full of elected officials is contemplating what to do with Social Security disability heading for a "2016 Cliff." According to the Social Security and Medicare Boards of Trustees, the disability trust fund now faces an "urgent threat of reserve depletion." In short, it is one year from insolvency. 

As background, Just Facts says that "In 1935, Congress passed and Democratic President Franklin D. Roosevelt signed into law the 'Social Security Act.' This law created 'a system of Federal old-age benefits' for workers and their families. In 1956, the law was amended to also provide disability benefits." (citations omitted). There are two programs referred to as "Social Security," the "old age" program and the "disability" program. The current crisis regards disability, but it appears that it may be a harbinger of things to come in the old age arena. 

The "cliff" is a subject I have written on before. In June 2014, I wrote the First Social Program Bankruptcy is Upon Us. In August this year, I found some news stories about over payments in Social Security Disability interesting in Time for that Bake Sale? We may see it as fortunate that the National Journal is writing about this subject, they certainly have a larger footprint than this blog. We might also be disappointed that it is only the National Journal. There has been little coverage of this in the rest of the news media?

I found a blog on the Center on Budget and Policy Priorities. There was also a recent piece on CNBC. Finally Yahoo news had some coverage. A story that may very soon affect about 10 million Americans (disability) and could soon affect us all (old age) is drawing very little attention as yet. 

There are proposals for reforms in the disability program. According to The National Journal, James Lankford of Oklahoma will reintroduce "the Coburn bill" from last year. This would reform the "administrative review process" change "how attorneys are paid" and impose "new rules for judges" in Social Security Disability (SSD) cases. There is also discussion of "a work-incentive program" described as changing the effect of part-time employment for those receiving benefits. 

The National Journal reports that there are already several bills pending in the House. One of these would "prevent people from receiving disability and unemployment insurance at the same time, tighten rules for who can provide medical evidence for disability determinations, and increases penalties for fraud." Some anticipate that various existing proposals will be consolidated into a single bill. 

The Journal reports that "Congress hopes to pass" legislation that will make reforms and add funding "to avoid a catastrophic 20-percent cut for those who receive disability insurance." The reduction would occur otherwise, because the payments for disability under Social Security come from a trust fund separate from the retirement trust fund. 

The blog on the Center on Budget and Policy Priorities says that the solution to this "cliff" is simple. It advocates doing away with the separate trust fund now. This would allow the full disability benefit payments to be made, without all of the debate about reform. The system could simply proceed as is, and the crisis is averted. A simple and elegant solution. 

According to the National Journal, this is the approach in a bill recently released by "House Democrats," and supported by "the White House and other outside groups." This is referred to as a "clean reallocation, without any strings attached." One interest group, the American Association of Retired Persons (AARP) reportedly agrees with a loan from one trust fund to the other, but opposes combining the two funds. 

Similarly, the Social Security and Medicare Boards of Trustees says that the solvency problem is not isolated to the disability program. Their report says that "Social Security as a whole as well as Medicare cannot sustain projected long-run program costs under currently scheduled financing." You see, the disability program is insolvent in 2016, but some predict the entire Social Security program is insolvent as early as 2037. 

The simple and elegant solution of just combining the bankrupt Disability Fund with the soon to be bankrupt general trust fund will do nothing more than speed the depletion of the general trust fund. It is as if there is a group in a boat that is slowly sinking. The boat is taking on water. There is another, larger, boat nearby which is also sinking but not as quickly. The simple solution is to evacuate the smaller boat, but that adds to the problem of the larger boat and speeds its sinking. The simple solution does nothing to save the smaller boat, it just defers the problem for another day.  

The Social Security and Medicare Boards of Trustees says that instead, "Lawmakers should take action sooner rather than later to address these structural shortfalls, so that the uncertainty now facing disability beneficiaries will not eventually be experienced by other programs’ participants." In other words, deal with the problems with the disability trust fund now, instead of merely putting this off for another day. In other words, they advocate fixing the smaller boat rather than abandoning it. 

What happens if Social Security Disability cannot pay? That is if the little boat sinks? According to the National Journal, the disability trust fund "covers 10 million Americans." That fund "will be unable to pay its full benefits starting in late 2016." If something is not done (that something has to be either less money paid out or more money paid in), then the Journal says there would have to be a "20-percent cut in 2016."

What does that mean in real terms for those receiving the disability benefits? According to Yahoo news, "the average monthly benefit for disabled workers and their families is $1,017." So, if the 20% cut occurs, the average disability benefit recipient would "would see a reduction of $193 a month," to about $824. 

In the debate between higher taxes (more finds paid in) and reform (less paid out), the Journal notes that reform alone cannot prevent the 20% cuts. It notes that "even if Congress agrees on these reforms," the effects of those reforms would be in the future, not in the near-term." As such, those "future savings" would not have the immediate effect necessary to make the disability fund solvent in the near-term.

The National Journal says that legislation will face "two tests." First, "does it do enough to convince Republicans to support reallocating money and can it attract any Democratic support?" The debate is not new. Neither of the Social Security programs is projected to be solvent long-term. The volume of payments out of the programs is simply disproportionate to the volume of income for the programs. Stated simply, the taxes imposed at this time are not sufficient to support the promised payments. 

For some reason, this simple math is rarely discussed. Will the benefits be decreased or will the taxes be increased? This is currently a disability debate, but in 20 years it will be an old age debate if the current course is not changed. If the retirement program is a lender in 2016, or if the two funds are combined for expedience in 2016, the day of reckoning for the retirement program may come sooner than 20 years. 

Will the government that created these insolvent programs fix the incongruity now, or will there be some stop-gap solution now to push this incongruity into the future for someone else to solve? There will be a great deal of debate at some point, but for now the media is quiet on this interesting conundrum of promises made but not funded. For now it is blogs and Internet providers asking the hard questions. 

Monday, September 28, 2015

Judges Nominated for Reappointment and Nominees Named

The Nominating Commission met in Orlando on September 28, 2015. It nominated the following judges for reappointment:

W. James Condry (ORL)
Charles M. Hill (MIA)
Ellen Lorenzen (TPA)

The Commission deferred consideration of Judge Punancy's  (WPB) application for reappointment. 

The Commission nominated the following individuals for the noted vacancies:

Ft. Myers District Vacancy
            John Paul Brooks
            Frank Clark
            Timothy Stanton
Port St. Lucie
            Lawrence Anzalone        
            Keef Owens
            Carol J. Stephenson

West Palm Beach
            Lawrence Anzalone
            Debra Hendry Pierce
            Thomas Hedler

Sunday, September 27, 2015

Should the Rules Change?

The procedural rules for workers compensation disputes are administrative in nature. The proper name for the rules is a mouthful, the Florida Rules of Procedure for Workers' Compensation Adjudication. About a year ago I wrote about the rules. In that post, I suggested that the appropriate abbreviation might be Fla.R.Pro.Work.Comp. 

That post drew a few comments. Some thought that how the administrative rules are cited should be controlled by what the Courts say. That is interesting because the Courts cannot make procedural rules for the Office of Judges of Compensation Claims (OJCC). From 1973 until 2004 the Florida Supreme Court made procedural rules for the OJCC. They were referred to as the Workmens' Compensation Rules of Procedure. That "men's" evolved in the 1970s to be "workers'." Ebarrrasingly, there was recently a newspaper ad for a prominent Florida firm that used the term "workmens' compensation."

The first rules were adopted pursuant to the Court's inherent rule-making authority. The next year, 1974, the Florida Legislature delegated the rule-making authority to the Court statutorily. The Court then made various amendments to the rules over the years. The Court used a two-year cycle for consideration of rule changes. Such a cycle did not mandate changes in the rules, it was a cycle for considering rule changes periodically. 

In 2004, the Court was asked to again amend those rules. A lengthy opinion was delivered tracing the history of those rules. The Court explained the original "inherent authority" and the statutory delegation authority. It then noted statutory amendments regarding rule-making, speifically the 1993 amendment which granted rule-making authority to the OJCC. The Court concluded that it had no authority to promulgate rules for procedure before the OJCC.  

The opinion noted not only that conclusion, but said that the Court had never "had the constitutional authority to promulgate rules of practice and procedure for this executive entity." The Court explained clearly that the OJCC is not a court. The term "court" is defined in the Florida Constitution, and simply does not include the OJCC, an agency of the executive branch. That bothers a fair number of people who insist on nonetheless referring to this agency as "this court" or "the court."

The Court's conclusion was not unanimously popular. There were attorneys who belived that it was the legislature that lacked the constitutional authority to grant rule-making power to the OJCC. A professor I studied under liked to remind us that the Supreme Court is always right, because they are last. For the last 11 years, the Florida Rules of Procedure for Workers' Compensation Adjudication, or Fla.R.Pro.Work.Comp. have been the guide through the OJCC litigation process. Some use the Court's vernacular, citing "Fla.Admin.Code.R. 60Q________." Some use "FRWCA" as in "Rule 60Q6.______. FRWCA." Some just say "the 60Qs."

A long recitation of history. The original 60Qs were published in 2003. There were amendments in 2006, 2010, 2012, and 2014. And in 2015 the question has been asked "will there be amendments in 2016?" 

There is no "two-year cycle" for the administrative rules. That two-year cycle concept was a Supreme Court format. The Florida Rules of Procedure for Workers' Compensation Adjudication could be amended at any time. The question is no longer whether it is time to amend the rules. The question is whether the rules need to be amended. 

There are a variety of ways to suggest changes. The Florida Bar has a rules advisory committee made up of practitioners from around the state. Philip Augustine, paugustine@thornelawgroup.com, is the chair and Rosemary Eure, rbe@lancasterlawyers.com, is vice-chair. The Florida Workers' Advocates (FWA) is an attorney group that includes a committee on procedural rules. Kellye Shoemaker, ksb@shoemakerandshoemaker.com, is the president of the FWA. The workers' compensation section of The Florida Bar also has a rules committee. The chair of the section is Michael Winer, mike@mikewinerlaw.com

But ideas for amendment to the rules need not come through any organization. You can contact me directly with any thoughts or suggestions. Email me at david.langham@doah.state.fl.us

Wednesday, September 23, 2015

Prescription Cost Control

In workers' compensation closed formularies and opt-outs are a frequent topic. There is discussion about whether these and other “solutions” are trends in American workers’ compensation or just interesting anomalies.

California has decided to join the states which will have some form of closed formulary for medications. At the close of its legislative session September 11, 2015, California passed Assembly Bill 1124. According to the American Insurance Institute, this “requires the adoption of a workers’ compensation drug formulary by July 1, 2017.”

WorkCompCentral reports this week that North Carolina is the latest to legislate regarding a formulary. It does not mandate adoption, but “directs the state Industrial Commission to conduct a study of implementing a drug formulary. It is to report to the General Assembly next April.

The formulary has been an interesting development, led by Texas in 2011. Formularies define a list of medications that are acceptable for treatment of workers’ compensation injuries. A doctor that wishes to prescribe something not on that list may do so, but additional paperwork and justification is involved. When a new medication enters the market, such as Zohydro in 2013, the presence of a formulary might prevent it from having an immediate market impact. See Zohydro and Closed Formularies (12.13).

The Workers’ Compensation Research Institute (WCRI) says that there is evidence that formularies can save significant money on prescription costs. The medications can be anticipated and purchasing volume could affect prices. It also noted in Texas a trend to fewer prescriptions after the formulary was adopted. See I am Learning More (06.14).

Formularies were In the News in October 2014. A study by the California Workers’ Compensation Institute (CWCI) had contemplated whether a formulary in California would result in savings as seen in Texas. That report acknowledged that Washington also has a formulary. CWCI concluded that California prescription costs would have been significantly lower if either a Washington or Texas style formulary had been in place in California.

Formularies were Back in the News in May 2015. As the subject was discussed in some legislatures, the Claims Journal noted that four states have adopted the formulary approach, “Washington, Texas, Ohio, and Oklahoma.” We now know that California will make five, and North Carolina is at least considering being number six.

While opt-outs are also in the news, that concept has not been adopted elsewhere since Oklahoma ignited the debate. I have written several times on that subject (most recently in What is Hot in Workers’ Compensation 07.15). For now, it is an experiment in Oklahoma. There have been efforts to implement the idea in Tennessee and South Carolina. There have been discussions and prognostications elsewhere. But for now, only Oklahoma has passed legislation. It is fair to say that the formulary idea is gaining acceptance more rapidly, for now.

Coincidentally, the news recently is taking notice of increases in prescription drug prices. The NY Times reported this week that a “62 year-old drug that is the standard of care for treating a life-threatening parasitic infection” recently increased from $13.50 per tablet to $750. That is just over a 5000% increase. Publicity on that increase had results reported by the Times the next day.

The Washington Post note that increase and reported that the “spectacularly high drug prices have become a political punching bag.” It claims that the increase in price was “more than 4,000 percent,” and likened this increase to “waking up one day and finding out a gallon of gas costs nearly $100.” This article details how the costs of medication, even some generics, have increased in recent years. It also details why the increase is not the 5,000% initially reported by the Times, but “merely a 4,000 percent increase.”

These examples are getting attention. But there is evidence that the cost increase in medications is not limited to these anecdotal stories. The Wall Street Journal reports drug costs are increasing. Over one half-million people incur more than $50,000 annually in medication payments. 

The cost of medication may be near to people’s hearts. According to the Washington Post story, “half the American people” use medications, and “a lot of them use multiple drugs.” In a survey in that article, the Post reports that 72% of those surveyed think prescription costs are unreasonable. Even more, 74% think that Americans pay more than people in other countries.

It appears likely that no single idea is “the” solution to “the” issue of prescription prices. Drug companies argue that there is a need for continued research and development of a variety of medications, and that this is expensive. Reportedly, many of the compounds into which they invest time and money never make it to the public; that research is a cost that has to be recouped from the products that do make the market. 

But is the formulary idea “a” solution to some portion of “an” issue of prescription cost? Payers have already instituted cost controls. Prescription Benefit Management or PBM is a growing business according to Forbes. Some see comparisons between the PBM methodology in the private sector and formularies. Moreover, there are insurance carriers that are adopting their own prescription formularies, including workers’ compensation carriers. To some degree it might be argued that formularies are coming to workers’ compensation with or without state regulation.

It appears that prescription costs will continue to rise. The workers’ compensation industry is focused on controlling those costs, and is utilizing tools like formulary and PBM already. Forward-focused states like California, North Carolina, Ohio, Oklahoma, Texas and Washington are either on the band wagon or are edging towards it. According to the Insurance Journal, Louisiana, Montana, Maine, and Tennessee are all considering formularies. That is five states committed, and if those studying it adopt the total could soon be 10 states.

Incidentally, the largest jurisdictions in the country for workers’ compensation are discussed in How Huge is it Anyway, Lex and Verum, Number LVII, June 2014. The ten largest jurisdictions account for 50% of American workers, 54% of the wages paid, and 60% of the workers’ compensation benefits paid in this country. They are (in order): California, New York, Federal, Illinois, Pennsylvania, Florida, Washington, Ohio, New Jersey, and Texas. Those in italics have adopted the formulary concept. It is somewhat curious that some of the smaller states, not in the top ten, are studying the concept while some of these larger states appear disinterested for now.

The adoption of workers’ compensation in this country was reasonably rapid. Thirty-two states enacted laws in the first five years after the first in 1911. Florida was not among them, cautiously waiting until 1935 to join the trend. Obviously, the opt-out and drug formularies will not spread with that speed. The Texas effort came in 2011, and we rapidly approach the close of the first five years thereafter. 

At this point it is fair to question whether opt-outs will spread at all. But formularies appear to be gaining momentum and are likely to come soon to a market near you. Will the momentum build, leading to a more rapid series of state adoptions in years ahead? Will the national or state governments take other actions to restrict profits on medications in light of the recent news of price increases?

Formularies are seen by some as restricting medication choice. That is a policy question that has to be discussed. Anecdotally, there are already stories of recovering workers who present at pharmacies for medication only to be told to return later because authorization of payment cannot be arranged instantly. There are similar stories of delayed prescription refills. How widespread is the complaint of slow prescriptions? Could a formulary law or regulation do anything to streamline the authorization process?

The Florida legislative session begins in January 2016. It is unknown what that will mean to Florida workers' compensation generally. Whether there is legislation regarding prescriptions or not remains to be seen, but there will likely be ongoing discussion of prescriptions and costs in coming months. 

Sunday, September 20, 2015

As Florida Waits, Commonwealth Court Holds Pennsylvania Statute Unconstitutional

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.


Wednesday, September 16, 2015

Assume Everyone is Watching

Rockwell released "Somebody's Watching Me" in 1984. The refrain in that tune repeatedly returns to "whose watching" and "whose watching me?" The answer in our post-smartphone world is more likely that not "everyone." Privacy has given-way in the new millennium. People are in the public eye constantly. Almost certainly in the world at large, and some even suspect their devices of invading their privacy in the expected privacy of their homes and offices (watch for cell phones wrapped in aluminum foil). 

Some of that privacy erosion is voluntary. I remember when people valued their privacy and their "personal" life and space. Today, a great many people share every detail of their lives in an ongoing narrative on social media platforms like Facebook, Instagram, Reddit, Twitter, and more. I imagine there would be anger and incredulity if government forced people to share photographs of each morsel they ate, but given a social media platform, some do so happily. 

I recently had the opportunity to deliver a talk to a group of judges regarding social media. I used as examples some recent news events. 

With all that has gone on in Baltimore this year, much has been seen on video. The original arrest of Freddie Gray is all over the web. Then there was rioting and demonstration. Two correctional officers, the police essentially, were charged with looting based on surveillance video. 

Video in a police shooting in South Carolina made the news also. We live in a world where cameras are everywhere. Still and video shots are being obtained in volumes barely conceivable thirty years ago. Some claim that hundreds of thousands of pictures are uploaded to the Internet each minute. One estimate is that 880 billion photos were taken in 2014 (that is 125 photos for each of the approximately 7 billion people on this planet). Amazing how many shots we will take when there is no film or development cost (for you millennials, you can look up both "film" and "film development" in your Funk and Wagnalls). 

It can be an event like the recent pool party in Texas. This video supported anger in a community, and ultimately led to a police officer's resignation. It does not have to be violent, a couple in Florida was recently convicted "of lewd and lascivious behavior" based in large part on a "a video shot on a bystander's phone that showed . . . the canoodling couple."

There are many examples of video being presented in legal cases. Many will remember last year when people began dumping five-gallon buckets of ice water over their heads "to raise money for ALS." Well the NY Daily News reports that a California police officer was filmed lifting just such a bucket last year. From that video, investigators now allege that she "exaggerated her injuries to collect disability benefits." Combined with an earlier claim,"she collected an estimated $117,000." The officer faces up to six years in jail if convicted. Just for reference, a gallon of water is about 8 pounds, so a 5-gallon bucket as described in this story might weigh as much as 40 pounds.

A year ago, the news was circulating about a young woman in a beauty pageant, seeking the "Miss Toyota Long Beach Grand Prix" title. According to ABC, a video surfaced on You Tube of "the 22 year-old strutting onstage in high heels." However, she was "collecting workers' compensation benefits at the time on a foot injury." She had informed her employer "that she couldn't work." Her father last year disagreed with the charges, saying "it's absolute cr*&." One station headlined the story "Beauty, bravado . . but no brains." The outcome of the case was reported this month on WorkCompCentral. After pleading guilty, she was sentenced to 36 months probation, a fine of about $1,000, restitution over $5,000, and 50 hours of community service. 

Recording equipment is everywhere. Privacy has become less and less expected in society. It seems in today's world, you have to expect that at any particular moment you are being recorded in audio, video or both. 

In many states it is perfectly legal to record conversations. According to the Reporters Committee for Freedom of the Press, the twelve states that forbid recording without all parties consent are "California, Connecticut, Florida, Illinois, Maryland, Massachusetts, Michigan, Montana, Nevada, New Hampshire, Pennsylvania and Washington." That leaves a great many states in which such recording is apparently fine. 

A Florida woman was accused of committing a felony when she was pulled over by a traffic officer and she recorded the resulting verbal exchange on her cell phone. While the officer accused her, she has not been charged with a crime. She has decided to sue the officer. Her lawyers claim that "state law is clear that police have no expectation of privacy when performing their duties." 

But is it legal to film people? In April, a police officer in California took exception to being recorded. An onlooker was recording on her phone when an officer "grabbed her phone and tossed it to the ground." This could have been a "he said/she said" dispute about whether she was interfering with the officer, or "in the way." However, she was "fortunate that someone on the other side of the road was filming her as she tried to film the officers." That recording "shows clearly the aggressive approach" of someone now identified as a U.S. Deputy Marshal. 

For now, it appears to be legal to film people in public in America. Not so in Spain. A recent post on the Stir documents a woman fined almost $900 for taking and posting a picture of a police care illegally parked in a handicapped spot (her caption "park wherever you bloody well please and you won't even get fined"). In their defense, Police say "they needed the parking space." They were not responding to a life-threatening call, but "respond(ing) to a vandalism report." They fined the woman for posting the photo because it "harmed their honor."

We have recently replaced some signage in our offices. Our hearing rooms have signs that remind people that proceedings in those rooms are recorded. We make audio recordings of our hearings and trials. Expect that. It is part of what we do when we have a hearing. 

I recently had an anecdote related to me about a mediation proceeding. I am still not certain whether this story is about a workers' compensation mediation. It seems one of the participants in this mediation later disagreed with others about what occurred at the conference. When the dispute escalated, this person claimed to have a recording of the mediation. As the story was told to me, the mediator then reminded everyone that such a recording (without everyone's knowledge) might violate the law and the mediation privilege. Hearing this, the participant that had claimed to have such a recording then recanted and claimed to have been bluffing, and denied making any recording. 

As the disagreement in that case did not proceed to a hearing, it remains conjecture whether such a recording ever existed. I have pondered how a judge in a workers' compensation hearing might react to such a recording taken in a mediation. Would it matter if the person who made the recording later published it on the Internet? Would the legality of recording be the deciding factor, or would the mediation privilege be the end of the analysis? An interesting problem. 

Assume you are being recorded. As the Marshal learned in California, even the person recording someone may also be recorded. Rockwell asks "I wonder who's watching me now," or "am I just being paranoid?"