Friday, August 30, 2013

The Sensitivity of Exclusive Remedy

I got a LinkedIn post notification yesterday that gave me some pause for concern...brief pause.

The LinkedIn post referenced an article that was authored in large part to promote a company's product for baseline testing, but used the threat of the possible demise of workers' compensation's exclusive remedy in the threat of several RICO lawsuits that had been making the rounds in the country.

RICO, as you may know, is the Racketeer Influenced and Corrupt Organizations Act and was made law way back when I was a young lawyer so that government and private parties could take gangsters to court and civilly remove the fruits of their corruption.

But the law was broadly drafted and soon was being used against "ordinary" citizens and businesses who ran afoul of its conscriptions.

The article said that the exclusive remedy of workers' compensation faced compromise because of the ability to pierce that protection where it could be shown that there was collusion between, for example, an employer, a carrier and a physician to deny benefits to a claimant.

Curiously, and quite surprisingly, it was announced yesterday that the National Football League has entered into a huge settlement to provide compensation to players that have demonstrated evidence of brain injury.

Under the terms of the proposed agreement between the parties, $675 million will go to the players and their families if the player presents medical evidence of severe cognitive impairment, dementia, Alzheimer's, or Lou Gehrig's disease.

Any of the league's approximately 18,000 former players would be eligible for an award, but the size of that award will depend upon the player's specific diagnosis, as well as other factors, including the player's age, the number of seasons he played in the NFL, and other relevant medical conditions.

If a retired player's condition worsens over time, he can apply for a supplemental payment.

The settlement also allocates $10 million toward medical, safety, and injury-prevention research. A portion of this amount will be used to support joint efforts by the NFL and retired NFL players to promote education and safety initiatives in youth football.

The rest of the money will go towards the cost of administering baseline medical exams to the players, legal fees, and the costs of administering the settlement.

I thought this was entirely interesting.

So what gives? Is the exclusive remedy of workers' compensation dying?

I don't think so. There have always been exceptions.

The RICO cases basically deal with criminal conduct - if parties to workers' compensation claims collude illegally to deny benefits then certainly they can not escape penalty by hiding under the veil of exclusive remedy. That has been the state of the law for some time. RICO or no RICO.

The NFL settlement could be more problematic relative to exclusive remedy, except for the fact that the NFL is NOT the employer of the players. Workers' compensation applies only to the teams that employ the players.

So there is no exclusive remedy threat there either.

I think that what these two stories have in common is that there are still many pitfalls for business other than workers' compensation. While work comp is a concern to business, there are a multitude of larger, more serious risks to manage that some workers' compensation issues.

The NFL settled the case before the discovery process, which in my mind is quite telling. Three quarters of a billion dollars committed before any interrogatories, any medical testimony, any reports, any depositions?

Perhaps the NFL and its teams were afraid of some RICO action themselves.

Or perhaps the NFL doesn't want to wait to find out what a jury thinks.

Regardless, from my vantage point, the exclusive remedy of workers' compensation has become stronger over the years.

While it seems that the legislative trend across the nation is to make qualification for workers' compensation benefits more difficult, once a claim gets into the work comp system, or it is determined that it should have been in the work comp system, it stays there.

The cost of workers' compensation is always going to generate debate, and there will always be friction due to the many moving parts.

By the same token, the premium dollar buys a good amount of risk management - the risk of getting side blinded by a big negligence suit is hugely ameliorated.

We tweak work comp from time to time seeking to curb abuses, rein in certain costs, smooth out the trends - but we can count on the century-long concept of exclusive remedy to stay the course.

Exclusive remedy isn't dying. We're just more sensitive to it now.

1 comment:

  1. The two paragraphs about baseline testing in that article were completely out of context with the rest of it. It was such an obvious commercial, and it detracted from the rest of the article.