Thursday, August 14, 2014

Padgett is About Bigger Issues

Starting this Sunday thousands of people from the workers' compensation industry descend upon Orlando, FL. for the bacchanal otherwise known as the 69th Workers' Compensation Educational Conference.

I am on several panels at this event, but I suspect that, since the event is Florida based, one of the hottest topics is going to be yesterday's ruling by Miami-Dade Circuit Judge Jorge Cueto in Padgett vs. State of Florida, that the exclusive remedy provision of Section 440.11 is facially unconstitutional.

That a trial level judge would take the time and energy to write a 20 page opinion denigrating an entire legal operating system and throwing the door wide open for challenges is extraordinary. The fact that Judge Cueto even took an interest in workers' compensation is beyond extraordinary.

And knowing that the only resolution of such a conflicting issue is an appeal to the Third Circuit or directly to the FL Supreme Court is pure judicial chutzpah.

The basis for Judge Cueto's ruling is that over the years the Florida workers' compensation act's original grant of benefits for permanent disability, which was part of the "Grand Bargain," has been so eroded as to no longer serve as an adequate remedy.

Citing the original constitutional test of the exclusive remedy of workers' compensation in the United States Supreme Court case of New York Central Railroad v. White, 243 US 188 (1917), a case in which ironically the business community sought to declare compulsory workers' compensation laws unconstitutional, Cueto quotes one of the more powerful passages in that case:
Bowzer asks, "what is it?"

"One of the grounds of its concern (the workers' compensation act in question) with the continued life and earning power of the individual is its interest in the prevention of pauperism, with its concomitants of vice and crime."

For years attorneys representing injured workers throughout the nation have been saying that the compensation bargain has been eroded and one need only visit all of the various injured worker "forums" on the Internet to see that this particular demographic feels pushed into pauperism as a consequence of industrial injury.

Cueto is basically saying that if the remedy provided by the Florida Act is mandatory and exclusive, then it doesn't meet constitutional muster because there isn't enough money to keep injured workers from diving into pauperism, which harms all of society and places excessive burdens on other systems such as Social Security or Medicare (or what we like to call in our sanitized jargon "cost shifting").

Cueto teed up the ball and drove it way down the fairway with his analysis. He said that while the exclusive remedy provision has been part of Florida's Workers' Compensation Act since 1935, it wasn't exactly "exclusive" until 1970, when lawmakers eliminated the ability of employers to "opt-out" of participating in the comp system.

At that time, Cueto said, the "benefits provided by the act should have increased substantially to account for the change in the value of the trade; i.e., allegedly fast, sure and adequate payments in exchange for the tort remedy that was cumbersome, slow, costly and under which it had been legally difficult for injured workers to prevail."

Lawmakers again tinkered with the act in 2003, to eliminate the payment of any compensation for a permanent loss of wage-earning capacity that is not total in character, Cueto noted. And even if the loss is total, the act cuts off benefits once the worker hits 75 or after receiving benefits for five years.

The amended version of the act also apportioned medical care expenses for workers between an employer and the worker, and if the worker can't afford his share of the cost, then the worker can't get treated, Cueto said.

Cueto reasoned that if the Act would "provide full medical care and some compensation for total or partial disability, it remains constitutional." But as it now stands, Cueto said, "it is inadequate as an exclusive replacement remedy for all injured workers."

Chief Workers' Compensation Judge David Langham in his blog post this morning asks, "What IS IT?" In other words, what does this court decision mean to the rest of the workers' compensation world?

While there will be plenty of debate about procedure, where the appeal is going to be first heard, and how the various special interests are going to line up, this is what I take out of Cueto's ruling: the adequacy of benefits in workers' compensation is getting the attention of the judicial system from coast to coast.

In California the constitutionality of the state's system is being picked at piece by piece with the Angelotti case challenging changes to the lien system, and other cases taking on SB 863 provisions.

Last year the Texas Office of Injured Employees Counsel released a couple of reports suggesting the dispute resolution system lacked constitutional protections for injured workers.

There are other states where workers' compensation laws are being questioned as conforming to the original bargain in one form or another.

Plenty of speculation will be circulating this coming week and surely this case will be the center of debate at next week's conference.

Cueto's ruling opens the debate full fledged however and is the boldest trial level attack on the system I can ever remember. Even Florida's Westphal case about attorney fee caps lacks the sheer boldness of Padgett.

What's really going on around the country, with Oklahoma opt out, constitutional attacks, complaints about costs and inadequate benefits is a debate that I've been having for quite some time: Is workers' compensation even relevant any longer?

It seems to me this debate is getting louder and, as work comp is a microcosm of society, points to larger issues facing society - a huge discord between the minority of "haves" versus the vast majority of "have nots."

Cueto in the Padgett case is really opening up a debate about whether society is taking care of its own any longer.

The Padgett case is about social unrest. We are, indeed, meandering into challenging times where the nation's soul is being examined.


  1. Daniel Montes vs the Texas WC Act as unconstitutional before the state and federal court, 2015, Harris Co Texas.