Cross-Border Issues

I frankly am surprised this issue hasn't been decided yet: 

Whether a foreign truck driver working for a foreign trucking firm who gets injured while driving a foreign truck on United States territory can be the subject of a state workers' compensation scheme if the driver had already availed himself of the foreign system.

But, apparently that issue has never been addressed - at least not by the United States Supreme Court.

SCOTUS docketed for review the case of Porteadores Del Noroeste v. Industrial Commission of Arizona, No. 14-937 on Tuesday.

This does not mean that the court will review the case, but they at least will take a look at it to determine if it is in their interests, and the interests of this country, to do so.

Porteadores del Noroeste is a trucking companuy based in Tijuana, Mexico. It pays into the Mexico version of workers' compensation and social security, the Instituto Mexicano del Seguro Social, for the benefit of its employees. Participation in the IMSS is mandatory - all employers in Mexico must participate.

The IMSS is funded by assessments against employers, based on a percentage of each employee's wages.

Adan Valenzuela was a driver for Cazali Adminsitradora de Personal, a Mexican company, as a long-haul truck driver.

Porteadores hired Cazali to supply drivers to pick up a load of diesel fuel in Phoenix and deliver it to Nogales, Mexico. Cazali sent Valenzuela to do the job.

Valenzuela crashed his truck in Arizona, 11 miles from the US/Mexican border. He escaped before the truck exploded and sustained some injuries, albeit minor.

IMSS paid Valenzuela for his lost daily wages and covered the cost of his medical care from doctors within its network of providers.

But, in September 2010, Valenzuela filed an injury report with the Arizona Industrial Commission naming Porteadores as his employer. Because Porteadores did not have Arizona workers' compensation coverage for its employees at the time of his accident, the commission claims division referred the matter to the Special Fund/No Insurance Section.

The Special Fund refused to make payment on Valenzuela's claim, finding he had already received "full compensation benefits" from the IMSS.

Valenzuela objected and requested a hearing before the Industrial Commission. Porteadores then challenged the commission's ability to take jurisdiction over it, since it was a foreign company and its corporate activities in the United States were governed by the North American Free Trade Agreement, not Arizona law.

The Administrative Law Judge decided that the commission had subject-matter jurisdiction and determined that Valenzuela was entitled to receive the benefits payable under Arizona's comp scheme.

Porteadores sought judicial review, but the Arizona Court of Appeals last January said the company didn't have standing to argue that NAFTA's provisions pre-empted Arizona's comp laws. The court also rejected the argument that labor and trade relations between the US and Mexico would be jeopardized by the enforcement of Arizona's laws for injured workers against a foreign employer.

A rehearing petition to the appellate court was rejected and the Arizona Supreme Court likewise refused to hear the case.

Porteadores argues that the Foreign Commerce Clause of the US Constitution should require individual states to recognize and honor the workers' compensation systems applicable to foreign employers, otherwise such employers are going to need to buy comp policies in every state they want to do business in, which would obviously be chaotic.

The company also argues that requiring Mexican employers to participate in both comp systems violates the Federal Commerce Clause's prohibition on multiple taxation.

Finally Porteadores argues that a Mexican employer who purchases only IMSS coverage is an “uninsured employer” in Arizona, and that the state does not have the right to decide such an employer "did not pay adequate lost wages, disability coverage, or disfigurement coverage through the insurance they paid for."

I don't think the issues in the Porteadores case are all that unique relative to American employers - those issues have long been resolved and whether or not there is liability in one state versus another is dependent upon cross-jurisdictional treaties and recognitions.

Policies written for American companies on American soil generally provide for compensation and defense in other states as applicable, so the cross-border issues are largely irrelevant.

Likely IMSS doesn't so provide, so Porteadores is out of pocket, which makes the enforcement of Arizona's comp scheme against the company particularly painful; think of the cross-border issues that preceded the National Football League's push for legislation in various states to shut down jurisdictional convenience.

Observers think that the Porteadores case may have some traction before SCOTUS because the company argues that enforcement of foreign workers' compensation against the company is double taxation since the court had opted to treat the Affordable Care Act as a "tax" back in 2012 and IMSS is deemed a tax in Mexico.

This makes the second workers' compensation case before SCOTUS this session that I'm aware of - the other raising the issue whether, under Florida's workers' compensation laws, undocumented workers can be criminally prosecuted for fraud by not "having papers" even if they don't make a workers' compensation claim.

For work comp wonks, it's an exciting judicial season.

Porteadores' petition for review is here.