Constitution Times Deuce

The Flying None...

2016 really is the year that challenges to workers' compensation's constitutionality is playing out across the nation in multiple jurisdictions under various theories.

Kentucky governor, Matt Bevin, only the third Republican governor in the history of Kentucky, drew fire for disbanding the Workers’ Compensation Nominating Commission on May 9 and then reconstituted it with new members.

Bevin dismantled the seven-member nominating commission even though all of them were serving unexpired terms. The commission exists to advise the governor on which administrative law judges should hear workers’ compensation cases.

The governor also changed the terms and membership criteria for commission members. State law requires that three of the members be from the state’s majority political party (in this case Democratic) and two from the minority party (Republican). Bevin’s executive order changes the makeup to two Democrats, two Republicans and one at-large member opponents say will mirror’s the governor’s views.

The Kentucky AFL-CIO, and Teamsters Local 89 aren't happy with Bevin and have brought suit to declare the governor's actions unconstitutional. Joining them are former nominating commission member Charles McCoy and Louisville attorney Eric Lamb, who represents three workers' compensation claimants.

They say Bevin is trying to stack the commission against workers and in favor of business.

The suit includes a petition for a temporary and, ultimately, a permanent injunction to prohibit the governor's restructuring from ever taking place. Franklin Judge Phillip Shepherd has scheduled a preliminary hearing for June 1 and the governor's office has decided to hold off on any appointments until at least then.

The challenge isn't appreciated by the governor's office. “Another day, another frivolous lawsuit,” the governor’s press secretary, Amanda Stamper, emailed WorkCompCentral.

The plaintiffs claim that not only did Bevin stack the deck with his new nominating commission, he refused to reappoint six qualified administrative law judges. 

In the meantime California lien claimants challenging SB 863 were thrown out of the Supreme Court of the United States with a no comment "writ denied," the final grasp for straw over.

On Monday, the court denied the petition for certiorari in Angelotti Chiropractic v. Baker, bringing an end to more than three years of litigation over the $100 "activation" fee imposed by SB 863.

They filed suit, with Angelotti Chiropractic serving as the lead plaintiff, asserting the doctors, chiropractors, pharmacies, interpreters, copy companies and other businesses like them have no way to get paid unless they file a lien claim. Thus, they complained that the forfeiture penalty is a governmental deprivation of their ability to be paid.

The U.S. 9th Circuit Court of Appeals wasn't persuaded, finding that a lien merely represented the claimant's expectation of payment.

Once the 9th Circuit denied the plaintiffs' request for reconsideration, the Angelotti plaintiffs turned to the U.S. Supreme Court for relief in January.

Though the California Department of Industrial Relations submitted a waiver of its right to respond to the petition, SCOTUS said it wanted to hear what the administration had to say.

The DIR submitted a response arguing that a lien claimant's "expectations" are not property subject to a governmental taking and that it just imposed a "user fee" on those who chose to use the workers' compensation adjudicatory system to pursue payment.

Apparently SCOTUS was persuaded.

And that's our constitutional lesson in work comp for the day....

No Limits

Changes in the weather...

Workers' compensation is a pendulum that swings back and forth.

For the past 10 or so years the interests of payers have trumped those of beneficiaries, as laws across the nation limited benefits, and consequently services and fees.

That swing to the right was precipitated by an earlier swing to the left which caused a perception that escalating benefits were out of proportion to the risk payers were willing to accept.

Expansion, contraction - workers' compensation is like the weather with high pressure pushing the winds and temperatures one way, and low pressure the other. The changes in the weather were mostly the product of legislative actions.

These past couple of years have seen several constitutional challenges to various workers' compensation "reform" laws, some successful, some not. 

What is remarkable is that "reform" is coming from state supreme courts, not legislative movements. State supreme courts have weighed in on work comp occasionally, but the wave of high court "reform" is, in my experience, unprecedented.

One of the constitutional targets that appears to be gaining steam are challenges to limits on fees attorneys can charge and collect in the representation of the injured.

Attorney fees were easy targets in reform laws. High rates of litigation are tied to high costs, and that litigation cost was perceived to be the product of lawyer attraction, so the theory was limit fees, limit litigation due to financial unattractiveness of the field.

Florida's Supreme Court just last month struck down the limitations on fees on the ground that the law violated due process since the restrictions left no means to secure a reasonable fee if the statutory formula yielded a grossly inadequate level of compensation for attorneys.

The Utah Supreme Court late Wednesday took a different tack on invalidating that state's fee restrictions: because the state's Constitution provides (as do most states) that the Utah Supreme Court has sole and plenary power over attorneys then any legislative control over lawyers violates the constitutional guarantee of separation of powers.

In other words, only the judicial branch can regulate attorneys, and their fees. Attempts by the legislative branch violate the separation of powers, the Utah Supreme Court concluded.

Frankly, this is a brilliant strategy that likely will find traction in many other jurisdictions.

Utah didn't have a maximum fee limitation until 1991. Then, the legislature implemented a law providing a fee of 25% for the first $25,000 of an award, 20% for the next $25,000 of the award, and 10% of amounts awarded in excess of $50,000, up to a maximum of $18,590.

After a lengthy unsuccessful battle to get the Utah Labor Commission to revise fee regulations, the Injured Workers' Association of Utah brought suit.

The St. George District Court rejected all of the association's constitutional arguments and granted summary judgment in favor of the state.

The association appealed this decision directly to the Supreme Court. On appeal, the association limited its arguments to an assertion that the fee restrictions violated principles of equal protection and the separation of powers doctrine.

Without addressing the equal protection argument the court said it has had plenary power to regulate the practice of law in Utah under that state's Constitution.

Accordingly, the court concluded that the legislative delegation of authority to the Labor Commission to create a fee schedule, as well as the fee schedule itself, were "unconstitutional encroachments upon the power of the judiciary to govern the practice of law."

The court went on to say that it would not adopt a fee schedule of its own making, as it found the Utah Rules of Professional Conduct adequately safeguarded injured workers by limiting attorneys to charging only "reasonable" fees for their services.

The court said it was not persuaded that having a fee schedule "actually protects injured workers," as there was "some evidence that there are now very few attorneys willing to represent injured workers in Utah and injured workers suffer as a result of being unable to obtain representation."

According to WorkCompCentral's research on the story, a vast majority of states have laws that place limitations on fees, and many use a percentage of recovery as a limit.

2016 is, indeed, shaping up to be the Constitutional Year in workers' compensation.

To read the Utah Supreme Court's decision in Workers' Association of Utah v. State, click here.

Dismantling By Courts

ProPublica declared that corporate America was dismantling workers' compensation piece by piece, state by state.

But 2016 is going to be known as the year that state supreme courts are the ones dismantling workers' compensation piece by piece.

We have seen a very active Oklahoma Supreme Court declare various provisions of that state's 2013 reform law unconstitutional. California courts haven't gone in that direction, yet, though there are still various challenges to the 2012 reform law.

Florida courts have been asked to review various elements of its workers' compensation laws, and yesterday the First District Court of Appeals, in what I think was a surprising decision to many, said that the state's statutory limits on the payment of attorneys for injured workers was unconstitutional.

Florida Statutes Section 440.34 provides that a claimant attorney is entitled to a fee equal to 20% of the first $5,000 in benefits secured for a client, 15% of the next $5,000 secured and 10% of any amount secured in excess of $10,000.

The statute further provides that a judge of compensation claims cannot approve any other payment arrangement, and Section 440.105(3)(c) criminalizes an attorney's receipt of any payment that has not been approved by a JCC.

Many states have similar statutes or regulations limiting fees for attorneys representing injured workers in litigation. These rules not only assume that the only compensation schema applicable to this group of service providers is contingency based upon disability, they essentially perpetuate it thus perpetuating the disability of America.

I'm not sure that the 1st DCA is cognizant of this hypocrisy, but the justices at least acknowledge that an injured person's right to representation in a highly complex, life altering, legal system should not be castrated by a fee regulation that discourages any representation.

That's what occurred in Martha Miles vs. City of Edgewater Police Department, 1D15-0165, 4/20/2016.

Miles was a police officer for City of Edgewater. She alleged exposure from toxic chemicals used to make crystal methamphetamine on two occasions in 2011, and she claims these events aggravated her asthma to the point it became disabling.

She filed a comp claim, but after she voluntarily withdrew it, the city filed a motion to recover the $3,860.82 it said it had expended in preparation to defend itself.

Miles then went to her union for help. The Fraternal Order of Police Lodge 40 said it was willing to pay a law firm for Miles $1,500 for the first 10 hours of work, and Miles agreed to pay the firm $150 per hour thereafter.

But Judge Mark Massey found Sections 440.105(3)(c) and 440.34 prohibited the payment arrangement being proposed by the union and Miles.

Miles refiled her claim and wound up going to trial without an attorney, where she told the JCC that she hadn't been able to find anyone who "works for free." She failed to introduce any evidence to support her claim at the trial, so the JCC denied it.

Miles then hired attorneys Michael Winer and Geoff Bichler to appeal the judge's decision (though it is not clear how these attorneys got paid to make the appeal, but not the trial...). Their argument on appeal was that Sections 440.105(3)(c) and 440.34 violated Miles' free speech right guaranteed under the First Amendment to the U.S. Constitution.

The theory is that free speech is abrogated if an unskilled litigant cannot get adequate representation if no attorney would take the case because of inadequate pay; ergo an individual's right to contract freely (subject of course to legality) is compromised.

In addition the court noted that individuals can waive their constitutional rights, so they certainly should be able to waive a lower standard law, i.e. a fee constriction statute.

But by far the most interesting point made by the court was its overall criticism of legislative attempts to limit litigation: "[In] a free society which attempts to allow individuals the intellectual prerogative to personally weigh the benefits and risk of exercising their statutory right to obtain redress for their injury, we hold that the rational intent to minimize workplace litigation cannot ultimately trump the benefits the public obtains by allowing an injured worker, or one who personally thinks she is injured, to seek redress under law."

Perhaps the Miles case will go up to the Supreme Court, which would make it the fourth case pending before Florida's highest court on constitutional issues, perhaps not.

The wheels of justice, it is said, turn very slowly. While ProPublica observed that state work comp protections have been dismantled over the past decade, perhaps what we are now observing is that those very laws are now in the process of being dismantled by the courts.

Who said work comp wasn't fascinating?

Right To Carry and Comp

Sometimes workers' compensation is a predictor of future economic or social trends. Sometimes it is reactionary.

And sometimes it is caught in the middle, trying to figure out what, when and how it fits in.

That's the curious, and interesting (at least to me) aspect of work comp - it's unique socio-economic place in our daily lives.

We see this as marijuana laws get liberalized across the country. New Mexico, with its courts ruling that medicinal marijuana must be reimbursed via work comp, is at the foreground of this movement, and Colorado with its even more liberal laws not far behind.

We also see this, as pointed out by WorkCompCentral's Sherri Okamoto in this morning's news, in state "right to carry" firearms laws.

22 states allow employees to store firearms in their cars while on employer parking lots.

Georgia gives an employer immunity from "any criminal or civil action for damages resulting from or arising out of an occurrence involving (the lawfully stored firearm)," unless the employer had reason to know the person who used the gun was going to commit a criminal act on the employer's premises.

Idaho, Texas and Oklahoma expressly provide immunity from a "civil action" only, while Wisconsin says an employer will be "immune from any liability" for allowing workers to carry weapons.

Maine provides employer immunity from civil liability for individuals who are injured or killed as a result of the employer's compliance with the statute — but it does not eliminate the potential for workers' compensation liability if a properly stored firearm were used against another employee.

The Tennessee right to carry law does not provide for immunity at all.

And right to carry or store doesn't stop with immunity for injury or death - last month the Mississippi Supreme Court ruled that that a worker could maintain a wrongful termination claim on the grounds that he was fired for lawfully having a gun in his car.

The insurance industry doesn't like guns, particularly on or near the work place, because it is a risk that can't adequately be controlled through normal safety channels, and they're rightfully concerned about the statistical assertion that work place homicide is 5 times more likely where guns are allowed than not.

Some carriers simply won't take on employers that permit guns on or near the work place; others provide exclusionary endorsements.

This is why workers' compensation remains, in large part, a state by state concern. Each state has laws that are unique to its culture and people. Some states are tolerant of guns, others not. Some states feel okay with pot (pun intended), others don't.

There's been lots of talk and speculation lately about the federal government intervening (or, perhaps, interfering) in state work comp programs to level the playing fields and establish minimum standards, but you can see the difficulty in doing so - the myriad of other social or economic policies of different states make any sort of overall standard very, very difficult lest such run afoul of The Constitution and its provisions for state's rights.

Against this backdrop, it's easy to see how interwoven workers' compensation is with our society and the impact unrelated laws have on work place safety and injury protection systems.

Work comp is complex, because the issues in our society and economy are complex.

Separate Powers

One of the most interesting debates going on in the country about workers' compensation is the constitutionality of changes to state systems that delegate certain acts and authority in non-traditional ways.

A major tenet of Constitutional Law is the doctrine of Separation of Powers. In short, the founders of this country had the foresight to set up a tripartite government: executive, legislative and judicial branches which are not to intrude into the functions of the other.

This system of checks and balances was designed to prevent monopoly powers in any single governmental branch. If the legislature (or the executive for that matter) does something that The People feel is wrong, then the judicial branch is supposed to be able to review it.

How far that doctrine goes in the real world is subject to all sorts of different review standards and competing interests.

Who's got The Power?

In the work comp world, a prime example is pending before the California Supreme Court in the Stevens v. WCAB (Outspoken Enterprises) case.

Last year the California 1st District Court of Appeals upheld the constitutional validity of the independent medical review process, basically saying that the state constitution gives the Legislature the power to do whatever it wants with workers' compensation, including defining its own constitutional powers and limitations.

In other words, because the state constitution gives the California Legislature plenary, or supreme, power on the topic of workers' compensation, that power exceeds any limitation the constitution may otherwise impose.

At least with regard to workers' compensation, the 1st DCA infers, the Legislature is not bound by the California Constitution.

Stevens is arguing to the Supreme Court that the Legislature is not so free to do as it wants with workers' compensation when it comes to violating the Separation of Powers doctrine, because by making Independent Medical Review a one-way process the judicial branch is usurped.

The flip side to that argument, and why this is such an interesting constitutional issue, is that there still is some judicial review, albeit limited, and that limited review is arguably balanced by the speed, efficiency and cost (financial and social) savings of IMR.

The justices in the 1917 US Supreme Court case of NY Railroad, which declared compulsory workers' compensation constitutional, said a review of workers' compensation statutes had to be done in totality - no single facet could be declared constitutionally erroneous without balancing against competing interests.

This is the sort of thing that drives engineers crazy - because the litmus test is vague. There's no clear yes or no answer. We can argue the merits all day long, and with good solid analysis for either proposition, but at the end of the day whether seven very intelligent, highly educated, people in robes agree is a gamble.

This is not a game, and certainly not made for TV entertainment - and the risk to a $30 billion system, and to the people it's to serve, puts the stakes high.

Which may be why this is so fascinating - the Stevens case has all the elements of high drama, and there's only three things the court can do: affirm, deny, or punt.

Just how much power does the California Legislature have? I reckon we'll find out soon enough.

Ain't No Justice

I'm probably going to get slammed by injured workers for this post, but that's okay because there's a truth that needs to be said.

There's a reality to workers' compensation that most injured workers who get wrapped up into the system, particularly in litigation, don't appreciate, much less understand:

Workers' compensation has nothing to do with justice.

Nothing.

If you are looking to correct wrongs done to you, or another, via the workers' compensation dispute resolution system, regardless of state or jurisdiction, you're wasting time, money, and your own health.

Here's the bottom line: Workers' compensation is simply a wealth reallocation system. That's all it is.

It was not, and never was intended to, right a wrong, bring people to justice, or provide any sort of revenge.

Justice has no place in workers’ comp. Work comp is only moves money from one pocket to another, with some deductions along the way to pay for that service.

Money comes in from a business in the form of premium. A percent is skimmed right off the top by the procuring broker or agent. Then some is allocated for investment by the insurance or holding company. Some is set aside to pay the cost of claims and the office building and staff. Other amounts are paid to various vendors. At the end of the day there may be some left to return to investors, or to pay employer dividends.

The only reason there’s a dispute resolution process in work comp is because whenever money is involved someone wants more than they are entitled to or what others think they should get, and there has to be a process to manage the dispute and put finality into a transaction.

There’s nothing “fair” about workers’ compensation. Fairness is a legislative matter. 

Legislatures determine what is "fair," and if legislatures go too far out of the "fairness" balance, then a court will intervene. There are state supreme courts reviewing the fairness equation right now, but the standard for review will be the standard espoused by the US Supreme Court in 1917 when America's highest court held compulsory work comp was constitutional.

So long as comp provided a "reasonably just substitute" to a tort claim, the US Supreme Court ruled in New York Central Railroad Co. v. White (1917), then it could be the sole means a worker had for recovering against an employer.

There's a lot of factors going into the determination of "reasonably just substitute" - not just how much money a claimant gets, or the timeliness or thoroughness of medical treatment, etc.

Certainly there are court challenges pending in various states arguing that work comp is no longer fair, that the Grand Bargain has been compromised to such an extent that it doesn't meet the Supreme Court's standard of a "reasonably just substitute," but that's not in the NOW, i.e. the present reality. Any future supreme court ruling about workers' compensation constitutionality won't help the claimant TODAY.

You or I may not make it to tomorrow. We need to deal with today...

As in any wealth reallocation system there are winners and losers. And there is plenty of friction in the system that gets in the way of an injured worker receiving benefits - there's no argument about that. 

Injured workers all too often get the short end of the stick. We have chronicled that many times in this blog and in the news.

But, there was a time not too long ago that the business sector felt they were getting the short end of the stick too, that they weren't being treated fairly and they couldn't get justice either.

Here's the real deal: Employers and their workers are in the same boat - without work to do, there is no employer, nor workers who may get injured. Likewise, without workers, there's no way business can get done.

Each needs the other. Sometimes that relationship is more balanced than at other times.

It’s not intended to be “fair.” It is simply reallocation of wealth - plain and simple. 

Everyone in the workers' compensation industry makes money off the misery of injured workers and their families.

We all profit off the injured worker in some context or other. Some, I’ll certainly agree, push the boundaries of ethics, morality, and legality.

To be clear, I'm not against an injured worker having legal representation. Most systems are complex. The concepts and terms are confusing, unfamiliar, and there are many traps for the unwary.

But a lawyer on your case is not about seeking justice. For the claimant, a lawyer's job is to maximize case value because that's how they get paid. The more the case is worth in terms of dollars, the better the pay day. For the claims payer the lawyer's job is about minimizing the expense.

And there's nothing wrong with that because, as I said, workers' compensation is about wealth reallocation and the injured worker's attorney does the job by reallocating as much as possible within the rules of the game to the injured worker. The defense lawyer checks the balance.

Sometimes wrongs occur in cases, and the lawyer will seek redress for those wrongs - again within the rules of the game. And those rules generally provide for some remuneration to compensate for those wrongs (we call such remuneration, "penalties"). The motive, again, is case value maximization - not to teach a lesson (though sometimes a lesson may in fact be taught).

An injured worker seeking justice through the workers' compensation dispute resolution system jeopardizes health, sanity, and life itself wasting years that could be spent living while trying to buck a system designed as an administrative process.

The bottom line - injured workers should get into and out of workers' compensation as rapidly as possible. Whatever it takes to exit the system with some modicum of health for the future, and whatever indemnity the law provides, is the goal.

Living the claim takes years off a life for naught. Workers' compensation litigation is a terrible place to live.

Florida Takes the Lead

The Florida Supreme Court announced yesterday it has accepted jurisdiction in Stahl vs. Hialeah Hospital/Sedgwick.

"The Court accepts jurisdiction of this case as to the basis for jurisdiction under Art. V, § 3(b)(3), Florida Constitution (i.e., expressly declares valid a state statute)" says the Court's docket.

This is big.

FL Supreme Court

Florida's high court will be the first in the nation to weigh in on whether workers' compensation benefits have so eroded the Grand Bargain that it no longer meets state constitutional muster.

Daniel Stahl was injured while working for the Hialeah Hospital in 2003.

A doctor placed him at maximum medical improvement in October 2005 and assigned him a 7% impairment rating.

Stahl's case went before the 1st District Court of Appeals, which has original jurisdiction over all workers' compensation appeals, several times on various issues. His last appeal challenged the statutory imposition of a $10 copay on his doctor visits after he reached MMI as unconstitutional.

He also argued that the elimination of permanent partial disability benefits in 2003 makes the Florida Workers’ Compensation Law an inadequate exclusive replacement remedy for a tort action.

The 1st DCA said both the copay and elimination of PPD withstand rational basis review, in that the copay provision furthers the legitimate stated purpose of ensuring reasonable medical costs after the injured worker has reached a maximum state of medical improvement, and PPD benefits were supplanted by impairment income benefits.

Stahl says in his petition to the Supreme Court that the use of the "Rational Basis" test is improper since fundamental rights are impinged upon: due process of law, the inviolate right of trial by jury, the right of access to courts and the right to be rewarded for industry; arguing that the "Strict Scrutiny" test must be applied instead.

Covering the bases, Stahl says that even if the rational basis test was the correct standard, it was misapplied because work comp law is "remedial" legislation, meaning it is designed to remedy a perceived problem in society: the burden of industrial injury on the industry served.

"It was not to make Florida business competitive with businesses in Mississippi, Alabama, Georgia, Texas or any other state or country," Stahl says in his petition.

So if the rational basis test is applicable, the test must apply to the purpose for which the law was enacted, in this case using the police power of the state as its legal foundation.

With regards to indemnity, Stahl argues that the Rational Basis asserted by the 1st DCA fails to take into consideration that in the 12 years since the 2003 amendments, workers' compensation premiums have been reduced by approximately 60%. "It is no longer necessary to keep benefit reductions in place to contain costs," it is argued.

Stahl's petition is here: https://efactssc-public.flcourts.org/casedocuments/2015/725/2015-725_brief_115576.pdf

Hialeah Hospital's response is here: https://efactssc-public.flcourts.org/casedocuments/2015/725/2015-725_brief_115800.pdf

Here is the Court's timing of events: "Petitioner's initial brief on the merits shall be served on or before November 2, 2015; respondent's answer brief on the merits shall be served twenty days after service of petitioner's initial brief on the merits; and petitioner's reply brief on the merits shall be served twenty days after service of respondent's answer brief on the merits. The Clerk of the First District Court of Appeal shall file the record which shall be properly indexed and paginated on or before December 14, 2015."

The parties will be noticed of the scheduling of oral arguments 60 days beforehand. 2016 is going to be very, very interesting.

A Sharp Point

There's a big debate going on in the United States, and workers' compensation, as it is with many bigger issues, is a microcosm of what ails society: the gulf between the haves and the have-nots; i.e. wealth distribution.

Minimum wage, living wage, tax reform, health and medicine - you name the financial topic and arguments break out about the widening gulf between the poor and the wealthy to such an extent that many are saying that the middle class is in jeopardy of being marginalized, if not out right extinguished.

Charles Moore, in the Saturday Essay of the Wall Street Journal, opines that the middle class is trending towards a "have-less", though not quite yet a "have-not", status.

"When things go backward in nations accustomed to middle-class stability, people start to ask questions," Moore writes. "What is the use of capitalism if its rewards go to the few and its risks are dumped on the many? The rights of property do not seem so enticing if the value of what you own collapses or if that property is trapped by debt. What is so great about globalization if it means that the products and services you offer are undercut by foreign competition and that millions of new people can come to your country, take your jobs and enjoy your welfare benefits?"

And we have started in the past decade to ask these same type of questions about workers' compensation.

What is so great about a no fault system of injury protection when you have to go to court to prove that an injury was not your fault (co-morbidities, psychological status, drug or alcohol use, cancer, etc.)?

What is so great about spreading the risk when the cost of spreading that risk causes business to question the value of such?

"The owner of capital decides where money goes, whereas the people who sell only their labor lack that power, " observes Moore. "This makes it hard for society to be shaped in their interests. In recent years, that disproportion has reached destructive levels, so if we don’t want to be a Marxist society, we need to put it right."

As recent studies and publications have explored, there is great disproportion between states as to benefits in workers' compensation.

But more than that, there is good evidence that there has been an increasing disproportion between wages, maximum benefit levels and the financial destruction to a wage earner's future.

Workers' compensation has been around for over 100 years in the United States. And since 1948, every state and federal agency has had a workers' compensation system. Other than in Texas, work comp is compulsory, and essentially has become a "right" unto The People. In fact, most states have workers' compensation embedded into their state constitutions.

Each state controls their own work comp system. They make it, tweak it, and regulate it based on the local social norms, which is why some states are more expensive than others, and why some states are less expensive than others. And why some states provide more benefits than other states, and some are more or less efficient than others.

Workers' compensation has essentially become a "states rights" program - just mention federalization of workers' compensation and you will see the passion flow, and more often than not a "hell no!" exclamation from the vast majority.

Here's the friction: workers' compensation is a right unto The People. That right has evolved over 100 years. Even in Texas, when workers' compensation is invoked, it is not just a benefit, but a right - the worker hurt doing his job is ENTITLED to compensation. In fact, work comp is much more of a right unto the people than even health care...

And when I say "compensation" in this context, I'm not just talking about indemnity, but also provision of medical benefits.

Disparity in compensation among the states has drawn public attention. And when enough public attention gets drawn to an issue that affects a big proportion of the population, government takes notice.

What DOES matter is the widening gap between have, and have not. Class divide. Socio-economic disparity.

When socio-economic disparity reaches intolerable levels, revolution occurs.

Throughout history, when the divide between the rich and the poor got too large, either the government took steps to redistribute the wealth or there was revolution and 'blood in the streets'. If you don't believe that you might want to check with Tsar Nicholas, Louis XVI, or Marie Antoinette.

The Federal Government made a massive wealth grab in 1913 with Income Taxes, going off the gold reserve, and setting up the Federal Reserve Board of Governors. Most of that was done under the influence of Teddy Roosevelt (who is also credited as a leading progenitor of work comp). In 1935, Congress passed the Social Security Act under Franklin Roosevelt. The Social Security Act of 1965 established Medicare and Medicaid under Lyndon Johnson with his Great Society and War on Poverty. They were all government controlled wealth transfers - from the rich to the poor.

"Labor is prior to and independent of capital," wrote Abraham Lincoln. "Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration." Abraham Lincoln wasn't against slavery simply because it was a human rights abuse so much as it was unfair competition...

Yet, in workers' compensation it's capital that comes first. Those that influence and make our workers' compensation laws have forgotten that without labor, workers' compensation would not be needed at all.

So, will the federal government step in and take over work comp, federalizing a states' rights program?

I don't see it, at least not in our current political environment. Good luck getting four people in Congress to vote for that. Right now Congress is so dysfunctional that their only aim is to make sure that whatever the other party wants to do, gets defeated - even if it is a bill to 'Pull Grandma out from under the bus.' It's not one-sided; the Democrats and Republicans share the blame equally. And no Senator or Representative will ever vote for legislation that curbs States Rights.

But the United States Supreme Court has no problem dictating States Rights. And it has weighed in on workers' compensation before, addressing its constitutionality, and they can do it again.

The Commerce Clause of the United States Constitution (Article I, Section 8, Clause 3) gives Congress, and by extension, the Supreme Court, basically full rein to do whatever they want.

The 14th Amendment (Equal Protection under The Law) puts the nail in the coffin. That gives the Supreme Court nearly unfettered power to legislate from the bench. And the Supreme Court has no problem doing so, its recent rulings on same sex marriage and the Affordable Care Act being the most current examples.

So, it is not a stretch of the imagination to see the Supreme Court invoke the Commerce Clause and the 14th Amendment to enforce a system where everyone gets equal access to work comp with equal benefits. Such action will be provoked by a sensitivity that there is an unacceptable declination in the Middle Class, that the gulf between haves, and have-nots, is too wide, as exemplified by the great disparity in benefits between states given the same or similarly situated injured worker.

Workers' compensation tends to live in its own shell, but we tend to forget that it is a microcosm of society - what happens in work comp is happening in the rest of the world. Work comp is just a focal point.

Albeit, a sharp point.

Padgett Out, Now What?

The big news that I'm sure will be circulating the workers' compensation world of information this week is that the Third District Court of Appeals in Florida reversed the Padgett decision.

Recall back in 2014 (seems so long ago!) that a trial judge in Florida wrote a lengthy opinion about the inadequacies of that state's system, opining that reforms had so decimated benefits that the system no longer met constitutional muster.

The state took that case up on appeal, I presume to set the record straight.

But the 3rd DCA set aside Judge Cueto's ruling on procedural grounds, not addressing any of the merits.

This leaves the question open.

The organizations pushing the constitutional challenge have vowed to continue the fight.

And those defending the system realize that the attacks will continue, particularly since there are still two cases pending in the Florida Supreme Court attacking smaller provisions of the law on similar grounds (Westphal v. City of St. Petersburg is about the statutory limits on the payment of temporary total disability benefits, and Castellanos v. Next Door Co. involves a challenge to the cap on claimant attorney fees).

I'm headed to Las Vegas this morning to attend the California Applicant Attorneys' Association's annual summer conference. Padgett isn't on the agenda, but I'm sure there will be plenty of discussion around the exhibit floor, and perhaps even in the sessions, on the case.

When we pull away all of the emotion though, the question, really, is: if workers' compensation (in any jurisdiction) is unconstitutional, then what's the alternative?

Do the plaintiff lawyers REALLY want workers' compensation to go away?

Or are they using a big club to get the attention of lawmakers to get back to the bargaining table and take a look at whether or not there is some validity to their cause in seeking a better system?

Do employers REALLY want to face a jury of their peers, or are they comfortable with the risk that they are just one injury away from financial catastrophe?

I find it hard to believe that, but for a few rogues, the plaintiff lawyers REALLY want to do away with workers' compensation, and likewise I find it hard to believe that employers are comfortable with the risk. 

When work comp operates well it does what it is supposed to do and everyone makes out okay.

And when it doesn't work well then there are tragic stories to tell.

Sam Miller, the executive director of the Florida Insurance Council, told WorkCompCentral, that his industry needs some reflection.

"So far we've dodged a bullet," Miller said, but if either Supreme Court case results in parts of the comp system being invalidated, employers and their insurance carriers are likely going to have to contend with increased costs, and groups like his are going to have to put pressure on lawmakers for a legislative fix.

Perhaps when that happens those who represent injured workers will have greater a louder voice when the sausage is made, from Florida to California, and all the states in between.

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.

IMR Challenges Communication

Frances Stevens, 46, sustained an injury Oct. 28, 1997, that required a series of surgeries, including the fusion of her first and second metatarsals. State Compensation Insurance Fund provided her a manual wheelchair, but difficulties moving the chair caused her to develop bilateral shoulder problems, according to her case file.

A combination of severe pain and confinement to a wheelchair caused Stevens to become severely depressed. She was declared permanently and totally disabled on Aug. 16, 2013.

Following the declaration of PTD status, Stevens’ physician recommended and prescribed pain and antidepressant medication as well as home health care.

State Fund denied the recommendation of home health care for eight hours a day, four days a week, as well as pain medications on July 25, 2013, and Oct. 17, 2013. Stevens appealed those decisions on Aug. 14, Sept. 19, Oct. 1, Oct. 15, Dec. 9 and Dec. 10, but Maximus did not issue its determination finding the treatments unnecessary until Feb. 20, 2014, according to the petition.

Now the case is being taken to the appellate court, on the grounds that IMR violates the California Constitution, Article XIV, Section 4, which vests with the Legislature authority to enact workers’ compensation laws “that provide substantial justice, without encumbrance” and that these laws be subject to review by a state appellate court.

The petition filed with the First District Court of Appeals avers that a writ of mandate is the only recourse available to Stevens. While Labor Code Section 4610.6(h) allows an injured worker to appeal an IMR decision based on allegations of fraud, conflict of interest, or bias, because the reviewing doctor is anonymous, “the injured worker is not provided any information upon which to make an appeal on any of those grounds.”

“The issue is that since the process is a secretive one, the injured worker has no basis upon which to ever mount an appeal on the grounds cited above,” Stevens' attorney argues in the brief.

“In essence, Labor Code section 4610.6 has rendered petitioner’s WCAB award of future medical care for her devastating and permanently disabling industrial injury meaningless,” the petition says. “Based on these facts, petitioner has no plain, speedy and adequate remedy at the WCAB to enforce the award or seek a ruling on the constitutionality of Labor Code Section 4610.6, or to compel the administrative director and Maximus to render a transparent decision subject to cross-examination and a fair speedy hearing before a WCJ with full appellate rights.”

Will this terminate IMR in California?

I don't know. But the drafters of SB 863 and the IMR provisions were dutifully warned about potential constitutional issues with failing to provide some avenue of judicial review.

There's an old saying in the legal profession - bad cases make bad case law.

This is a bad case. 100% disabled according to both physician opinion and judicial declaration, need for ongoing medical care, and an attorney who knows what he's doing (Stevens' attorney was successful counsel to Wanda Ogilvie, the applicant whose comp claim gave rise to a line of cases addressing how and when an injured worker to rebut the permanent disability rating schedule by showing it didn't fully account for future lost wages caused by the injury).

If any case is going to be successful in challenging IMR this is the case.

I think IMR can be a good thing if it properly disposes of medical treatment requests that are not reasonably evidence based or whatever standard is deemed applicable.

I also believe that there can be no absolutes.

SB 863 made some absolutes. So it is going to be challenged, and likely those absolutes are going to be stricken.

That doesn't mean the death of IMR however, just that some assumptions are changing.

And of course SB 863 proponents are going to argue that system savings are not going to be realized. But that's the gamble. It's not like there wasn't any debate or warning about whether or not those savings in fact were going to be realized, or that the reformation of the system would withstand challenge.

The Stevens case is going to be an emotional debate.

And maybe this is actually going to be a good thing - maybe the threat of ultimate judicial review will cause the parties go start talking again and settling issues rather than perfunctory reliance on a system devoid of rational communication.

How Far Will the Ripples Travel?

One time, I figure it's an anomaly.

But twice. In the same state. Just weeks apart - something is going on.

I'm talking of course about Florida and the sudden penchant for that state's first court of review in workers' compensation cases, the 1st District Court of Appeals (1st DCA), to find various elements of Florida's workers' compensation laws violative that state's constitution.

First there was the Westphal case which found that the current time limitation on payment of temporary total disability indemnity created an unconstitutional situation for workers who had not reached maximum medical improvement by that time and thus could not be rated for permanent disability.

Now the 1st DCA has found in Jacobson v. Southeast Personnel Leasing Inc./Packard Claim Administration that a statute that prohibits workers' compensation claimants from hiring attorneys to represent them against motions to tax costs is unconstitutional.

There are going to be numerous news reports, prognostications, advise pieces and other musings about this precedential case so I won't go into the facts here (here's the opinion) - needless to say that the court's activity is noteworthy not just for finding statutes unconstitutional, but twice and in such short order.

The actual ruling in the Jacobson case is quite narrow and in the long run may actually benefit the Florida system by providing claimants with counsel in disputes over cost petitions by employer/carriers, which may in fact reduce the quantity of such litigation. Certainly the opinion that is being widely accepted is that the Jacobson case is not really going to be much of anything.

But to me, the real question is whether the court's willingness to review a constitutional challenge denotes an emerging trend.

State constitutions are, by nature, limited in application to the particular state for which the constitution was drafted, so making some grand pronouncement about a trend is not going to happen. There are too many variables from state to state to say that something is up on the constitutionality of laws in workers' compensation because work comp is a statutory creature - there are no "common law" elements that would trigger a United States Constitutional challenge.

But a court hearing and ruling on constitutional challenges on a particular topic within just weeks of each case challenge is very unique, and the 1st DCA has yet another constitutional challenge it will be hearing in Davis v. Nascar Holdings.

Davis had reached MMI for her physical injuries in March 2011, but she has not yet reached MMI for her psychological injuries. Her employer, however, stopped paying for her psychological care six months after she reached physical MMI, based on Section 440.093 which provides that a worker can receive indemnity benefits for a mental injury for only up to six months from the date the worker achieves MMI for the physical injury.

Davis is relying on the court's holding and the arguments in Westphal to make her case. Whether the 1st DCA finds in favor of Davis of course is subject to speculation, but it seems to me that the Westphal logic is applicable and that Davis has a good chance of prevailing given the 1st DCA's current track record.

Speculation in Florida is that claimant attorneys are attacking the 2002 reform law, SB 50A (which was implemented over the 2 year period from 2003 to 2004), in piece meal fashion by challenging the constitutionality of small parts of the law.

Get enough unconstitutional rulings against the law, the theory goes, and there is a real possibility that the Florida Supreme Court could eventually declare the entire act unconstitutional forcing a renegotiation of the grand bargain.

I don't know whether this is a viable strategy or even whether these rumors have an iota of validity - certainly though claimant representatives in other big states that have seen significant changes to their systems (e.g. California, New York, Illinois) are looking to the Sunshine State for inspiration and perhaps strategic education.

Westphal and Jacobson were heard and written by different panels of justices working in the 1st DCA. Westphal has been granted rehearing before the 1st DCA En Banc (meaning the entire court will weigh in on the issue), so the issue in Westphal is far from over. There is no indication that Jacobson will go any further.

But if you're a work comp wonk, what's going on in Florida is fascinating. California stirs things up in the legislative ring and 3500 miles away Florida is stirring things up in the judicial ring.

Is there a trend towards constitutional challenge to work comp reforms? Certainly it is too early to tell.

But one can't deny that these are indeed interesting times.

As Chief Workers' Compensation Judge, David Langham, in his blog on the subject has written, "The stone is in the pond, whether a pebble or boulder, how far the ripples travel, and their effect on the distant shores remains to be seen."

Westphal - Use A Bigger Hammer

The recent Florida 1st District Court of Appeal's decision in the Westphal case, and the action of the court to rehear it en banc, is probably the most exciting workers' compensation activity in the state since the reforms of 2004.

The Westphal case has raised emotions in Florida and is probably one of the most divisive court rulings to come out of the courts of appeal in some time.

To the uninitiated, Westphal was a firefighter who sustained significant injuries and was not declared to have reached maximum medical improvement (MMI) prior to reaching the 104 week cap on temporary total disability indemnity benefits.

The 1st DCA in an emotionally charged panel opinion declared the cap unconstitutional because it was "fundamentally and manifestly unjust" although, as I understand the underlying facts from others, Westphal was then put on permanent disability indemnity advances and apparently continues to receive advances pending the determination of this case.

In the meantime, the roar over this controversial decision, which some believe was inappropriate legislating from the bench, had grown so loud that the court announced that it would rehear the case en banc, meaning that all of the justices that sit at the bench in the 1st DCA district would weigh in with their opinions, rather than just the three members of the panel that issued the original decision.

The list of interested persons and entities jumping into the fray with amici brief requests is impressive, including amici brief requests from both the House and the Senate of the Florida legislature.

Other amici include the Associated Industries of Florida; the Florida Chamber of Commerce; the Associated Builders and Contractors of Florida; the Property Casualty Insurers Association of America; the Florida Justice Reform Institute; Publix Supermarkets; United Parcel Service; the Florida Roofing, Sheet Metal and Air Conditioning Contractors Association; the Florida Retail Federation; the American Insurance Association; the National Federation of Independent Business; the Florida United Business Association and the Florida Association of Self-Insureds all opposing the court's ruling.

Supporting the courts ruling include The American Association for Justice, Florida Workers' Advocates, the Florida Justice Association and the Police Benevolent Association.

The emotion that the Westphal case has elicited is evident in the briefs of the opposing amici.

The Associated Industries amicus brief insists that the theory of "natural justice" used by the 1st DCA to declare the cap unconstitutional is an "anachronistic and imprecise equitable doctrine [that] may not be used to invalidate a lawfully adopted statute."

Westphal's attorneys responded to the Associated Industries brief last Friday, insisting that "natural justice" is better understood as "an expression of fundamental fairness," which is "the very essence of constitutionally guaranteed due process of law."

Both sides have their points and we've all seen instances where situations arise that justify either argument - there are the claimants who, if based on generally accepted principals of medicine, have no reason to be temporarily disabled for more than 2 years. And there are cases where the injuries are so serious, but medical improvement continues to be noted, that additional time to reach a point where there is no further appreciable gains is needed.

Most cases, and I'd venture to say the vast majority of cases, will never have these issues.

The Westphal situation makes two points very clear: 1) there are ALWAYS exceptions that don't fit nicely into the law; and 2) workers' compensation is emotionally charged and divisive.

I don't know how the court is going to rule and I don't have an opinion one way or the other as to how it should rule.

My grandfather, who was a master diesel mechanic back in the days when trades were respected, used to joke, "if it doesn't fit ... use a bigger hammer!"

I have faith. Florida will figure it out - and use a bigger hammer.

A Common Sense Fix to the TX URL Case

Because workers' compensation is a state-by-state phenomenon, every jurisdiction has its own little quirky laws that originate to deal with relatively local problems - at least as they are perceived by legislators and regulators.

Texas has a law, Section 419.002 of the Texas Labor Code, that prohibits the misuse of the Texas Division of Workers' Compensation's (DWC) name, initials, logo and any combination of the words "Texas" and "Workers' Compensation" (or "Workers'Comp") by unauthorized persons "in connection with any impersonation, advertisement, solicitation, business name, business activity, document, product, or service made or offered by the person regarding workers' compensation coverage or benefits."

Lubbock workers' compensation attorney, Jack Gibson, has an Internet domain name, "texasworkerscomplaw.com."

A few years ago he received a cease and desist order from DWC, advising him that he was in violation of Section 419.002 by the use of such domain name.

So Gibson sued, alleging violation of his free speech rights and other constitutional protections.

The U.S. District Court for the Northern District of Texas dismissed Gibson's complaint, saying he had failed to state a claim.

On Oct. 30, 2012, the U.S. 5th Circuit Court of Appeals in New Orleans ruled that the trial court erred by dismissing Gibson's constitutional challenge and remanded the case back to the trial court to determine whether the statute is necessary to advance a "substantial state interest" and whether the law is more extensive than necessary to serve that interest.

The origin of 419.002 goes back to abuses by certain medical clinics that were setting up shop in buildings that also housed the field offices for the former Texas Workers’ Compensation Commission (DWC’s predecessor) and using similar names, such as "Texas Workers’ Compensation Clinic" in conjunction with the use of the state seal.

Presumably this is no longer an issue.

But the statue remained and Gibson was targeted.

Now DWC Commissioner Rod Borderlon is asking the legislature to reconsider that statue and amend it so that it is not so broad and sweeping.

In DWC's biennial report to the Legislature, in which Borderlon is expected to say the state's workers' compensation system is in good shape, it is suggested that the legislature create a "new Labor Code Section 419.001 and clarify existing Labor Code Section 419.002" to say that the use of the agency's name "and other terms and state symbols is prohibited if they are used in a 'deceptive manner' in an effort to create a false impression that something is endorsed, approved, sponsored, authorized or associated with" the DWC, Texas Department of Insurance or the State of Texas.

"These changes are meant to clarify the existing statute so that it aligns with the way the Division has applied these requirements in individual cases − to prohibit the use of the agency’s name, certain terms and state symbols when it is being used in a deceptive manner," the report to the Legislature says.

Kudos to Borderlon for thinking ahead, and for making a good attempt at rectifying what I think is a misdirection of DWC resources.

I can understand DWC's cease and desist enforcement action against Gibson - upholding the law requires administrative action. The law is what the law is and that law was necessary to deter deceptive actions by people that have no association with the Division.

And I can completely understand Gibson's position, in particular because I am a publisher. The enforcement action in my opinion is an impermissible restriction against free speech since Gibson is not engaging in any practice that holds himself out as a part of the government.

Borderlon's approach should end the issue for the long term. And it seems to me the parties (Gibson and DWC) can come together at this stage and settle the litigation so that each can direct their energies and resources towards more productive activities.

And I urge the Texas legislature to adopt Commissioner Borderlon's recommendations as just plain good sense.

Not Protected, Not Fundamental

Workers' compensation claimants are not a protected class, nor are workers' compensation benefits a fundamental right.

That's what the Colorado Court of Appeals said when a disabled veteran challenged offsets to his workers' compensation award.

Robert Zerba served in the U.S. military for 28 years, retiring from duty in 1989. After leaving the military, Zerba worked for 13 years as a receiving manager for K-Mart until the age of 62, when he began drawing Social Security benefits.

Zerba later began supplementing his income from his military retirement and Social Security with a part-time job at a King Soopers grocery store.

In April 2009, he sustained injuries to his back when a rack of milk fell on him, pinning him to the floor.

An administrative law judge determined that Zerba was permanently and totally disabled by the accident and awarded him benefits.

King Soopers did not contest the award of benefits, but asked that the amount be reduced by the amount of Social Security and military retirement benefits Zerba was receiving under the version of Colorado Revised Statutes Section 8-42-103(1)(c)(I) that existed at the time.

The judge granted the offset for Zerba's Social Security income, but not as to his military retirement benefits. The Industrial Claim Appeals Office affirmed the judge's ruling.

Zerba appealed, arguing that Section 8-42-103(1)(c)(I) violated his right to equal protection under the 14th Amendment of the U.S. Constitution. King Soopers cross-appealed the denial of an offset for Zerba's military retirement benefits, contending that the military pension was effectively the same as other payments for which offsets are allowed and should not be treated differently.

Zerba claimed that allowing an employer to reduce an injured worker's benefits based on his Social Security income disproportionately harmed elderly and poor workers by depriving them of the full sum they were receiving when they supplemented their benefits with income.

Both appellate arguments failed.

The Court said that classifications based on age do not create a suspect class, and since Zerba did not provide any evidence that he was poor he could not raise an argument on behalf of a class to which he could not prove to be a part.

Likewise, since King Soopers was not the employer providing Zerba with the military retirement benefits,  it was not entitled to an offset.

Workers' compensation has been with us now for around 100 years. It is a creature of statutory creation, having no basis in United States Constitutional fundamentals. Some state constitutions provide for this right, but those are not held to the same standard as The Constitution.

People both inside and outside the industry forget this. Workers' compensation has such an entitlement aura about it that people tend to think of the system as granting "rights" as in either property or liberty.

But workers' compensation is not about either of these. It is a system of convenience for employers and employees. 

Workers' compensation provides benefits applicable upon the occasion of an event - work injury or disease to an employee.

The system spreads the risk of work injury or disease over the broad base of the other group of beneficiaries - employers.

Many tend to think of these benefits as entitlements - and perhaps they are, upon meeting qualifying elements. And workers' compensation law does grant rights - again, upon meeting qualifying elements.

The distinction as pointed out by the Colorado Court of Appeals is that injured workers are not a suspect class and workers' compensation benefits are not a fundamental right. They are simply creatures of statutory grant that do not amount to property or liberty.

The Zerba case is here: http://www.courts.state.co.us/Courts/Court_Of_Appeals/Opinion/2012/11CA1777-PD.pdf

CA Research Confirms - Injured Workers Need Representation

Much is going to be made of the University of California, Berkeley, researcher Frank Neuhauser's report to the Commission on Health and Safety and Workers' Compensation (CHSWC) on the effect of the 2004 reforms on permanent disability indemnity.

But will the arguments be properly focused?

According to Neuhauser, in order for permanent disability indemnity levels to match pre reform levels an additional $2.64 billion will need to be found in the system.

Don't expect that to come from employers' premiums - Governor Brown gave no indication that he was inclined to promote any indemnity increases during California's tenuous recessionary recovery unless there was a wholesale revision of the work comp system that did not negatively impact the state's employers.

And even if permanent disability indemnity was increased to meet pre 2004 levels, is that a proper measurement of what this benefit is supposed to accomplish?

The California Constitution does not give us any clue as to whether permanent disability indemnity is to perform any specific function - the best the Constitution does is state that the overall workers' compensation system is to make "adequate provisions for the comfort, health and safety and general welfare of any and all workers and those dependent upon them for support to the extent of relieving from the consequences of any injury or death incurred or sustained by workers in the course of their employment".

The California Labor Code does not define permanent disability. It tells us how to determine how much there is, but not what it is or what it is supposed to "relieve".

Case law gives us a clue as to what permanent disability indemnity is presumed to provide - as summarized by Sullivan on Comp, Chapter 10:

"Case law has understood permanent disability as the 'irreversible residual of an injury.'[1] It refers to the condition that remains after maximum recovery from the effects of the injury has been attained or the employee's condition becomes permanent and stationary.[2]Permanent disability also has been defined as 'the impairment of earning capacity, impairment of the normal use of a body member or function or a competitive handicap in the open labor market.'[3]"

Still, this case law does not give us any notion that one way of computing the adequacy of this benefit is any better or more accurate than any other method.

That job is up to the Legislature, and this legislature isn't interested in a political hot potato like permanent disability benefits, especially when increasing them to pre-reform levels would increase system costs by over 30%.

Perhaps what is most troubling about the findings of Neuhauser is that the gulf between injured workers who hire an attorney, and those who do not, is expansive - and that points to a system that does not make "adequate provision" for "any and all workers and those dependent upon them for support".

The average impairment rating for cases in which the injured worker did not hire an attorney decreased 40.1%, from an average rating of 22.2% under the 1997 rating schedule to 13.3% under the 2005 schedule. At the same time, average compensation in unrepresented cases decreased 51.7% to $12,246 from $25,363 under the new system, according to Neuhauser's study.

In cases where the claimant did have an attorney, impairment ratings dropped 28.4% on average, from 37% under the previous rating schedule to 26.5% under the current schedule. Compensation paid in represented cases decreased 37.2%, to an average of $30,804 from $49,080.

Regardless of the drop in indemnity, this study says that injured workers need representation in order to get maximum advantage of "adequate provision".

I've heard it stated in the past that one of the objectives of "reform" was to minimize attorney participation in order to reduce litigation costs in the system. It's true that immediately following SB 899 the ranks of attorneys representing injured workers (aka "applicant attorneys" in California) dropped precipitously. Figures from the Division of Workers' Compensation (DWC) in 2007 showed a 30% drop in the applicant attorney rolls.

But has this really resulted in a drop in litigation?

Overall litigation at the Workers' Compensation Appeals Board (WCAB) division offices is down if measured by the number of Applications for Adjudication of Claim forms filed with the WCAB and by quite a bit. We don't know if this is due to reform effects, the economy, or a combination of factors.

We do know that cases that do get into the WCAB system are taking longer than before to resolve - but again we don't know if this is because of the complexity of issues, litigation management issues, WCAB staffing level issues, carrier opposition, etc.

But clearly, attorney involvement is desired if the injured worker wishes to avail him or herself of all of the benefits allegedly available, but made difficult to access by "reform" and related regulations.

One of the stated purposes of the 2004 reform laws that instituted a new permanent disability rating system based on the AMA Guides 5th edition was to promote uniformity and predictability.

About the only thing that is really uniform and predictable is that if an injured worker does not have an attorney then that injured worker will get significantly less money as compensation.

NM Case Makes Clear Work Comp Can't Discriminate Arbitrarily

Workers' compensation is a creature of statute. We're constantly reminded of that. But even though statutorily created, rules of fair play and application still apply - in other words the laws of any particular state must still meet constitutional standards.

In New Mexico a court ruled that a statute enacted in 1917 that excludes farm and agricultural workers from the New Mexico Workers' Compensation Act is unconstitutional.

New Mexico 2nd Judicial District Judge Valerie Huling said Dec. 27 in an opinion in Griego et al. v. New Mexico Workers' Compensation Administration that agriculture is the only industry allowed to shift the burden of injured workers onto taxpayers by not providing workers' compensation coverage.

The distinction used to define who is exempt and who is not exempt comes down to whether the worker is directly involved in harvesting crops or working with animals. For example, a worker picking onions on a farm would be excluded from coverage, but a person who is packing those same onions inside a building on the same farm would be covered by the Act.

The court found this distinction arbitrary and thus unconstitutional.

"Although the legislative intent of the farm and ranch exclusion, protection of the agricultural industry, is a legitimate goal, the exclusion is an arbitrary classification plainly at odds with the articulated purposes of the Act," Huling wrote.

This all came about when three dairy workers filed the lawsuit in 2009, after legislation failed that would have eliminated the farm and ranch workers' exemption from the Workers' Compensation Act. Similar legislation failed in 2007.

The three had worked as farm and ranch laborers for dairies and had received injuries in the course and scope of their employments. They sought workers' compensation benefits but the cases were dismissed under the 1917 law.

Judge Huling, finding the distinction between farm workers and dairy workers capricious and arbitrary, took on big ag business in the state noting in her opinion that the agricultural industry has reported average profits of $667 million over the past eight years, yet eliminating the exclusion would require coverage for about 10,000 workers, and the cost of providing workers' compensation insurance to the additional employees would be between $5 million and $7 million, less than 1% of annual profits.

Gail Evans, legal director for the New Mexico Center on Law and Poverty, filed the lawsuit on behalf of the workers and told WorkCompCentral that this conclusion was important because it stands in sharp contrast to what lobbyists for the agricultural industry told lawmakers in 2009.

"The fact that this will cost less than 1% of profits, that fact was not presented to the Legislature," she said. "The agricultural lobby presented incorrect information at the Legislature that it would cost $90 million."

The Workers' Compensation Administration argued what I consider to be an irrational point, and one that is largely moot after 100 years: that many agricultural workers are seasonal and earn varying wages working for multiple employers. The administration said it would be difficult to trace an injury to work performed for a specific employer, demonstrating that agricultural workers present challenges to the efficient administration of the system.

Lots of other states have been dealing with this issue, as I said, for nearly 100 years. New Mexico certainly has many models to choose from to comply with the court's ruling. The administration's argument lacks substance.workers compensation, work comp, injured worker