Guest Post: Florida Comp Judge David Langham on the Current Crop of Supreme Court Challenges

David Langham is Deputy Chief Judge of Compensation Claims for the Florida Office of Judges of Compensation Claims and Division of Administrative Hearings. In a guest post below, Judge Langham reviews the complexities of the three workers’ comp cases currently pending before the Florida Supreme Court, all of which could have potentially huge consequences for the last twenty years of reform packages. He also authors the popular industry blog Florida Workers’ Comp Adjudication.

 

At the Louisiana Workers’ Compensation Conference last week, I provided an overview of some constitutional challenges to workers’ compensation. Five years ago, that would have been a ten minute discussion, but constitutional challenges have trended from the exception to the norm.

For context, remember our government is a product of power granted by the people and the states. The federal government is defined and empowered by the U.S. Constitution. And, each state also has its own constitution. There are similarities and consistencies among them, but differences also. When discussing constitutional challenges, it is critical that we remember these might be based on a state’s constitution, the U.S. Constitution, or both.

I was surprised by the response to my audience question, “from where did your rights come?” A majority insisted their rights came from the Constitution. A lone voice insisted they were wrong. I agreed and reminded them that “all men are created equal, they are endowed by their creator with certain inalienable rights.” Government does not give rights – you have rights because you exist.

Upon the fundamental foundations of inalienable rights and government power, states have enacted a statutory process for the mutual renunciation of rights and we call it workers’ compensation.

The recent constitutional challenges fall into several categories including the preemption doctrine, separation of powers, due process, equal protection, access to courts, and compensation for labor.

Preemption is not a new subject. The U.S. Constitution has been around for over 230 years. Preemption is based upon Article VI., “the supremacy clause.” If the U.S. government exercises a legitimate power, and legislates, then the states are precluded from contradicting that action. Furthermore, under some constructs, such as the “dormant commerce clause,” the states may be precluded from acting in an area in which the federal government is empowered, but in which it declines to act.

Another constitutional concept often cited is access to courts. There is no stated recognition of a right of access to courts in the U.S. Constitution. However, that right has been implied through the 5th and 14th Amendments; the basis is that no rights are protected if an individual cannot enlist the aid of the judiciary in enforcement.

The 14th Amendment memorializes equal protection and due process. Many ponder the seeming repetition of due process recognition in the 5th and 14th Amendments. The explanation is simple, early U.S. Supreme Court analysis concluded that the Bill of Rights protections forbid the national government, that is the one created by that constitution, from impairing rights, but did not prevent the states from doing so. With the reiteration of this language in the 14th, and the addition of “no state shall,” the recognitions of the Bill of Rights are extended to actions by the states.

Attorney fee challenges have been a staple of Florida workers’ compensation litigation for most of this century. The Florida statute precludes injured workers from paying their attorney as they wish; fees since 2009 have been set by a specific formula based on the value of benefits obtained by the attorney.

Florida attorneys contend this violates equal protection (14th Amendment), inhibits access to courts (14th Amendment), the right to contract, and the right to compensation for labor.

Until 2001 our statute had a formula that produced a presumptive attorney’s fee. The value of benefits obtained, through this formula, equated to a presumptively fair fee. It was a “floor” not a “ceiling.” So if that fee was adequate the attorney would stipulate to it; if that fee was not believed adequate the attorney could ask the judge of compensation claims to award an attorney’s fee on an hourly basis. So in cases in which the formula yielded a high fee, with an effective hourly rate of $1,000 or more, the presumption generally required that fee to be paid. Alternatively, when the formulary yielded a lower fee, the presumption was set aside and “reasonable fee” was awarded or agreed.

In 2001 that formula was changed from a presumption to a near absolute. However, there was some language left in the statute describing the fees as “reasonable.” Various cases were litigated on the constitutional challenges. In 2008, the Florida Supreme Court sidestepped those issues. In Murray v. Mariner, 994 So.2d 1051 (Fla. 2008), the Court concluded that the word “reasonable” in this statute precluded the absolute application of the formula, and ordered the continued awarding of hourly attorney fees.

The Florida Legislature acted rapidly in 2009 and removed “reasonable” from the statute. We now watch for the Supreme Court to rule in the case of Castellanos v. Next Door Company, 124 So. 3d 392 (Fla. 1st DCA 2013), essentially the same access to courts, due process, equal protection arguments previously raised in Murray. It has been back before the Court now for almost 2 years.

A good example of due process is found in Florida Workers Advocates v. The State of Florida. Here, and employee sued his employer in a tort claim and the employer asserted the protection of workers’ compensation exclusive remedy.

After the employer raise that defense, interest groups Florida Workers Advocates (FWA) and the Worker’s Injury Liability Group (WILG) intervened. The original parties resolved their differences and FWA/WILG were left alone in the case. They therefore obtained the court’s permission to involve another injured worker, Ms. Padgett, as plaintiff and substitute The State of Florida as the defendant for consideration of legal questions regarding constitutionality of exclusive remedy.

Substantively, the plaintiffs argued that the value of benefits afforded injured workers has declined so in recent decades that the “Grand Bargain” is no longer “grand” or even sufficient to support the corresponding employer benefit of tort immunity.

The plaintiffs added The State of Florida to the case, and sent a notification that this case would challenge the constitutionality of a statute. They contended that this notification was sufficient to put the state on notice. The plaintiffs did not serve notice and a complaint on the state, or on Ms. Padgett’s employer (who could ultimately be sued in tort if the plaintiff’s prevailed on their constitutionality argument).

As the state and employer were never served, neither showed up to defend the allegations. The trial judge, having heard from one side, signed a lengthy order siding with the plaintiffs and concluding that Florida exclusive remedy is unconstitutional.

The state sought review by the Florida 3rd District Court of Appeal, which reversed the trial judge. The Court concluded that failure to serve the state was problematic, and that the issue of constitutionality of exclusive remedy was no longer relevant to the case after the original employee and employer in the case withdrew.

The Florida Supreme Court declined to review that decision in December. However, it accepted Stahl v. Hialeah Hospital, a case which raises similar issues, and will hold oral arguments in April.

There has been a great deal said about Oklahoma’s recent reforms.

Oklahoma is about 3 years into a major revision of its worker’s compensation statute. As soon as it was passed a constitutional challenge was taken and we hear a lot about Coates v. Fallon 316 P.3d 924 (OK 2013)(December 16, 2013).

Too many people cite Coates for the proposition that the Oklahoma reform law is “constitutional.” That is not the substance of that decision. The only constitutional issue raised in Coates was whether the bill that resulted in the new statute contained too many various different subjects.

The challengers contended that the breadth of topics in the bill was a violation of the Oklahoma Constitution,  which limits bills to a “single subject.” The Coates court concluded that “workers compensation” is a single subject, and thus the bill was procedurally appropriate.

This does not mean that the Oklahoma reforms are constitutional, or not. It means that those questions are left for another day. A variety of substantive challenges remain pending at this time.

Delegation was a significant issue in 2015.

Delegation occurs when a government agency asks some other body to act on its behalf. The existence of workers’ compensation is a legislative delegation of authority to executive agencies in the various states.

We see a multitude of situations in workers’ compensation where states adopt the disability guidelines, treatment guidelines, drug formularies, or other benchmarks.

These “adoptions” are not “delegation.” But, when Pennsylvania adopted the AMA Guides, the 4th Edition was contemporary. In its statute adopting the Guides, it included language that that the “most current edition” would be used.

Thereafter, the AMA published the Fifth Edition and later the Sixth Edition. The law suggested that with each such AMA action, the legally adopted Guides changed.

Similar language has been used in other states. The New Mexico Supreme Court concluded that this language meant the “most recent” edition of the Guides at the time that the statute was passed.

Asked to interpret the meaning, the Pennsylvania appellate court declined that interpretation in 2015 and instead concluded that this language delegated authority for the process and substance of the official Guides to the AMA. This, it concluded, was unconstitutional delegation of state power to a private organization.

These and other intriguing questions are before courts across the country. Constitutional challenges are popular at this time as statutory changes change the perceptions of the employers and carriers for which workers’ compensation was created.

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