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Workers’ Compensation Emerging Issues Analysis: The Year of Constitutional Challenges

November 08, 2017 (18 min read)

By Thomas A. Robinson, J.D., co-author, Larson’s Workers’ Compensation Law

As most states move into the second millennia of their respective workers’ compensation acts, one might expect that most constitutional issues within the occupational injury and illnesses world would long ago have been decided. Indeed, when it comes to many core issues, the constitutional issues have long been settled [see Larson’s Workers’ Compensation Law, § 2.07].

And yet, in spite of its relative age, workers’ compensation law is far from static. The rather delicate balance established by the so-called “grand bargain” is subject to testing at each end of the spectrum, with claimants successfully seeking benefits for a broadening range of injuries and conditions [e.g., sleep apnea, in City of Los Altos (Police Dep’t) v. W.C.A.B. (Verna), 77 Cal Comp. Cases 640 (Cal. App. 6th App. Dist. 2012)], on the one hand, and employers regularly pursuing a host of so-called legislative “reforms” to stem rising costs, on the other.

As we put together last year’s edition of this Workers’ Compensation Emerging Issues Analysis series, I noted that 2016 had been predictably dominated by Oklahoma’s controversial opt-out experiment, which was struck down in September 2016, on equal protection grounds, by that state’s Supreme Court. As 2017 began to develop, I felt like the year might be a quiet one from a constitutional challenge standpoint, as legislators, attorney practitioners, administrators, and claims and risk management professionals contemplated their next steps in light of the Sooner State’s Vasquez decision.

I was wrong. I should have paid more attention to the lessons I’ve learned in my 30 years with the Larson Treatise. Perhaps buoyed on by their relative success in fighting back the opt-out law, claimants mounted other constitutional attacks. Some efforts were more successful than others. This year’s edition of Workers’ Compensation Emerging Issues Analysis (now on sale) examines a number of additional recent challenges to the important provisions of state workers’ compensation law.

Pennsylvania High Court Strikes Down AMA Guides Provision

In what is likely the most important constitutional case during 2017, Protz v. Workers’ Comp. Appeal Bd. (Derry Area Sch. Dist.), 2017 Pa. LEXIS 1401 (June 20, 2017), a split Supreme Court of Pennsylvania held that the provision, found in Section 306(a.2) of the state’s Workers’ Compensation Act [77 P.S. § 511.2(1)], requiring physicians to apply the methodology set forth in “the most recent edition” of the American Medical Association Guides to the Evaluation of Permanent Impairment (AMA Guides), violates the state’s constitutional requirement that all legislative power “be vested in a General Assembly” [Pa. Const. art. II, § 1]. The majority added that in spite of the severability clause found within the Pennsylvania Workers’ Compensation Act (“the Act”) [77 P.S. § 1022], Section 306(a.2) was “a paradigmatic example of a law containing valid provisions that are inseparable from void provisions” [2017 Pa. LEXIS 1401]. Accordingly, the majority struck Section 306(a.2), in its entirety, from the Act.

On the heels of Protz, the Commonwealth Court of Pennsylvania, in Thompson v. Workers' Comp. Appeal Bd. (Exelon Corp.), 2017 Pa. Come. LEXIS 596 (Aug. 16, 2017), held that without the underpinning supplied by Section 306(a.2), the entire impairment rating evaluation (IRE) process set forth within the state’s Workers’ Compensation Act could no longer be sustained. Accordingly, it was error for the Board to affirm a decision by the workers’ compensation judge that reduced claimant’s full disability benefits to partial disability, based upon the unconstitutional scheme. The court indicated that no other provision of the Act allowed for the modification of benefits based upon an IRE.

Responding both to Protz and Thompson, on October 2, 2017, 29 Pennsylvania legislators co-sponsored House Bill 1840, which would substitute “the sixth edition” for the former “most recent edition” in Section 306(a.2) of the state’s Workers’ Compensation Act [see 77 P.S. § 511.2(1).  If enacted, this would nullify Protz and reinstate the IRE procedures used in the state.  

Kansas Challenge to AMA Guides

Kansas avoided Pennsylvania’s unconstitutional delegation issue by avoiding use of “the most recent edition” in its statute, specifically amending K.S.A. § 44-510d(b)(23) to require use of the AMA Guides, 6th Edition for injuries occurring after January 1, 2015 (the 4th Edition continue to apply to injuries sustained before that date). The Kansas claimants’ bar, like claimants’ bars in a number of other states that utilize the 6th Edition, have boisterously complained that the practical effect of switching editions is to reduce significantly the levels of medical impairment for injured workers.

Channeling the claimant’s argument in the Alabama Clower case discussed below, a Jayhawk State claimant, in Pardo v. United Parcel Service, Inc., Docket No. 1,073,268 (WCAB Oct. 2016), contended that mandatory use of the 6th Edition so significantly reduces impairment ratings—and resulting compensation awards—that there is no longer an appropriate balance between what injured workers receive via the workers’ compensation scheme and what they gave up (i.e., the injured worker’s common law right to sue the employer in tort).

Upon administrative appeal, the Kansas Appeals Board observed that since it is a quasi-judicial body within the state’s Executive branch—and not an Article III [Kansas Constitution] court, it had no authority to hold any portion of the Kansas comp scheme unconstitutional. The Board accordingly affirmed denial of compensation to the claimant under the statutory scheme, but signaled that it agreed, at least in part, with the injured worker that there was no economic recovery allowed under the statute, in spite of the fact that there was some level of permanent injury.

When this WCEIA volume went to press, Pardo had been appealed to the Kansas Court of Appeals. The date for oral argument has not yet been set. The case begs the question: how many “Padgett-like” cases will be litigated before a court finds a state comp act unconstitutional?

Oklahoma Supreme Court Strikes Down Forfeiture Provision Re: Missed Medical Appointments

On October 3, 2017, in Gibby v. Hobby Lobby Stores, Inc., 2017 OK 73 (Oct. 3, 2017), a divided Supreme Court of Oklahoma struck down as unconstitutional § 57 of the state’s Administrative Workers’ Compensation Act (AWCA) [see Okla. Stat. tit. 85A, § 57].  Under § 57, an injured employee was disqualified from continued benefits if he or she missed two or more scheduled medical treatment appointments.  The majority stressed that such a forfeiture provision was outside the “Grand Bargain” struck a century ago between employees and employers.  According to the majority, the provision upset the delicate balance that must be maintained between employers and employees.  Moreover, the provision introduced the concept of fault into a system that was supposed to be administered on a no-fault basis.  The majority noted that a separate provision in the AWCA, § 50(H)(12)(Supp. 2013) already allowed for the imposition of a penalty against any injured employee who could not show a good faith reason for failing to appear for a scheduled medical appointment.  That provision was sufficient; forfeiture of vested benefits and statutory indemnity could not be justified.

$841,200 Fine Against Small Colorado Employer Was Unconstitutionally Excessive

Not all constitutional issues arise from the claimant side of the fence. A Colorado decision, Dami Hospitality, LLC v. Industrial Claim Appeals Office, 2017 COA 21, 2017 Colo. App. LEXIS 207, is illustrative. While upholding the facial constitutionality of Colo. Rev. Stat. § 8-43-409, which provides for the imposition of fines against certain employers that fail to maintain workers’ compensation insurance, the appellate court nevertheless found that the imposition of a fine of $841,200 against a small employer was unconstitutionally excessive because the Director of the Division of Workers’ Compensation failed to apply the excessive fine factors adopted under the Eighth Amendment to the U.S. Constitution (and a similarly-worded provision of the Colorado constitution).

Alabama Trial Judge Strikes Down State’s Workers’ Compensation Act as Unconstitutional

In a decision that was somewhat reminiscent of Florida’s 2015 Padgett decision, in which Circuit Court (for Miami-Dade County) Judge Jorge Cueto declared unconstitutional the exclusive remedy provision of the state’s Workers’ Compensation Law, on the grounds that original “grand bargain” had become so eroded that injured employees should no longer be bound by it, an Alabama Circuit Court Judge, in Clower v. CVS Caremark Corp., 01-CV-2013-904687 (Jefferson County Circuit Court, May 8, 2017) found unconstitutional two separate provisions of the Alabama Workers’ Compensation Act: the $220 cap on weekly PPD benefits [Ala. Code § 25-5-68] and a 15 percent cap on attorneys’ fees [Ala. Code § 25-5-90(a)].

Noting that the Alabama Legislature had inserted a non-severability statute [Ala. Code § 25-5-17] into the Act in 1984, Judge Pat Ballard indicated the effect of his ruling was to declare the entire Act unconstitutional. With more than a nod to the Oklahoma high court’s decision in Vasquez, Judge Pat Ballard stressed that Alabama’s Act impermissibly established two groups of disparately treated injured workers without a rational basis. The first group—those receiving TTD benefits and PTD benefits—enjoy indexed benefits; their weekly benefits increase annually with changes in Alabama’s statewide average weekly wage. The second group—those who qualify for PPD benefits—can receive no more than $220 per week, a maximum amount that has not been increased by the Legislature in several decades. As to the attorney fee cap, the judge referenced Florida’s Castellanos decision (discussed extensively in last year’s edition of this series), finding the 15 percent cap on attorneys’ fees violated the due process rights of Alabama’s injured workers. The judge stayed his order for 120 days to give the Legislature an opportunity to take appropriate action, but none was taken. Later, Judge Ballard issued an Order essentially staying the full effect of his decision (for additional discussion of Clower, see the Alabama section in Part II, below).

Disparate Treatment of Certain West Virginia Inmates Is OK

In Crawford v. West Va. Dep’t of Corr. Work Release, 801 S.E.2d 252 (W. Va. 2017), the Supreme Court of Appeals of West Virginia held that a provision in the West Virginia Workers’ Compensation Act [W. Va. Code § 23-4-1e(b)] that prohibits an inmate housed at a state work release center from receiving workers’ compensation benefits for injuries sustained while performing work for the state’s Division of Highways (DOH) does not violate the inmate’s equal protection rights, in spite of the fact that such benefits are allowed if a similarly housed inmate sustains injuries while working for a private employer. The court noted, inter alia, that private employers hiring inmates would be impermissibly favored if they were shielded from the costs of workers’ compensation coverage for inmate employees. The court also observed that the state paid more than $90,000 in medical expenses related to the inmate’s injury.

North Dakota Need Not Subordinate its Workers’ Comp Death Benefits Statute to Colorado’s More Liberal Provisions

The 8th Circuit Court of Appeals, in DeCrow v. North Dak. Workforce Safety & Ins. Fund, 2017 U.S. App. LEXIS 13877 (8th Cir., July 31, 2017), held that the widow of a Colorado resident killed in a traffic accident while working in North Dakota could not successfully challenge—on constitutional grounds—a North Dakota statute that suspended her previously awarded death benefits while she pursued supplemental benefits in Colorado, and which further, would have required her to reimburse the state’s Workforce Safety and Insurance Fund (“WSI”), if her Colorado claim proved successful. Noting that the central question was one of first impression, the 8th Circuit added that the North Dakota statute satisfied rational basis review. The Court also reiterated that a State need not substitute the statutes of other states for its own statutes dealing with a subject matter concerning which it is competent to legislate.

Unsuccessful Challenges in Florida

Imposition of Prevailing Party Costs on Claimant Was Not Unconstitutional Denial to Access to Courts

Among the most contentious of Florida’s recent workers’ compensation “reforms” is the requirement that litigation costs be assessed against the non-prevailing party, including the unsuccessful claimant. Claimants have contended that the statutory provision works as a detriment to the filing of legitimate claims. Earlier this summer, in Govea v. Starboard Cruise Serv., 212 So. 3d 466 (Fla. 1st DCA 2017), a state appellate court held that the provision was not an unconstitutional denial to access to the courts.

Challenge to Maximum Comp Rate Limits

In Jimenez v. UPS, 2017 Fla. App. LEXIS 8907 (1st DCA, June 19, 2017), the appellate court gave the aggrieved claimant a partial victory. Claimant challenged as unconstitutional Florida’s statutory cap on the weekly compensation rate set out in § 440.12(2), Fla. Stat. (2014). When the compensation judge dismissed the petition for benefits, the claimant appealed, arguing that the judge’s order did not afford him the opportunity to create a record for review. The appellate court agreed. The court acknowledged that the judge of compensation claims could not pass upon the core constitutional issue; the judge should have allowed sufficient evidence to allow for meaningful review.

Part I. Expert Analysis and Commentary

As with past annual editions of this work, we have assembled a number of timely and incisive articles by nationally-known legal experts and commentators on a host of interesting workers’ compensation topics.

The Opioid Crisis

During the past year, we have seen national headlines almost weekly related to the opioid crisis or epidemic within the country. As noted in a recent study by the National Institute on Drug Abuse, more than 90 Americans die each day from opioid overdoses. A national problem, the issues are particularly important within the workers’ compensation world, where chronic pain, PTSD, and other complex medical issues often result in opioid prescriptions for claimants.

Deborah Kohl’s piece, found in Part I, entitled “WCRI Conference Focuses on Combating the Opioid Epidemic,” focuses on the WCRI’s recent national conference in Boston within which the opioid “epidemic” was center stage. In a separate article, Elizabeth Connellan Smith highlights the opioid issue, inter alia, in her commentary, “Innovations in Workers’ Compensation Regulation From the IAIABC Conference, 2016,”

Noted New Jersey legal expert, Richard Rubenstein, provides an interesting overview of that state’s new legislation regarding opioid prescriptions in “New Jersey’s New Opioid Law: Concerns for Injured Workers.” In “2017 Data on Opioid Use in Workers’ Compensation Claims Reported,” attorney Roger Rabb analyzes a new report by Drs. Thumula, Wang, et al on interstate variations on the use of opioids

Physicians as Pharmacists

In a separate piece, “Uncovering the True Costs of Physician Dispensing of Drugs,” Rabb reviews a look at a paper by author Richard Victor, Ph.D., formerly of WCRI, entitled “Does the Practice of Physician Dispensing Lead to Overprescribing of Drugs?” Recently published by the Sedgwick Institute, Victor’s study examines this problem of physician dispensing of drugs. Rabb assesses important take-aways from the Sedgwick study.

Are We “Done” With Opt-Outs?

Part II also contains a fine example of Bob Wilson’s always and incisive commentary—this one on Opt-Outs [see his August 10, 2017 reprinted blog, entitled “Opt Out is Going to Return, and Why We Should Pay Attention”]. Bob opines that large employers and other proponents of Opt Out may have kept their heads low during 2017; they haven’t given up. My own companion blog, [see “Bob Wilson May Have a “Cluttered Desk;” His Prediction of Opt Out Reprise is Spot On!” takes up the issues addressed by Bob. I also point out that, IMHO, it will take more than jettisoning the exclusive remedy defense for Opt Out to pass constitutional muster in most states.

Trends in Workers’ Compensation

While many of this year’s Part II articles understandably look at the year behind us, Brad Bleakney (prominent Chicago practitioner) and Lora Northen (noted New Jersey attorney and board member, National Workers Compensation Defense Network), look to the future [see “Trends to Watch in Workers’ Compensation Law”]. This piece is a Q & A to Bleakney and Northen following their engaging presentation at last November’s National Workers’ Compensation & Disability Conference in New Orleans. They opine upon a number of issues, including (a) continued pressure to “rollback” benefits in various states, and (b) constitutional challenges to arbitrary limits on TTD and wage loss benefits.

Undocumented Workers

Readers should take note of the interview with Kip A. Kubin, prominent Kansas attorney, regarding the Kansas Supreme Court’s significant decision, Mera-Hernandez v. Unified School Dist. 223, 2017 Kan. LEXIS 113 (Mar. 24, 2017). There the Court held that the use of a false name and identification papers to apply for a job does not render a worker’s employment contract void ab initio, so as to preclude the worker from receiving workers’ compensation benefits following a work-related injury.

Other Timely Offerings in Part I

We round out the discussions noted above with other timely articles, including two pieces by Texas attorney, Stuart D. Colburn. In “How to Utilize a Medical Expert and Effectively Present Causation Opinions,” Colburn offers his skilled insights into how an attorney can persuasively weave an expert’s opinion into the fact finder’s moral value system and the jurisdiction’s legal requirements. His second piece provides insightful commentary regarding RAND Corp.’s recent report on the Occupational Disability Guidelines (ODG).

Speaking of RAND reports, Brad Wixen provides cogent commentary regarding a RAND report on California’s drug formulary [see “RAND Issues Report on California Workers’ Compensation Drug Formulary: How will the drug formulary impact California?”].

Wixen also provides an interesting commentary on a recent study published by the Workers’ Compensation Research Institute (WCRI) that surprised many last year with its findings. While cautioning against reading too much into the data, the study showed that overall, there was, no difference in average costs between states where policies give employers control over the choice of providers and states where policies give workers the most control over the choice of provider.

Additional offerings relate to such issues as telemedicine [see my article, “National Conference Session Points to Increase Use of Telemedicine for Injured Workers”] and Jennifer Jordan’s excellent offering on the “Amended Review” Process released by CMS [see “CMS Unveils New Details About “Amended Review” Process,”]. Ms. Jordan adds always-provocative gaze into the “Set-Aside” tea leaves with “Medicare Secondary Payer Concerns in 2017: A Perfect Storm Could Be Brewing.”

Part II. State-By-State Legislative & Case Survey

As with past editions, Part II offers a run-down on important legislative developments at the state level during the past year, as well as spotlight cases from every jurisdiction.

Important state-specific updates include:

  • California looks to single-payer health system (Healthy California Act, SB 562) that could have significant impact on the provision of medical services in workers’ compensation cases.
  • New York legislature’s passage of the most significant changes to workers’ compensation practice within the Empire State since the 2007 reforms.
  • Additional discussion on the constitutionality of requiring use of the AMA Guides, 6th Edition, in Kansas. Similar cases are before the Oklahoma Supreme Court regarding use of the 6th Edition in the Sooner State.
  • Status of attorney fee awards in New Hampshire.
  • Litigation in connection with ambulance reimbursement rates in Texas.
  • Clarification of TTD requirement during disability is before the Indiana Court of Appeals [Board’s decision in In Masterbrand Cabinets v. Waid].
  • Medical marijuana use in a number of states, including Connecticut, Florida, New Jersey
  • Statute of limitations decision by the Supreme Court of Washington that indicates the “day of injury” is not included in the calculation of the one-year limitations period for injury claims.
  • South Carolina discussion of the “yo-yo” scenario involving the  Clemmons decision.
  • Additional language was added to Missouri’s statute dealing with drug violations in connection with claims. Generally speaking, where an injured worker tests positive (within 24 hours of the accident or injury) for a non prescribed controlled substance or has the presence of metabolites of such a drug in his or her system, there arises a rebuttable presumption that the tested drug was in the claimant’s system at the time of the accident or injury and that the injury was sustained in conjunction with the drug use.

Interesting spotlight cases include:

  • Alaska: Employer Hit For Attorney’s Fees When IME Request Delays Surgery [see Bockus v. First Student Servs., 2016 Alas. LEXIS 131 (Dec. 2, 2016)].
  • Arkansas: Commission, Not Trial Court, Must Determine if Claim is Barred by Exclusive Remedy Provisions of the Workers’ Compensation Act [see Truman Arnold Cos. v. Miller County Circuit Ct., 2017 Ark. 94 (Mar. 16, 2017)].
  • California: Staffing Agency Operator Required to Pay $37,000 in Restitution Following Guilty Plea in Workers’ Comp Fraud Case [see People v. Riddles, 2017 Cal. App. LEXIS 259 (Mar. 23, 2017)].
  • Delaware: Undocumented Worker Entitled to Total Disability Benefits as “Displaced” Worker [see Roos Foods v. Guardado, 2016 Del. LEXIS 620 (Nov. 29, 2016)].
  • Florida: Professional Football Player Injured During Tryouts Was Not Employee of League [see Arena Football League v. Bishop, 2017 Fla. App. LEXIS 8126 (June 6, 2017)].
  • Illinois: Teacher Recovers for Injury Sustained in After School Basketball Game [see Calumet Sch. Dist. #132 v. Illinois Workers’ Comp. Comm’n, 2016 IL App (1st) 153034WC, 2016 Ill. App. LEXIS 774 (Nov. 10, 2016)].
  • Kentucky: IME May Use Clinical Skill and Judgment in Construing AMA Guides [see Cunningham v. Quad/Graphics, Inc., 2017 Ky. App. LEXIS 268 (June 16, 2017)].
  • Massachusetts: Indicted EMT Allowed Workers’ Compensation Benefits While Under Indictment [see Benoit v. City of Boston, 2017 Mass. LEXIS 348 (May 16, 2017)].
  • Mississippi: Officer’s Participation in High-Speed Chase Was Not Willful Intent to Injure Himself [see City of Jackson v. Brown, 2017 Miss. App. LEXIS 382 (June 27, 2017)].
  • New York: Failure to Disclose Lawn Mowing Activities Constitutes Violation of Employee Fraud Statute [see Matter of Kodra v. Mondelez Intl., Inc., 2016 N.Y. App. Div. LEXIS 7976 (3rd Dep’t, Dec. 1, 2016)].
  • New York: Opera Singer Can Sue Metropolitan Opera House for Injuries Sustained in Fall [see White v. Metropolitan Opera Assn., Inc., 2017 N.Y. App. Div. LEXIS 90 (Jan. 5, 2017)].
  • New York: Eucharistic Volunteer Trips at Altar and in Court—Tort Suit is Barred by Exclusive Remedy Rule [see Aprile-Sci v. St. Raymond of Penyafort R.C. Church, 2017 N.Y. App. Div. LEXIS 4332 (2nd Dept., June 7, 2017)].
  • Ohio: Worker May Receive TTD Benefits In Spite of Positive Drug Test After Injury [see State ex rel. Cordell v. Pallet Cos., 2016-Ohio–8446, 2016 Ohio LEXIS 3142 (Dec. 29, 2016)].
  • South Carolina: Formal Notice to Employer Excused Where Supervisor Witnessed Employee’s Injury [see Nero v. South Carolina Dept. of Transp., 2017 S.C. LEXIS 62 (Mar. 29, 2017)].
  • Tennessee: Court Awards PTD Benefits for Migraines in Spite of AMA Guides (6th ed.) [see Patton v. Paris Henry Cnty. Med. Clinic, 2016 Tenn. LEXIS 858 (Nov. 30, 2016)].
  • Texas: AMA Guides Must be Utilized in Determining Impairment Rating [see American Zurich Ins. Co. v. Samudio, 2017 Tex. App. LEXIS 713 (Jan. 26, 2017)].

© Copyright 2017 LexisNexis. All rights reserved. This article is reprinted from Workers’ Compensation Emerging Issues Analysis, 2017 Edition (LexisNexis).