Courts in three states have struck down at least certain parts of their workers’ compensation laws as unconstitutional. These decisions favored injured workers. A ruling by an Alabama court last week may be the most important of the three, because it most directly goes to the heart of the problem, which is adequacy of benefits. Judge Pat Ballard in his opinion pointed to, as legal scholar Michael Duff noted to me, “the elephant in the room.”
And it is not just that benefits might not be adequate in many instances. There is no consensus, or even sustained discussion about, how to define adequacy.
The public wants to know only one thing about workers’ comp: Are benefits adequate?
Let’s suppose that wage replacement benefits are inadequate if they fail to replace wages before injury. Or, another one might look not at replacement rates, but at the worker’s financial distress, taking into account basic household expenses. Or, an injured worker might be denied benefits available only to a privileged class, a scenario which the current wave of presumption laws has created.
These are researchable scenarios that attract few researchers and apparently no state regulators. The Alabama decision came out the same time of a report by the Upjohn Institute for Employment Research that noted the scarcity of studies on benefit adequacy.
The Alabama case is called Clower v. CVS Caremark, Florida’s main case is Castellanos v. Next Door Co., and Utah’s is Injured Workers’ Ass’n of Utah v. Utah. The three struck down limits to compensation to claimant attorneys. The Alabama and Utah courts noted that compensation limits were unbalanced, applying to claimant attorneys but not defense attorneys.
The importance of Clower v. CVS Caremark is that it also struck down a provision that severely caps, at $220 a week, permanent partial benefits. Due to inseparability, the court ruled that entire workers’ comp statute as unconstitutional. The judge wrote, “The plaintiff furnished to this Court data demonstrating that $220 per week exceeded minimum wage and exceeded the poverty level for a family of four when it was passed three decades ago; today, $220 has fallen from its genesis of 164% of 40 hours worked for minimum wage in 1985 to 76% of 40 hours worked for minimum wage, and from 105% in 1985 to 46.4% of the poverty level for a family of four.”
Note how the court brought into its decision the affordability of being on work injury benefits. In my own 50 states review, I found that in 31 states, workers receive a reduction in take-home pay of 15% or more when they’re injured on the job; and in half the states, households with two median wage earners, and one on work disability and the other working full time, cannot afford to sustain their basic budget.
In Alabama, a brief work disability can cut the workers’ take home pay by more than half. The cost of living in the state is high and benefits are low enough that many injured workers even with partner income, unimpaired, cannot meet a basic living budget.
The judge cites how benefit adequacy deteriorated over time. One of the most notable experts on workers’ comp has leveled this charge in a broadside against the entire state-based system. John Burton served as chair of the federal workers’ compensation commission, a temporary feature of the law that brought the Occupational Safety and Health Administration (OSHA) into being in 1970.
The National Commission on State Workmen’s Compensation Laws (yes — workmen’s) advocated “substantial protection against interruption of income.”
The Alabama case involves an act of omission, the failure to update a benefit provision in light of changes in general wages and costs of living. It’s also possible that design of the provision is itself unconstitutional, as the judge concluded, because it arbitrarily grants different benefits according to the class of injured worker.
Michael Duff is a law professor at the University of Wyoming and blogs on workers’ compensation and the law. In 2016 he wrote, “The [U.S.] Supreme Court may be forced to intimate an opinion on the constitutional right to a remedy for personal, and especially physical, injury (whether within or outside of the workplace). The Court has not squarely addressed the issue since 1917, when it decided New York Cent. R. Co. v. White, a case originally upholding the constitutionality of workers’ compensation systems. In White, the Court hinted, but did not clearly establish, that the right to a remedy for physical injury may not be abolished without substitution of a reasonable remedy.”
Does anyone have an idea about how many states beyond Florida, Utah and Alabama are ripe for a constitutional challenge? The most interesting cases are probably those in which a person on the street would perceive inadequacy of benefits and which the court would find, as well, unequal protection under the laws among injured workers.
ABOUT THE AUTHOR
Peter Rousmaniere is widely known throughout the workers’ compensation industry, both for his writing and consulting experience. Based in the picture perfect New England town of Woodstock, VT, he is a regular on the conference circuit, and is deeply in tune with trends and developments within the industry. His passion is writing and presenting on issues largely related to immigration, and he maintains a blog on the subject at www.workingimmigrants.com.
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