Oklahoma Supreme Court Strikes Down State’s Opt Out Law

Earlier today (September 13, 2016), in Vasquez v. Dillard’s, Inc., 2016 OK 89, in a 7–2 decision, the Supreme Court of Oklahoma, in one of the most important workers’ compensation decisions in memory, held the core provision of the Oklahoma Employee Injury Benefit Act (the state’s Opt Out Law), Okla. Stat. tit. 85A, § 203, creates “impermissible, unequal, disparate treatment of a select group of injured workers” and, therefore, is an unconstitutional special law under the Oklahoma Constitution, art 2, § 59 [Opinion, ¶ 1]. Continue reading

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510 Pills Per Month With Little Improvement: Tennessee High Court Allows Change of Physician

Illustrating the deep—and sometimes bitter—divide between some who espouse clinically oriented medical treatment and others that promote the so-called “best practices” guidelines outlined in evidence-based medicine (EBM), a Special Workers’ Compensation Appeals Panel of the Supreme Court of Tennessee, in Russell v. Dana Corp., 2016 Tenn. LEXIS 520 (Aug. 1, 2016), aff’d and adopted, 2016 Tenn. LEXIS 519 (Aug. 1, 2016), held that a state trial court erred when it denied an employer’s motion to remove an injured employee’s treating physician where the evidence indicated that although the employee had achieved MMI more than 20 years earlier, the employee’s physician was still prescribing some 510 pills each month, many of which were Schedule II controlled substances. Acknowledging that the employee’s treating physician was entitled to a rebuttable presumption that his or her treatment was reasonable and necessary, the panel found that the employer had more than adequately rebutted that presumption.

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Connecticut High Court: Widow’s Bystander Emotional Distress Action Barred by Exclusivity

Earlier today, the Supreme Court of Connecticut released a decision holding that a widow’s bystander emotional distress action filed against her deceased husband’s employer is barred by the exclusive remedy provisions of the Connecticut Workers’ Compensation Act [Conn. Gen. Stat. § 31–284(a); see Velecela v. All Habitat Servs., LLC, 2016 Conn. LEXIS 233 (to be published 8/9/2016)]. The widow discovered her husband’s lifeless body after he had been crushed under an all-terrain vehicle that he had been repairing at work. The high court affirmed a trial court’s decision that granted the employer summary judgment. Continue reading

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Ohio High Court Says Injury is Not Required to Support Retaliatory Discharge Claim

In a split decision, the Supreme Court of Ohio held that compensability of the alleged underlying injury is not a required element in a retaliatory discharge action under Ohio Rev. Code Ann. § 4123.90. Accordingly, a former employee presented a prima facie case for retaliation where he alleged that he was injured on the job, filed a claim for workers’ compensation, and was discharged by that employer in contravention of the statute [see Onerko v. Sierra Lobo, Inc., 2016-Ohio–5027, 2016 Ohio LEXIS 1892 (July 21, 2016)]. The employer argued that § 4123.90 explicitly required a showing that the plaintiff had suffered a workplace injury, and that such a showing was particularly essential in cases like that presented to the Court, where the employee pursued a retaliation claim after the Industrial Commission had determined that the employee did not suffer a work-related injury. The majority disagreed, finding that such a reading would ignore the intent of the statute.

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New Mexico High Court Strikes Down Farm and Ranch Laborer Exclusion

Decision Continues Long National Trend to Treat Farm Workers on Par With Other Employees

A provision of the New Mexico Workers’ Compensation Act (Act) [N.M. Stat. Ann. § 52–1–6(A) (2015)] that excludes farm and ranch laborers from its protections, although other agricultural workers are not so excluded, is unconstitutional under the Equal Protection Clause of Article II, Section 18 of the New Mexico Constitution, held the state’s Supreme Court, in a divided decision [Rodriguez v. Brand West Dairy, 2016 N.M. LEXIS 150 (June 30, 2016)]. The majority’s decision reflects the fact that farming operations have substantially changed since the original enactment of state workers’ compensation laws 100 years ago. The decision continues the strong national trend that treats farm laborers similarly to factory and office workers.

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Florida High Court Strikes Down 104-Week Limitation on TTD Benefits

Earlier today (June 9, 2016), a divided Supreme Court of Florida rendered its long-awaited decision in Westphal v. City of St. Petersburg [No. SC13–1976], striking down as unconstitutional the state’s 104-week limit on temporary total disability benefits [see § 440.15(2)(a), Fla. Stat.] for workers who are totally disabled and incapable of working, but who have not yet reached maximum medical improvement. The majority found that the provision violated article I, section 21, of the Florida Constitution, as a denial of the right of access to courts, since it deprived an injured worker of disability benefits for an indefinite amount of time, and in the process, created “a system of redress that no longer functions as a reasonable alternative to tort litigation” [Opinion, p. 2].

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Cautionary Tale: Retaliatory Discharge Statute May Not Protect Employee if Original Comp Claim Was Filed in Another State

A recent federal district court decision from Oregon, Kwiecinski v. Medi-Tech International Corp., 2016 U.S. Dist. LEXIS 72453 (D. Or., June 3, 2016), provides an important practice point not only for attorneys in the Beaver State, but for practitioners across the nation: A state’s retaliatory discharge statute might not apply where the employee’s workers’ compensation claim was filed in another state. That is to say that where an Oregon resident sustained an injury in New York, while training for his New York employer, and where he was discharged shortly after filing a claim for benefits under the New York system, he could not maintain a retaliatory discharge action against that employer under Oregon’s law. Continue reading

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Oklahoma Legislature Can’t Agree on Opt Out Fix

The Oklahoma legislature adjourned last Friday (May 27, 2016), without resolving a bill that would have amended several troublesome provisions of the state’s controversial Employee Injury Benefit Act (“opt out” law). Some in the legislature felt the amendments were necessary in order to respond to a February 26, 2016 decision by the state’s Workers’ Compensation Commission (Vasquez v. Dillard’s) that declared important parts of the opt out law unconstitutional (see my earlier post regarding Vasquez). The original bill—2015 Bill Text OK H.B. 2205—was first introduced in the Oklahoma House during the last legislative session. On March 4, 2016, the Oklahoma Senate passed the bill, with modifications. The House rejected those modifications and the bill is dead, at least for now.

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Does Long-Term Strength of the SSDI Trust Fund Depend Upon Changes to State Workers’ Comp Programs?

Part of SSDI’s Fiscal Weakness Tied to Cost Shifting from Workers’ Compensation

In an important recent paper, Professor John Burton and his colleague, Steve Guo, argue that significant fiscal improvements to the Social Security Disability Insurance (SSDI) Trust Fund could be achieved by addressing one of SSDI’s core problems: the way it interacts with state workers’ compensation (WC) programs [see Burton, John F., Jr. and Guo, X. “Improving the Interaction Between the SSDI and Workers’ Compensation Programs,” SSDI Solutions: Ideas to Strengthen the Social Security Disability Insurance Program, The McCrery-Pomeroy SSDI Solutions Initiative, a project of the Committee for a Responsible Federal Budget, 2015].

Building on their own earlier research, and that of others, Burton and Guo argue that significant cost shifting from WC to SSDI adds to the overall difficulties experienced by the SSDI Trust Fund. They allow that some of the cost shifting is due to the various existing offset provisions that are used to coordinate WC and SSDI benefits. They add that additional cost shifting is due to inadequate WC cash benefits—a problem that they contend has become more serious during the past 25 years. Burton and Guo go on to offer four separate proposals that they contend would strengthen the relationship between WC and SSDI and, in the process, provide additional fiscal support for the shrinking SSDI Trust Fund.

“Primer” on SSDI, Medicare and WC Programs

After providing the reader with a short, yet excellent, “primer” on SSDI, Medicare, and WC programs, Burton and Guo observe that many injured workers who sustains a significant level of permanent partial disability face a quandary: that in spite of the WC system’s pegging wage replacement at roughly two-thirds of lost earnings, the practical or actual replacement rates are much lower. Citing earlier studies, the authors indicate replacement rates 10 years after injury were:

• 46 percent in New Mexico
• 41 percent in Washington
• 37 percent in California
• 36 percent in Oregon, and
• 30 percent in Wisconsin

Faced with such a shortfall, it is altogether understandable that many disabled workers have sought federal disability benefits under the SSDI system.

Changes in WC Cash Benefits Since 1980

Burton and Guo observe that the shortfall in WC cash benefits can be clearly seen in the data: WC cash payments per $100 of covered payroll. They note that in 1980, WC cash benefits were approximately $0.68 per $100 of payroll. Payments generally increased until 1991, when WC cash benefits amounted to $0.99 per $100 in payroll. From that point on, cash benefits have trended negatively, declining in most years after 1991 until in 2013, when they reached $0.50 per $100 in payroll, tied for the lowest figure since 1980.

They observe a relative paucity in published studies that have attempted to determine the sources of declining cash benefits for the period between 1990 and 1999. Those note, however, that several such studies showed that while some relatively small share of the decline was due to a drop in the work-related injury rate during the time period, a much larger share was caused by a combination of:

• More stringent administrative practices, rules and decisions by state courts,
• An overall tightening of eligibility rules in the state workers’ compensation acts, and
• The declining share of WC cases that qualified for permanent partial disability

Heightened Standards of Proof Result in Reduced Cash Benefits

Burton and Guo catalog a host of more recent restrictions that result in lower cash benefit payments to injured workers. They note, for example, that the traditional WC causation standard allowed recovery where the work-related injury was a “nontrivial” source of his or her disability. Movement by in a number of states, such as Florida, Missouri, Kansas, Oklahoma, and Tennessee to rules that require the workplace to be the “primary cause” or the “major contributing cause” of the disability have resulted in declining cash benefit payouts. They cite an earlier Burton study that tended to show that Oregon’s restrictive statutory amendments, including a move to the major contributing cause standard, have resulted in cash benefits about 25 percent below the amounts that would have been paid under the “old” rules.

Restrictive Legislation Also to Blame for Reduced Benefits

The authors point to other recent restrictive legislation, such as the controversial opt out provisions in Oklahoma and wonder if those sorts of limitations on compensable injuries will continue the current downward trend in cash benefits paid to injured workers. The authors cite an article I wrote in 2013, [Robinson, Thomas A. “Oklahoma Commentary,” Workers’ Compensation Emerging Issues Analysis, 2013 Edition. Thomas A. Robinson and Robin E. Kobayashi, eds., New Providence, NJ: LexisNexis: 154–164], that expresses concerns that the Oklahoma opt out legislation will result in an entire subclass of injured workers who receive virtually nothing for what earlier would have been compensable injuries or illnesses. Burton and Guo point out that since 2003, 33 state legislatures have passed WC laws that either reduce benefits or make it more difficult to qualify for those benefits.

Shifting of Costs from WC to SSDI

A major portion of the Burton/Guo paper details the authors’ strong argument that significant cost shifting has occurred from the WC arena to the federal SSDI program during the past 25 years. They observe that in the years when WC cash benefits were generally rising—1980 to 1991—SSDI benefits actually declined. As WC cash benefits began to decline after 1991, however, SSDI payments increased.

They identify two important factors behind the cost shifting:

• Ineffective coordination of WC and SSDI payments (the battle of the competing offsets)
• Inadequate WC cash benefits paid under the state WC systems

Coordination of SSDI and WC Benefits

Burton and Guo point out that some cost shifting is the result of the “coordination” of SSDI and WC benefits. Since 1965, the Social Security Act has sought to limit SSDI benefits in such a fashion that, when combined with WC cash benefits, do not exceed 80 percent of the worker’s pre-injury earnings. They provide an example of an injured worker whose average current earnings (ACE) prior to qualifying for SSDI benefits is $4,000 per month. The applicable limit would, therefore, be $3,200. Assuming, for purposes of the illustration, that the WC cash benefits are $2,800 per month, and that the SSDI benefits would ordinarily have been $1,800 without the offset provision, the application of the SSDI offset would reduce the SSDI payment to $400 per month.

Of course, 15 states have reverse-offset laws of their own. In those states, the WC cash benefits are reduced to achieve the 80 percent limitation. In those states, using the same pre-injury earnings, WC benefit would be reduced to $1,400 and the SSDI benefits would be $1,800. In essence, in those reverse-offset states, the state WC program has shifted $1,400 per month to the SSDI Trust Fund.

Additional Strong Evidence of Cost Shifting

The authors point to a number of studies that support their contention that cost shifting from WC programs to the SSDI Trust Fund has increased during the past two and one-half decades. One national study, for example, showed that among those in the study group who reported that their health condition was caused by their work, some 29 percent were enrolled in the federal SSDI program, while just 12.3 percent of them had ever received WC benefits.

Drawing on their own prior research, the authors posit that additional cost shifting occurs because, as briefly noted above, many states have enacted restrictive legislation, rules, and procedures that limit WC cash benefits. Where state WC cash benefits are less than adequate, or non-existent (e.g., where a claimant could show a causal connection between the workplace and the condition or illness, but is unable to establish the claim because he or she cannot show that the workplace was the major contributing cause), cost shifting to SSDI is the natural result.

Four Proposals to Reduce Extent of Cost Shifting Between WC and SSDI

The final major portion of the authors’ paper offers four suggestions, any of which would reduce the level of cost shifting from WC to SSDI. The first would jettison the reverse-offset provision for WC and SSDI that exists in 15 states. The authors point out that, among other things, the reverse-offset provisions have a perverse effect on workplace safety. There is less incentive to beef up safety programs where SSDI is picking up a larger portion of the overall disability bill. Proposal one would also implement additional data gathering from the states in order to judge the overall coordination aspects of SSDI and WC.

The second recommendation would be to require WC settlements to cover future cash benefits for the permanently injured worker. Here the model is the current system utilized by Medicare to require a set-aside in any WC settlement to take care of future medical expenses. If, relative to long-term disability benefits, the SSDI Trust Fund were seen as a secondary program—like Medicare is seen for medical care—the WC system would bear a more appropriate share of the long-term disability that results from workplace injuries and illnesses.

The third recommendation is more radical. It would require the SSDI program to be experience rated. For example, if an employer’s contribution to the SSDI Trust Fund took into account SSDI payments made to former employees, there would be an incentive to provide safer workplaces. The authors point out that currently WC programs and unemployment insurance are experience rated. The same could be done for SSDI. Burton and Guo argue such a change would not only reduce SSDI expenditures, it would also indirectly result in reduced cost shifting from WC to SSDI.

The authors indicate their last proposal is the most radical and, in fact, isn’t currently feasible. That proposal: establish federal standards for state workers’ compensation programs. As a backdrop for the proposal, they note the work of the National Commission on State Workmen’s Compensation Laws (National Commission) created by the Occupational Safety and Health Act of 1970. The National Commission (incidentally, chaired by Burton) was directed, inter alia, to determine if state WC laws provided adequate compensation.

The National Commission’s findings were that the state systems’ benefits were neither adequate nor equitable. The National Commission offered 84 recommendations. At the time, state legislators recognized that if the states didn’t act, Congress might well do so.

The authors posit that as time moved on, the threat of federal intervention diminished and so also—not coincidentally—did core disability benefits to injured workers. Establishing federal standards would allow for greater cohesion, not only among the states, but it would reduce the load that is currently being born by the SSDI Trust Fund. Alas, the authors indicate, this proposal is not possible in the current environment.

Where Do We Go From Here?

As the authors point out, SSDI currently provides more than four times the cash benefits for disabled workers (and their families) as provided by the WC system. Some, perhaps even a majority, of that difference is due to the fact that SSDI pays benefits regardless of the source of the disability. It is, however, indisputable that the SSDI Trust Fund is running out of money and something will be done to shore it up. The issue is, of course, what the solution or solutions will look like. Burton and Guo provide an excellent paper to help frame that discussion.

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Oklahoma Supreme Court Lands Yet Another Body Blow to State’s Controversial Opt Out Law

The 2013 Oklahoma workers’ compensation “reforms” 2013 Senate Bill 1062 which, among other things, created the state’s uber-controversial “Opt Out” arrangement, in which employers can jettison the entire state-run system if they substitute their own “separate, but equal” employee benefit plans, continues to take it on the chin. Yesterday (April 19, 2016), the Supreme Court of Oklahoma, in a per curiam decision, Robinson v. Fairview Fellowship Home, 2016 OK 42 concluded that the state’s Workers’ Compensation Commission had the power to determine whether a provision of the state’s workers’ compensation law was being unconstitutionally applied to a particular party in a proceeding before the Commission. The decision has huge implications for other cases currently before the Court, including Vasquez v. Dillards, Inc., in which the Commission earlier held two core provisions of the state’s Opt Out law were unconstitutional.  Continue reading

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