The Constitutional Elephant in the WC Courtroom
Common challenges and when they do and do not succeed.
There is an ancient Buddhist parable about a group of blind men and the elephant. Each man feels only one part of the elephant: the tail is described as a rope; the trunk is described as a large snake; the ear is described as a large fan; and the leg is mistaken for a tree trunk.
The lesson, of course, is that we are each limited by our own perceptions. In the workers compensation landscape, insurance underwriters, claims professionals, attorneys, employers, and workers perceive the law differently. When that law starts facing what are known as constitutional challenges, we come to understand, or at least try to process, these challenges through our limited vantage points on the behemoth elephant called the workers compensation law.
When employers or employees feel the law is unfair, either as written or as it is being applied in a specific case, they may challenge the law as violating the constitution. When this occurs, the courts have to follow certain rules for deciding the challenge.
The first step is that the courts should avoid determining the constitutionality of legislation if they can get to the right decision without performing a constitutional analysis. If the court has to review the statute under the magnifying glass of the constitution, it will try to find that the statute is constitutional, but that the way it was applied in a particular case was unconstitutional. Only when it cannot avoid any other result will it declare a statute unconstitutional, and even then, it will try to do its work surgically to remove just the offending part of the statute instead of voiding the entire statute.
If the court has to evaluate the legislation on a constitutional basis, then it uses different degrees of review depending on the circumstances. The first is the rational basis test. In general, the courts give great deference to the legislature. In determining if the legislature violated constitutional restrictions on power, the courts generally seek to ascertain whether the means selected are reasonably necessary to accomplish the purpose of the statute and are not unduly oppressive upon individuals. The courts are even free to hypothesize the reason for the rational basis when the legislature fails to state one. In Caputo v. WCAB (PA. 2012) and Zerba v. Dillion Companies, Inc. (CO. 2012), the courts upheld a statute that allowed the employer to take a Social Security retirement-payments offset for certain employees who sustained compensable injuries before the commencement of the retirement. The courts hypothesized that the law was designed to encourage employees to remain in or reenter the workforce, thus reducing the burdens of workers compensation on employers.
At the other end of the spectrum is the strict scrutiny test. If the law is applied to what is called a suspect class—such as gender, race, religion, or age—or if the law affects a “fundamental right,” such as freedom of speech or assembly, the court applies strict scrutiny to the analysis by asking if there is a way to accomplish the same state interest without trampling on these rights.
There is an intermediary step in which the court finds that a statute implicates an important, though not fundamental, right, or it involves a sensitive classification instead of a suspect class. Under this scenario, the courts assess the statute under a heightened scrutiny to determine if there is an important governmental purpose.
Given these ground rules, let the games begin.
Constitutional Challenge #1: The Statute Violates the Separation of Powers
This constitutional challenge is predicated on the argument that one branch of government is driving in another branch’s lane.
For instance, in Injured Workers Ass’n of Utah v. State (UT 2016), the court held that the legislature’s regulation of attorneys’ fees for workers compensation actions violated the separation of powers as attorneys’ fees are part of “the practice of law,” which is a judicial function.
In another case, the Pennsylvania Supreme Court found in Protz v. WCAB (PA 2017) that the legislature unconstitutionally delegated its authority to issue impairment-rating guidelines to a non-legislative body (the American Medical Association) without any judicial mechanism for review, 20 years after enactment.
One challenge that consistently fails involves statutes that vest the initial hearing in either the executive branch or the legislative branch and the appeal in the judicial branch. These statutes do not violate the separation of powers clause, as discussed in Kentucky Fried Chicken of McAlester v. Snell (OK 2014). Another often unsuccessful challenge involves the reverse of this argument—that giving the decision to an administrative law judge (executive branch) instead of a judicial branch judge violates the separation of powers clause, as discussed in Sanchez v Industrial Claim Appeals Office (CO. 2017).
Constitutional Challenge #2: The Statute Violates the Equal Protection Clause
The concept of equal protection is that the litigant is being treated differently than others who are in the same position. The legislature is allowed to create different classes of litigants; it just has to do so on a rational basis.
For example, denying workers compensation death benefits to recognized same-sex partners violated the couple’s equal protection rights in Harris v. Millennium Hotel (AK 2014). The state’s goal of administrative efficiency was not a sufficient or rational state reason.
In another case, it was shown that terminating all workers compensation income benefits for a class of injured employees who actually qualified for Social Security old-age benefits violated equal protection guarantees in Parker v. Webster County Coal, LLC. (KY. 2017) because it allowed other similarly situated employees to keep their benefits.
Lastly, in Vasquez v. Dillard’s Inc. (OK. 2016), it was determined that allowing employers to opt out of the workers compensation scheme resulted in the unconstitutional creation of two classes of employees—those covered under the statute, and those doing the same job for a different employer but not covered, thereby denying some employees equal protection.
This challenge, too, has a very high percentage of failed attempts. The key to the failures was that the courts found a rational basis for the distinction between the “winners” and “losers” created in the statutes.
Constitutional Challenge #3: The Statute Violates the Due Process Clause
Due process focuses on the concept of fairness. There are two types of due process: procedural due process, which looks to see if the rules of the game are fair; and substantive due process, which protects certain rights from governmental interference even if the rules are fair.
Recent successful procedural due process challenges include Williams Companies Inc. v. Dunkelgod (OK 2012), where the court found that claimant’s failure to exercise her legal rights by filing suit prior to a change in the law extinguishing those rights could not be applied retroactively under the state constitution.
Additionally, in Torres v. Seaboard Foods LLC (OK 2016), a statute requiring that an employee work a continuous 180-day period for her employer as a prerequisite for filing a cumulative trauma claim was found to have denied the plaintiff her rights through an arbitrary scheme.
Failed attempts at asserting procedural due process include Folta v. Ferro Engineering (IL 2015), in which limiting the venue where a worker can file a claim (exclusive workers compensation jurisdiction), or the statute of limitations in which to file a claim, did not deny the claimant a right to a remedy.
Additionally, allowing the employer to unilaterally cut off benefits did not violate due process in Fitchctt v. WCAB (PA 2013) and Pagan v Carey Wiping Materials Corp. (CN 2013) because there was sufficient judicial review and remedy if the employee was improperly harmed.
Substantive due process challenges consider whether rights were taken away after they had already vested. As a general starting point, the law that was in effect at the time of the injury is the law that will apply for the rest of the life of the claim. As simple as that rule sounds, legislatures regularly violate it. For instance, in Gibby v. Hobby Lobby (OK 2017), the Oklahoma legislature’s attempt to deny all future medical treatment and indemnity benefits for missing two medical appointments was deemed to take away vested property rights without due process.
Again, there have been numerous failed challenges to this concept, as well. For instance, imposing a $10 co-pay for additional medical treatment after the injured employee had reached maximum medical improvement did not create an inadequate replacement remedy for the tort action given up in favor of the workers compensation Grand Bargain, according to Stahl v. Hialeah Hospital (FL 2015).
And in Fulgham v. Daniel J. Keating Co. (NJ 2003), extending the workers compensation’s exclusive jurisdiction to a general contractor for injuries to an employee of a subcontractor did not violate the injured employee’s substantive due process because the state had a rational basis for the law and the injured worker still had his statutory rights to be made whole for his work-related injury.
There are also less mainstream constitutional challenges to the workers compensation statutes. For instance, limiting workers compensation attorneys’ fees in the way the legislature did resulted in a denial of the claimant’s right to free speech and association, according to Miles v. City of Edgewater Police Dept. (FL 2016).
Additionally, a religious organization engaged in commercial activities does so through the grant of commercial privileges, and, therefore, must abide by state statutes, as determined in Big Sky Colony, Inc. v. Montana Department of Labor and Industry (MO 2012). Religious organizations cannot claim exemption based on freedom of religion, including the free exercise clause or establishment clause.
Lastly, limiting workers compensation attorneys’ fees in the way the legislature did in Miles v. City of Edgewater Police Dept. (FL 2016) resulted in an unconstitutional interference by the state on the right to contract.
What happens when a statute gets struck down? It depends. If a statute is deemed unconstitutional as applied, then the law can still exist unchanged. Future courts take their guidance from the decision and the legislature may choose to fix the flaw.
If the challenge results in poking a hole in the statute scheme, then the legislature will address the flaw with more urgency. If the offending statute was an amendment to a prior constitutional statute, then the court may reimpose the prior statute, as it did in Westphal v. City of St. Petersburg (FL 2016) when it invalidated a 104-week limitation on temporary indemnity benefits, thereby raising the benefits back up to 260 weeks.
Frequently, when a court finds a section of the statute unconstitutional, it will apply the ruling prospectively only—that is, cases prior to the ruling cannot rely on the ruling. A variation on the above resolution is that the court will enter a judgment finding a law or a section of the law unconstitutional and then will stay its own ruling for a period of time to allow the legislature to fix the statute.
Sometimes the legislature will attempt to make a statute “bulletproof” by putting in language stating that if any section of the statute is deemed unconstitutional, then the whole statute must be deemed unconstitutional. Generally, when the court finds this type of statute unconstitutional, it will again stay the judgement for a reasonable time for the legislature to address the flaw.
Workers compensation, like any other law, is generally a process of compromise of competing interests. As a result, while the legislature chafes at the suggestion, it will often pass a flawed compromised piece of legislation and allow the courts to do the ugly work of constitutional surgery. For those of us who exist in this system, find comfort in the fact that, for the number of statutory changes that take place, surprisingly few challenges succeed. So as the popular saying goes, keep calm and carry on.
Editor’s Note: Due to corporate communication restrictions, Bradley Hamline contributes under a pseudonym. However, he has been vetted by CLM Magazine editors to confirm his extensive experience and background.