The Latest And Maybe Greatest — Sunshine State W.C. Showdown

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by H. George Kagan

Adding to a growing inventory of test cases in Florida, a Miami Circuit (trial) Court Judge struck down the Workers’ Compensation Statute, holding it facially unconstitutional to the extent it is the exclusive remedy for an injured worker.

On August 13, 2014, Judge Jorge Cueto issued an opinion holding the Statute denied an injured worker adequate access/redress by restricting her to a system that provides ‘too’ much less, so to speak, than what she could otherwise have recovered in tort .  As such, the Judge ruled injured workers should be, and per his opinion are now entitled to sue employers directly and avail themselves of civil remedies (pain and suffering, loss of consortium, inter alia), if they so choose: elections of remedies, essentially, in an exclusive remedy state.  Naturally the decision has caused a stir and not a small amount of uncertainty among all stakeholders while drawing national attention, certainly within the blogosphere.

The Florida Statute was enacted in 1935, long after many States implemented theirs.  By the mid 1930’s, Florida saw an unprecedented influx of out-of-state farm and industrial workers, and workers’ advocates feared claims of out-of-state workers would result in sharply limited access and redress for work injuries.  Their demands were met, and later, in 1970, the Act became the exclusive remedy in Florida.   What seemed dramatic to many at the time was the trade-off whereby even if a worker negligently causes injury, she is entitled to benefits for lost wages, medical care and rehabilitation — in exchange for her right to sue her employer in civil court — a “no fault” theory. The injured worker cannot sue for the full value of a claim, but her employer must pay benefits regardless of fault.  This ‘grand bargain’ as it is sometimes called is the central premise which informs the “exclusive remedy” core of the Statute.

In 2012, Elsa Padgett was injured on the job and underwent a shoulder replacement surgery.  She later claiming she was incapable of returning to work due to her injuries, and with the support of many Claimant and trial bar organizations, filed a lawsuit in civil court.  She argued that while she understood the mutual tradeoffs inherent in the Act, successive amendments had so degraded available benefits that the act as a whole no longer embodied a viable tradeoff: her workers’ compensation benefits were inadequate to compensate her — all things considered, so to speak — so much so that the system unfairly denied her constitutional right of access to the court and redress for injury.

In a case characterized also by several procedural quirks (some of which may lead to its undoing, i.e., potentially trumping the contest on the merits), Judge Cueto ruled in Padgett’s favor, holding the Florida Act unconstitutional.  The 20-page decision focused on the “exclusive remedy” feature of the Statute and questioned its current fairness.  Chronicling the many legislative changes and cuts in benefits, he declared, in total, these amounted to a substantial erosion which now fatally undermined the principles justifying its status as an exclusive remedy.  Judge Cueto specifically linked the “erosion” of the system to a few expressly enumerated measures (though some have argued other measures were more egregious), e.g., requiring an injured worker to co-pay for medical care after maximum medical improvement.  Thus, according to Judge Cueto, the Statute “… is inadequate as an exclusive replacement remedy for all injured workers” and because its mix of benefits is no longer ‘significant,’ exclusive remedy violates the 14th Amendment Due Process Clause of the U.S. Constitution.

The case was appealed to the Third District Court of Appeal by, essentially, the Claimant’s bar (one of the procedural anomalies mentioned earlier), who are seeking “pass through” jurisdiction directly to the Supreme Court (procedurally permissible on issues of great importance), which is where the matter will have to be decided ultimately, so why prolong the uncertainty, Appellants argued.   The Attorney General’s Office objected was ordered to Show Cause for their objection, and that’s where things stand as of this writing.

The Decision in Padgett kicked open an already swinging door, as there are two major and numerous other test cases relating to benefits and limitations on fees now pending or working their way up, and certainly there is hot debate on the legitimacy of Judge Cueto’s decision and the impact it may have on Florida.  If ultimately affirmed, it will likely have a tremendous impact on both the cost and availability of Workers’ Compensation Insurance in Florida — and it would almost certainly compel a special session of the legislature, as has happened in the past under similar circumstances (or if the timing is lucky, some hard work to do in the regular Spring session), where either a patch or major overhaul of perceived weaknesses will emerge. (And did someone say opt out?)

If the decision stands, the invocation of alternative, unlimited liability (no doubt “elected’ in cases of clearer liability or highest ‘damages’) will likely cause insurers to cease writing or seek significantly increased rates — or both.  Of course, less competition among insurance companies and higher rates means employers will suffer — and when employers struggle — higher unemployment rates surely follow.

Even if the Act is ultimately upheld in Padgett, there are ‘the other’ Florida test cases pending – and the case has garnered national attention for it signals yet more ‘crowds spilling onto the streets,’ clamoring for fundamental shifts — in ideology, some would say — with complaints now starting to land on more sympathetic ears, which is a phenomenon not constrained to Florida: in California, Oklahoma, and Texas, workers’ compensation laws and their sufficiency are being seriously questioned.   Of course in many of these cases, as in so many other ‘zealous’ change/revolutionary movements, not enough credit may be given to the ‘benefits’ of the status quo, as was successfully pointed out by the undersigned in another but now-decided test case (in the unpublished opinion: Davis v. NASCAR Holdings, Inc., 139 So.3d 303 (Fla. 1st DCA 2014), in which the worker challenged a statue nearly identical to one tentatively, successfully challenged in one of Florida’s other pending test cases, Westphal v. City of St. Petersburg/City of St. Petersburg Risk Mgmt., 122 So. 3d 440 (Fla. 1st DCA 2013), awaiting Supreme Court ruling).  Ironically, the undersigned also hears reports from esteemed DRI committee members in a few states (where no doubt the hand of labor is stronger) indicating their states are still perceived as being too generous in their benefit and/or adjudicatory systems, and the would-be rabble rousers in those states would represent industry!

In either outcome, the state — and it is fair to say the nation — will surely be watching to see how it may inform likely similar challenges across the country.

H. George Kagan is included among Corporate Counsel Magazine’s ‘Best Lawyers;’ has been named among Florida Trend’s ‘Legal Elite’ for his Appellate work: has been designated one of Florida’s Top Lawyers by Florida Monthly and as one of South Florida Magazine’s ‘Top Lawyers’

This article appeared in Volume 19 Issue 2  of DRI – The Voice of the Defense Bar’s newsletter.

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