Due Process Reminders and Questions

Due process is a term that is thrown about in the legal profession. There are two kinds of due process, procedural and substantive. Each are products in part of the Fifth and Fourteenth Amendments to the Constitution. The Fifth gets little reference for this in the television-laced pop culture where it is better known for its prohibition on "self-incrimination."

The Fifth Amendment provides that no "person" shall be "deprived of life, liberty, or property, without dues process of law." The Fourteenth Amendment is more specific to the states and provides that no state may "deprive any person of life, liberty, or property without due process of law." The Fourteenth also has the prohibition from denying "equal protection of the laws," which language is absent from the Fifth. 

The Fifth was adopted as part of the first ten amendments ratified, commonly referred to as "The Bill of Rights." These were ratified on December 15, 1791. The Fourteenth was ratified about 70 years later, following the Civil War, on July 9, 1868.  The Thirteenth, Fourteenth, and Fifteenth are commonly referred to as "the Civil War Amendments." There was a long period in our history when the Bill of Rights was seen as protecting us only against the Federal government. Thus, the specific reference to the "state" in later amendments. You could study the interaction of the Fifth and Fourteenth for a career. 

Substantive due process is a term that is said to trace its roots to English common law. As such, a legal construct older than the Constitution to which we ascribe it. In essential terms, impairments of liberty are considered to be violations of "substantive due process." This is a topic we are likely to hear about when someone is incarcerated, or their travel or privacy is constrained or compromised.  

Procedural due process is a bit easier to understand, but perhaps as difficult to quantify. Procedural due process is essentially notice of proceedings and an opportunity to be heard. That is, everyone affected by a proceeding should know that a decision is going to be made, and everyone should have some opportunity to participate in the decision. This simple description begs the more difficult question that is raised, how much process is due? 

I addressed some of this several years ago in the Spring 2012 News and 440 Report, in an article titled Process, How Much is "Do." which can be accessed through the Florida Bar Workers' Compensation Section website, www.flworkerscomp.org. Unfortunately, I have been unsuccessful in directly linking to the newsletters there. 

Due process is often mentioned or raised in litigation, and the question can be how much process is due, thus the tongue-in-cheek play on words in the 2012 article. How much process is due? A valid question that might be a consideration of issues such as how many witnesses may counsel call, how much time may counsel have, how much documentary evidence may counsel submit, and the list goes on. 

The answer to "how much" is not easy to define. Essentially, the United States Supreme Court has answered this with the response: "enough." This may seem about as helpful as "it depends," but that is the measure that is due, "enough."

A seminal case on procedural due process is Mathews v. Eldridge. In 1976, the Court considered how much process is due and established a "balancing test" that has been used since. The Court said that "due process is flexible and calls for such protections as the particular situation demands." (citing Morrissey v. Brewer). Thus three factors (the following are quotes) were deemed worthy of consideration:

1. the private interest that will be affected by the official action; 
2. the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional procedural safeguards; and 
3. the Government's interest, including the fiscal and administrative burdens that the additional or substitute procedures would entail. 

This balances risk to the person's rights versus the cost of providing the process. The less important the interest affected, the less process is due, and conversely as the importance of the interest increases so should the volume process provided. In the end, it seems that we are not all entitled to a full measure of process in all instances, regardless of the nature of the interest which we seek to protect. Just try to get a jury trial on a speeding ticket sometime.

Mathews is interesting for another reason, but it is rarely discussed. Though it is often cited for its legal standard on due process, it is also a case about disability. 

Mathews was a recipient of Social Security Disability benefits, whose entitlement was stopped in 1972. He challenged the authority of the Social Security Administration to halt his benefits without affording him an evidentiary hearing. At that time, there was precedent (Goldberg v. Kelly) that held termination of welfare benefits without an evidentiary hearing was in fact a deprivation of substantive due process. 

The Mathews Court distinguished Goldberg on various grounds. Perhaps the most instructional being that the SSA termination process required that the "disability recipient" was provided with a written explanation of any "tentative assessment" that disability payments should end, and was "given an opportunity to submit additional arguments and evidence." Essentially, that the opportunity to respond in writing, and the full access to "the information relied on by the state agency," was sufficient due process in this context. 424 U.S. at 322.

In affirming that Mathews had no such right to an evidentiary hearing before termination of his disability benefits, the Court made some other interesting observations which I have pondered over the years, as I have taught Constitutional Law. 

The Court supported its decision saying that "the decision to discontinue disability benefits will normally turn upon routine, standard, and unbiased medical reports by physician specialists "(citing Richardson v. Perales).

The Court also said that "eligibility for disability payments is not based on financial need, and although hardship may be imposed upon the erroneously terminated disability recipient, his need is likely less than the welfare recipient." In other words, the Court seems to conclude that people on welfare have had to prove they need support, but injured people have not been put to that proof. 

This was cited as a justification for the conclusion that "there is less reason than in Goldberg to depart from the ordinary principle that something less than an evidentiary hearing is sufficient." 424 U.S. at 339. 

Are reports by physician specialists "routine, standard, and unbiased?" Or is it appropriate that these reports be subjected to cross-examination? Is it logical that someone disabled has less of a need for financial support than someone who, while able, is not working? Is the distinction not in the need for support, but in the fact that need is previously proven in the welfare example?

Mathews makes for interesting reading. Understanding the extent of due process is positive for everyone, and a good reminder even for those who studied it in law school. 

Pharmaceuticals in the News

Alzheimer’s brings me to medication and litigation this morning. At first blush, the connection of Alzheimer's to workers’ compensation seems tenuous, but the connection comes back to pharmaceuticals, and everyone knows that from muscle relaxants, to pain inhibitors, to blood pressure control and more, pharmaceuticals play a role in many workers’ compensation cases.

Pharmaceutical companies invest huge amounts of money in the research and development aspects of medications. After they perfect something, they spend a great deal of time and money in the approval process required by the Food and Drug Administration (FDA). In most cases, medication must be approved by a vetting panel at the FDA, without which approval is unlikely. This is not always the case, however, and sometimes the FDA even overrides its own panels to approve seemingly unnecessary medications that present potential risks to patients and society.

The reward for all that effort, time and money is a patented medication for the marketplace. The patent generally lasts for 20 years. Thus, for 20 years the company can charge “name brand” prices for the medication it has developed and generate profits that are commensurate with all of that investment, rather than merely with the cost of manufacture and distribution. Sometimes the actual chemicals involved in a medication are not very expensive and the manufacture/distribution process is not complex.

The fact that the raw materials, manufacture and distribution are not complex or expensive is one explanation for why generic drugs are so much cheaper than “name brands.” According to some, another reason is that generic manufacturers do not spend the same money on advertising, promotion, and marketing. When is the last time you saw an advertisement on television for a generic medication?

There is a benefit for the pharmaceutical companies to advertise. They have invested heavily in research, development and approval for a new combination of substances/chemicals which are efficacious against some malady, symptom or condition. They have 20 years to recoup that investment, then the patent expires and other manufacturers will produce the “bioequivalent,” or “generic” of that compound of substances, and the sale of the “name brand” will undoubtedly be affected. It is possible that the "name brand" will persist thereafter, some people still buy "Tylenol" instead of generic acetaminophen. 

According to choosinggenerics.com, generic drugs are 80-85% less expensive than “name brand” drugs. In other words, a “name brand,” like Namenda for example, that costs as much as $2.50 per dose, would cost about $.37 per dose in generic. That means someone taking two Namenda per day would spend about $150.00 per month on the "name brand," and taking the generic equivalent would instead cost about $22.50. Generics are big business; according to choosinggenerics.com, 78% of all prescriptions in the United States in 2010 were generic.

The logic is easy to follow. Who is paying for these prescriptions? If it is a person, they will naturally seek the lowest cost alternative unless they are convinced that there is a genuine benefit to the “name brand” prescription. If it is an insurance company, they will certainly seek to minimize their expenditure and maximize savings, the same way a self-pay patient would. And, if it is a program like workers’ compensation, the decision may be made by adjusters or by some system like the Texas-approved formulary. Under all scenarios, we would be likely to see a tendency toward generics.

This subject is in the news because the New York Attorney General has filed an antitrust lawsuit against Actavis PLC, the company that developed and sells Namenda. Actavis developed Namenda in 1995 and got it approved to sell in 2003. Their 20-year patent expires in July 2015 (notice that with the approval process time considered, the company got about 12 years of profitable distribution from their 20-year patent). They know, as do we all, that this chemical compound is likely to be manufactured by a variety of companies immediately after the patent expires. The generic manufacturers will seek to profit from selling their far less expensive alternative to a great population of users that have been marketed to and recruited by Actavis in the last twelve years.

A few years after Namenda went on the market, Actavis developed a second version of Namenda, called Namenda XR. This is “extended release,” and by using it the patient can take one pill each day instead of two regular Namenda. This XR version was also patented, and that patent has a few more years until expiration. So, it is alleged that Activis’ goal is to get patients to switch from Namenda to the XR form. This keeps them as customers even when the new generics of Namenda (generic name “memantine”) hit the market in 2015. That’s right, there will not be a “one pill per day” generic, only a “two pill per day” generic.

How to get patients to switch now though? A marketing campaign? Sales representatives convincing doctors that the change is needed? Activis has decided instead to simply withdraw Namenda from the market. It will allegedly forego the last few profitable months of Namenda sales. By withdrawing it from the market, they leave physicians with little choice but to switch their patients to Namenda XR. According to the New York Attorney General, "This means that most Alzheimer's patients and their families will end up paying for the higher priced drug, even when the generic version is the doctor-recommended and cost-effective choice." 

Of course, those patients could rectify their own dilemma. That is, they could take the Namenda XR for the next year, and then return to their doctor in August or September of 2015. At that time, they could remind their physician that they were on “two pills per day” and they were forced to “one pill per day” and that they would now (in 2015) like to switch back to “two pills per day” and take the generic pills now that they are available.

The problem with that “self-help” method of reacting to Activis is that people are creatures of habit. This is particularly true with some “seasoned” Americans, as you may know if you have ever tried to explain to your grandparent or parent why something in their treatment regimen was changed. Hint, some do not tend to take kindly to changes in their schedules, their pills, or much else for that matter. Are we not all like that to some degree, whether it is our preferred parking place, the kind of coffee creamer we are used to, or otherwise?

The attorney general’s lawsuit says that Activis’ claims “that Namenda XR is a superior drug simply because it can be taken once a day instead of twice – rings hollow.” They allege that the “forced switch” to the XR version has no health benefit, but is merely to “blunt the financial impact” to Activis and its related companies when the “two pills per day” Namenda patent expires.

I know, Namenda and Alzheimer's are just not large workers' compensation issues. But, if this course is successful for Activis, then it could be applied to other medications by other manufacturers. The practice could be used industry-wide to lengthen the protection period for patented medications in a far broader context than this one. 

Some would argue that the effect on workers’ compensation would be minimal. Certainly, if the injured worker did not instigate that post-patent expiration return to the doctor, the carrier would likely prompt it nonetheless. This is likely true in the health insurance setting also, although in the meantime there may be a significant effect on the patient from medication co-pays and deductibles. Of course, there is cost and time expended for those doctor visits required for the change back to the then cheaper medication. 

New York Attorney General Eric Schneiderman is saying that "by forcing patients to switch to Namenda XR, Activis is gaming the regulatory system that governs pharmaceutical and violating antitrust laws designed to encourage competition and keep prices down for consumers." This, he says, undermines the pharmaceutical marketplace generally. New York claims that by the elimination of non-XR Namenda (the “two pills per day”), Activis will enjoy profits by "eliminating patient choice and manipulating the treatment plans for these vulnerable patients." 

The coming days, weeks, and months will tell if this situation is really noteworthy. Whether the implications are far-reaching or not, it is interesting. If it is significant, the implications for a vast array of medications could affect workers' compensation and the other broad markets of American health care.

Exclusive Remedy Case From the 5th

Friday brought an interesting appellate case on workers' compensation, from the Fifth District Court of Appeal in Daytona Beach. We are accustomed to our appellate workers' compensation cases coming from the First District in Tallahassee. There are circumstances in which other District Courts of Appeal (DCA) address workers' compensation though. 

For example, many eyes are on the Third District right now with the appeal of Judge Cueto's decision in Padgett (Florida Workers Advocates v. State of Florida) pending there. This blog has periodically brought you cases from other Districts around the state, illustrating that there are occasions for other DCAs to examine the provisions of Chapter 440. 

Last week, the Fifth District addressed exclusive remedy in R.L. Haines Construction v. Eva Santamaria, Case 5D13-1937. This is a sad circumstance involving a fatality in the workplace. We have witnessed great improvement in Florida workplace fatalities over the last decade, according to the Bureau of Labor Statistics. The high was 422 in 2004, to a low of 209 in 2012. According to the U.S. Census Bureau, Florida has about 6% of the United States Population (19 million divided by 316 million). In 2012 Florida had less than 5% of the workplace fatalities (209 divided by 4,383). Certainly, one death is too many and 209 is way to many, but the last decade's figures show improvement. 

The worker in R.L. Haines was Victor Lizarraga. He died when a 2000-pound steel column fell and struck him. A wrongful death case was prosecuted and a verdict returned for over two million dollars. The Fifth DCA reversed last Friday, concluding that the exclusive remedy in this situation is workers' compensation. 

The accident occurred when the decedent and others were building a structure, to be supported by steel columns. These columns were secured to the foundation of the building with bolts set in epoxy. The epoxy was supposed to dry ("cure") for 72 hours before the columns were installed. The contractor had Mr. Lizzarraga and his coworkers begin setting the columns after these specific bolts had been curing for about 44 hours. 

In letting the case proceed to trial, the Circuit Court concluded that the exclusive remedy immunity did not apply, because R.L. Haines' decisions regarding setting the columns after 44 hours made the "collapse of a column" "virtually certain to injure or kill." 

The Court noted that this exception had been previously referred to as "substantially certain to result in injury or death," but that the Legislature amended section 440.11 in 2003 to provide instead for a "virtually certain standard." The Court explained that this standard has been applied with the analysis somewhat dependent upon whether "prior accidents" had occurred, such that there is notice of the probability or potentiality of such an event. 

According to the Court, citing the Fourth DCA in List Industries Inc. v. Dalien, This "virtually certain" standard, "is an extremely different and manifestly more difficult standard to meet." In order to overcome the immunity, "a plaintiff must show that a given danger will result in accident every -  or almost every - time." 

The Fifth DCA in R.L. Haines concluded that this "virtual certainty" conclusion had been reached repeatedly by the Fourth DCA following List, and by the Third DCA in Vallejos v. Lan Cargo S.A.. It concluded on these precedents, that Eva Santamaria, Lizarraga's widow, would have to establish "that as a result of the shortened epoxy cure time, the column was virtually certain to fall and injure the decedent." It noted that there was no evidence of prior accidents, and that three other columns set with the same "shortened curing period" did not likewise fall. 

The Court clarified that it is the injury, not just the accident (the column collapse), that must be "virtually certain," noting that even if it was virtually certain the column would fall, there was no evidence "that the column would fall at a time, in a direction, and in a manner that was virtually certain to injure or kill." 

R.L. Haines is not a unanimous decision, Judge Cohen dissenting. Judge Cohen points out "that, to date, not one Florida case has upheld a finding that an injury or death was virtually certain to occur," citing Gorham v. Zachary Industrial Inc. Judge Cohen wrote that the appellate court's role "should not be to second guess the trial judge" who concluded in this case that there was sufficient evidence to make the "virtual certainty" a jury question. 

Judge Cohen noted evidence that some on the job site perceived an issue with one of the bolts on the column that ultimately collapsed. One of those bolts had changed position, indicating a lack of security, suggesting a vulnerability. There was testimony that if the bolts are not secure, "the column is going to fail." He concluded that this evidence supported a conclusion that R.L. Haines had received "explicit warnings specifically identifying a known danger."

The explanation in this case, by both the majority and dissent are enlightening on the current state of the law in Florida. The subject of exclusive remedy is in the news and of interest to employees and employers alike, making this case worthy reading.

Interesting Lawsuit in Tampa about a California Comp Claim

ABC News affiliate WFTS is reporting that Brad Culpepper, a former Tampa Bay Buccaneer has been sued by an insurance company claiming "fraud and deceit."

According to NFL.com he played for two seasons with the Vikings, six seasons for the bucs and one season for the Bears. According to WFTS, he "parlayed fame on the field into success as a personal injury attorney."  They say that in 2010 he filed a California workers' compensation claim. They note that California had "no statute of limitations and any player who had ever played a game in the state was eligible to file."

The story also says that Mr. Culpepper "was the lead plaintiff in the recent NFL brain injury lawsuit, which was tentatively settled for $765 million."

WFTS says that an insurance company has filed suit regarding the California claim, which was settled in 2011 for $175,000. The "suit says he told doctors pain interfered with his daily activities, concentrating and thinking 'a lot, or most of the time.'" The suit also alleges that in 2012 Mr. Culpepper "earned a black belt in mixed martial arts," and that "last year, both Culpeppers (he and his wife) competed on 'Survivor'" (a reality television show). 

Mr. Culpepper's attorney, Scott Shutzman, commented to WFTS. He affirmed that Mr. Culpepper's responded to "questions honestly." He addressed the activities with mixed martial arts (MMA) and the television show, saying "There's nothing that I've seen that says an 89 percent disability rating says you can't be on a TV show, or do an MMA workout." He asserts that the injuries to Culpepper were "confirmed by no less than 14 or 15 MRIs, various x-rays, legions of doctors."

Mr. Culpepper "told the I-Team (WFTS) he has had multiple surgeries, has a room full of medical records and wants to do an on-camera interview, but his attorney told him not to at this time." 

Waste, Fraud and Abuse

A recent fraud conviction in Ohio made me think about the subject of medical billing in general. This was a significant case, in which a chiropractor plead guilty to workers' compensation fraud, a felony in Ohio. He was ordered to pay almost $400,000 in restitution. The break-down was about $60,000 in investigative costs and about 335,000 in actual restitution. 

Last January, another Ohio chiropractor plead guilty to workers' compensation fraud, this time a misdemeanor charge. He was ordered to pay almost $70,000 in restitution. The $70,000 included about $10,000 in actual restitution and almost $60,000 in investigative costs that the chiropractor must repay. 

Notice the similarity, it can be expensive to investigate medical billing issues. There is another interesting similarity between the cases. In each, the investigation began when regular people, patients, complained that they believed charges were being billed for services that were not rendered. The system, it seems, depends on every day people to be alert and communicative. 

These are not the biggest fraud cases you would see if you Googled "workers' compensation fraud." That search would include results with million-dollar stories. Such a search would also reveal smaller cases, like the chiropractor who was ordered to pay $1,977 in restitution. These billing challenges seem to know no boundaries and are not easily defined. These particular examples come from the field of chiropractic, but the problems certainly exists across the breadth of American medical care and is by no means limited to any specialty or practice. These are simply examples, and should not be seen as maligning this specialty.

Is such billing manipulation a real problem? Some say it is. Last spring, the Government Accountability Office (GAO) published a report on medical fraud, the focus was Medicare. Their title says much "Progress Made, but More Action Needed to Address Medicare Fraud, Waste, and Abuse." It concludes that Medicare annually spends about $604 billion to care for 51 million people. In 2013 they estimated that $50 billion of those payments were "improper" and "may be fraudulent." Only eight percent, but to paraphrase Everett Dirksen "50 billion here, 50 billion there, pretty soon you are talking about real money."

Look at it another way, what is $50 billion divided by the 51 million people served? Well, it is not quite $1,000 each, exactly $980.39. So, in 2013, the average Medicare recipient was the subject of almost $1,000 in "improper" or "may be fraudulent" charges. That is just the Medicare element. This does not address or consider that similar "improper" charges could have been made against health insurers, workers' compensation insurers, employers, and in many instances injured people who lack coverage and are responsible for their own bills.

In 2010, the Chief Counsel for the U.S. Department of Health and Human Services testified before the House Ways and Means Subcommittee on Health Oversight, regarding reducing "Fraud, Waste, and Abuse." He described that fraud schemes "commonly include billing for services that were not provided or were medically unnecessary." He says that other providers are "purposely billing for a higher level of services than what was provided." Some schemes allegedly misrepresent costs, involve kickbacks, or improperly use stolen identities for billing. He testified with specifics on a variety of improper payments and billing. See generally Fee Schedules, Reimbursements, and Medical Necessity in this blog. 

Insurancefraud.org estimates that the United States spends $2 trillion on healthcare annually. They assert that between "$600 billion to $800 billion" is waste and of that "between $125 billion and $175 billion annually" is attributable to fraud. If they are correct, that is thirty to forty percent (30-40%) waste, including six to nine percent (6-9%) fraud. According to the Census Bureau, the U.S. population is 316 million, and 76.7 of those are over 18 years old, which yields about 242.4 million adults. Each American adult's share of the $800 billion waste is therefore about $3,299. 

This week, WorkersCompensation.com published a summary report on the efforts of the Ohio Bureau's Special Investigations Department team that focuses on fraud in the healthcare industry. Their focus included "pill mills and injury mills." They "referred 32 subjects for criminal prosecution, 300 percent more than last year." According to their report, the team identified "$19.5 million in savings for Ohio's workers' compensation system." If each state had similar figures, it would amount to almost one billion dollars per year in workers' compensation savings alone. 

Is the current enforcement effort sufficient? Are the perpetrators generally being caught, or is there more out there that should concern us? Insurancefraud.org's website may be supportive of the hypothesis above, that every day people will have to play a role in stopping waste. It recommends that "consumers need to closely read the explanation of benefits (EOB) forms that health insurers sent to policyholders." They lament, however, that these explanations are not easy to read or understand. They cite one source as supporting that almost 70% of these EOB forms "confuse people who receive them." Thus, reliance on the patients may not be a complete solution.

For instances of fraud against federal programs like Medicare and Medicaid, there is a whistleblower statute. Such a law allows private citizens to sue those whom they believe are committing such offenses, and the private citizen who prevails gets to keep some of the recovered money. There are also online reporting tools such as the Medicare website and Florida's Department of Financial Services site which also has an online tool for reporting insurance fraud. These tools may allow and encourage those working in the medical industry to report abusers.

Illinois has a state whistleblower statute as well. Workcompcentral reported this week that a Cook County Judge interpreted that statute as empowering such lawsuits "only for unlawful kickback schemes, not other forms of insurance fraud." The issue is before the Illinois Appellate Court now in State of Illinois ex rel Zolna-Pitts v. ATI Holdings. In that instance, a physical therapist was allegedly instructed by her employer to bill in "15-minute increments" for tasks that she performed "for only five minutes," which "effectively tripled the amount of services provided." More accurately, it seems like this tripled the amount billed and the amount performed remained five minutes. 

That instruction reminds me of a defense lawyer I once knew who insisted that unit billing was appropriate and that insurance companies expected to be billed without regard to any efficiency of scale that might be involved. That is, he believed that if you drove an hour to an adjoining county and worked there on three cases, the two hours of total commute time should be billed to each client. He explained to me that the insurance companies were not smart enough to understand if you billed them two hours for the trip this week when they were the only case you were working on and then billed them only 40 minutes for the same commute next week when you worked on three client's needs during a similar trip.

Would state laws enabling whistleblower status for private citizens lead to less "improper" or "may be fraudulent" activity? Would that entice more industry insiders to take a stand against "improper" or "may be fraudulent?" Should it matter if the source or problem is allegedly misrepresented costs, kickbacks, or improper use of stolen identities for billing? Is it really comprehensible that there is an $800 billion problem and something more is not being done? Perhaps it is not the magnitude of the problem that it is being portrayed to be?

There's No Other Place I Wanna Be

I check the Florida Supreme Court opinions each Thursday. Florida's District Courts of Appeal issue their decisions when they are made. If you are interested in them, you can sign up on their sites to receive email notifications (access them through www.flcourts.org). Unlike Florida's District Courts, the Supreme Court releases their opinions on a schedule, each Thursday, which provides some regularity to the process. 

Watching the Supreme Court is not usual in Florida Workers' Compensation. There has not been much regarding substantive workers' compensation issues from this Court since 2009 when they decided Murray v. Mariner Health, 994 So.2d 1051. Before that, there was Sanders v. City of Orlando, 997 So.2d 1089 in 2008. Looking for a substantive workers' compensation case in the Florida Supreme Court before that might take you back to Aguilera v. Inservices, Inc., 905 So.2d 84 in 2005. 

There have been some other cases on the subject, which were arguably not exactly substantive workers' compensation cases, but touched the subject. They are interesting reading nonetheless, such as Saleeby v. Rocky Elson Const., Inc., 3 So.3d 1078 in 2009, Bakerman v.The Bombay Company, 961 So.2d 259 in 2007, Summit Claims Management Inc. v. Lawyers Exp. Trucking, 944 So.2d 339 in 2006, Florida Division of Workers' Compensation v. Cagnoli, 914 So.2d 950 in 2005 and Taylor v. School Board of Brevard County, 888 So.2d 1 in 2004. 

So, over a ten-year period, something perhaps around ten cases, I am sure I missed some. Certainly, you might make arguments in favor of including a few more on this list. But, the fact remains Florida Supreme Court decisions on workers' compensation issues are not very common. 

There are currently three workers' compensation cases pending in the Supreme Court: Morales v. Zenith Insurance, Westphal v. St. Petersburg, and Castellanos v. Next Door Company.

Morales v. Zenith Insurance (SC13-696) is case referred to the Supreme Court by the Eleventh Circuit United States Court of Appeal in Atlanta. Federal courts hear various kinds of cases, and when they hear a case involving state law, they apply that state law rather than federal law. In this instance, the Eleventh Circuit could not determine what Florida's law is with certainty so it asked the Florida Supreme Court to clarify the issue. This case was filed in April 2013, and the oral argument was held on April 10, 2014. So some court watchers predict a decision could come from the Court on any Thursday. 

Westphal v. City of St. Petersburg (SC13-1930 and SC13-1976) is a discretionary review of a decision of the Florida First District Court of Appeal. This is interesting because it began as a decision by a First DCA panel holding part of the workers' compensation law unconstitutional. It evolved from there to an "en banc," meaning by all the judges of that court, decision adopting a statutory interpretation. The Court's most recent interpretation of this statute in Westphal is different than one rendered by the same court, en banc, only a few years before (Matrix Employee Leasing, Inc. v. Hadley, 78 So.3d 632 (Fla. 1st DCA 2011). The Supreme Court heard the oral argument in this case on June 5, 2014. Some Court watchers question whether there will be a decision on this in 2014.

Castellanos v. Next Door Company involves a constitutional challenge to the computation of attorneys fees under Section 440.34. The First District Court of Appeal decided that the attorney fee provision is "constitutional, both on its face and as applied," providing a lengthy list of citations to prior District Court decisions. The court "certified" to the Supreme Court a "question of great public importance," that is, "whether the award of attorneys fees, in this case, is adequate and consistent with the access to courts, due process, equal protection, and other requirements of the Florida and Federal Constitutions."  The Court accepted jurisdiction to hear this case. Last week it scheduled oral argument to occur on November 5, 2014.  It seems unlikely that there will be a decision on this in 2014.

As I check the Florida Supreme Court opinions each Thursday, sometimes I hear music in my head. Recently, these songs have become recurrent:

In 1971, Carly Simon sang "we can never know about the days to come, but we think about them anyway," then the chorus "anticipation, anticipation, is making me late, is keeping me waiting," and concludes "and stay right here, 'cause these are the good old days." Like the song or not, Simon has a tremendous voice and that song has resonated for decades. The Court is keeping us waiting, curious about how these cases will affect the future. 

Sometimes while I check the page, I hear Tom Petty from 1981 instead. The chorus goes "The waiting is the hardest part, every day you see one more card, you take it on faith, you take it to the heart, the waiting is the hardest part." That may just say it all. 

Sometimes I hear Jesus Jones from 1990 in my head, singing "Right here, right now, there is no other place I wanna be; right here right now, watching the world wake up from history." Many in the workers' compensation community are intellectually curious how the Court will address these questions. It is very interesting. 

That interest has to be tempered. There was a hit movie in 1996, Independence Day. The premise is that the great UFO conspiracy of the 1950s is confirmed when "the rest" of the aliens appear and begin blowing up Earth's cities. The President and entourage end up at Area 51 and meet the scientists who have been studying the 1950's crashed aliens. 

Dr. Okun, the lead scientist, explains to President Whitmore what they know and what they have been studying for years and then exclaims "The last 24 hours have been really exciting!" The President replies "EXCITING? People are dying out there. I don't think 'exciting' is the word I'd choose to describe it." This puts things into perspective. Maybe these are not "the good old days"  as Carly Simon sings. Maybe "exciting" is not the way to describe what is going on today in workers' compensation, particularly in Florida.

Each of these cases, in fact, all workers' compensation cases, involves real people, important issues, and critical points of law and construction. I tend to side with Independence Day's President Whitmore, "exciting" is not the best word to describe it. But it is interesting. Over the coming months, the Florida Supreme Court will address three very intellectually interesting workers' compensation questions. As I ponder the many potential outcomes and the possible effects on this thing called workers' compensation, into which I have poured much of my adult life, I end up with Jesus Jones, concluding that right now "there is no other place I wanna be."

Did Dirkson Have it Right?

Everett Dirkson was a United States Representative and Senator. According to the Dirkson Center, he had a hand in the passage of some monumental legislation like the Civil Rights Act of 1964 and the Voting Rights Act of 1965. He is also credited with the quote "a billion here, a billion there, and pretty soon you are talking about real money." The word "billion" used to get attention, but the impact has been diminished by the invasion of "trillion" into our modern vernacular. Trillions are perhaps so large that we just cannot comprehend these figures anymore. Our national debt for example has expanded by roughly one trillion dollars each year over the last six years.  

With that backdrop, can we get excited about a measly billion dollars? There is a story in the news this week that concludes that "misclassification" and other fraud "diverts nearly $1 billion from " Florida's economy annually according to Florida CFO Jeff Atwater. Perhaps we could and should get excited about a mere billion dollars? 

I wrote a blog some days ago about "ghost policies," which drew an intriguing response from attorney David Wiitala. He lamented that he experiences a similar process, which he labels "phantom employers and borrowed certificates." He describes that contractors want their subcontractors to have coverage and so they require them to each present a certificate of insurance. So someone wanting that work could buy workers' compensation insurance. But he tells me that some instead "rent" a certificate of insurance. The contention is that workers' compensation coverage is expensive.

The business providing that certificate (the "provider" or "facilitator") does business in its company name with the contractor and is paid by the contractor, with checks made out to the certificate provider. The work is not done by the provider, however, but by the employer (subcontractor) "renting" that certificate. The employer/subcontractor takes those contractor-issued checks to the provider, which cashes them and allegedly keeps a percentage of the total as compensation for providing the certificate of insurance. 

Mr. Wiitala says that this process has also been employed by former employees of contractors. These individual employees are told that they cannot continue as employees, but are allowed to work on the contractor's job site if they each obtain their own individual certificate as proof they are covered as a subcontractor. In this instance, he says employees may go out and procure a similar certificate through a rental agreement with someone as described in the scenario above. 

Misclassification is a term regularly used to describe a practice of identifying employees as independent contractors. There has been a fair amount written on the subject. A September 4, 2014 article in South Carolina provides an amazing amount of detail, and outlines how the process affects employers, government and taxpayers. A Wisconsin blog by DomerLaw also has several interesting posts on the subject. 

The news this week has included a story about exotic dancers in South Carolina and their efforts to be considered "employees" and all that would entail in terms of pay, overtime, and insurance coverage including workers' compensation. The news last week included a story on problems with misclassification that was centered on payroll taxes.  Part of the issue of misclassification may be that the definitions to qualify as an independent contractor for payroll purposes under the Fair Labor Standard Act may not be the same as those under a particular state's workers' compensation law. Thus, one might legally be an independent contractor for one purpose (payroll) but not another (workers' compensation) or vice versa. 

Florida is well familiar with the tribulations of misclassification, and extensive legislative effort has been focused on curtailing it. In 1991 the definition of "employee" was refined in Section 440.02, F.S. to clarify that "independent contractors" were not employees if they did not act "subject to the control and direction of the employer." The legislature amended that section/definition again in 1994 inserting a litany of requirements for anyone to be an "independent contractor." That litany was further refined in the 2003 statutory amendments. In short, the qualifications for being an independent contractor under Florida law have become increasingly specific. 

Our statute has long required coverage for companies with four employees or more, since 1990; prior to that it was three or more. But in 1989 language was added so that coverage is required for employers with one employee or more if the employer is engaged in the construction industry. This is another legislative effort to hone the requirement for coverage and the independent contractor issue at least in the construction industry. 

This week brings three interesting news stories that are related to the phenomena of misclassification. The first story is Florida-focused and further describes the process brought to my attention by Mr. Wiitala, intended to avoid workers' compensation costs. This story by the Miami Herald describes this practice as "the Florida Plan," which it says is "a complicated and illegal scheme to avoid paying workers' compensation premiums." 

Similarly to Mr. Wiitala, the story describes a "facilitator" who opens a "shell company" that does no construction work and has no employees, but does have a workers' compensation policy that they bought cheap (because it has few or no employees, see the "ghost policy" concept). The facilitator then "rents the shell company's name and insurance" to those without coverage, just as described by Mr. Wiitala. According to the article some "facilitators" have run networks as large as 10 concurrent shell companies to market "the Florida Plan." One facilitator's scheme described in the article "allowed uninsured subcontractors to work on more than 1,600 projects and collect more than $73 million in contracts." A side note, those subcontractors who avoid the costs of workers' compensation coverage can perhaps underbid other subcontractors who have coverage. 

An old cliche goes "it's all fun and games until someone loses an eye." You can imagine that these "shells" only work until someone gets hurt and a claim is filed. Then the shell company was "burned" and a new company was set up "so investigators couldn't trace" the facilitator. This leaves the injured worker in a very tough situation. Joseph Barrs is featured in the Herald article. Electrocuted and injured in a resulting fall from a scaffold, according to the Herald, he found himself in a legal battle regarding the actual identity of his employer; a battle about who should pay for his injuries. 

The second story this week is from South Dakota (S.D.) where insurance carriers have been focused on misclassification issues. There, through audits, carriers have been identifying people they believe to be employees misclassified as independent contractors. The S.D. Division has concluded that carriers there are being too aggressive, and are consequently collecting premiums for people who actually are independent contractors. They sent out a memorandum recently and told the carriers that they each must have defined processes for determining contractor status. 

A third story today on Workcompcentral says that Illinois has just taken efforts to better document independent contractors. They are requiring contractors to do more record-keeping and reporting. The details are on page 18,500 of the State Register. Contractors will be reporting "any individual performing services" and the reporting will include that person's "business identification number and federal employer identification number." These efforts add a level of bureaucracy and accounting, which bring with them some cost. But, what law enforcement does not? 

So added to our knowledge base recently are the "ghost policy" and now "phantom employers and borrowed certificates" and "the Florida Plan." We are told that misclassification and other fraud are diverting about $1 billion annually from Florida's economy. Will Florida adopt Dirkson's logic, conclude that eventually, this could amount to "real money," and put a stop to it? Would such an enforcement effort be a benefit to honest businesses that cover their workers for injuries with legitimate workers' compensation policies? 

Say what you will about workers' compensation. Obviously, I find it interesting or you would not see my thoughts here periodically. But on a more profound level, this concept which is workers' compensation provides a a safety net for employers and employees and makes their efforts more likely to be stable and predictable. Practices that are criminal, which create uncertainty in people's lives, deserve the state's attention. 

Links to other recent stories:

North Carolina

South Dakota

Unintended Consequences

Years ago, there was a comedian named Sam Kinison. That name still likely resonates with some readers, positively or negatively. With the passage of many years, others may simply not remember who he was. Certainly he offended many people with his rants on religion, women and other groups. In this land of free speech, there are often statements that offend someone.

During Kinison's appearance on Saturday Night Live (SNL) in 1986, the NBC censors gave him the "electronic hook," blocking his "audio and pictures" for about 13 seconds. One edit involved one of his perspectives on drugs. He noted that there was much in the media pleading with people to stop smoking crack. That was a form of cocaine back then, it is something we have not heard much about lately as the modern trend has turned to methamphetimine and other substances. Back then President Reagan's wife, Nancy, produced some public service announcements on drug use, urging people to "just say no" to drugs, and the airwaves were crowded with other pleas to avoid crack. 

In this comedy routine, after noting the many media pleas to avoid crack, Kinison said "they've taken the pot, there is no more pot, you can't get any more pot." Then in the screaming voice that was his trademark, he said "if you give us back the pot, we'll forget about the crack." Lorne Michaels, the producer of SNL disagreed with censoring this and said of the drug comment "I thought his comment was a very smart comment." The commentary was clear, Kinison's contention was that some population was going to use drugs, and that crack use was the result of inaccessibility of pot. There was discussion back then about pot being a "gateway" drug, one whose use would lead the user to instead use other more serious illicit drugs. 

That is all ancient history of course. Kinison died at 38 back in 1992. But the commentary on drugs remains interesting. Is it possible that there is some population of people out there who are simply inclined to drug use? Whether for physical or emotional discomfort or distress, do some people simply have to turn to something? We see people we admire or enjoy like Philip Seymour Hoffman and Heath Ledger who pass from our world due to their struggles with chemicals. That brings attention to drug death, but perhaps not the magnitude of it.

In August, Dr. Gupta reported on "unintended consequences," and the message is troubling. He notes that in the 1960s heroin was popular, and that users were "usually young men" who started using this around 16 years old and "most likely from low-income neighborhoods." 

According to a Journal of the American Medical Association article cited by Gupta, heroin use in the United States has changed in the last fifty years. So, "today's heroin addict" begins using in the early twenties, and is "likely to live in the affluent suburbs," demonstrating a demographic shift. But more importantly, the article concludes that today's addict was "likely unwittingly led to heroin through painkillers prescribed by his or her doctor." In other words, there is the suggestion that prescription pain pills are a "gateway drug" for heroin. 

Heroin may be an only child, but it has many cousins. Among them are Oxycontin, Vicodin, Morphine, Oxycodone (Percocet), and Fentanyl. There can be arguments about how closely they are related, Fentanyl for example is a synthetic opiod rather than being derived from the natural poppy plant that yields most opiods. So, call Fentanyl a "cousin" by marriage if you prefer, but a cousin nonetheless. 

According to Gupta, all of these chemicals produce an increase in "pain tolerance and a sense of euphoria." That is "intense excitement and happiness." Everyone likes to be happy (except perhaps Oscar on Sesame Street who thrives on being grouchy). Unfortunately, one of the critical characteristics of these opioid chemicals is that the human body develops "tolerance" for them. That is the user needs increasing amounts over time to achieve the same result as the body becomes accustomed to the chemicals. 

Gupta says it is "precisely because there are so many similarities that pain pill addicts frequently turn to heroin when pills are no longer available to them." Why are the pills no longer available to them? Because doctors' ability and willingness to prescribe the pills is being constrained by the attention focused on use of Opioids. Why are governments constraining that ability? Because people are dying from pain pill overdose. 

Because people are dying from pain pills, we strive to better control access to them. Pill mills were shut down, regulations for prescribing were tightened, some chemicals were changed to a more restrictive "schedule" by the Food and Drug Administration, states implemented prescription drug monitoring programs to help doctors identify persons getting multiple scripts from various doctors. The result is clear improvement in decreasing opioid use. The unintended consequence though seems to have been that they instead use heroin from the streets. I suspect that people are dying from that too. I know it killed Philip Hoffman (who can forget his manic character in Twister?) and Heath Ledger (the Joker). 

Gupta says we have been "railing about the flagrant use of pain pills" for years in the United States. He notes that at least since the Clinton administration the U.S. has been consuming about 80% of the pain pills in the world. So through legislation and regulation we constrained opioid pill use, made them more difficult to abuse (crushing, etc.) and the overdose deaths from opioid pain pills began to subside. But, he notes, that "heroin use nearly doubled."

Who is using this stuff? Gupta cites a study in Charlotte, North Carolina which sought to understand heroin use. They found that people seeking help in that community were "cops, lawyers, nurses, and ministers who came from some of the best neighborhoods in the area." The problem is not so easily constrained or defined as to the "who," the "where," and perhaps the "why."

Why do people turn to drugs? Well, if I could crack that nut I would not be sitting here writing about workers' compensation any longer. Perhaps the reason this is such a difficult question is because there is no single answer. What seems clear to me, however, is that there must be some way to treat what ails people. Whether it is Oxycontin or heroin, there is a reason someone is putting the chemical in their body. Constraining access to the chemical has proven successful in one regard, but seems to just drive people to a different chemical. If asked, would today's heroin users tell us in the spirit of Sam Kinison "if you give us back the Opiod pills, we'll forget about the heroin?"

It seems that restricting access to some chemicals is not solving the problem for people. It seems that those people still have the problem and simply look for some other chemical to fill their needs. There are bath salts, methamphetamines, alcohol, and more. I shudder to think of the many people over the years who testified to various efforts at self-medication with easily accessible alcohol. As Gupta says, "Medication and drugs aren't the problem; it's the intrinsic behavior of human beings. We do not need to treat the drugs we are taking; we need to treat the drug addiction we are suffering."  

He concludes that "good doctors don't focus on the symptoms of a disease; they want to treat the disease itself." He suggests that we attack America's "awful drug habit" and that this would be the most productive approach to decreasing the cost, human and financial, that it is having on us as a society. With the inexorable ties between workers' compensation and injuries and pain, would any marketplace benefit more from such an approach than employers and employees? 

It is hard to believe that this is a problem that is beyond us as a society or an industry. There is so much effort out there to attack the insidious diseases like cancer, ALS, diabetes, and more. Attacking and conquering these are priorities of various groups all struggling for limited financial resources and a limited population of great scientific minds. But is there some expertise, some resources, to focus on these chemical issues? Can America find a way to decrease heroin death without simply driving those people to the "next" tragic chemical?

Cancer Presumptions for Firefighters

Workcompcentral reported in August that firefighters in Idaho will pursue presumption legislation again in 2015. Specifically, the subject is cancer. It reports that a cancer presumption bill cleared the state Senate there during the last legislative session, but failed to gain the support of the House. That bill, Senate Bill 1273, would have created a presumption of compensability of "several types of cancer."

SB 1273 lists the following conditions as grounds for invocation of the rebutable presumption for firefighters:  

(i) Brain cancer after ten (10) years; (ii) Bladder cancer after twelve(12)years; (iii) Kidney cancer after fifteen (15) years; (iv) Colorectal cancer after ten (10) years; (v) Non-Hodgkin's lymphoma after fifteen (15) years;(vi) Leukemia after five (5) years; (vii) Ureter cancer after twelve (12) years; (viii) Testicular cancer after five (5) years if diagnosed before the age of forty (40) years with no evidence of anabolic steroids or human growth hormone use; (ix) Breast cancer after five (5) years if diagnosed before the age of forty (40) years without a breast cancer or breast cancer genetic predisposition to breast cancer; (x) Esophageal cancer after ten (10) years; and (xi) Multiple myeloma after fifteen (15) years. 

Rob Shoplock, Vice President of Idaho's Professional Firefighters Union, told Workcompcentral that the burden of proof for firefighters with cancer is too imposing. He says this supports the imposition of a presumption, noting "when it comes to cancers, trying to identify what day or what fire you may have gotten that exposure . . . that's really the uphill battle that we fight." Because of the challenge of this proof, the firefighters contend that a statutory presumption for cancer is warranted. 

Presumptions for firefighters and other first responders are not something new. Florida has first-responder presumptions for cardiac issues. Multiple states have presumptions for cancer. A great dissertation on the subject was published by the National Association of Workers' Compensation Judiciary as part of their Comparative Law Project. 

According to the NAWCJ, thirty-three states have such presumptions: Alabama, Alaska, Arizona, California, Colorado, Connecticut, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Massachusetts, Maryland, Minnesota, Missouri, Nebraska, Nevada, New Hampshire, New Mexico, New York, North Dakota, Oklahoma, Oregon, Pennsylvania, South Dakota, Tennessee, Texas, Vermont, Washington and Wisconsin. One of the great benefits of the NAWCJ, and the opportunities it affords for adjudicators to meet and interact with other adjudicators, is the chance to discuss distinctions and similarities of state workers' compensation laws and procedures. 

According to the NAWCJ study, presumptions for occupational disease have existed almost as long as workers' compensation has. The cancer presumption, according to this study and one court, "was enacted to relieve claimants from the nearly impossible burden of proving firefighting actually caused their disease." The argument in favor of such presumptions is essentially that firefighters and perhaps other first responders, go places the rest of us do not and would not (who rushes into a burning building?) and there they are exposed, at least potentially, to things which the rest of us generally are not. They argue that it is impractical or impossible to identify "the exposure" or even "the agent" when a diagnosis is made months or years thereafter, as similarly advocated by Mr. Shoplock.

The existence of cancer presumptions is also not new, and according to a 2012 article on WCI360, there is an "Ongoing Debate" on the subject. It is noted by critics that the scientific evidence does not support an increased rate of cancer in firefighters or other first responders to an extent that would justify presuming their cancer is work-related. One court noted, regarding a similar perception of cardiac presumptions, "the medical community disagrees as to the role of one's occupation in the development of these diseases." 

Of course, whether the evidence supports such presumptions or not is a topic for the legislative process. Subjected to the scrutiny of public debate, the majority of American states, listed above, have enacted these cancer presumptions. 

That "public policy" big picture is not one that adjudicators really view. I hear periodic complaints from attorneys about judges and their (purported lack of) common sense. Judges are not employed to make rulings using what they "know" about medicine or science or what "everybody knows," however. Judges are employed to use their skills to decide disputes, in which parties actively engage. 

Active engagement means those parties go out and discover the evidence to support their claims or defenses, prepare it, document it, and present it to the judge for consideration. This is the fundamental process of dispute resolution. I think the system and people are served through this due process in which the judge is brought the evidence, rules on the evidence, and follows the law. 

Idaho firefighters are not alone. In 2013, firefighters in Kentucky advocated for a cancer presumption. They claimed that the financial impact on the system would be minimal, citing an NCCI evaluation that concluded that "the premium paid for Kentucky Firefighters is less than .3% of the total premium in the state." They also cited a University of Cincinnati study on the relation between cancer and firefighting. They argue that this study supports a connection between firefighting and the occurrence of "brain, colon, non-Hodgkins Lymphoma, kidney, prostate, liver and multiple myloma." These were noted in a November 2013 workcompcentral article.

Pennsylvania is the most recent adopter; it enacted a cancer presumption in (2011). Thereafter, there were reports that insurance companies had begun to decline writing workers' compensation coverage for municipalities or other government entities that included fire departments. These unintended consequences of legislative change may perhaps be on the minds of legislators elsewhere, like Kentucky and Idaho, considering statutory amendments of their own.

There are costs with any benefit delivery process. These include the actual benefits, the delivery system and the dispute resolution system. Anytime the workers' compensation law is changed there are resolution costs, as uncertainties in the statutory language are tested by system constituents. Historically, major statutory revisions are followed by periods of significant litigation that tests and refines the revisions through interpretation. 

In an ideal world, any such additional costs in terms of dispute resolution would be short-lived following statutory change. Ambiguity or interpretation issues would be sorted, a solid foundation of decisional law would be published and the marketplace would proceed with the delivery or denial of benefits upon that foundation. There have been instances in which reform followed this path, but others in which litigation over nuance and interpretation have persisted long after a particular reform. 

As states grapple with the debate over presumptions in workers' compensation, long-term market effects will likely be considered. Notably, the short-term effect in Pennsylvania was some degree of market disruption. That is normal in statutory change. I would be curious what the long-term effects have been in these jurisdictions over the decades of experience, as decisional law has caught up and any ambiguities and interpretation issues have been adjudicated.