Florida waits breathlessly for
decisions from the Supreme Court regarding the constitutionality of Fla.
Stat. §440.34 (Castellanos,
also discussed here
and here),
the appropriate interpretation of temporary indemnity under Fla. Stat.
§440.15 (Westphal,
also discussed here
and here),
and whether it will revive the “grand bargain” debate in Florida Workers’
Advocates v. ? (Padgett).
That case was recently
reversed by the Florida Third District Court, but the plaintiffs there have
asked the Florida Supreme Court to review.
A few people have asked why the Florida
Court is taking so long with the decisions in Castellanos and Westphal.
My unscientific (and largely incorrect) predictions
of when it might rule are here. The Court has returned from the August “recess”
and is issuing opinions again. Some were disappointed on September 10, 2015
when none of these three workers’ compensation cases were among those first released
upon the Florida Court’s return. However, there was a very
important decision clarifying that constitutional judges who wear robes
should wear plain black robes without embellishments.
Meanwhile, the Commonwealth
Court of Pennsylvania delivered a decision on Friday, September 18, 2015 that
will be the subject of much discussion in coming days, Protz
v. Workers’ Compensation Appeal Board (Derry Area School District),
Case No. 1024 C.D 2014 (hereafter “Protz”). It will be meaningful in
Pennsylvania, and may be an important decision elsewhere.
The Protz Court concluded
that the state (or Commonwealth) has the authority to define standards by which
impairment is determined, and in doing so it may adopt standards published by
private groups. Statutory reliance on the AMA
Guides is permitted. However, once adopted, those guidelines remain in
effect as adopted even if that private group (the AMA) thereafter amends or
changes them.
According to a site
maintained by the Elizabethtown
Pennsylvania School system, in Pennsylvania the Supreme Court is the highest
state court. There are two parallel intermediate appellate courts in
Pennsylvania, the Superior Court and the Commonwealth Court. Either can “issue
petitions for review to the Pennsylvania Supreme Court.”
The Superior Court
reviews decisions from the state’s county courts. The Commonwealth Court
reviews “cases involving the state government, regulatory agencies and” a
variety of lawsuits. The Commonwealth “Court is made up of nine justices.” They
hear cases generally in three-judge panels, similarly to Florida’s First
District Court of Appeal. The decision last week however was en banc, decided by the entire court, although only seven justices
participated.
The Protz decision was a narrow victory. Three of the seven justices dissented, leaving a majority by
one vote. Justice Covey wrote a dissent in which Justices Simpson and
Leadbetter joined. Justice Simpson also wrote a separate dissent.
There will be those who see this
as a Pennsylvania issue and leave it at that. Others will suggest that the
decision has broader implications. The critical effect of the Court’s
conclusion is that Pennsylvania has thus retreated in Protz from the American Medical Association (AMA) Guides to
the Evaluation of Permanent Impairment (6th Edition) to a prior
version, the AMA Guides 4th
Edition. This is not entirely unpredictable; one Pennsylvania judge has reportedly been quietly rescuing copies of the 4th edition from the recycle bin
for years in preparation for just such a potential outcome.
More on the AMA Guides. According to the American
Academy of Disability Evaluating Physicians (AADEP), the AMA Guides were conceived in the 1950s
and 60s, and were first published in 1971. The Second Edition came 13 years
later in 1984, followed by the Third four years later in 1988. The 4th
Edition was published in 1994. The Fifth followed 6 years later in 2000 and the
Sixth in 2007. The concept of the AMA
Guides is not yet fifty years old, and has seen significant revisions in the
44 years since the 1971 first edition.
Florida once ascribed
to the AMA Guides, but took a
path less travelled in 1990, electing to mandate the creation of The Florida Guides to Permanent Impairment.
As an interim step, Florida used the Minnesota
Guides (and the AMA Guides for
conditions not addressed in the Minnesota
Guides) from 1990 until The Florida
Guides were completed and adopted in 1997.
Some question why Florida has
its own guides, and in August 2015, at #WCEC2015 in Orlando, the Florida Division of
Workers’ Compensation seemed to ask that question at a public meeting. In light of Protz and the other cases mentioned here, the
wisdom of The Florida Guides,
promulgated and adopted by the state and revised thereafter only by the state
may be more clear.
The majority in Protz
concluded that section 306(a.2) of the Pennsylvania “Act (is)
unconstitutional.” It explained that a recovering worker in Pennsylvania is entitled to benefits for total disability, but this may be reduced to a partial disability “if he or she has a total impairment of less than fifty
percent.” Thus, the extent of disability payment is directly impacted by the impairment
delineated by the applicable Guide.
Ms. Protz was receiving
benefits, when the employer obtained an “IRE,” or impairment rating evaluation.
That IRE determined a permanent impairment rating (PIR) based on the AMA Guides 6th Edition (the “most
current” edition). Based on the result of that IRE, the employer sought to
reduce the worker’s entitlement period for benefits, and succeeded at the trial
level and before the Workers’ Compensation Appeal Board.
Ms. Protz complained that if the
IRE had used the AMA Guides 4th
Edition, her benefit period would not have changed as her PIR would have
been greater than 50%. She sought review by the Commonwealth Court asserting
that Pennsylvania’s mandatory use of “the latest edition” of the Guides improperly delegated authority of
the state to the AMA.
The Court distinguished a similar
prior constitutional challenge. It noted that in Protz, the claimant established
that use of one edition of the Guides
(6th) versus another (4th) resulted in actual harm to Ms. Protz,
a proof that was not adduced in the prior appeal argued as controlling by the
employer (Wingrove v. Workers’ Compensation Appeal Board (Allegheny Energy),
83 A.3d 270 (Pa. Cmwlth 2014)).
The Court noted of the Guides that “each edition can change the
impairment rating for the same injury.” This is inarticulately stated. The
Guides are inanimate and cannot change anything. But clearly, the rating for
any particular injury/outcome may be different pursuant to one edition versus
another. The Court explained that section 306(a.2) requires that the “degree of
impairment” shall be determined “pursuant to the most recent edition of the American Medical Association Guides to the
Evaluation of Permanent Impairment.” (emphasis added).
The majority concluded that the
effect of this statutory language would allow a private organization, the AMA,
to determine the standards for impairment without legislative oversight. As
such, this provision violates the Pennsylvania Constitution which states “the
legislative power of this Commonwealth shall be vested in a General Assembly,
which shall consist of a Senate and a House of Representatives.” It is the
legislature that would decide on the determination of impairment, not the AMA,
according to the majority. The legislative attempt to allow the AMA to do so with
the publication of future editions was held to be an improper “delegation.”
Authority of the government in
America comes from the people. This is not a universal truism across the globe,
where a variety of totalitarian regimes thrive on the strength of military force.
In America, the people have granted government its authority and in theory the
government’s power is limited.
In line with that constitutional
theory, powers are specifically granted to the executive, judicial and
legislative branches of government. Each has a role to fulfill, and thereby
obligations to the people and responsibilities to its co-equal branches.
On the subject of constitutions,
it is important to remember that the U.S. Constitution is the supreme law of the land. The U.S.
Constitution says so in Article 6, the “supremacy clause.” This is important to
remember because that Constitution applies to and protects us all.
Through this document comes
definition of national government and the protection of various rights, either
stated in the Constitution itself or implied by the context of the document. As important as this document
is, it does not stand alone in protecting rights and defining government power.
Each state likewise has a
constitution that defines the branches of state government. States are also free
to provide greater protections of rights than those found in the U.S.
Constitution, but not to contradict the U.S. Constitution. A state’s treatment
of persons there is therefore constrained by both the Federal and that state’s
constitution.
An important point of last
week’s decision in Pennsylvania is that this portion of that state’s workers’
compensation law has been deemed unconstitutional pursuant to the Pennsylvania
Constitution. Specifically, the provisions which create and empower the
branches of Pennsylvania government. This makes it a decision which could
influence other state’s courts, but possibly not to the extent it might had the
Protz decision been based on the U.S. Constitutions guarantees, such as
the Due Process or Equal Protection clauses.
Much authority is invested in
legislative bodies because legislatures are arguably the branch of government
closest to the people. It would be inefficient however, for the legislature to
manage regulation of specifics in the vast assortment of various areas in which
government is expected to act. Imagine having to convene the full legislature
to debate and respond to the subtle but constant changes in the world around
us.
In a concession to expeditious
action, many of the day-to-day needs of the people have therefore been
delegated by legislative bodies to the executive branch of government. As
Lawrence Tribe explains in his treatise on Constitutional Law, “under the
necessary and proper clause . . . any constitutionally granted congressional
power implies a power to delegate authority under it sufficient to effectuate
its purpose.” (Tribe, American
Constitutional Law, Second Edition, §5-17, p 362).
To this end, various familiar
agencies have been created by law, with the passage of what are commonly called
“enabling statutes.” With such laws legislatures create executive branch
agencies, define the scope of their authority, and charge them with
responsibility for various aspects of governance. This process is the heart of
the existence of the familiar Environmental Protection Agency, the Internal
Revenue Service, the Departments of Energy, Education, Transportation and more.
In a similar vein, state
legislatures have created agencies to manage and regulate workers’
compensation. They are referred to as “Boards,” “Commissions,” “Divisions” and
more. Florida’s statute creates and empowers two agencies, the Division of
Workers’ Compensation (DWC) and the
Office of Judges of Compensation Claims (OJCC), an agency to regulate the
business of workers’ compensation and an agency to adjudicate disputes about
benefits. In most other states these responsibilities are vested in a single
agency.
But the point is that the powers
are vested by legislation that creates the agency or agencies, and defines the
power of executive government that is vested therein. After such legislation,
the legislature may be relieved of the daily management, having delegated it to
the executive branch.
And that in a nutshell is
delegation. Delegation is critical to the concept of state agencies, and the
regulation and authority vested therein. The complaint of Ms. Protz is that the
Pennsylvania legislature in this instance delegated outside of government, to
the American Medical Association.
Can a state legislatively adopt
a set of parameters by which benefits could be measured or delimited?
Presumably yes. The Florida Legislature adopted the AMA Guides, then the Minnesota
Guides and finally The Florida Guides.
Cannot Pennsylvania likewise adopt some guide? Pennsylvania is not the first to
confront this issue, or even the specific language “most recent edition.”
Justice Simpson’s dissent in Protz
notes that New Mexico rejected a similar constitutional challenge in Madrid
v. St. Joseph Medical Center, 928 P.2d 250 (1996). There, the Court noted
that “new developments in medical science relevant to evaluating impairments
demand periodic modifications of the standard.” This reality results in the
Guides being “periodically updated to encompass these new developments.” The Court concluded that those revisions by
the AMA did not change the conclusion that New Mexico’s adoption of and
deference to the Guides is constitutional. Note, again, that this was a conclusion that such delegation did not violate the New Mexico Constitution. Thus, while of interest in Pennsylvania and elsewhere the Madrid decision may not persuade other courts, nor may Protz.
The seminal authority on the
application of the AMA Guides to workers’ compensation is Understanding the AMA Guides in Workers’ Compensation, by Steven
Babitsky and James Mangraviti, Jr. In the 2015 supplement, it notes that
“numerous challenges have been made to the AMA
Guides as used in various workers’ compensation systems.” (§3.05). There
are several of these examples that are interesting and even intriguing.
In Texas, the Supreme Court
affirmed use of the Guides concluding
that the Guides “albeit imperfect,
was not invalid under the equal protection clause.” (a challenge under the U.S.
Constitution). (Babitsky, §3.05).
This treatise also cites Davis
v. B.F. Goodrich, 826 P.2d 587 (Okla. 1992), in which a dissenting justice
commented on the Guides, concluding
that their use is “an unconstitutional delegation of power,” and that this
“vests in a purely private organization . . . the unbridled authority to set
standards for permanent impairment which govern an employee’s right to collect
compensation.” (Babitsky, §3.04). But this is a dissent, and reliance on the Guides has been upheld in Oklahoma.
According to Babitsky, the Courts in Tennessee,
Colorado and Wyoming have concluded that the use of the AMA Guides is constitutional. These challenges address the Guides generally, but do not address the
specific question in Protz.
But in North Dakota there was a more similar case. There the Court concluded that language requiring “use of the
‘most recent’ or ‘most current’ edition of the AMA Guides should be interpreted to mean the most recent edition at
the time of the statute’s enactment.” (Babitsky,
§3.04) (McCabe v. North Dakota Workers’ Compensation Bureau, 567 N.W. 2d
201 (N.D. 1997).
Essentially, North Dakota in McCabe
reached the same outcome Pennsylvania did in Protz, i.e. that the Guides edition in effect when
statutorily adopted shall control. The North Dakota Court did so through statutory
construction rather than a conclusion of constitutional infirmity, as in Protz.
Babitsky
says that only New Mexico and Arizona have concluded the use of the “most
recent” Guides, meaning most recent when the impairment is determined, is constitutional. Justice Simpson’s dissent in Protz
notes New Mexico. Babitsky clarifies that
Arizona’s outcome accepting “a yet unpublished edition,” Gutierrez v.
Industrial Comm’n, 249 P.3d 1095 (Ariz. 2011), is seemingly similar to New
Mexico. But, it notes that the Arizona statute encourages use of the Guides, but does not mandate them. It is perhaps because of this distinction that the Protz dissents do not rely so on Gutierrez.
So, the states that have considered
this delegation issue have all concluded that this reference to published
guides such as the AMA Guides is an
acceptable delegation, with a dissenting voice in Oklahoma. Most have
concluded, however, that the delegation has to be to a set of Guides already
published, except Arizona and New Mexico.
In Protz, the majority
says that delegation, such as to the AMA Guides,
is appropriate in Pennsylvania. However, that authority to delegate is limited:
“(1) the basic policy choices must be made by the Legislature; and (2) the
legislation must contain adequate standards which will guide and restrain the
exercise of the delegated administrative functions.” The delegation to the AMA
in this context, that is the use of future Guides as yet unwritten at the time of the
legislative adoption, was seen by the court as failing to “prescribe with
reasonable clarity the limits of the power delegated or if those limits are too
broad it attempt to delegate is a nullity.”
The Protz Court concluded
that “the General Assembly has failed to prescribe any intelligible standards
to guide the AMA’s determination regarding the methodology to be used in
grading impairments.” Furthermore, it noted, the statute contains no “mechanism
requiring governmental review of the Guides
by the promulgation of regulations.”
So, the Court was persuaded by the
lack of statutory standards or guidance (telling the organization, the AMA, how to proceed), and the absence of an ongoing
regulatory involvement as the Guides
evolve, which proved fatal to the delegation. The AMA could revise the Guides at will without any state
mandated parameters, and if it did so those new Guides would effectively become the law of Pennsylvania without
further legislative or executive regulatory consideration or action. While the
Court did not accept the Oklahoma dissent’s suggestion that reliance on Guides is impermissible, it concluded
that the process of adopting Guides
cannot be constitutionally delegated in Pennsylvania as it may be in Arizona and New Mexico.
Judge Simpson’s dissent in Protz
is interesting, taking issue with the majority on multiple points. This
includes seven policy safeguards that he contends the legislature included to
provide structure for the delegation.
Justice Covey’s dissent in Protz
is broader. She points to precedent from the Pennsylvania Supreme Court in Gima
v. Hudson Coal Co., 165 A. 850 (Pa. 1933). There, the Court affirmed
delegation arguably similar to the instant dispute regarding the AMA Guides. Though that decision is over
80 years old, Judge Covey notes that the Gima analysis has been
reaffirmed by the Pennsylvania Supreme Court in 1973, and relied upon by the
Commonwealth Court en banc “just five
years ago.” Citing Pennsylvania Builders Association v. Department of Labor
and Industry, 4 A.3d 215 (Pa. Cmwlth 2010). She thus asserts that the
majority’s decision to disregard Gima, concluding it was “inferentially
overruled,” is inappropriate.
Justice Covey reiterates the Gima
rationale that “the General Assembly cannot be expected to enact laws which
shall in themselves keep abreast of every advance of science and
invention.” This is somewhat similar to the logic employed by the New Mexico Court in Madrid. Therefore, Justice Covey concludes it “is
unreasonable to impose upon the General Assembly the burden of frequently revisiting
legislation to reflect evolving, broadly-accepted changes in the medical
field.”
If the Pennsylvania Supreme
Court reviews Protz, that review is perhaps most likely to be based on
this conflict: Justice Covey’s characterization that the majority opinion in Protz
directly contradicts the same Court’s earlier decision in Pennsylvania
Builders.
So the answer seems to be that
delegation to a set of guides is not in itself unconstitutional. The majority
in Protz takes issue with the continuing nature of the statute. With its
“most recent edition” language, the legislature accomplished a delegation and
absolved itself from the need to ever again revisit the analysis or debate regarding impairment
determination.
Revisions thereafter, if seen as
appropriate by the unelected AMA, would presumably be made. Through the broad
language of the statute, Pennsylvania would remain current with the latest version
of the AMA Guides over time, without
the government officials charged with authority ever reviewing the impacts of
those AMA changes.
Thus, it was not the delegation
to the Guides generally that was
found repugnant, but the delegation to the ongoing AMA process without further
intervention of the Pennsylvania legislature or regulators.
The Protz Court concluded that the legislature
cannot prospectively adopt future changes in the Guides. Doing so goes beyond adoption of the
Guides as they exist and as they are
perceived by the legislature at the time of adoption. This prospective adoption instead delegates the authority for
determining the appropriateness of the Guides,
in the future, to the AMA. In effect, as this private organization deems it
efficacious to change the Guides,
they are likewise, under the statutory language in Pennsylvania, changing the
measure of benefits to which a recovering Pennsylvanian is entitled.
In effect, the language used by
the Pennsylvania legislature delegated to the AMA the authority to determine
the appropriate measure of benefits. It was this ongoing delegation of authority
which the Protz Court found violative of the Pennsylvania Constitution.
The Court could have reached the same decision through statutory interpretation
as the Court in North Dakota did, but chose the constitutionality result.
The Florida workers’
compensation marketplace is accustomed to constitutional questions. Since our
last reforms in 2003, we have had various challenges to the Florida workers’
compensation law, some at the appellate courts and some at the Florida Supreme
Court.
To recap the saga of 21st
Century attorney fee litigation in Florida, challenges to the Florida attorney
fee statute (Fla. Stat. §440.34) worked through our appellate system after the 2003
statutory reforms, culminating in Murray v. Mariner Health (Fla. 2009).
There the Court evaded the constitutional question of statutorily constrained "percentage recovery" fees and relied upon statutory
interpretation to conclude that hourly attorney’s fees were still appropriate under
the existing law, in order that fees would be “reasonable.” The Court's Murray approach thereby was more
akin to the North Dakota Guides
analysis in McCabe.
The Florida legislature reacted
in the next session and removed the modifier “reasonable” from the statute,
nullifying the Court’s Murray interpretation for cases thereafter. Since
that time, the District Court of Appeal has rendered various decisions denying
claims that this statute is thus constitutionally impaired on a variety of bases under the Florida and U.S. Constitutions; the court has also repeatedly certified
the question to the Florida Supreme Court. These have come to be called “Castellanos
and The Companion Cases.”
The Court could again resort to
statutory interpretation in Castellanos, as it did in Murray and
as the North Dakota Court did in McCabe. The Florida Court could also
eschew the interpretation route and address the contention that Fla. Stat.
§440.34 is unconstitutional either on its face or as applied. The distinction
between these two concepts (“facial” and “as applied”) is explained
here.
On the currently pending
indemnity benefit dispute, many believe that the Florida Court will not address
constitutionality in Westphal (The panel of three judges at the First
District initially decided that this indemnity statute was unconstitutional as
a violation of “natural law”). Prognosticators contend that the Court can
avoid the constitutional questions of “natural law” and merely decide if the
First District was correct with its en
banc analysis in Westphal or whether it was correct with its en banc analysis a few years earlier in Matrix
Employee Leasing v. Hadley.
There will likely be similar
questions about Protz in days to come. Pennsylvanians may ask
whether their Supreme Court might review Protz to reconcile whether the
Commonwealth Court was right its en banc
decision in Protz or in its en
banc decision in Pennsylvania Builders. In other words, the Court
could consider, as raised by Justice Covey, whether the Commonwealth Court
improperly eschewed precedent in deciding Protz.
It is impossible to tell whether
a pebble
dropped in the pond will create a tidal wave, or if a boulder dropped in
the pond will result in merely ripples. Whether Protz is a harbinger for
other states will be known in time. It appears that even Pennsylvania concedes
to the delegation to a set of standards, but in some context other states like
Arizona and New Mexico perhaps concede more regarding delegation of the process
of setting or vetting standards.
It therefore
appears clear that Pennsylvania can still join the ranks of those utilizing
the AMA Guides 6th Edition, but that its legislature will have to do
so specifically. What that means for many Pennsylvanians with existing workers’
compensation issues is that they will now be measured by the AMA Guides
4th Edition, to their benefit or detriment, until the legislature acts or
the Pennsylvania Supreme Court addresses the issue.
It is possible too that the Protz decision will be discussed in Florida should there be any proposal to retreat from The Florida Guides and a re-adoption twenty-five years later of the AMA Guides.
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#workerscompensation
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