Just over 100 years ago, the Supreme Court of the United States (SCOTUS) rendered workers' compensation a reality in America. Much is said about New York Central Railroad v. White, 243 U.S. 188, 37 S.Ct. 247, 61 L.Ed. 667 (1917) at various seminars and lectures. But, it is rare to find someone that has read the decision. Most have heard parts and pieces quoted, but few actually read it. The decision found constitutional the "grand bargain" that is workers' compensation, but that label does not appear in the decision.
In order to understand and appreciate the reasoning of White, it is perhaps helpful to understand that several prior forays into the socialistic realm of workers' compensation had been tested and found wanting. Multiple courts had determined that workers' compensation in various iterations was not constitutional. There was this great socialistic effort underway early in the twentieth century and it was being constricted by the constitutional foundations upon which the world's greatest modern republic was built. Socialism in this form was seen as contradicting our constitutional values.
To appreciate the departure that is White, I recommend as a precursor Ives v. South Buffalo Railway Company, 201 N.Y. 271, 94 N.E. 431 (NY Ct. App. 1911). The Ives Court interpreted an effort of the New York Legislature to enact workers' compensation. The legislative action followed the publication of a report by the "Wainwright Commission," in 1909. 201 N.Y. at 284. The Ives Court was effusive in its praise, noting "no word of praise could overstate the industry and intelligence of this commission." Stated simply, the court concluded, the resulting "statute, judged by our common-law standards, is plainly revolutionary." 201 N.Y. at 285.
The Court reminded that America is a Constitutional Republic. And, when that constitution was "adopted, it was the law of the land that no man who was without fault or negligence could be held liable in damages for injuries sustained by another." 201 N.Y. at 293. Liability without fault was "a liability unknown to the common law." The Court concluded that such liability "plainly constitutes a deprivation of liberty and property under the federal and state Constitutions." 201 N.Y. at 294.
The Ives Court concluded that property rights are important; they have their foundation "in the fundamental law." Id. Thus, they are not founded "upon philosophical or scientific speculations, nor upon the commendable impulses of benevolence or charity, nor yet upon the dictates of natural justice." To conclude otherwise, the Court held, would be to conclude that "there is no private right entirely safe, because there is no limitation upon the absolute discretion of Legislatures, and the guarantees of the Constitution are a mere waste of words." 201 N.Y. at 295.
The course of that analysis led the Court to the conclusion that the initial New York effort towards workers' compensation was unconstitutional, a violation of the "‘due process' of law guaranteed by the Constitutions." 201 N.Y. at 298.
Only six years later, the SCOTUS would disagree in White.
The Court in White explained first that history may set our personal expectations, but that "no person has a vested interest in any rule of law, entitling him to insist that it shall remain unchanged for his benefit." 243 U.S. at 198. The Court conceded that perhaps a state could not "abolish all rights of action, on the one hand, or all defenses, on the other," in a singular process. However, the Court concluded that is not what workers' compensation does. Instead, "the statute under consideration sets aside one body of rules only to establish another system in its place." 243 U.S. at 201. It is thus, not an abolition of "all," in terms of either rights or defenses. Workers' compensation is a substitution of something new in place of something else.
The Court described at some length this perspective of both employers and employees yielding certain previously held legal expectations in exchange for some alternative benefit of the new process. It noted:
"If the employee is no longer able to recover as much as before in case of being injured through the employer's negligence, he is entitled to moderate compensation in all cases of injury, and has a certain and speedy remedy without the difficulty and expense of establishing negligence or proving the amount of the damages." Id.
Thereby, the employee:
"instead of assuming the entire consequences of all ordinary risks of the occupation, he assumes the consequences, in excess of the scheduled compensation, of risks ordinary and extraordinary." Id.
The employee, in the view of the Court, may be called upon to "assume" various risks that are not compensated by the statute; seemingly, the quid pro quo of workers' compensation need not be all-encompassing to pass constitutional muster. Nor, it seems must it be more than "moderate compensation" (nor as seemingly may it be less). As to the employer, it may well be deprived of various defenses to compensation. The Court noted:
"if the employer is left without defense respecting the question of fault, he at the same time is assured that the recovery is limited, and that it goes directly to the relief of the designated beneficiary." Id.
Thus, there is likewise support in the discussion of the employer obligation that seems to perhaps sanction the concept of limits upon recovery. Whether that would refer solely to a restriction on the weekly value (a maximum compensation rate for example) or a limitation on the duration (such as the 104 week limitation stricken by the Florida Supreme Court in Westphal), or both, the inherent nature of limitations seems accepted by the White Court. The remaining question, perhaps, is the extent of that limitation, and thereby perhaps a return to the Court's "moderate" constraint?
The Court noted, essentially, that Someone has to Pay (May 2016), as I expounded upon in a previous post. The Court's words: "the pecuniary loss resulting from the employee's death or disablement must fall somewhere." 243 U.S. at 205. Whether upon the employee, the employer, or yet some third party, when injury occurs it may produce loss in terms of actual cost like lost wages and medical bills, and/or non-pecuniary costs such as discomfort, fear, and pain. Those losses must be allocated through a process that is transparent and clear to both the employer and employee.
There is argument often about "pain and suffering" as damage. In civil tort claims, that is something a jury might award. I hear it discussed in workers' compensation educational settings, and there is a seeming logical disconnect. Too often that discussion is simply that "workers' compensation does not address pain and suffering," and adequacy argument regarding case benefits. That is a true statement in terms of damage, a payment, to compensate for such pain. But, perhaps that focus needs to remain upon the pain itself. Without exception, it will be the injured employee who suffers the actual pain of any injury. That should be remembered.
And, there is a vast array of medical efforts deployed in many workers' compensation injuries. We see medical care delivered in workers' compensation that may be inaccessible in a tort claim, not provided by a group health or motor vehicle insurance policy. At least some of that exceptional and skilled care may be directed precisely at an injured worker's "pain and suffering." Thus, while the systems may lack cash compensation for such damages, some may effectively argue that there is in fact "a benefit" for "pain and suffering" in the comparatively broad entitlement to medical care and even attendant care afforded by some workers' compensation laws.
The White Court reminded that any such injury "results from something done in the course of an operation from which the employer expects to derive a profit." 243 U.S. at 205. And it may be fairly said that when there is injury, the "primary cause . . . is . . . the employment itself." Id. In that employment, "both parties are responsible, since they voluntarily engage in it as coadventurers, with personal injury to the employee as a probable and foreseen result." Id. In that, there is a seeming recognition of a symbiosis between employer and employee. The two need each other, one to produce jobs and thus earnings, and the other to produce products or services and thus, likewise, earnings. Each with self-interest, supporting both her/himself as well as thereby supporting the other.
Thus, the analysis includes consideration of substituting one set of remedies and defenses for another. It includes a recognition that there are benefits and burdens in workers' compensation for both the employer and the employee. There is a recognition of a symbiosis between both participants in the selected enterprise, employer seeking profit and employee seeking wages. From that foundation of symbiosis, the White Court concluded that in the replacement of one system for another, there are benefits and burdens for both. From that conclusion, someone later coined the characterization of a "grand bargain."
There is, however, a cautionary note in White. The Court noted as an aside that:
"This, of course, is not to say that any scale of compensation, however insignificant, on the one hand, or onerous, on the other, would be supportable."
No such "adequacy" complaint was prosecuted in White, as regards the benefits provided to either employers or employees. Thus, the Court there did not address what is "adequacy" per se, though a great many have begun to voice that perspective as the twenty-first century dawned. Those who voice "adequacy" rarely, however, voice the entirety of this phrase. They do not tend to include the "onerous" concern. It is important that everyone involved remember that this socialistic system of workers' compensation is a balance between adequate and onerous. One is the ying, the other the yang, and symbiosis is the result.
In 1972, coincident with the creation of the Occupational Safety and Health Administration (OSHA) the federal government examined workers' compensation through the lens of a national commission (March 2016). Some of its participants have complained publicly of the influences of various interests in that evaluative process. The results of that commission have received some legislative recognition, but not widespread. The efforts of that commission might be seen by some as worthy of the praise afforded New York's Wainwright Commission, but such praise has not been forthcoming. A variety of critics' perspectives over the years may or may not explain the tepid effect of that last great effort toward national consistency and the perceptions of some regarding "adequacy."
As the National Conversation (August 2016) on workers' compensation has proceeded, benefit adequacy has been a recurrent topic. Coincidentally, it is our topic this week on the Hot Seat. In that discussion, is it practical to contemplate balance, adequacy, and also what is onerous? It will be an interesting discussion with Paul Sighinolfi and Ramona Tanabe. And, the recordings of these Hot Seat productions remain available on WorkersCompensation.com for future viewing.
