Stare Decisis, Goodgame, Livingood, and Westphal

In 1982 American classic Fast Times at Ridgemont High was released. A sophomoric high school comedy, it features an interesting interrelationship between an uptight teacher, Mr. Hand, and a drug-addled student named Spicoli. At one point, Spicoli shows up late to class and Mr. Hand seeks explanation. The only Spicoli response though is “I don’t know.” A sarcastic Mr. Hand writes this on the classroom board and to the class says “I like that. ‘I Don't Know.’ That's nice.” It was not an answer, it was an expression of the lack of any answer.

When parties have conflicts, they seek resolution. Sometimes that comes from a judge or jury, but more often resolution happens at the hands of the parties. Settlements and stipulations are far more likely than trials in America. It is common in negotiating resolutions for parties to consider the probabilities of winning or losing at trial. Is their case strong or not? The answer that they do not want from their attorney is “I don’t know.”

Kentucky has recently experienced two appellate (in)decisions in August and September. These may lead to some attorneys there offering “I don’t know” as the best available advice. Some will wonder whether recent cases will remain the law there, or whether the Court will retreat from these decisions.

Trial courts hear cases. They are concerned with the facts of a case, to which they apply the law, and they render decisions. American appellate courts rarely reconsider facts. They are generally courts of “error,” considering whether the law was correctly interpreted and applied to the facts.

There are fewer state appellate courts than trial tribunals. Their decisions therefore bring a consistency in the territory over which they have authority, which could be part of a state, certain types of cases in a state, or an entire state. Their decisions control future decisions of trial tribunals, thus consistency across regions or states. Each state has an ultimate appellate court, in most states called a “supreme court,” though that is not always the title (New York is an example).

The Kentucky Supreme Court is the highest court in that state. Twice in two months it has rendered interesting decisions that may contribute more to confusion and litigation than to predictability and resolution. The cases are Livingood v. Transfreight and Consol of Kentucky v. Goodgame. They may have a fair number of Kentuckians answering questions with “I don’t know,” which Mr. Hand tells us is “nice.”

In Livingood, a unanimous supreme court interpreted a Kentucky statute (KRS 342.730), but it interpreted it differently than the same Court did just a few years earlier in Chrysalis House Inc. v. Tackett, 283 S.W.3d 671 (KY 2009). In Goodgame, the unanimous court interpreted another statute (KRS 342.185), but interpreted it differently than it had in Manalapan Mining v. Lunsford, 204 S.W.3d 601 (KY 2006). Notably, the legislature has not changed these laws in the interim. In each instance, the Court reads the same statute differently that it previously had.

KRS 342.730 provides what Kentuckians refer to as the “two multiplier.” Double indemnity benefits are awardable when employment ceases after a work accident. In 2009, the Kentucky Supreme Court decided in Chrysalis that this multiplier is permitted only “when employment ceases for reason relating to the disabling injury.” In Chrysalis, the recovering worker lost his job after “stealing a money order” from his employer’s client; not related to the injury, and no entitlement to the “two multiplier.”

The Court in Chrysalis may have been moved by the facts of the case, i.e. that the indemnity recipient was a wrongdoer. But the appellate courts are supposed to interpret the law. In Chrysalis, the Court took simple statutory language that did not require interpretation and created a constraint that the statute did not contain, i.e. the relationship to the injury. Departing from the plain language of the statute, the Court created uncertainty in the market.

Six years later in Livingood, the same court concluded that it was mistaken in 2009. It conceded that the Livingood trial judge followed the law, but said “the circumstances in the present case are very different from those in Chrysalis.” In Livingood, the recovering worker had committed no such criminal offense. The Court reversed Chrysalis reasoning that the Chrysalis analysis did not “promote the statute’s obvious purpose of encouraging continued employment,” and cited the Kentucky theme that “all statutes of this state shall be liberally construed with a view to promote their objectives and carry out the intent of the legislature.”

The Livingood Court concluded that a literal interpretation of the statute is appropriate, instead of the interpretation in Chrysalis. But it noted that such a literal interpretation would lead to “an unreasonable result if an employee . . . is allowed to benefit from his own wrongdoing.” And, citing a multitude of unrelated statutory provisions, the Court grafted a new, more constrained, “employee’s wrongdoing” exception onto the “two multiplier.”

The Kentucky “two multiplier” is now awardable “‘for any reason, with or without cause’ except where the reason is the employee’s conduct shown to have been an intentional, deliberate action with a reckless disregard of the consequences either to himself or another.” The Court created a condition in Chrysalis, one not in the statute.

In Livingood, the same Court says literal interpretation is appropriate, but then declines a literal interpretation. Instead, the Court merely narrows the exception that it legislated in Chrysalis. Some in Kentucky wonder how many appellate cases it will take to arrive at an understanding of what this new Lovingood judicially-created “reckless disregard” standard actually means.

Said the Kentucky client to the lawyer “will we win this ‘two multiplier’” case? Said the lawyer in reply “I don’t know,” and the client replied “that’s nice.”

With time to ponder changes, we examine and hopefully comprehend, then adjust. The August 20 decision in Livingood was the subject of some discussion (and confusion) and September arrived. A month later, September 24, 2015, the Kentucky Supreme Court rendered Consol of Kentucky v. Goodgame.

Goodgame was a coal miner, an occupation of decreasing demand. The employer closed a Kentucky mine and Goodgame transferred to the employer’s mine in Virginia for about six months and then retired. After retirement, he sought Kentucky workers’ compensation benefits for injuries to his arms and legs “as a result of cumulative trauma” throughout the course of his employment. The trial judge dismissed his case, concluding the statute of limitations had run. There were some other challenges to the case like whether Kentucky or Virginia benefits would be appropriate, but the point of interest here is the statute of limitations.

There are accidents, which are events. Then there are occupational diseases and exposures, which may occur over time. Then there is the hybrid which many refer to as “repetitive trivial trauma” a series of little events (even movements or postures) that result in injury over time, perhaps similarly to the way an exposure might lead to a disease.

Kentucky has a “discovery” standard for occupational disease statute of limitations, in which the worker must “file within three years after the last injurious exposure . . . or after the employee first experiences a distinct manifestation of the disease.” You do not have to file until you discover the disease, and since most of us are not doctors, in Kentucky that is when a doctor tells you of the disease and that it was work related.

For non-disease cases, Kentucky has a “date of accident method” that requires the worker to file “within two years of the accident.” There is no “last injurious” exposure language in the accident statute, “which makes sense when the injury is the result of one traumatic event or accident” but according to the Court makes less sense “with cumulative trauma injuries” that it sees as a hybrid of accident and disease.

The Court explained that there are statutes of "limitations" and statutes of "repose." “Limitation” means “time in which one may bring suit after the cause of action accrues, while . . . repose potentially bars a claimant’s suit before the cause of action accrues.” The Court focused on the presence of “repose” in the disease statute. In Kentucky disease, the claim must come within so long after discovery (limitations) but must also come within 5 years of the last exposure, which is a “repose” and could bar the claim even before the disease was discovered. The accident notice section contains no such "repose."

In 2006, in Manalapan Mining Co. v. Lunsford, 204 S.W.3d 601 (KY 2006), the Kentucky Supreme Court nonetheless concluded that the accident statute of limitations “acts as both a statute of limitations and a statute of repose in cumulative trauma cases.” In that hearing loss case, the Court held that the claim was barred because it was not filed within two years of the last injurious exposure. That is, it was barred by a judicially created statute of repose. Not a literal interpretation of the statute according to some in Kentucky.

In Consol of Kentucky v. Goodgame, The Court did not retreat from its creation of a statute of repose. Instead, it created a new definition of the repose it created in Manalapan, holding that the repose for repetitive trauma likewise begins in Kentucky when “the date a claimant is informed of a work-related cumulative trauma injury.” Thus, the accident repose, is inferred from the Kentucky occupational disease statute.

The Court then notes that “workers’ compensation is a creature of statute, and the remedies and procedures described therein are exclusive” (except apparently for those later grafted on by court decision such as the repose statute for accidents, remember the court says “the injury statute of limitations, does not contain statute of repose language.”)

Said the client to the lawyer “am I in time to pursue my” case? Said the lawyer in reply “I don’t know, today I say yes, but the Supreme Court may change the law tomorrow” and the client replied “that’s nice.”

Stare decisis means “to abide by, or adhere to, decided cases.” It is a fundamental maxim of American law.

It has been around a long time. An informative article The Principle of Stare Decisis was published in the American Law Register in 1886. It explains that “when a point of law has been once solemnly and necessarily settled by the decision of a competent court, it will no longer be considered open to examination, or to a new ruling, by the same tribunal or those which are bound to follow its adjudications.”

It goes on to explain that “if a decision has been made upon solemn argument and mature deliberation, the presumption is in favor of its correctness.” Therefore, “the community have (sic) a right to regard it as a just declaration or exposition of the law, and to regulate their actions and contracts by it.” In other words, once a competent court answers a question, it is presumed to stay answered. Parties should be able to rely on that interpretation in future cases and act accordingly. Stipulations can be reached, cases can be settled.

The Principle goes on “it would, therefore, be extremely inconvenient to the public, if precedents were not duly regarded and implicitly followed. It is by the notoriety and stability of such rules that professional men can give safe advice to those who consult them.” In other words, it is these published cases, these adjudications, that allow attorneys to predict how a set of facts may be decided in the future. The attorney can then advise a client of the potential and probable outcomes. On the strength of that knowledge agreements are reached and not all disputes have to be decided by the nation’s courts.

We have also seen a departure from stare decisis in Florida. In 2011 Matrix Employee Leasing, Inc. v. Hadley was tried, a dispute regarding temporary indemnity benefits. The trial judge decided the case following City of Pensacola Firefighters v. Oswald, an appellate court decision from 1998. That is how stare decisis and the common law works in America, parties and judges look to previous decisions to guide the decision in the present case. The prior decisions perhaps make the outcome of the current litigation predictable.

One party sought review of the Hadley outcome by the Florida First District Court of Appeal (DCA). The DCA concluded that a different interpretation of the law was more appropriate. And in 2011 Hadley was the law.

It is worth noting that the majority of appellate cases are decided by three judges working together in what is called a “panel.” Sometimes the parties seek to have the entire court consider a case, which is called an “en banc” decision. It is possible for different panels of a court, in considering different cases, to make decisions that result in confusion among attorneys and parties.

To reduce the potential for confusion the appellate court periodically hears the case en banc and issues a decision that represents the conclusion of the entire court, as opposed to a panel of the court. Hadley was an en banc decision. Thus, it was viewed as representative of the whole First District Court of Appeal’s interpretation of the temporary indemnity provisions in Fla. Stat. §440.15.

Two years later, a panel of the same court considered a similar indemnity question in Westphal v. City of St. Petersburg. That panel did not follow the interpretation of Hadley, and instead decided that Fla. Stat. §440.15 is unconstitutional. The Court panel concluded that this statute was inconsistent with “natural law.” This has since been referred to as the “Westphal panel decision,” because later in 2013 the entire First District Court rendered an en banc decision in Westphal. The Court as a whole did not find a constitutional problem with the statute. The Court did interpret Fla. Stat. §440.15 in Westphal differently than it had in Hadley.

So, Florida is left with an en banc decision interpreting Fla. Stat. §440.15. In many contexts, that would bring stability and predictability. But with three interpretations in three years (Hadley en banc, Westphal panel, Westphal en banc), some in the marketplace doubt that Westphal en banc is the “last word” and wonder what the next interpretation of this statute might be.

The Westphal case is currently pending review by the Florida Supreme Court. The There is some probability that the Florida Supreme Court will bring clarity to the interpretation. The oral argument in Westphal was held June 5, 2014. And so the market has waited about 480 days. Some feel that a decision in Westphal will come soon.

In total, Florida workers’ compensation awaits two or three decisions from the Florida Supreme Court. Castellanos v. Next Door Company ("Castellanos") is a challenge to the constitutionality of Fla. Stat. §440.34 (attorneys fees). This is an issue upon which the First District has been clear, concluding that the statute is constitutional.

Padgett v. State of Florida (Padgett) is a Circuit Court decision finding “exclusive remedy” is not constitutional under the Florida statutory framework. The Supreme Court is, at this time, merely trying to decide whether to review the decision of the Third District Court of Appeal (DCA) in Padgett (first it decides to review, then it decides the case). The Third DCA concluded that the trial decision was procedurally flawed and reversed the trial court's conclusion of unconstitutionality.

Westphal is not seen by many as being nearly as monumental. Either Castellanos or Padgett are perceived by many as potentially having profound implications for Florida workers’ compensation, if the pundits and prognosticators are to be believed. But Westphal is predicted to result in one of three outcomes. Some believe the Supreme Court will return to “natural law” and find Fla. Stat. §440.15 unconstitutional, but it seems to be a minority prediction. Most think that the Court will either adopt the District Court’s en banc decision in Westphal or its en banc decision in Hadley.

These prognosticators predict an interpretation of the statute will be adopted, the market will adjust accordingly and move on. When the Florida Supreme Court speaks, however, it is likely that the market will know how to interpret Fla. Stat. §440.15. Westphal is not seen by many as having the probable impact of Castellanos or Padgett. Some question why the Supreme Court need review Westphal at all, while others believe that the highest court must speak due to the perception of vacillation seen by some in the three DCA interpretations (Hadley en banc, Westphal panel, Westphal en banc). These pundits say predictability is needed and that the Supreme Court's decision is what will deliver it.

The uncertainty from Hadley en banc, Westphal panel and Westphal en banc will soon conclude. Castellanos will soon be decided. We will learn whether the Court will address Padgett. In Florida, the uncertainty will give way, and the answer here will not be “I don’t know” and many feel “that’s nice.” As Spicoli might note, we will not be "bogus."

It is interesting that so much is going on in the national workers’ compensation market. These decisions like Goodgame and Livingood make for interesting reading. Courts are struggling with statutory construction and constitutional issues. Workers' compensation is a very exciting place to be right now, and There's no other Place I Wanna Be. You might find interesting As Florida Waits, Commonwealth Court Holds Pennsylvania Statute Unconstitutional (09.20.15), Tennessee and New Mexico Provisions Deemed Unconstitutional (06.29.15), Court Watching (05.04.15), and Oklahoma Supreme Court Decides Coates (12.18.13).

Mediation is Growing, it can work in Comp

In 1962, the Beachboys released Surfin' Safari. Expounding on their enthusiasm for the sport, they noted

I tell you surfing's mighty wild

It's getting bigger every day

From Hawaii to the shores of Peru

Catchy tune. 

I remember mediation coming to Florida workers' compensation. Not with a bang or fanfare. It was not popular. I recall some of the sage "old-timers" telling me that it would never work. Mediation was a great tool for civil litigation they allowed, but "it will never work in comp."  Asked naively why, and the best response I ever got was "comp is different, everybody knows that."

The first workers' compensation mediation I ever attended was conducted by Gail Adams. Gail was employed by the state at the time to mediate workers' compensation cases. She later became a workers' compensation judge in Jacksonville, transferred to the Orlando OJCC and eventually was elected to the Circuit bench. I was in Jacksonville at that time and Gail was one of three workers' compensation mediators in the state. Her responsibilities included essentially everything north of Orange County (Orlando), from the Atlantic ocean to Alabama. A considerable geographic area. 

She traveled to Jax for the mediation. We had no state facilities, and so we used the claimant's attorney's office. He was represented by Roger Risk, a true gentleman, from whom I learned a fair bit early in my career. There was a conference room, but no "break-out rooms" per se. I therefore sat in Mr. Risk's office, with the attorney with whom I was attending the mediation, in front of a desk laden with piles of paper. It looked like a recycle center drop-off. 

The claimant and Mr. Risk sat in the firm's conference room. The claimant had brought with him a union representative. Though the date of accident was in the late 1980s, the representative had brought  copy of the workers compensation statute from the early 1970s with him. We were all obliged to listen to him repeatedly recite "what the law says" from this tome as if it were gospel. Gail Adams spent a great deal of time discussing the law with this well-intentioned, though misinformed, gentleman. That day in my first mediation I learned about the patience a mediator must have.

As the afternoon wore on, the union representative retired to the office waiting area. I recall after we reached impasse, we left the office past him. He had removed his shoes and was propped on the waiting area couch. His eyes shaded by his open workers' compensation pamphlet from the 1970s, soft snores emitting from beneath. I envied him his peacefulness after a long day of arguing about the law. 

It was one of those seminal career moments. I soon had a chance to discuss it within a group clustered in the local comp office. Back then we seemed to always be there for some purpose or another. One wise and experienced attorney offered his two cents on why the mediation I described had failed.  "You see," he said "workers' compensation is just too complex for mediation." He said it would never catch on. Too many intricacies, too much statutory complexity and change, it just would never work. That, he explained to us, is why that case had reached impasse that day, a "complete waste of time."

That case later settled. Was it because of something said in that mediation? We will never know. What we do know is that the process does facilitate us talking. Talking may not solve everything, but over time I have learned it is usually a good place to start. 

I have to admit I had my share of unsuccessful mediations. One lawyer I ran into periodically was well-known in Jax for asking for the moon in his openings. Defense lawyers came to expect it. We all resigned ourselves to dealing with it. Unfortunately for us all, his clients were often convinced these demands were achievable and realistic; they were not. It made for slow going, and often ended in impasse. Everyone needs to remember that there is posturing and there is the bottom line, and clients on both sides of the table need to understand that also. 

Another point that is critical for mediation is preparation. The successful party knows their own case, the opponent's case, and is willing to listen to all sides. This work may lead to a resolution of the case. If it does not, this preparation can hone the case that is later presented to the judge. A good mediation, prepared for carefully, will be a benefit to the lawyer that allows it to be. 

I was not many years into the practice when the mediation process was made mandatory. There was discussion about whether one can be forced to do something voluntary. The suggestion being that "mandatory mediation" was akin to "jumbo shrimp," a classic oxymoron. Some scholars made interesting fodder of that conundrum. Eventually they seemed to reach consensus that making us all appear for mediation was not really forcing the issue, merely forcing us to discuss the issue. We adapted, and mediation grew beyond 1994. Yes, without fanfare mandatory mediation in Florida workers' compensation has reached drinking-age this year. 

There have been great strides in workers' compensation mediation across the country. Virginia has jumped in with both feet, as has Washington. Pennsylvania more recently has begun using mediation in its process, following the lead of Georgia and others. We see a growing trend towards the benefits of self-determination and conciliation. Florida is among a small handful of mandatory mediation states, but the trend toward mediation's use is growing nonetheless. 

I was pleased in July to see a story on WorkCompCentral advising that Connecticut is joining the mediation parade. Their program will be voluntary, It will be "available only if both parties agree and a request is submitted through" the chair of the Connecticut Commission. This seems a little redundant. If they agree to mediate, and if settlement/resolution is otherwise allowed, why would they need permission?

Perhaps that answer is simply one of resource allocation, as the Commission is providing the mediator in the form of a Commissioner. Under the proposal, The parties would file their request along with the names of two Commissioners upon whom they can agree. This would presumably put the chair in a position of accommodating the requested. It will be different than Florida's program, but so are many other states' programs. 

Florida does not use judges as mediators, as many states do. We are fortunate to have a great team of state mediators spread across Florida. Next time you are in for a mediation, take a minute to thank them for the job they do. 

Prepare for mediation. Know your objective for mediation. Be prepared to listen in mediation. Learn from the exercise. If it settles the issue or the case, that is great. If it does not, it is still a great benefit if used carefully and thoughfully.

Will mediation work in workers' compensation? The answer to this is that it certainly can work. The "will" is up to those who would use it and if they have that "will" then mediation is certainly a way. 

I tell you mediating's mighty wild

It's getting bigger every day

On compensability and benefits too

. . .

Happy 21st Mandatory Mediation!

Judicial Behaviour and Ex Parte Communication

A long-running story of Judicial misconduct in Florida concluded about a year ago. The Florida Bar News reported August 1, 2014 on the disbarment of former Circuit Judge Ana Gardiner. That is the process by which she has lost her license to practice law in Florida. 

The Florida Bar News story outlines a volume of communications between the Judge and a prosecutor in a capital murder trial. There were 44 messages in the days surrounding the defendant's sentencing. Judges do not communicate with any party to a case or to any attorney in a case without giving everyone involved a chance to participate. One-sided conversations are called "ex parte." I am regularly surprised by judges and attorneys who do not understand this. 

Former Judge Gardiner was out to eat in 2007 before the sentencing in that case and "ran into the prosecutor." They "decided to continue the evening in the bar" and a law student that was present was the one to suggest that there could be an "appearance of impropriety." Perhaps those closest to their legal education are the best at spotting legal issues? Law school provides exquisite detail and large volumes of information on a variety of topics. Upon graduation, we perhaps know more breadth of the law than at any other time in our careers. Then we begin to specialize and narrow our focus, and much of what we learned perhaps becomes distant memory?

The judge's communications in this instance were not disclosed to the defense when the trial resumed and the sentence was imposed. This is a defendant in a capital case, her or his life on the line, and the judge is communicating with the prosecutor that is seeking to take her or his life. After sentencing, the Judge's "relationship with the prosecutor intensified." When all of this came to light, the judge resigned from the bench in 2010, capping a twelve-year  judicial career. The prosecuting attorney involved was suspended by the Supreme Court and is therefore not currently permitted to practice law. 

Four years after her resignation from the bench, Judge Gardiner was eventually disbarred by the Court. In Florida, allegations against an attorney are investigated by The Florida Bar, and if probable cause is found, a referee is appointed to conduct a trial and recommend discipline. In this instance, the referee recommended something short of being disbarred. It is possible that the resignation from the bench was seen as sufficient punishment itself.

The Court, however, disagreed with a referee's recommendation for discipline and said "considering Gardiner's dishonest conduct and the harm that her actions have caused to the administration of justice in a capital first-degree murder case, we conclude that disbarment is the appropriate sanction." This suggests that both the activity, ex parte communication, and the seriousness of the situation in which it occurred, influenced the decision. 

Some might argue, from this contention, that ex parte communication is more serious if the case involved is more serious. Would the judge's "dishonest conduct" and harm to "the administration of justice" been less serious if it had been a misdemeanor trial in which she was presiding? In the workers' compensation context, is ex parte communication more troublesome in a permanent total disability case than in a "one time change" of physician case?

Ex parte communication is addressed in the Florida Code of Judicial Conduct, Canon 3, paragraph (7):

(7) A judge shall accord to every person who has a legal interest in a proceeding, or that person's lawyer, the right to be heard according to law. A judge shall not initiate, permit, or consider ex parte communications, or consider other communications made to the judge outside the presence of the parties concerning a pending or impending proceeding except that:

(a) Where circumstances require, ex parte communications for scheduling, administrative purposes, or emergencies that do not deal with substantive matters or issues on the merits are authorized, provided:

(i) the judge reasonably believes that no party will gain a procedural or tactical advantage as a result of the ex parte communication, and

(ii) the judge makes provision promptly to notify all other parties of the substance of the ex parte communication and allows an opportunity to respond.

(b) A judge may obtain the advice of a disinterested expert on the law applicable to a proceeding before the judge if the judge gives notice to the parties of the person consulted and the substance of the advice and affords the parties reasonable opportunity to respond.

(c) A judge may consult with other judges or with court personnel whose function is to aid the judge in carrying out the judge's adjudicative responsibilities.

(d) A judge may, with the consent of the parties, confer separately with the parties and their lawyers in an effort to mediate or settle matters pending before the judge.

(e) A judge may initiate or consider any ex parte communications when expressly authorized by law to do so.

From my perspective, I find it hard to distill from the Canon some factor regarding the seriousness of the case. It would seem that regardless of whether the case is over $12.00 in medical mileage reimbursement or $500,000 in permanent total disability benefits, the parties are each entitled to expect that their judge will follow this Canon and not engage in ex parte communication with any party or attorney. 

In what context? We find ourselves in an age of amazingly diverse communication opportunities. There is social media, email, texting and more recently I have learned that people wearing headsets actually converse while they play Internet-based games with one another. Apparently, still others communicate with text message-like opportunities while engaged in other online games. Are these exchanges or conversations communication? It would seem so. 

It is likely that those messages are about the game being played and not about other subjects. One recent situation brought to my attention involved a judge who participated in online gaming and in a group that included attorneys. They assure me that their communications were innocuous, related to the game, and had nothing to do with the workers' compensation system generally or anything the judge and attorney did professionally. But what appearance is created when those attorneys appear at a hearing and a conversation ensues about the game? About their previous communications? Is there an appearance that ex parte communication has occurred, or at least that it easily could have?

As the law student so aptly noted, might there be an "appearance of impropriety?" When a judge and counsel have the opportunity to speak privately, it is not the means (telephone, text, online game) that is critical. Each have the same capacity to afford inappropriate conversation. Would the Supreme Court have been less troubled if Judge Gardiner had communicated in the forum of an online video game? I suspect not. Judges need to remember that it is not the platform or the means of communication that is troublesome. 

What is troublesome is that communication is occurring without all parties or counsel present, or at least invited to be present. Were cases, concepts, or the law discussed? Were perceptions of the system or the procedures discussed? We will never know. There is no record, and when there is no record there is opportunity for conjecture, suspicion and distrust. There is just no room for ex parte communication, and the best tool for preventing misconceptions about all communication seems to be to have all that communication on the record.

The potential for appearances is too great. The risk of harm to the participants and the process is too great. The potential harm to the administration of justice is simply not worth it. The Judge lost her job and was disbarred. The prosecutor also lost the ability to practice law. It is the responsibility of both lawyers and judges to avoid ex parte communication. 

One Year to Insolvency

The image I cannot get out of my head while writing this is the quartet playing calmly on deck as the Titanic slowly sinks into the sea.?

The National Journal reported in July that a hand full of elected officials is contemplating what to do with Social Security disability heading for a "2016 Cliff." According to the Social Security and Medicare Boards of Trustees, the disability trust fund now faces an "urgent threat of reserve depletion." In short, it is one year from insolvency. 

As background, Just Facts says that "In 1935, Congress passed and Democratic President Franklin D. Roosevelt signed into law the 'Social Security Act.' This law created 'a system of Federal old-age benefits' for workers and their families. In 1956, the law was amended to also provide disability benefits." (citations omitted). There are two programs referred to as "Social Security," the "old age" program and the "disability" program. The current crisis regards disability, but it appears that it may be a harbinger of things to come in the old age arena. 

The "cliff" is a subject I have written on before. In June 2014, I wrote the First Social Program Bankruptcy is Upon Us. In August this year, I found some news stories about over payments in Social Security Disability interesting in Time for that Bake Sale? We may see it as fortunate that the National Journal is writing about this subject, they certainly have a larger footprint than this blog. We might also be disappointed that it is only the National Journal. There has been little coverage of this in the rest of the news media?

I found a blog on the Center on Budget and Policy Priorities. There was also a recent piece on CNBC. Finally Yahoo news had some coverage. A story that may very soon affect about 10 million Americans (disability) and could soon affect us all (old age) is drawing very little attention as yet. 

There are proposals for reforms in the disability program. According to The National Journal, James Lankford of Oklahoma will reintroduce "the Coburn bill" from last year. This would reform the "administrative review process" change "how attorneys are paid" and impose "new rules for judges" in Social Security Disability (SSD) cases. There is also discussion of "a work-incentive program" described as changing the effect of part-time employment for those receiving benefits. 

The National Journal reports that there are already several bills pending in the House. One of these would "prevent people from receiving disability and unemployment insurance at the same time, tighten rules for who can provide medical evidence for disability determinations, and increases penalties for fraud." Some anticipate that various existing proposals will be consolidated into a single bill. 

The Journal reports that "Congress hopes to pass" legislation that will make reforms and add funding "to avoid a catastrophic 20-percent cut for those who receive disability insurance." The reduction would occur otherwise, because the payments for disability under Social Security come from a trust fund separate from the retirement trust fund. 

The blog on the Center on Budget and Policy Priorities says that the solution to this "cliff" is simple. It advocates doing away with the separate trust fund now. This would allow the full disability benefit payments to be made, without all of the debate about reform. The system could simply proceed as is, and the crisis is averted. A simple and elegant solution. 

According to the National Journal, this is the approach in a bill recently released by "House Democrats," and supported by "the White House and other outside groups." This is referred to as a "clean reallocation, without any strings attached." One interest group, the American Association of Retired Persons (AARP) reportedly agrees with a loan from one trust fund to the other, but opposes combining the two funds. 

Similarly, the Social Security and Medicare Boards of Trustees says that the solvency problem is not isolated to the disability program. Their report says that "Social Security as a whole as well as Medicare cannot sustain projected long-run program costs under currently scheduled financing." You see, the disability program is insolvent in 2016, but some predict the entire Social Security program is insolvent as early as 2037. 

The simple and elegant solution of just combining the bankrupt Disability Fund with the soon to be bankrupt general trust fund will do nothing more than speed the depletion of the general trust fund. It is as if there is a group in a boat that is slowly sinking. The boat is taking on water. There is another, larger, boat nearby which is also sinking but not as quickly. The simple solution is to evacuate the smaller boat, but that adds to the problem of the larger boat and speeds its sinking. The simple solution does nothing to save the smaller boat, it just defers the problem for another day.  

The Social Security and Medicare Boards of Trustees says that instead, "Lawmakers should take action sooner rather than later to address these structural shortfalls, so that the uncertainty now facing disability beneficiaries will not eventually be experienced by other programs’ participants." In other words, deal with the problems with the disability trust fund now, instead of merely putting this off for another day. In other words, they advocate fixing the smaller boat rather than abandoning it. 

What happens if Social Security Disability cannot pay? That is if the little boat sinks? According to the National Journal, the disability trust fund "covers 10 million Americans." That fund "will be unable to pay its full benefits starting in late 2016." If something is not done (that something has to be either less money paid out or more money paid in), then the Journal says there would have to be a "20-percent cut in 2016."

What does that mean in real terms for those receiving the disability benefits? According to Yahoo news, "the average monthly benefit for disabled workers and their families is $1,017." So, if the 20% cut occurs, the average disability benefit recipient would "would see a reduction of $193 a month," to about $824. 

In the debate between higher taxes (more finds paid in) and reform (less paid out), the Journal notes that reform alone cannot prevent the 20% cuts. It notes that "even if Congress agrees on these reforms," the effects of those reforms would be in the future, not in the near-term." As such, those "future savings" would not have the immediate effect necessary to make the disability fund solvent in the near-term.

The National Journal says that legislation will face "two tests." First, "does it do enough to convince Republicans to support reallocating money and can it attract any Democratic support?" The debate is not new. Neither of the Social Security programs is projected to be solvent long-term. The volume of payments out of the programs is simply disproportionate to the volume of income for the programs. Stated simply, the taxes imposed at this time are not sufficient to support the promised payments. 

For some reason, this simple math is rarely discussed. Will the benefits be decreased or will the taxes be increased? This is currently a disability debate, but in 20 years it will be an old age debate if the current course is not changed. If the retirement program is a lender in 2016, or if the two funds are combined for expedience in 2016, the day of reckoning for the retirement program may come sooner than 20 years. 

Will the government that created these insolvent programs fix the incongruity now, or will there be some stop-gap solution now to push this incongruity into the future for someone else to solve? There will be a great deal of debate at some point, but for now the media is quiet on this interesting conundrum of promises made but not funded. For now it is blogs and Internet providers asking the hard questions. 

Judges Nominated for Reappointment and Nominees Named

The Nominating Commission met in Orlando on September 28, 2015. It nominated the following judges for reappointment:

W. James Condry (ORL)

Charles M. Hill (MIA)

Ellen Lorenzen (TPA)

The Commission deferred consideration of Judge Punancy's  (WPB) application for reappointment. 

The Commission nominated the following individuals for the noted vacancies:

Ft. Myers District Vacancy
            John Paul Brooks
            Frank Clark
            Timothy Stanton
           
Port St. Lucie
            Lawrence Anzalone        
            Keef Owens
            Carol J. Stephenson

West Palm Beach
            Lawrence Anzalone
            Debra Hendry Pierce
            Thomas Hedler

Should the Rules Change?

The procedural rules for workers compensation disputes are administrative in nature. The proper name for the rules is a mouthful, the Florida Rules of Procedure for Workers' Compensation Adjudication. About a year ago I wrote about the rules. In that post, I suggested that the appropriate abbreviation might be Fla.R.Pro.Work.Comp. 

That post drew a few comments. Some thought that how the administrative rules are cited should be controlled by what the Courts say. That is interesting because the Courts cannot make procedural rules for the Office of Judges of Compensation Claims (OJCC). From 1973 until 2004 the Florida Supreme Court made procedural rules for the OJCC. They were referred to as the Workmens' Compensation Rules of Procedure. That "men's" evolved in the 1970s to be "workers'." Ebarrrasingly, there was recently a newspaper ad for a prominent Florida firm that used the term "workmens' compensation."

The first rules were adopted pursuant to the Court's inherent rule-making authority. The next year, 1974, the Florida Legislature delegated the rule-making authority to the Court statutorily. The Court then made various amendments to the rules over the years. The Court used a two-year cycle for consideration of rule changes. Such a cycle did not mandate changes in the rules, it was a cycle for considering rule changes periodically. 

In 2004, the Court was asked to again amend those rules. A lengthy opinion was delivered tracing the history of those rules. The Court explained the original "inherent authority" and the statutory delegation authority. It then noted statutory amendments regarding rule-making, speifically the 1993 amendment which granted rule-making authority to the OJCC. The Court concluded that it had no authority to promulgate rules for procedure before the OJCC.  

The opinion noted not only that conclusion, but said that the Court had never "had the constitutional authority to promulgate rules of practice and procedure for this executive entity." The Court explained clearly that the OJCC is not a court. The term "court" is defined in the Florida Constitution, and simply does not include the OJCC, an agency of the executive branch. That bothers a fair number of people who insist on nonetheless referring to this agency as "this court" or "the court."

The Court's conclusion was not unanimously popular. There were attorneys who belived that it was the legislature that lacked the constitutional authority to grant rule-making power to the OJCC. A professor I studied under liked to remind us that the Supreme Court is always right, because they are last. For the last 11 years, the Florida Rules of Procedure for Workers' Compensation Adjudication, or Fla.R.Pro.Work.Comp. have been the guide through the OJCC litigation process. Some use the Court's vernacular, citing "Fla.Admin.Code.R. 60Q________." Some use "FRWCA" as in "Rule 60Q6.______. FRWCA." Some just say "the 60Qs."

A long recitation of history. The original 60Qs were published in 2003. There were amendments in 2006, 2010, 2012, and 2014. And in 2015 the question has been asked "will there be amendments in 2016?" 

There is no "two-year cycle" for the administrative rules. That two-year cycle concept was a Supreme Court format. The Florida Rules of Procedure for Workers' Compensation Adjudication could be amended at any time. The question is no longer whether it is time to amend the rules. The question is whether the rules need to be amended. 

There are a variety of ways to suggest changes. The Florida Bar has a rules advisory committee made up of practitioners from around the state. Philip Augustine, paugustine@thornelawgroup.com, is the chair and Rosemary Eure, rbe@lancasterlawyers.com, is vice-chair. The Florida Workers' Advocates (FWA) is an attorney group that includes a committee on procedural rules. Kellye Shoemaker, ksb@shoemakerandshoemaker.com, is the president of the FWA. The workers' compensation section of The Florida Bar also has a rules committee. The chair of the section is Michael Winer, mike@mikewinerlaw.com. 

But ideas for amendment to the rules need not come through any organization. You can contact me directly with any thoughts or suggestions. Email me at david.langham@doah.state.fl.us. 

Prescription Cost Control

In workers' compensation closed formularies and opt-outs are a frequent topic. There is discussion about whether these and other “solutions” are trends in American workers’ compensation or just interesting anomalies.

California has decided to join the states which will have some form of closed formulary for medications. At the close of its legislative session September 11, 2015, California passed Assembly Bill 1124. According to the American Insurance Institute, this “requires the adoption of a workers’ compensation drug formulary by July 1, 2017.”

WorkCompCentral reports this week that North Carolina is the latest to legislate regarding a formulary. It does not mandate adoption, but “directs the state Industrial Commission to conduct a study of implementing a drug formulary. It is to report to the General Assembly next April.

The formulary has been an interesting development, led by Texas in 2011. Formularies define a list of medications that are acceptable for treatment of workers’ compensation injuries. A doctor that wishes to prescribe something not on that list may do so, but additional paperwork and justification is involved. When a new medication enters the market, such as Zohydro in 2013, the presence of a formulary might prevent it from having an immediate market impact. See Zohydro and Closed Formularies (12.13).

The Workers’ Compensation Research Institute (WCRI) says that there is evidence that formularies can save significant money on prescription costs. The medications can be anticipated and purchasing volume could affect prices. It also noted in Texas a trend to fewer prescriptions after the formulary was adopted. See I am Learning More (06.14).

Formularies were In the News in October 2014. A study by the California Workers’ Compensation Institute (CWCI) had contemplated whether a formulary in California would result in savings as seen in Texas. That report acknowledged that Washington also has a formulary. CWCI concluded that California prescription costs would have been significantly lower if either a Washington or Texas style formulary had been in place in California.

Formularies were Back in the News in May 2015. As the subject was discussed in some legislatures, the Claims Journal noted that four states have adopted the formulary approach, “Washington, Texas, Ohio, and Oklahoma.” We now know that California will make five, and North Carolina is at least considering being number six.

While opt-outs are also in the news, that concept has not been adopted elsewhere since Oklahoma ignited the debate. I have written several times on that subject (most recently in What is Hot in Workers’ Compensation 07.15). For now, it is an experiment in Oklahoma. There have been efforts to implement the idea in Tennessee and South Carolina. There have been discussions and prognostications elsewhere. But for now, only Oklahoma has passed legislation. It is fair to say that the formulary idea is gaining acceptance more rapidly, for now.

Coincidentally, the news recently is taking notice of increases in prescription drug prices. The NY Times reported this week that a “62 year-old drug that is the standard of care for treating a life-threatening parasitic infection” recently increased from $13.50 per tablet to $750. That is just over a 5000% increase. Publicity on that increase had results reported by the Times the next day.

The Washington Post note that increase and reported that the “spectacularly high drug prices have become a political punching bag.” It claims that the increase in price was “more than 4,000 percent,” and likened this increase to “waking up one day and finding out a gallon of gas costs nearly $100.” This article details how the costs of medication, even some generics, have increased in recent years. It also details why the increase is not the 5,000% initially reported by the Times, but “merely a 4,000 percent increase.”

These examples are getting attention. But there is evidence that the cost increase in medications is not limited to these anecdotal stories. The Wall Street Journal reports drug costs are increasing. Over one half-million people incur more than $50,000 annually in medication payments. 

The cost of medication may be near to people’s hearts. According to the Washington Post story, “half the American people” use medications, and “a lot of them use multiple drugs.” In a survey in that article, the Post reports that 72% of those surveyed think prescription costs are unreasonable. Even more, 74% think that Americans pay more than people in other countries.

It appears likely that no single idea is “the” solution to “the” issue of prescription prices. Drug companies argue that there is a need for continued research and development of a variety of medications, and that this is expensive. Reportedly, many of the compounds into which they invest time and money never make it to the public; that research is a cost that has to be recouped from the products that do make the market. 

But is the formulary idea “a” solution to some portion of “an” issue of prescription cost? Payers have already instituted cost controls. Prescription Benefit Management or PBM is a growing business according to Forbes. Some see comparisons between the PBM methodology in the private sector and formularies. Moreover, there are insurance carriers that are adopting their own prescription formularies, including workers’ compensation carriers. To some degree it might be argued that formularies are coming to workers’ compensation with or without state regulation.

It appears that prescription costs will continue to rise. The workers’ compensation industry is focused on controlling those costs, and is utilizing tools like formulary and PBM already. Forward-focused states like California, North Carolina, Ohio, Oklahoma, Texas and Washington are either on the band wagon or are edging towards it. According to the Insurance Journal, Louisiana, Montana, Maine, and Tennessee are all considering formularies. That is five states committed, and if those studying it adopt the total could soon be 10 states.

Incidentally, the largest jurisdictions in the country for workers’ compensation are discussed in How Huge is it Anyway, Lex and Verum, Number LVII, June 2014. The ten largest jurisdictions account for 50% of American workers, 54% of the wages paid, and 60% of the workers’ compensation benefits paid in this country. They are (in order): California, New York, Federal, Illinois, Pennsylvania, Florida, Washington, Ohio, New Jersey, and Texas. Those in italics have adopted the formulary concept. It is somewhat curious that some of the smaller states, not in the top ten, are studying the concept while some of these larger states appear disinterested for now.

The adoption of workers’ compensation in this country was reasonably rapid. Thirty-two states enacted laws in the first five years after the first in 1911. Florida was not among them, cautiously waiting until 1935 to join the trend. Obviously, the opt-out and drug formularies will not spread with that speed. The Texas effort came in 2011, and we rapidly approach the close of the first five years thereafter. 

At this point it is fair to question whether opt-outs will spread at all. But formularies appear to be gaining momentum and are likely to come soon to a market near you. Will the momentum build, leading to a more rapid series of state adoptions in years ahead? Will the national or state governments take other actions to restrict profits on medications in light of the recent news of price increases?

Formularies are seen by some as restricting medication choice. That is a policy question that has to be discussed. Anecdotally, there are already stories of recovering workers who present at pharmacies for medication only to be told to return later because authorization of payment cannot be arranged instantly. There are similar stories of delayed prescription refills. How widespread is the complaint of slow prescriptions? Could a formulary law or regulation do anything to streamline the authorization process?

The Florida legislative session begins in January 2016. It is unknown what that will mean to Florida workers' compensation generally. Whether there is legislation regarding prescriptions or not remains to be seen, but there will likely be ongoing discussion of prescriptions and costs in coming months. 

As Florida Waits, Commonwealth Court Holds Pennsylvania Statute Unconstitutional

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 (6^th Edition) to a prior version, the AMA Guides 4^th Edition. This is not entirely unpredictable; one Pennsylvania judge has reportedly been quietly rescuing copies of the 4^th 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 4^th 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 6^th 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 4^th 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 (6^th) versus another (4^th) 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 21^st 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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