So Florida workers' comp died on Wednesday, in case you weren't paying attention.
Acutally, probably not. But it makes for a catchy title, doesn't it? As you may have heard, a Miami Circuit Court Judge, Jorge E. Cueto, issued an Order on Wednesday which is sending a lot of shockwaves through our workers' compensation community - Padgett v. State of Florida. Here's a link to the opinion itself:
Probably the best way to hash through this is in the hypothetical "Q&A format," so let's go with that, shall we?
Q. So what's this Padgett thing really about?
A. In short, a Miami Circuit Court Judge determined that Florida's workers' compensation laws no longer provide an adequate remedy for injured workers and that injured workers are entitled to sue their employers directly, rather than just being stuck with workers' compensation benefits, should they choose to do so.
Q. Why is this even in front of a Circuit Court Judge? I thought workers' compensation claims used those Judges of Compensation Claims people and were contained in their own system.
A. Normally, yes. But in this case the injured worker, Ms. Elsa Padgett, decided to try and sue her employer directly for her damages (i.e. injuries). This gets a bit confusing, since she was actually an employee of the State of Florida (hence the case caption) but the State is named because that's who she actually worked for as an employee - not because she was suing the governor or the attorney general, or something like that. Workers' compensation claims are adjudicated by Judges of Compensation Claims, which are part of the Florida Division of Administrative Hearings (DOAH, to you and me). But because Ms. Padgett tried to sue directly, rather than pursue workers' compensation beneifts, it was treated like any of other lawsuit.
Q. I'm still confused. Why doesn't everyone do this then, if workers' compensation is so terrible?
A.That actually goes right to the heart of the issue. You can read the opinion yourself, and I'm trying to keep this blog post succinct and on point but as a brief, brief summary, let's cover an abbreviated history of how workers' comp, uh, works.
The first workers' comp schemes in the United States came into being during World War I to address specific problems inherent in the employer/employee relationship. The United States was emerging from the industrial revolution as a juggernaut, and our economy was finishing its transition from an agricultural one to an industrial one. We enjoy a lot of protections at the state and federal level as employees these days - OSHA, FMLA, ADA, EEOC, and a lot of other alphabet-related things actively work to keep our workplaces safe and to protect our roles in the workforce (at least in theory). But none of these things were around back then.
Workplaces (factories, for the most part) in the early part of the 20th century were filthy, unsafe, dehumanizing affairs. Business were largely unregulated and had no incentive to do anything but produce as much and as fast as possible. Labor was cheap and disposable and in light of the boom in immigration, there was a bottomless supply of it. The novel "The Jungle" by Upton Sinclair is worth reading if you want an idea about working conditions at the turn of the century.
Workers were getting injured or killed constantly, and in large numbers. Lawsuits were available for these damages, of course, but it was David vs. Goliath. Corruption was rampant. Even worse, these lawsuits took years to get to trial with no guarantee in the outcome, leaving the injured worker and his/her family bereft of any kind of compensation or help in the meantime. They could just be starved out, if all else failed.
This wasn't a great situation from the point of view of employers and insurance companies, either. Juries ocassionally produced astronomical verdicts which smaller companies couldn't afford to pay. They too got bogged down in the litigation (and there was a lot of it, given the volume of people getting hurt or killed) and that was costing them lots of money. Also, even though there was a lot of labor available it was still expensive and time consuming to keep replacing it and training it (I don't mean this to sound callous - I'm just trying to focus on the history here).
Workers' compensation presented a win/win compromise for both sides, in a sense.
Q. Are you getting to the point yet?
A. Yes, yes. The essential exchange involved in pretty much every workers' compensation system is as follows. The employer gives up the right to argue that an injured worker got hurt as a result of his/her own negligence. It's a no-fault system. The employee gives up the right to sue for any injuries on the job. Instead, the state creates a statutory benefits scheme that provides medical care to an employee for any injuries and different categories of benefits to the employee based on the nature of the injuries involved. The employer is required to purchase workers' compensation insurance, or to self-insure (by setting a side a pool of money to pay claims). The cost of the insurance cannot be passed on to the employees.
The general phrase we use to describe this arrangement is the "exclusive remedy doctrine." Workers' compensation benefits are the exclusive remedy for an employee who has an on-the-job injury. They can't sue, but the employer has to pay the benefits regardless of fault.
Philosophically, this system works because both sides are giving up some things, and both sides are getting some things. This gets us back to Ms. Padgett. Florida's workers' compensation system, in its modern incarnation, came into being in 1968. There have been a large number of changes to the system since then, as well as numerous changes to Florida's tort laws. Based on Judge Cueto's analysis of these changes (which you can look at in terms of a balance scale, if you like) he concluded that the system is not an even trade, and actually hasn't been for a very long time. Injured workers are giving up a whole lot more than they're getting at this point.
Q.Wait, hang on. If this has been a problem since 1968, hasn't anyone brought it up before?
A. Indeed they have. The Florida Supreme Court usually doesn't get involved in workers' compensation if it can avoid it. For various reasons not pertinent to this blog post, the First District Court of Appeal is much better equipped to interpret and provide guidance on how Florida's workers' compensation laws work, or should work, and they've been doing it for a long time. The Florida Supreme Court generally only gets involved when there are big picture problems implicating the Florida or U.S. Constitutions. But those have been few and far between. Nonetheless the Florida Supreme Court has, from time to time, continued to reaffirm the viability of the system as a whole as a "reasonable alternative to tort litigation." There have been some particular provisions of the statute which have been addressed or struck down over the years, but the core system itself - the fundamental exchange outlined above, and the application of the exclusive remedy doctrine - have never been disturbed. But Padgett may change that.
Q.So what did Padgettreally do?
A. It's actually pretty straightforward. Judge Cueto struck down s. 440.11, Florida Statutes (2003) as unconstitutional (that's the exclusive remedy part of the statute) because it denies an injured worker adequate redress for his/her injuries by restricting him/her to a benefits scheme which is much less than what could otherwise be recovered in tort. It doesn't strike down workers' compensation itself - it just means that an injured worker can sue to the extent that workers' compensation doesn't compensate him/her adequately. Judge Cueto implied that the scheme may well have not been viable for decades, but he couldn't really overturn Florida Supreme Court precedent. So he overturned the law as of 2003 which, for our purposes here, is when the statute we currently use came into effect (it was when the last major overhaul took place in the legislature). The Florida Supreme Court hasn't explicitly reaffirmed the viability of the statute since 2003, so it was the logical place for Judge Cueto to go without putting the Florida Supreme Court in the position of having to reverse its own prior decisions (which is exceedingly rare).
Q.OK, I think I get it, but what does this all mean? What happens now?
A. THIS is the million dollar (actually a lot more than that) question. And beause we're heading into some rough and uncharted waters here, it's time for a disclaimer.
DSICLAIMER: If you didn't figure it out from the website, I'm a workers' compensation lawyer and I run a law firm that specializes in workers' compensation. It's pretty much all I've ever done and the Florida Bar allows me to describe myself as an expert in it since I'm one of the 198 attorneys in Florida Board Certified in it. I've got my own personal feelings, biases, and thoughts on these issues. My goal here is to present this information as objectively as possible. In the interests of full disclosure I primarily represent employers and insurance companies, but I do represent injured workers from time to time as well. I, like a lot of my colleagues on both sides, think the system has some serious problems and that it's a healthy and necessary thing for the legislature to address those problems from time to time. We're long overdue for that to happen, in fact. I don't think litigation can ever be eliminated - at its heart it's still an adversarial system with stakeholders having different priorities. But the goal is (or should be) to evolve the system continually towards something that works right most of the time and takes care of the needs and concerns of all the stakeholders fairly. Frankly, I don't believe that the system does that now and both sides have legitimate gripes about aspects of the law. This is NOT an invitation to engage in a discussion about which side is getting "screwed more," relative positions of power, or anything else of that nature. Again, it's just my opinion - you can disagree. Now. Having said all that.
This decision, on its face, allows employees to sue their employers. As of this writing, I'm not aware of where the State of Florida is going to go with this (the decision is only 48 hours old) but I can make some pretty reasonable assumptions. First, the State is going to file for rehearing in front of Judge Cueto. If that doesn't go anywhere, they're going to appeal. Because it is a Miami case, it will go next to the Third District Court of Appeal (also in Miami). This is interesting in and of itself, since all workers' compensation appeals in "normal" workers' compensation cases go to the 1st DCA in Tallahassee. The other DCAs only come into play in unusual cases such as these and, as a result, the other DCAs are not overly familiar with Florida workers' compensation.
Depending on the result, the Florida Supreme Court will be the next step and that is almost certainly where this is heading. In a way, the 3rd DCA is more of a formality. Given the importance of this issue, it almost has to be heard by the Florida Supreme Court.
And it is an important issue. Every employer and every insurance company in the state now has the potential to be hit for millions and millions of dollars in liability that it hadn't planned on, underwritten, or otherwise seen coming. I'm not trying to say the sky is falling, but...OK, the sky may be falling. This is a huge deal and the long term consequences on the number of insurance companies willing to write workers' comp in Florida, and the number of employers able to afford it, will be dramatically impacted. And this potentially goes all the way back to 2003.
Given that the United States Constitution is also impacted here, it could go beyond the Florida Supreme Court as well - the next step would be the 11th Circuit in Atlanta, and then the big enchilada - the United States Supreme Court (although the federal courts may or may not decide to get involved - their jurisdiction is a lot more open and they've got a lot more latitude in what they decide to hear).
Q. So can everyone go out and start suing now?
A. They CAN, but it's not likely that other cases will all go down like this one did. First off, this is a decision from a Miami Circuit Court Judge, so it's only applicable to Miami-Dade County. Other courts around the state can do whatever they want with the issue, if it comes before them. The appellate courts and Florida Supreme Court exist, in part, to resolve conflicts between jurisdictions and that could well come up in the future, but that's way down the road. Padgett is going to lead the way.
it should also be noted that this was pretty clearly a test case. I wasn't personally involved, but the case caption references a number of employee advocacy groups backing Ms. Padgett. There's nothing wrong with that, of course, but based on the evidence which was put before Judge Cueto and the names of the players involved, I can reasonably infer that this was set up in such a way to allow those groups to take a big swing at this aspect of the law (and they connected solidly, it would appear). It also bears noting that the Florida Attorney General, who is charged with defending and enforcing the laws of the State of Florida, decided to sit this one out even though she could have participated. That's probably not going to be the case going forward, though.
Finally, and I'm just stating a conventionally accepted opinion here, Miami is generally regarded as a very Claimant/Plaintiff friendly venue. This case, under its facts, could have been brought anywhere in Florida. Miami was chosen for a reason.
All I'm driving at is that there was a particular confluence of events and circumstances which were almost certainly chosen with care and deliberation, and the State of Florida chose not to get involved. That's probably not going to happen again in other venues.
The final point I need to make is that while these appeals are going forward, the effect of the opinion is almost certainly going to get placed on hold (we use the word "stayed") pending the outcome of the appeals. This is primarily because the opinion itself would produce some drastic consequences if it stands, but noone knows whether it will or not - there needs to be some finality on this before everyone is forced to come into compliance with it. In actuality, given the timetables involved with the appeals and the dockets of these courts, we're actually not going to have a final answer on Padgett for several years, in all likelihood.
Q. OK, I've been reading forever - are you almost done?
A. Almost. The last thing I'll touch on involves breaking out my crystal ball. What's going to happen? We've got a lot of really smart people who know an awful lot about workers' compensation who are all going to be gathered together next week, by happy coincidence, at the annual Florida workers' compensation conference here in Orlando. We're going to be talking about this A LOT. My personal suspicion is that this is going to finally force the legislature's hand and get an overhaul of the statute implemented, with the goal being to short circuit this appeal (which may or may not be possible). I just don't see employers and insurance companies sitting on their hands gambling on whether the coin is going to land heads or tails. Insurance, after all, is about mitigating risk, and the insurance and industry lobbies swing a large stick in Tallahassee right now.
As to the title of this blog post, I don't think workers' compensation is going to die. The main reason is that there's just too much of it. We're a big state with a lot of employees and employers. Our courts are already overloaded and understaffed - they simply cannot take on this burden. It's mathematically and logistically impossible (to say nothing of the fact that none of them know anything about workers' compensation).
But changes are coming to the system - I think that's a given. And I dearly hope that those changes take everyone's interests into account and keep trying to evolve the system into what it was always intended to be - a fair exchange and a fair deal. At its heart, that's what Padgett is all about.