Undermining the “Grand Bargain” of Workers’ Compensation: How Does This Impact Exclusive Remedy?

At the 23rd Annual National Workers’ Compensation & Disability Conference in Las Vegas, attorneys associated with LexisNexis presented a session on “Direct and Peripheral Attacks on the Exclusive Remedy Doctrine”. The presenters were Deborah Kohl, Lex Larson, and Thomas Robinson.

The panel felt that Padgett case in Florida and the Oklahoma Option are two of the biggest threats to traditional workers compensation systems and the notion of exclusive remedy.

Padgett
In Padgett, a judge in Miami-Dade County, Florida ruled that Florida’s workers’ compensation statutes were “unconstitutional” on their face because they no longer provided adequate benefits to injured workers in exchange for them giving up their constitutional rights to pursue civil litigation. In the ruling, the judge stated that statutory changes in Florida had eroded benefits for injured workers to the point that it was no longer a “grand bargain” for the injured workers.

Since the 1990’s many states have passed workers’ compensation reform legislation that was intended to reduce employer costs. These reforms reduced benefits for injured workers and heightened definitions on causality. Given this, there is concern that a ruling like Padgett could spark similar litigation around the nation with injured workers’ making the argument that the pendulum has swung too far in favor of employers.

Another example of this issue is death claims where there are no dependents. Under tort law, the parents of someone killed have standing to pursue litigation for the negligence that led to that wrongful death. However, under workers’ compensation those same parents usually do not have standing to pursue a workers’ compensation claim. This leads to a class of workers who receive no benefits under workers’ compensation in exchange for having given up their ability to pursue a tort liability action.

Oklahoma Option
In Oklahoma, employers now have the opportunity to utilize the “Oklahoma Option”. This allows employers to replace traditional workers’ compensation with a benefit plan that must provide benefits that are as good, or better, than those provided under the traditional workers’ compensation system. There is concerned that these benefit plans will restrict injured workers access to attorneys and eliminate claims where pre-existing conditions exist.

It is interesting to note that the 2012 bill on this subject that was defeated by the Oklahoma legislature used the phrase “ERISA plan” as the description of what must replace workers’ compensation. In the 2013 bill that was passed, all references to “ERISA” were removed from the legislation over concern that this would lead to litigation in Federal courts and the State of Oklahoma losing control over workers’ compensation issues in their jurisdiction.

There are efforts to take opt-out similar to the Oklahoma Option to other states. The panel indicated that such legislation could open the door for federal government involvement in state workers’ compensation systems because of the ERISA provisions of those laws. They also felt that these opt-out provisions completely undermined the intent of workers’ compensation legislation which will inevitably lead to more litigation over the constitutionality of such legislation.

The panel pointed out that in most instances, injured workers benefit significantly from the workers’ compensation “no fault” system vs a tort system that requires years of expensive litigation and a risk of receiving no benefits or having benefits significantly reduced due to contributory negligence.

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