Alabama Workers' Comp Blawg

Alabama Circuit Court Judge Issues Order Determining Workers’ Compensation Act to be Unconstitutional

Perhaps you have already heard as news travels fast but on May 8, 2017, a Jefferson County Circuit Court Judge issued an Order declaring the Alabama Workers’ Compensation Act to be unconstitutional. That’s right… the entire Act.  I am sure that you have many questions.  Here are a few answers.

QUESTION:        Is the judge stating that the entire Act is unconstitutional?  If not, why does he not just strike down the parts that are and leave the remainder intact?

ANSWER:           The Judge is not saying that the entire Act is unconstitutional.  However, he is of the opinion that (1) the statute which places a $220 weekly cap on permanent partial disability awards and (2) the statute that places a 15% contingency fee cap on legal fees are both unconstitutional.  Since the Judge has found those 2 statutes to be unconstitutional, it has the effect of declaring the entire Act unconstitutional due to a non-severability (all or none) statute.

QUESTION:        Can he do that?

ANSWER:           Yes.  A Circuit Court Judge is empowered to consider the constitutionality of statutes.  In fact, there is an obligatory duty on courts to do so.  However, it is important to remember that the proverbial buck does not stop there.  In the event that this Order becomes final, then the parties will have the right to appeal the issue to the Alabama Court of Civil Appeals which has original jurisdiction over workers’ compensation matters.  From there the parties can appeal to the Alabama Supreme Court.

QUESTION:        The Judge gave the Alabama legislature 120 days to fix the parts of the Act that he deems unconstitutional.  Do you think that is enough time and, if so, will amended bills get passed?

ANSWER:           Probably not.  There is not enough time with only 6 meeting days left in the 2017 Regular Session.  Even if there was enough time, the issue has come up many times over the years.  Bills are introduced which include too many controversial provisions.  For the $220 cap or the 15% contingency fee to change, there needs to be a serious conversation between employee and employer interests to figure out the best way to effectuate that change.  Simply introducing a bill and trying to force it down the other side’s throat is not going to work.  Major changes were implemented in 1992 and that was due to a couple of years of meetings between all interested parties until a consensus was formed.

QUESTION:        What happens if the Appellate Courts agree with the Circuit Judge?

ANSWER:           Before I answer that, let me first address why they probably will not agree.  The reason they probably will not agree is because it is a function of the legislature to make this needed change.  The Circuit Judge has put a spot light on the need for the change and that is a good thing.  However, the Appellate Courts are probably not going to send Alabama into the work accident dark ages because of 2 statutes regardless of how unfair they are deemed to be.  The more likely scenario is that the Appellate Courts will either disagree and reverse or agree but reverse on the grounds that it is the legislature’s responsibility.   In that scenario, my guess is that the Courts will encourage employer, employee, and medical interests to get together as they did 25 years ago in order to effectuate change.

QUESTION:        What if you’re wrong?

ANSWER:           Let’s all hope that I’m not!  Workers’ Compensation was created for a couple of reasons.  First, it provided immediate indemnity and medical benefits to injured employees through a system of no fault insurance.  Second, it provided employers with protection from tort liability through the Exclusivity Doctrine.  This was known as the Grand Bargain.  Scrapping this system would result in the following:

1. Employers would no longer have any protection against tort lawsuits since the Exclusivity Doctrine would be gone.
2. Employees would be able to maintain tort lawsuits against employers.
3. Plaintiffs’ attorneys would enjoy much higher percentage contingency fees because there would be no statute placing any restrictions on how much they could take from the award or settlement of an injured employee.
4. In order to prevail against the employer, the employee would have to prove at a bare minimum the elements of negligence. In other words, they would have to prove that the employer breached a duty of care and said breach caused the accident and injury.
5. In all situations where an employee was injured and it was not the fault of the employer, the employee would have no access to a tort recovery or workers’ compensation benefits. In other words, the employee would be receiving nothing.
6. A flurry of motions to dismiss pending workers’ compensation lawsuits will be filed all over the state.
7. Many employees in the insurance and legal industry would be out of a job.

In a nutshell, employee, employer, insurance, medical, and legal interests will all be adversely affected. While our system is far from perfect, it is the only one that we have.  The alternative is far worse.  Rather than pursue a final order deeming our current system to be void as unconstitutional, let us use this recent Order as a wakeup call to all concerned and open a dialogue between all interested parties.  In 2019, we will celebrate 100 years of workers’ compensation in Alabama.  Let’s work together to make sure that the system we have in place at that time is improved and fair to all concerned.

About the Author

This blog submission was prepared by Mike Fish, an attorney with Fish Nelson & Holden, LLC, a law firm dedicated to representing self-insured employers, insurance carriers, and third party administrators in all matters related to workers’ compensation. Fish Nelson & Holden is a member of the National Workers’ Compensation Defense Network. If you have any questions about this submission or Alabama workers’ compensation in general, please contact Fish by e-mailing him at mfish@fishnelson.com or by calling him directly at 205-332-1448.