On May 8, 2017, an Alabama Circuit Court judge declared the state’s entire workers’ comp system unconstitutional.
Judge Pat Ballard of the 10th Judicial Circuit in Jefferson County took issue with two statutory provisions that cap attorney fees and permanent partial disability benefits – but because the Alabama Workers’ Compensation Act contains a non-severability clause, he tossed the whole thing.
He stayed enforcement of his order for 120 days to give lawmakers a chance to cure the deficiencies he identified in Alabama Code Sections 25-5-68 and 25-5-90.But the legislative session ends in less than two weeks, so lawmakers will have to act fast.
In Clower v. CVS Caremark Corp., Ballard found that Section 25-5-68 impermissibly subjects workers to differential treatment depending on whether they had permanent disabilities that were partially or totally disabling. Section 25-5-68 provides that the maximum compensation payable for PPD “shall be no more than the lesser of $220 per week or 100% of the average weekly wage.” Unlike the benefits available for totally disabling injuries, this is a hard cap that is not adjusted for inflation and increases in the cost of living.
Temporary total and permanent total disability benefits in Alabama are tied to the statewide average weekly wage, which is revised every year, but “PPD rates have stagnated in place at $220 per week for three decades,” Ballard noted. Providing temporarily disabled workers “with an indexed system of benefits and denying it to those permanently disabled (to an extent less than totally) makes no rational sense at all,” he opined. Ballard also said he also thought there was “little credibility” for a benefit structure that pays the same $220 weekly benefit to a worker who had been making $350 per week and a worker who had been making $3,000 per week.
“There cannot conceivably be any more arbitrary, capricious, irrational, or attenuated idea than telling both workers that ‘equal protection of the laws’ means that they each get the identical amount,” Ballard contended. What’s more, Ballard said an income of $220 per week would have kept a family of four above the poverty line when the Section 25-5-68 cap was imposed 30 years ago – but now that amount is 46.4% of the poverty level for the same family. “What once qualified as an adequate ‘remedy’ for those partially disabled no longer does,” Ballard said. As the cost of living continues to rise, Ballard reasoned that the value of a $220 weekly benefit has “rotted away” to the point that it is “too infirm to qualify as a ‘remedy’ sufficient to meet the requirement that the Workers’ Compensation Act involve adequate ‘quid pro quo’ to pass constitutional muster.”
Ballard then went on to find the attorney fee cap in Section 25-5-90(a) unconstitutional as well. The statute limits a claimants’ attorney to a fee of no more than 15% of the compensation awarded to an injured worker – without any exception.
Last year, the similarly unyielding nature of Florida’s attorney fee statute led that state’s Supreme Court to strike the statute down as unconstitutional. Ballard said he found the Florida Supreme Court’s reasoning in Castellanos v. Next Door Co. to be persuasive. He also said he agreed with the reasoning of the Utah Supreme Court, which declared the Utah fee state unconstitutional in Injured Workers’ Association of Utah v. State. The Utah court’s decision had been based on the fact that the state constitution placed the regulation of attorney fees falls within the judicial branch’s authority. In Alabama, Ballard said, the task of regulating attorney fees has historically been a function of the judiciary as well. He said he viewed Section 25-5-90(a) as a “legislative trespass into a function reserved to the judicial branch of government.”
The low rate of PPD meant an attorney’s prospective fee from taking on a client with a PPD claim wouldn’t be very much, and so the joint operation of Sections 25-5-68 and 25-5-90 discourages lawyers from taking the cases, leaving the injured workers at the mercy of the employer and insurer.