Workers’ compensation laws are supposed to take the guess work out of employee injuries. If an employee is hurt at work, the statute governs, you pay the benefits and move on—right? Well, if you have employees in Alabama, some of the predictability of the workers’ compensation scheme is in question. In Clower v. CVS Caremark Corporation, Jefferson County Circuit Judge Pat Ballard ruled that two provisions of the law violate the U.S. and the Alabama Constitutions. To make matters even more interesting, because the Alabama Workers’ Compensation Act has a nonseverability clause, that means Judge Ballard finds the entire law unconstitutional.
The Offending Provisions
The provisions at issue are Ala. Code 25-5-68, which sets a weekly $220 cap on permanent partial disability benefits (PPD), and Ala. Code 25-5-90(a), which caps attorney’s fees at 15% of the compensation awarded or paid in workers’ compensation proceedings. If you want the specifics of why Judge Ballard found that these provisions violated the federal and state constitutions, read the opinion—which includes a history of the workers’ compensation law. Suffice it to say, he concluded there was a constitutional violation and that potentially throws the entire Alabama workers’ compensation world into a spin.
If this becomes the law in Alabama, this decision will change everything about employee injuries. Judge Ballard noted that he was “not blind to the magnitude nor the consequence” of the holding. The impacts that he mentioned included:
- Medical providers will no longer be able to bill claims to workers’ compensation insurers, employers and self-insurance funds.
- Insurers will not be able to sell workers’ compensation insurance policies or collect premiums.
- Self-insurance funds will continue only on claims that pre-date this decision.
- Employees injured at work will have to file tort claims for on-the-job injuries—and get no benefits while they await a verdict.
What Should We Do Now?
Judge Ballard has stayed the ruling for 120 days, so it will not go into effect at least until early September—assuming the legislature or an appeals court takes no action. The Alabama Legislature is at the end of the legislative session, so it is unlikely to be addressed in this session. We can expect an expedited appeal and a number of organizations (including insurance carriers) weighing in on the subject with amicus curiae (“friend of the court”) briefs. Once appealed, the case is likely to be stayed pending the outcome of that appeal (so there will be more than the 120-day respite).
For the law nerds out there: This decision is not binding on any court until affirmed by an appellate court, so for now it only impacts the parties in the Clower case. No other court has to follow it. Undoubtedly, some judges will jump on this bandwagon and others will reject it. Employers in Jefferson County, Alabama may see some interesting results in the next few months.
In the meantime, what can you do to get ready for a potential workers’ comp apocalypse? Frankly, not much. However, here are some ideas:
- Talk with your workers’ compensation carrier. This could have a huge impact on their business, and they should be all over it. Make sure they know you want them to keep you updated.
- Look at short-term disability coverage and whether you need some or more of it. If this ruling becomes the law of the state, you could end up with injured employees who no longer get comp benefits, and they will be looking for other sources of replacement income (which you probably want them to have). It might be good to think about that impact and how you would handle it.
Otherwise, we will all just have to wait and see.