Alabama Workers’ Compensation Act to Remain in Place, For Now

Alabama’s workers’ compensation law, ruled unconstitutional by a county judge last month, will remain in effect for the immediate future.

The Alabama judge who on May 8 declared the state’s workers’ compensation act unconstitutional has issued an indefinite stay to his decision, leaving the current system in place until he rescinds the stay or lawmakers enact reforms.

The move came in part because the original order was issued just days before the state legislature was about to close its session, meaning there would not be time for lawmakers to change the provisions of the state law the judge criticized.

On May 8, Judge Pat Ballard of the Circuit Court of Jefferson County in the Clower v. CVS case found fault with two provisions of the Alabama Workers’ Compensation Act, thus rendering the entire act unconstitutional. He found fault with a provision capping recovery for workers permanently but not totally disabled at $220 a week, and with another capping attorney fees at 15 percent. The decision was a response to a lawsuit brought by Clower against CVS Caremark Corp. in 2013 after she suffered a lower back injury on the job.

The $220 cap was established in 1987, but attorneys for Clower successfully argued that the amount was not commensurate with today’s cost of living standards.

In his May 8 ruling, Ballard issued a 120 day stay for the workers’ compensation act to give the Alabama Legislature a chance to enact reforms. Given that the 2017 session ended on May 22, it was widely viewed that the legislature would not take up the issue this year, leaving many to question what would happen next.

On May 17, Ballard issued a revised order for an indefinite stay to his decision.

Ballard’s original decision was met with much concern over what would happen with the state’s workers’ compensation system. But legal experts said that because the judgment came from a county trial court judge, and not an appellate or state court judge, the constitutionality finding actually only applied in the Clower case and not to other workers’ compensation cases statewide.

“This was just one district in Alabama saying the law was unconstitutional, but it wasn’t across the state,” said Charley Drummond, attorney at Birmingham firm Fish Nelson & Holden, the Alabama member of The National Workers’ Compensation Defense Network.

Drummond said for the ruling to be extended beyond this one Alabama district, it would have to be appealed by CVS and the appellate court would have to weigh in.

CVS had yet to indicate if it would appeal as of the end of May, but the judge’s original decision could have made it so Clower didn’t receive any award from CVS if the company didn’t appeal the ruling, Drummond said.

“They have taken the position that the act is unconstitutional, and if it is unconstitutional in that one case, she gets nothing,” he said.

Drummond said he believes the judge’s May 8 order was an attempt to put pressure on state lawmakers to enact reforms. But after it became clear that wouldn’t happen in the final days of the session, and after the implications of the constitutionality ruling on pending workers’ comp cases also became clear, the judge wrote his May 17 order.

“This Court is … very aware of the substantial interest and concerns that have arisen as a result of that Order as it relates to the practical impact of that Order on the administration and handling of pending workers’ compensation claims in the state,” Ballard wrote. “The Order of May 8, 2017, given the legislative schedule for the current session, is hereby stayed pending further order of this Court rather than for the 120 days stated in the May 8, 2017 order.”

Ballard said the amended order would “allow the legislature sufficient time to remedy the Constitutional insufficiencies in the Act addressed by the prior Order.”

In the interim, Ballard said the court would continue judging any pending workers’ compensation claims in accordance with the current law. But he added that “upon the motion of any party, upon action of the legislature, or upon this Court’s own determination that the legislature is either unwilling or unable to take legislative action on these issues, the court will make any further order deemed necessary to implement – in full – the terms of the prior order regarding the constitutional invalidity of the Alabama Workers’ Compensation Act.”

What happens in the interim could be decided by CVS, according to Trey Gillespie, senior workers compensation director at the Property Casualty Insurers Association of America (PCI). If CVS decides to appeal the decision and bring the case to the state appellate level, it could motivate lawmakers to take up reforms.

“We are hopeful the case will proceed on through the appellate court process so the issues can be readdressed by a reviewing court and we can better understand if there are issues that need to be addressed by the legislature at a later date,” Gillespie said.

Joseph Ammons, general counsel for the Alabama Department of Labor, which regulates and enforces state workers’ compensation laws, said in an email his department expects that an appeal will be filed to stop the judge’s ruling, and “whatever the final disposition may be, we will honor and enforce it.”

“My guess and hope is that this will force business and labor to get together to draft legislation in 2018 that both sides can agree on. Time will tell,” Ammons said.

Drummond, however, doesn’t think this one case will be enough to change the state’s entire system.

“It’s a good thought, if you are a plaintiff’s lawyer, that this one situation could change it and bring the system to its knees – but it’s not likely,” he said. “There are a lot more moving parts and risks involved than I think anyone is willing to put on this one case.”

In the meantime, there won’t be any immediate impact on workers’ compensation rates in Alabama, according to Dean Dimke, marketing communications director for the National Council on Compensation Insurance (NCCI), which files loss costs for state workers’ comp carriers.

“NCCI is carefully reviewing the decision, being mindful of any potential appeals or corrective legislation that may occur,” he said in a statement to Insurance Journal. “Once issues become more clear, we will be in a better position to act.”