Archive for the ‘Law’ Category

John Geaney: Setting A High Bar For New Jersey’s Bar

Thursday, April 14th, 2016

John Geaney’s been a friend for years. And why not? He’s a Holy Cross and Boston College Law School grad, as well as a Red Sox fan. So, in a way we’re Boston Brothers.

But that’s not important. What is important is that John Geaney is recognized as the pre-eminent New Jersey attorney focusing on workers’ compensation. He heads the workers’ compensation practice for Capehart Scatchard, one of New Jersey’s foremost law firms. There are nearly 40 attorneys in John’s practice department.

John is the author of “Geaney’s New Jersey Workers’ Compensation Manual for Practitioners, Adjusters, and Employers,” and updates it annually. If you have anything to do with workers’ compensation in New Jersey, you need to have John Geaney’s Manual.

In addition to representing a great number of New Jersey’s premier employers, writing a Lexis Nexis Top Blog (a really good one!) and creating the aforementioned Manual, John, teaming with Millennium Seminars, puts on three seminars each year for New Jersey professionals specializing in workers’ compensation.

I’m writing this from today’s seminar in Mount Laurel. I’m attending with Richard Filippone and Mary Ann Kezmarsky, founders of Work Comp Psych Net, a seminar exhibitor and a Lynch Ryan client.

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There more than 100 New Jersey workers’ comp pros here, and all of them are highly engaged. Moreover, Geaney’s seminars are always fully subscribed. Attendees keep coming back, and that doesn’t happen by chance. Geaney is charismatic on the podium. The presenters are interesting, articulate and well-regarded. It’s considered a high compliment to be invited to present here.

Around the nation, most states have one, perhaps two, people who set the professional standard for everyone else in their state. In New Jersey, that person is John Geaney.

 

What life was like for U.S. workers in 1915

Wednesday, February 24th, 2016

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To commemorate its centennial, editors at the Monthly Labor Review have produced an excellent and fascinating report on The life of American workers in 1915 and the progress we have seen in the workplace since then. We think it’s worth your time to check it out!

The context of the era is first established with a list of news events that were occurring at the time: a bill to give women the right to vote was rejected; labor leader Joe Hill was charged with murder, a charge that would lead to his execution; Alexander Graham Bell made his famous call to Thomas Watson in San Francisco, Typhoid Mary was arrested, Einstein formulated his theory of general relativity -these and several other key events shaped the era.

The report goes on to discuss the demographics of the day and paint a portrait of daily life with many interesting facts about daily life ranging from where and how people lived (mortgages typically ranged from 5 to 7 years, but required 40-50% down) to how they commuted to work each day (streetcar, by foot or by horse) , what they typically ate for breakfast (corn flakes and puffed wheat cereals), what they wore for work clothing, how many hours they worked, what an average worker was paid ($687 a year), how they spent their leisure time, and more. It’s a fascinating and well-researched historical document.

For our purposes, we were most interested in work conditions and safety. Here’s one excerpt:

Although working in mines was notoriously dangerous, mill work could also be quite hazardous. BLS reported about 23,000 industrial deaths in 1913 among a workforce of 38 million, equivalent to a rate of 61 deaths per 100,000 workers. In contrast, the most recent data on overall occupational fatalities show a rate of 3.3 deaths per 100,000 workers. Regarding on-the-job safety, Green notes, “There was virtually no regulation, no insurance, and no company fear of a lawsuit when someone was injured or killed.” Frances Perkins, who went on to become the first Secretary of Labor (1933–45), lobbied for better working conditions and hours in 1910 as head of the New York Consumers League. After witnessing the 1911 Triangle Shirtwaist Factory fire, which caused the death of 146 mainly young, immigrant female garment workers in New York’s Greenwich Village, Perkins left her job to become the head of the Committee on Public Safety, where she became an even stronger advocate for workplace safety. From 1911 to 1913, the New York State legislature passed 60 new safety laws recommended by the committee. Workplaces have become safer, and technology has been used in place of workers for some especially dangerous tasks.

In addition to this excellent article, there are a few noteworthy accompanying reports and articles in the sidebar, as well. Occupational changes during the 20th century charts how farmers, craftsmen, laborers and private household workers gave way to professional, managerial and service workers over the course of the century. Labor law highlights, 1915–2015 runs through legislation and trends that improved the worker’s lot – ranging from legislation that regulated child labor to laws prohibiting discriminatory practices for women and minorities. Two key legal initiatives were the introduction and adoption of workers compensation laws and workplace safety initiatives being legislated in 1970 with the passage of the birth of the Occupational Safety and Health Act (OSHA).

 Theodore Roosevelt, arguing in favor of workers’ compensation (then known as workmen’s compensation) laws in 1913, offered the story of an injured worker that summed up the legal recourse available for workplace injuries at the time. A woman’s arm was ripped off by the uncovered gears of a grinding machine. She had complained earlier to her employer that state law required the gears be covered. Her employer responded that she could either do her job or leave. Under the prevailing common-law rules of negligence, because she continued working she had assumed the risk of the dangerous condition and was not entitled to compensation for her injury.

As the example illustrates, common-law negligence was not ideal for handling workplace injuries. Workers who noticed hazards could either “assume the risk” and continue working, or leave work; they were powerless to change the condition. Employers were at risk as well: they were vulnerable to negligence suits that could yield large, unanticipated awards for injured workers. Workers’ compensation, where employers insure against the cost of workplace injuries and workers have defined benefits in the case of injury, significantly reduced the risk for both parties.

Our brief excepts don’t do these report justice. Kudos to all the people who produced these great documents and congratulations on 100 years of reporting on the American workplace!

Fifty States, Fifty Different Laws: A Peter Rousmaniere Analysis

Monday, February 1st, 2016

According to the Bureau of Labor Statistics’ (BLS) Consumer Price Index calculator, what you bought for $100 in 1973 would today cost $533.82. Despite this, during that same period wage growth for the median hourly worker grew by less that 4%. 

Moreover, as the following chart from the Economic Policy Institute (EPI) shows, while wages flattened out after 1973, productivity continued to increase at a steady pace through 2010.

Everything seems to be going up across America except hourly compensation. That helps explain why our recent economic high hard one to the head, known as The Great Recession, has left so many families living paycheck to paycheck, one crisis away from living under a bridge. It also illuminates why the indemnity and medical benefits of workers’ compensation are critical to economic survival following a work injury.

In 2015, ProPublica and NPR published a series of exposès that showed widespread disparity in the way the various states deal with work injuries. Workers’ comp professionals didn’t like the series much, complaining en masse that it was biased, agenda-driven and just plain wrong. Silly me, I thought the series actually made some important points, especially around the level of compensation for loss of function.

Into this battle now rides Peter Rousmaniere, friend, colleague, Harvard MBA, WorkCompCentral columnist and all-around deep thinker.

Mr. Rousmaniere spent a good portion of 2015 researching the economic consequences to injured workers with respect to how the different state workers’ compensation laws deal with the early days of a work injury. He illustrates his findings in The Uncompensated Worker: The Financial Impact of Workers’ Comp on Injured Workers & Their Families, published as a workcompcentral special report.

In the Uncompensated Worker, Peter Rousmaniere creates the metaphorical Tim, a New York electrician earning the median wage for New York electricians. He then goes really deep into the take home pay hit Tim experiences following a work injury. He shows how Tim will always suffer earnings losses while injured regardless of how long he’s out of work, and he does it by considering the waiting period (the number of calendar days between the injury and when indemnity payments will begin), the “shortfall” (“The difference between a workers’ after-tax take-home pay and the amount of the replacement wages”), the “retroactive” calculation (the number of days an injured worker has to lose from work before being paid indemnity for the waiting period) and the maximum weekly benefit cap.

Here’s how Rousmaniere describes what happens to Tim if he misses three, six or ten days due to the injury:

While Tim’s 6% shortfall may not seem unreasonable, additional deductions further reduce his replacement wages. First, there’s a waiting period during which a worker receives nothing, a retroactive period (in most states) and a maximum weekly benefit cap. The amount Tim actually receives depends on the number of days he missed work. We can correlate work and calendar days for Tim by looking at a calendar and figuring his first lost work day on a Monday. If Tim misses three days of work, he receives nothing; losing six days of work yields close to one work day of replacement wages, and losing 10 work days yields five work days (seven calendar days) of replacement wages.

With that New York backdrop, Rousmaniere then shows how Tim would fare in each of the other states. But he goes even farther. Drawing from Economic Policy Institute estimates, which create basic monthly household budgets based on household size and location “to attain a modest yet adequate standard of living,” he builds an EPI-estimated monthly basic budget for Tim and his family of four. He then lays out what happens to the family economy when Tim is out of work due to injury for an extended time, say more than a month. If Tim’s spouse works part-time, the family can’t afford the basic budget in 29 states; if the spouse doesn’t work, they’re under water to the tune of $2,200 a month in every state.

This is sobering stuff. The 50-state and District of Columbia chart at the end of the report is nearly totally comprised of negative numbers.

Reading the report, I’m left with this: Assume (as most claim adjusters tell me) that well over 90% of injured workers really are injured and want to get back to work as expeditiously as possible. Should those workers suffer economic deprivation simply because they had the misfortune to be injured at work? Does society have an obligation to ensure that families, already perilously close to the edge of the financial cliff, are not booted into the abyss because of that work injury? And, finally, is it time for indemnity and medical benefit parity among the states (for example, if Tim were injured in New Jersey he’d fare considerably better than in New York)?

Peter Rousmaniere has performed a valuable service with The Uncompensated Worker. When (it should not be “if”) you read it, you’ll come away admiring the level of research and detail that went into producing it. I also hope you come away thinking their just might be a better way.

 

Kudos And Thanks To Work Comp Central’s Greg Jones

Wednesday, December 9th, 2015

Work Comp Central’s Greg Jones has relentlessly followed and reported on the Michael Drobot case in Southern California, a case that fairly oozes greed and sleaze.

For the uninitiated, Michael Drobot’s Pacific Health Corporation owned two hospitals, Pacific Hospital of Long Beach and Tri-City Regional Medical Center in Hawaiian Gardens. For around 10 years, he paid kickbacks to a number of doctors for referring spinal fusion patients to Pacific Hospital of Long Beach for surgery. In February, 2014, Drobot pleaded guilty to making the kickbacks, which are illegal, and for charging California’s workers’ compensation system, the U.S. Department of Labor and about 150 workers’ compensation insurers somewhere in the vicinity of $500 million dollars for the surgeries over the ten year period. At that time, we wrote about this with Honor Sold, Trust Betrayed: Unbridled Greed in California.

Drobot is also charged with bribing state senator Ron Calderon for his help in easing one of the SB 863 requirements, which we don’t need to go into here. Calderon has pleaded not guilty, and that case is moving through the system.

Throughout this sordid business, Greg Jones has been there, providing a valuable service with his spot-on reporting, most recently last week with his story (subscription required) that a number of the doctors who took the kickbacks, at $15,000 a pop, also had filed “more than 15,000 liens with a total claimed value of $93.8 million.” To get that story, Jones had to wade through what must have been a steamer trunk full of documents.

Personally, I owe a debt of gratitude to Mr. Jones. He found two errors in my post of 30 November, Workers’ Comp Fraud: The Michael Drobot Case Grinds On. I had written that the kickback scheme involved both of the Drobot hospitals. That was wrong. They only happened at Pacific Hospital at Long Beach. Also, I had written that Drobot had pleaded guilty to bribing Calderon. He did not. He is charged with doing it, and both he and Calderon have pleaded not guilty. Before Work Comp Central ran my post, Greg found the errors and made edits to correct them, for which I am grateful.

The Drobot case is complicated and it represents the bottom of the workers’ compensation bird cage. However, the solid reporting of Greg Jones shines an arc light on the sorry mess and will help to improve the system so that in the future the Drobots of the world will think twice about this kind of criminality.

 

 

Workers’ Comp Fraud: The Drobot Case Grinds On

Monday, November 30th, 2015

In late February, 2014, we wrote about the sordid tale of corruption perpetrated in southern California by Michael Drobot and his gang of thieves. Honor Sold, Trust Betrayed: Unbridled Greed In California describes the astonishing criminality of a large group of highly placed people whose job it was to care for others.

This from our original post:

Suppose you’re a doctor in California with a patient who complains that his back hurts a lot. Suppose further that Michael Drobot, the owner of California’s Pacific Health Corporation, will give you $15,000 if you refer your patient to his Pacific Hospital of Long Beach for lumbar fusion surgery, which may or may not be warranted. And what if Drobot’s Pacific Hospital were hundreds of miles away and that other qualified hospitals that wouldn’t pay you a kickback were much closer. What would you do?

The answer? Many doctors took the money and delivered up their patients to the Drobot surgical mill. Drobot paid the doctors in this scheme somewhere between $25 and $50 million.

Drobot’s two hospitals, Pacific Hospital of Long Beach and Tri-City Regional Medical Center in Hawaiian Gardens, billed thousands of mostly spinal fusion surgeries to California’s workers’ compensation system, the U.S. Department of Labor and workers’ compensation insurers. Over an eight year period, the hospitals were paid more than $500 million.

Drobot pleaded guilty in early 2014 to paying the kickbacks. He also pleaded guilty to bribing state Senator Ron Calderon to the tune of $100,000 for massaging the SB 863 legislation so that the fraud could continue for all of 2013. After his indictment in February, 2014, Calderon pleaded not guilty.

The wheels if justice have ground slowly but exceedingly fine in the nearly two years since. Former U. S. Attorney Andre Birotte, Jr., now a U. S. District Judge in California’s Central District, passed the baton to his replacement U.S. Attorney Eileen M. Decker. Last week Decker announced that Drobot’s CFO, James L. Canedo, and Paul Richard Randall, a “health care marketing recruiter” (he recruited doctors to refer patients in return for the illegal kickbacks) pleaded guilty to fraud, money laundering, conspiracy and other crimes. Also, two orthopedic surgeons, Philip Sobol of Studio City and Mitchell Cohen of Irvine, and Alan Ivar, a Las Vegas chiropractor who used to live in Southern California, have agreed to plead guilty to conspiracy and other charges.

There will certainly be more to come in this tale of sleaze.

Blankenship on trial: Potentially precedent setting case re CEO criminal responsibility

Wednesday, October 7th, 2015

A day that many in West Virginia have waited for has come to pass: Don Blankenship, former CEO of Massey Mining, is on trial. Proceedings began on October 1 in Charleston Federal Court and are in the jury selection phase.

Get your popcorn ready for what promises to be a very interesting and potentially precedent setting case. Holding a CEO criminally responsible for charges related to work safety violations is extremely rare. Observers are interested particularly in light of the Justice Department’s new emphasis and directive on prioritizing accountability and prosecution of individuals rather than just corporations. And no one is watching the proceedings with more interest than the families of the 29 miners who lost their lives.

The Charleston Gazette is following the trial closely with Don Blankenship on Trial, a special reporting section that includes day-by-day trial coverage updates and stories, timelines, a list of legal documents, historical articles, videos, maps and more. It also includes photos and profiles of the deceased.

Coverage also includes links to podcasts by West Virginia Public Broadcasting. WVPB has also been reporting on the case, offering an extensive background and podcasts of the trial events. You can find the latest podcast on the link above, or find a roster of the daily podcasts here or at the WVPB site’s dedicated Blankenship Trial page, where other reportage is also available.

The 16 minute Episode One is well worth a listen. WVPB’s Ashton Marra interviews
Howard Birkus, investigative reporter for NPR on coal mining and work safety, and Mike Hissam, Partner of Bailey & Glasser law firm. They set the stage for the trial and talk about its precedent-setting nature. Birkus says that it is “”extraordinarily rare to hold a CEO responsible for criminal or civil violations at their companies” noting that prosecutors need a paper trail, electronic trail or inside people who will testify. Hissom talk about how this case is on the leading edge of the Obama Justice Department’s new guidelines on criminally prosecuting individuals rather than just fining a corporation. They discuss how CEOs are often insulated from decision-making, but that Blankenship is unique and legendary in his micro-managing practices.

For background on the Justice Department’s new focus on criminal prosecutions, see the New York Times: Justice Department Sets Sights on Wall Street Executives. Matt Apuzzo and Ben Protess report on new rules, issued in a memo to federal prosecutors nationwide:

“Though limited in reach, the memo could erase some barriers to prosecuting corporate employees and inject new life into these high-profile investigations. The Justice Department often targets companies themselves and turns its eyes toward individuals only after negotiating a corporate settlement. In many cases, that means the offending employees go unpunished.

The memo, a copy of which was provided to The New York Times, tells civil and criminal investigators to focus on individual employees from the beginning. In settlement negotiations, companies will not be able to obtain credit for cooperating with the government unless they identify employees and turn over evidence against them, “regardless of their position, status or seniority.” Credit for cooperation can save companies billions of dollars in fines and mean the difference between a civil settlement and a criminal charge.”

For background on the case, How we got here offers a history of the case.

The reporting traces Blankenship’s rise to power in the coal mining industry and his influence in the state’s politics on through to the April 2010 Upper Big Branch Mine explosion that claimed the lives of 29 miners. Several investigations revealed ” … a pattern of violations by Massey of key safety standards, including proper mine ventilation, control of the buildup of explosive dust, and maintenance of equipment to prevent sparks that could set off a blast.” To date, four criminal convictions have occurred. Then in November of last year:

“… a federal grand jury meeting in Charleston indicted Blankenship, charging him with four criminal counts. A superseding indictment was later filed that combined two of the counts. Blankenship faces charges that he conspired to violate federal mine safety standards and to hide those violations from government inspectors and that he lied to federal securities regulators about Massey’s safety practices to try to stop the company’s stock prices from plummeting after the disaster.”

More resopurces
See our prior stories on Don Blankenship here

Follow Ken Ward on Twitter

Follow other reporting and commentary on twitter at #Blankenship

News Roundup: ADA at 25; Consolidation; Retaliation; “Old Farts” and other noteworthy items

Monday, August 3rd, 2015

Last week, the ADA turned 25. A few noteworthy related posts:

Joe Paduda’s been working through the summer, keeping track of the recent spate of industry consolidations and the implications for workers comp. At his blog, he also features an interesting post about Maryland’s innovative approach to hospital care – and implications for work comp: “…a fundamental shift in medical care is occurring, one that will have a dramatic impact on how patients are evaluated and monitored and incentivized to pursue health, what care is delivered via what method (telemedicine, care extenders, wearable technology). This will dramatically affect workers’ comp – patients will be healthier but the bifurcated payment system will cause headaches.”

Jon Hyman of Ohio Employer’s Law Blog says that while employers tend to associate retaliation with the big employment statutes (Title VII, the ADEA, the ADA, the FMLA, and the FLSA), are dozens of other federal statutes that protect employees from retaliation. He offers a handy alphabetized list: Retaliation alphabet-soup

In what appears destined to be a classic in the “what not to do” department, Robin Shea posts about the court case that followed when an “Old fart” got fired at Employment & Labor Insider. It’s one case with many lessons!

If your summertime vacations include any water sports, you might want to take a look at the Consumer Insurance Blog’s post and video about how drowning doesn’t look like what we see in the movies. The post notes that “We have wrong ideas about drowning and our ignorance means we don’t always recognize the signs of a person in distress when we see them.” This ignorance means that every year, children die in pools and water just feet away from parents or friends who do not recognize the signs of distress.

Lone workers continue to pose a risk challenge for workers comp. At WCI360, there’s a reprint of Tom Musick’s article from The National Safety Council August 2015 newsletter: Taking Steps to Ensure the Safety of People Who Work Alone.

Dave DePaolo says that he reported on Illinois’ lax attitude towards workers’ compensation fraud in 2013 and things have not gotten much better since. In Illinois Light on Fraud, he notes, “The latest report from the WCFU reflects there were just six convictions in 2014, with only one resulting in jail time.”

Advanced Safety and Health reports that OSHA has added key hazards for investigators’ focus in healthcare inspections: “Targeting some of the most common causes of workplace injury and illness in the healthcare industry, OSHA announced the agency is expanding its use of enforcement resources in hospitals and nursing homes to focus on musculoskeletal disorders related to patient or resident handling, bloodborne pathogens, workplace violence, tuberculosis, and slips/trips/falls.”
Related: OSHA Healthcare Inspections

Ken Ward at Coal Tattoo reports on the latest case developments in the criminal trial against Don Blankenship: Why doesn’t Don Blankenship want the jury to hear about the Upper Big Branch Mine Disaster?
Follow past case updates here

At The Pump Handle, Celeste Monforton offers a roundup of tributes on the passing of Donald Rasmussen: Coal miners’ physician, humble man. A dedicated worker health and safety advocate, “For more than 50 years, he diagnosed and treated coal miners with work-related lung disease, first at the then Miners Memorial Hospital in Beckley, WV and later at his own black lung clinic.”

Your chance to speak out – deadline August 7
Bob Wilson: The Feds Are Looking to Act on Disability and RTW: Speak Now or Forever Hold Your Peace
Jennifer Christian: Tell us: Who should be helping workers with health problems keep their jobs? and #1 of 3 fleeting opportunities to influence policy recommendations

More noteworthy news

Employee Misclassification: The Beat Goes On And On And On And…

Wednesday, July 8th, 2015

Bill Clinton used to say that (fill in the blank) would last “until the last dog dies.” Well, friends, today’s topic is all about a dog that won’t die, absolutely refuses to die, will outlive us all, cannot be killed. You get the point.

Eleven years ago (I almost feel like writing “in a galaxy far away”), the Insider started to track the illegal practice of misclassifying employees. We found that, while it was almost ubiquitous in the construction industry, its tentacles reached into other industries as well. We saw it as widespread right in our backyard of Massachusetts. We found a 2005 paper addressing the issue in the Maine construction industry published by the Labor and Worklife Program, Harvard Law School and the Harvard School of Public Health. We conducted employer seminars on it in many states.

At the time, we thought it was a pretty egregious practice that would be hard for state Attorneys General to ignore, so it would probably get fixed lickety split. We were half right. It was egregious, and Ags from the majority of states published stern regulations, as did state Departments of Insurance. But “fixed?” Nope.

Then, in 2005, a national class-action lawsuit with hundreds of plaintiffs from 30 states was filed against FedEx Ground alleging that workers were misclassified as independent contractors. This was mother’s milk to us. We had our bogeyman, and his name was Fedex. Since then, we’ve written about this Dorian Grey issue ten times. Here’s an example from 2006

FedEx loses contractor battle in Mass – Last year, my colleague Jon Coppelman blogged that FedEx should beware of Massachusetts when calling drivers “independent contractors.” Last week, the Massachusetts Department of Workforce Development ruled that a FedEx ground driver was not an independent contractor, and was therefore illegally denied unemployment benefits. Of course, this opens a can of worms about the denial of other statutory benefits, like workers comp. This is not the end of the lawsuits by any means. FedEx faces ongoing challenges in multiple states. The moral of the story: if you work with independent contractors, be sure they meet state and federal criteria to qualify as such.

Fast forward to now. Specifically, to Wall Street Journal writer Laura Weber’s 30 June story “Bosses Reclassify Workers To Cut Costs.” Ms. Weber’s story manages to be both objective reporting and poignant at the same time. Here’s an exccerpt:

Employers have long shifted work from employees to independent contractors, often relabeling the workers and slightly altering the conditions of their work, court documents and settlements indicate. Now, businesses are turning to other kinds of employment relationships, such as setting up workers as franchisees or owners of limited liability companies, which helps to shield businesses from tax and labor statutes.

In response, some state and federal agencies are aggressively clamping down on such arrangements, passing local legislation, filing briefs in workers’ own lawsuits, and closely tracking the spread of what they see as questionable employment models.

All this is happening against the backdrop of a broader shifting of risk from employers to workers, who shoulder an increasing share of responsibility for everything from health-insurance premiums to retirement income to job security. Alleged misclassification of workers has been one of the primary battlegrounds of this shift, leading to high-profile lawsuits against Uber Technologies Inc. and FedEx Corp., among others. Both have recently lost or settled big cases. Uber is appealing one decision, and FedEx settled in California for $228 million but is continuing to challenge classification lawsuits in other states.

Today I’m an employee; tomorrow I’m an Independent Contractor; the next day a Franchisee, or, oh, I don’t know, CEO of my own one-person LLC. Not only will the dog not die, his bark is really loud.

Very smart people are cooking up these schemes. I ask you – Do you think they are:

  • Bettering the lives of America’s workers?
  • Enhancing American productivity?
  • Propelling more workers into the ranks of the dwindling middle class?
  • Growing shareholder value?

I’d like to know what you think. Write me at tomlynch@lynchryan.com.

Exclusive Remedy wins: Safe in Florida … for now. Also upheld in DBA suit

Thursday, June 25th, 2015

The big workers comp news of the week: A three-judge panel of the 3rd District Court of Appeal overturned a ruling that challenged the concept exclusive remedy: Appeals court tosses out key workers-comp ruling. Refresher: In the 2014 Florida case often referred to as the Padgett ruling, Miami-Dade Circuit Judge Jorge Cueto ruled ruled workers compensation unconstitutional, commenting that state legislative reforms had weakened the law to a point where the remedy for employees was no longer sufficient to warrant the loss of their right to sue employers.

But before exclusive remedy proponents break out the champagne to celebrate the victory, in Padgett Out, Now What? Dave DePaolo dissects the ruling, explaining why any celebrations may be premature.

“But the 3rd DCA set aside Judge Cueto’s ruling on procedural grounds, not addressing any of the merits. This leaves the question open.

The organizations pushing the constitutional challenge have vowed to continue the fight.

And those defending the system realize that the attacks will continue, particularly since there are still two cases pending in the Florida Supreme Court attacking smaller provisions of the law on similar grounds (Westphal v. City of St. Petersburg is about the statutory limits on the payment of temporary total disability benefits, and Castellanos v. Next Door Co. involves a challenge to the cap on claimant attorney fees).”

For the legal nerds in the crowd, a must-see analysis on the case can be found at Judge David Langham’s post It is Padgett Time, Third DCA Reverses. As Deputy Chief Judge of Compensation Claims for the Florida Office of Judges of Compensation Claims and Division of Administrative Hearings, Langham wields some expertise on the matter — his post is worth reading.

Exclusive remedy upheld in Defense Base Act ruling

In other recent exclusive remedy legal news, the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) reaffirmed that the Defense Base Act (DBA) is the exclusive remedy for contract workers. See: The D.C. Circuit’s Message to Injured Government Contractor Employees: ‘There’s an Exclusive Remedy For That’ in National Law Review.

“Despite the Act’s broad exclusivity provision, in Brink v. Continental Insur. Co., an estimated class of 10,000 contractor employees who were injured in Iraq and Afghanistan brought a purported class-action lawsuit for $2 billion against dozens of government contractors, alleging that the contractors conspired with their respective insurance carriers to deny the workers DBA benefits. But a three-judge panel of the D.C. Circuit unanimously rejected plaintiffs-appellants’ claims and, in a 17-page opinion, made five key findings that will help government contractors defend similar lawsuits in the future.”

Related

3rd DCA Reverses Summary Judgment in FWA Constitutional Challenge to Exclusive Remedy

Brink v. Continental Insurance Company, Court of Appeals

Appeals Court Tosses Out Key Workers Comp Ruling

D.C. Circuit tosses suit brought by injured military contractors

“Calling a dog’s tail a leg does not make it a leg”: Big court loss for FedEx

Monday, September 15th, 2014

Over the years, we’ve devoted a few dozen posts to the issue of FedEx and its drivers. Here’s the issue in a nutshell: FedEx thinks its Ground drivers are independent contractors and the drivers generally disagree.

For the eleven years we’ve been blogging, this issue has been wending its way through state courts, with a win for the company here, a win for the drivers there. On August 27, FedEx suffered a massive one-two punch at hands of the Ninth U.S. Circuit Court of Appeals in San Francisco, who overturned a lower court’s decision in Alexander v. FedEx, ruling that 2,300 drivers were indeed employees. Within a few days, the same court ruled that some 360 Oregon drivers were also employees (Slayman v. FedEx.) In making the ruling, the Court found that when the rubber hit the road, the lower court had overstated the entrepreneurial opportunities factor that benefited the so-called independent contractors. It apparently wasn’t enough of a benefit to sway the court.

To paraphrase our illustrious VP, “…this is a big effing deal.”

Contractors and small business are being chased down aggressively by state authorities (and rightly so, we think) to make them shoulder responsibility for employment obligations that other businesses carry. But in the land of the giant employers, many use independent contractor and subcontractor mechanisms to shield themselves from workers comp, Social Security, unemployment insurance, the provision of benefits like healthcare and paid vacation, and the obligation to protect workers in a variety of ways.
For your further edification on this important issue, we defer to business and legal experts. We’ve gathered opinions and analyses from a variety of sources and offer excerpts.

What court rulings against FedEx mean for workers
“It seems likely FedEx will want to appeal the 9th Circuit decisions to the Supreme Court. But it may face some difficulty in doing so, because — even though made at the federal level — the two decisions concern matters of state law rather than federal. Their reach is similarly limited; they apply only to FedEx drivers in California and Oregon. But there’s a decent chance the 9th Circuit’s decisions will influence future decisions in other jurisdictions. At the very least, they are shining more light on corporations’ maddening reluctance to take responsibility for the folks who represent them most directly to the public.”

FedEx Latest Company Slammed Over ‘Independent’ Employees
“What the 9th Circuit did was to apply the more traditional measure. Judge Stephen Trott, a Reagan appointee in a concurring opinion, quoted Abraham Lincoln: “‘If you call a dog’s tail a leg, how many legs does a dog have?’ His answer was, ‘Four. Calling a dog’s tail a leg does not make it a leg.'” Trott also admonished FedEx for presenting some information out of context and told the company’s lawyers that they “would be well advised not to elide the truth, the whole truth, and nothing but the truth.”

Reagan Appointee ‘Unravels FedEx’s Business Model’ In Court Ruling
“FedEx is largely credited with having pioneered the “independent contractor” work model in the logistics industry. Under this system, workers function as self-employed drivers with their own routes, covering the costs of their own trucks, gasoline, uniforms and so forth.

While corporations claim the contractor system gives drivers flexibility and strong incentives as “small businesses,” critics say it’s simply a way to shift the costs of employment onto workers and avoid payroll taxes and workers’-compensation costs.

The basic question in lawsuits involving the independent contractor model is whether or not a company like FedEx still maintains control over the work itself. In Wednesday’s ruling, the judges asserted that it does.”

Employment Law Summer Recap 2014: Part 1 of 11 – FedEx sings Nico & Vinz’s “Am I Wrong”…to Classify Our Drivers as Independent Contractors?
“The decision will likely upend FedEx’s driver business model in part because it makes it more expensive for FedEx to operate its business – an added expense that we can expect it will pass along to us, the consumers. Why more expensive? Because, among other things, FedEx will now have to (i) make the required employer contributions on behalf of these individuals (i.e. to Social Security and unemployment benefit funds); (ii) take out new insurance policies (i.e. for workers’ compensation insurance); (iii) offer them health insurance and (possibly) pension benefits along with other benefits like paid vacation; (iv) incur the administrative and operational costs associated with treating these individuals as employees (i.e. additional training and development, compliance, etc.); and (v) potentially pay them back for millions in lost wages. Further, these individuals can now sue FedEx under many of the employment laws that did not previously cover them (i.e. Title VII) – yet another potential expense for FedEx.”

Who’s the Boss
“It has become harder and harder for workers to tell who their employer is. Companies have engaged in vertical dis-integration as franchised businesses have become increasingly prominent and contracting out of operations by traditional firms has increased. The expanded reach of private equity funds as owners of Main Street companies has also undermined the traditional employment relationship.

In both cases, a complex web of legally distinct entities has been put in place whose aim is to separate a business’s actual owners and managers from responsibility for the effects of their decisions on workers.”

‘Seismic’ 9th Cir. rulings nix FedEx claim its drivers aren’t employees, could cost company millions
“By retaining independent contractors to perform work instead of employees, companies can potentially save a lot of money that would go toward overtime pay and other benefits such as social security. FedEx also has reportedly required its drivers to pay for their own uniforms and trucks. But if companies are determined to have misclassified employees as independent contractors, they can wind up paying not only the original employee costs they avoided but substantial penalties, as an earlier ABAJournal.com post about the FedEx litigation details.”

Is this the end of the independent contractor as we know it?
“This case also confirms that if you exercise any control over how workers perform services for you, it is likely that they should be classified as employees, not independent contractors. This distinction is important, because, unlike contractors, employee are subject to a host of employment laws, including the anti-discrimination laws, workers’ comp laws, and wage-and-hour (minimum wage and overtime) laws.

While this case only covers employers governed by California law in the 9th Circuit, I would expect the filing of copycat lawsuits under the laws of different states in different courts. In other words, this case is not the final word on this issue. Thus, to answer the specific question I posed in the title to this post, while this case does not necessarily spell the end of the independent contractor, it very well could be the beginning of trend of cases leading down this path.”

FedEx Refuses to Treat Your Friendly Delivery Guy Like a Real Employee And an important new court ruling could change that
“This is a classic example of employee misclassification, but such employer malfeasance is not limited to FedEx. It’s a nationwide problem that shifts significant costs to workers, eliminates employment-related protections, deprives the government of billions of dollars in revenue and prevents workers from unionizing. On Wednesday, labor earned a big victory when the Ninth Circuit Court of Appeals ruled in two cases that the shipping company misclassified the employment status of 2,300 California drivers and 363 Oregon drivers. It’s an important, if limited, step towards rectifying this widespread problem.”

Court rejects FedEx Ground’s driver business model
“Ross said that FedEx now requires its contractors based in California to hire a secondary workforce of FedEx drivers, who do the same work as the plaintiffs under the same contract. She said the Alexander decision “calls into question FedEx’s strategy of making plaintiffs the middle men” between the secondary workforce of drivers and FedEx. “We have heard of many instances where the secondary drivers are earning such low wages that they have to rely on public assistance to make ends meet.”