In Westphal v. City of St. Petersburg, No. 1D12-3563 (Fla. Ct. App. Feb. 28, 2013), a Florida appellate court recently ruled that a 2-year limit on workers’ compensation benefits for temporary disability violated the state’s constitution. The decision has employers, insurers and legislators “scrambling” for a solution. While that scramble lasts, the opinion must be parsed for guidance on technical questions about whether to increase temporary benefits or expand eligibility for permanent disability. More fundamentally, though, the court’s opinion appears to revive an approach to workers’ compensation law that had largely disappeared: declaring that process-based constitutional rights can be translated into minimum levels of benefits for employees. At a time when legislatures in many states are reducing traditional statutory protections for employees, we can expect plaintiffs to be citing Westphal well into the foreseeable future.

What happened in Westphal?

Bradley Westphal is a firefighter who was seriously injured on the job. He needed multiple surgeries, including a “five-level fusion of the lumbar spine.” Under Florida’s workers’ compensation regime, Mr. Westphal was barred from bringing a legal action for his injuries against his employer; he was required, instead, to apply for workers’ compensation benefits that are prescribed by statute. In connection with that process, Mr. Westphal was required (as a condition on his benefits) to accede to his employer’s choice of physicians and to abide by those physicians’ advice.

The doctors determined that Mr. Westphal suffered from a temporary total disability, and that he should not resume work before his condition improved. The workers’ compensation statute provides benefits for temporary total disability, but, under a 1994 amendment, those benefits are capped at 104 weeks, and Mr. Westphal’s disability extended beyond that limit. The statute also provides benefits for permanent total disability. To be eligible for permanent benefits, the employee must have already achieved “maximum medical improvement” (MMI) from her injury. Because Mr. Westphal was continuing to improve, albeit slowly, from his surgeries, he was not yet eligible for permanent disability benefits.

The limit on benefits for temporary total disability can affect injured workers under two different possible scenarios. Some employees will ultimately reach MMI and still be totally disabled; for them, the limit on temporary benefits creates what the Westphal court called a “statutory gap” in coverage. Others will eventually recover from their disability; for them, the 104-week limitation will have functioned as a cap on total benefits.

Of course, at the 104 week mark, it is often impossible to distinguish the gaps from the caps. In Mr. Westphal’s case, the physicians had advised him not to return to work. If he disregarded that advice, he risked losing the benefits to which he would later become entitled (should he eventually become permanently disabled), because the workers’ compensation statute required him to cooperate with his doctors. By staying home, on the other hand, he was essentially making a bet against his own future recovery. The stake was whatever income he might currently be capable of earning.

Fifteen years ago, in City of Pensacola Firefighters v. Oswald, 710 So.2d 95 (Fla. Ct. App. 1998), the same District Court of Appeal that decided Westphal partially addressed this problem. It construed the workers’ compensation statute to mean that a claimant whose temporary disability benefits are about to expire will be entitled to receive permanent benefits immediately, even without having reached MMI, if he can prove that he will be permanently disabled when his condition stops improving. But that solution does not help the claimants who will actually become permanently disabled, but who cannot prove it in advance. Even after Oswald, therefore, employees like Mr. Westphal could still face what the court called “potential economic ruination . . ., with all the terrible consequences that this portends for the worker and his or her family.”

What was the court thinking?

Westphal really raised at least two different questions. One is whether the law can tolerate the “statutory gap”—the temporary suspension of benefits before the employee’s condition becomes permanent—along with the Hobson’s choice confronted by injured employees who have fallen into it. The other is about the cap: Even assuming that the injured worker will eventually recover, may the state impose an absolute limit on benefits for temporary disability?

The court expressly declared that its decision addressed only the first question. Without elaborating the point, it wrote: “We now must answer [the] question . . . [w]hether this ‘statutory gap’ . . . violates” the Florida Constitution.” But the court’s actual analysis has implications for both issues.

Enter the Constitution

Workers’ compensation statutes modify the rights provided by conventional tort law for cases based on work-related injuries. In most cases, employers are liable, regardless of fault; they therefore lose the right to assert certain defenses that would be available (for example) in a suit for negligence. On the other hand, employees and their families are limited to the specific remedies that the statute prescribes, and that fact can deprive them of claims they would otherwise be entitled to assert. New Hampshire law, for example, permits only a limited recovery by the estate of a worker who dies without dependents; outside the workers’ compensation context, all estates may seek damages for wrongful death. See Alonzi v. Northeast Generation Services Co., 156 N.H. 656, 940 A.2d 1153 (N.H. 2008).

In the early days of workers’ compensation, this aspect of the system was challenged as a violation of various procedural safeguards afforded by the Constitution. In Borgnis v. Falk Co., 147 Wis. 327, 133 N.W. 209 (Wis. 1911), Wisconsin’s Supreme Court found that the nation’s first workers’ comp statute did not impair freedom of contract or deny due process. (Borgnis was a suit by an employee against an employer, and both parties argued, unsuccessfully, that the statute was unconstitutional.) In N.Y. Central R. Co. v. White, 243 U.S. 188 (1917), the U.S. Supreme Court rejected claims that New York’s compensation law impaired freedom of contract and violated the Equal Protection and Due Process Clauses.

In recent years, therefore, the constitutional questions have largely been treated as settled. (In Alonzi, New Hampshire’s Supreme Court overruled an earlier decision that found an equal protection violation. See Park v. Rockwell International Corp., 121 N.H. 894, 436 A.2d 1136 (N.H. 1981).) Twenty years ago, in Smith v. Gould, Inc., 918 F.2d 1361 (8th Cir. 1990), the U.S. Court of Appeals for the Eighth Circuit summarized the situation in this way:

The constitutionality of workers’ compensation acts was settled early this century . . . . The Supreme Court in these early decisions did suggest some due process limits on workers’ compensation statutes: in New York Cent. R.R., for example, the Court considered whether the statute was arbitrary and unreasonable from the standpoint of natural justice, implied that the workers’ compensation remedy must be a reasonably just substitute for the common law rights of action taken away, and hinted that the scale of compensation under a workers’ compensation act might be subject to constitutional limits; but a Court in this era also stressed that the citizen has no vested right in any particular rule of law, that a legislature has discretion to alter the law governing employers and employees in the public interest, and that its discretion to enact such laws under the police power is broad. The Court never found a workers’ compensation statute that transgressed constitutional limits, nor did it identify a hypothetical statute that would do so. Today courts continue to uphold workers’ compensation statutes against (now infrequent) constitutional attack.

Westphal’s Constitutional Analysis

Article I, Section 21 of Florida’s Constitution, which was adopted in 1968, provides: “[T]he Courts shall be open to every person for redress of any injury, and justice shall be administered without sale, denial or delay.”

Florida’s Supreme Court has interpreted this provision to mean that the Legislature may not abolish a right of access to the courts that existed before the provision was adopted, unless it also “provid[es] a reasonable alternative.” Kluger v. White, 281 So.2d 1 (Fla. 1973). Westphal therefore raised the question of whether Florida’s workers’ compensation statute provides a reasonable alternative for whatever rights Mr. Westphal would have had, in 1968, with respect to the portion of his injury that is now left uncovered by the “gap.”

That question looks easy. Under tort law, Mr. Westphal could seek damages for the entirety of the period in which he was totally disabled. In 1968, Florida workers’ compensation law might have offered benefits for the entirety of that period, because benefits for temporary total disability could last up to 350 weeks. (The maximum was reduced to 260 weeks in 1991, and to 104 weeks in 1994.) Today, however, the statute fails to provide either a legal remedy or an insurance benefit for one portion of that period—the “statutory gap.”

Rather than address the issue in this way, however, the court added a second layer of analysis. Citing the U.S. Supreme Court’s 1917 decision in N.Y. Central R. Co., it asserted that it could not uphold any limitation on benefits that is “unreasonable ‘from the standpoint of natural justice.’” Thus, the court examined the substantive merits of the 1994 statute that capped temporary disability benefits at 104 weeks. It did so by comparing the 104-week maximum with the limits imposed on temporary benefits by other states. This is what it found:

When the 104–week limit on Florida’s temporary total disability is compared to limits in other jurisdictions, it becomes readily apparent that the current limit is not adequate and does not comport with principles of natural justice.

In other words, while the U.S. Supreme Court, in a Lochner-era decision, only “hinted that the scale of compensation under a workers’ compensation act might be subject to constitutional limits,” Smith v. Gould, supra, the Westphal case seems to have said so definitively. The court held that “the 104–week limitation on temporary total disability benefits violates Florida’s constitutional guarantee that justice will be administered without denial or delay.” It struck down the provision that imposed the limit, and thereby reinstated the 260-week limit that was in place at the time of the 1994 amendment.

What is to be done?

The opinion in Westphal eloquently explained the dire situation in which the plaintiff had been placed by the awkward interaction of different sections of the workers’ compensation law. But its “natural justice” analysis went further: Even without the particular problems created by the “statutory gap,” the court’s analysis suggests that a state may not reduce workers’ compensation benefits below a minimum level demanded by “natural justice,” and that this level can be ascertained by reference to the standards of “sister” states. There have been other recent signs that Lochner v. New York is coming back into vogue, but this is probably not what its supporters had in mind.