UPDATE: As noted in our Client Alert below, the Court that declared the Alabama Worker’s Compensation Act unconstitutional last week also simultaneously stayed the effect of that order for 120 days to give the Alabama Legislature an opportunity to address and correct these potential constitutional issues. In that same Client Alert, we noted that with this year’s legislative session drawing to a close, it was quite unlikely that these issues would be addressed by the Legislature in the near future. Yesterday, in apparent recognition of that reality, that same Court entered a new order staying the Court’s earlier ruling “until further order of this Court”. As such, the Court’s earlier ruling is stayed indefinitely and the Alabama Workers’ Compensation Act remains in effect pending some future action by the Courts or the Legislature.

On May 8, 2017, a Jefferson County, Alabama Circuit Court Judge declared two sections of the Alabama Workers’ Compensation Act unconstitutional, thereby rendering the entire Act unconstitutional. More specifically, Circuit Judge Pat Ballard ruled that Section 25-5-68 of the Workers’ Compensation Act (which establishes a “cap” of $220 per week on permanent partial disability benefits and which has not been increased for inflation or other factors since 1985) was unconstitutional under both the U.S. Constitution and the Constitution of Alabama. Likewise, Judge Ballard found that Section 25-5-90 (a) of the Workers’ Compensation Act (which caps plaintiffs’ attorneys’ fees at 15% of the compensation awarded or paid) was unconstitutional under the due process provisions of both the State and Federal Constitutions and the separation of powers guarantees under the Constitution of Alabama. The Court expressly recognized that since those two sections of the Workers’ Compensation Act are unconstitutional, the entire Act is unconstitutional because of the non-severability provisions inserted into the Act by the Alabama Legislature in 1984.

Should the Alabama Workers’ Compensation Act ultimately be deemed unconstitutional and should the Alabama Legislature not remedy those constitutional flaws, the consequences could be dramatic and severe for employers, employees, insurance companies and medical providers alike. For example, employees injured on the job could go long periods of time without any compensation or medical benefits, and employers and co-workers could face tort and negligence suits for many job-related accidents and injuries. To delay those consequences, Judge Ballard stayed his ruling for 120 days to give the Alabama Legislature an opportunity to address the constitutional flaws identified in his Order. With the current legislative session nearing an end, however, it is somewhere between unclear and doubtful as to whether the Legislature can or will address (much less remedy) these issues within the stay period ordered by the Court. Stay tuned for further developments.