Regulatory Developments

Uproar in Alabama: One Unconstitutional Provision Invalidates the Entire Workers’ Compensation Act

Workers’ compensation laws vary by state—but sometimes, what happens in one state has an impact on what happens in another state. In this case, a ruling in Florida and a subsequent ruling by an Alabama Circuit Court Judge may have just invalidated the state of Alabama’s entire Workers’ Compensation Act—but, since this happened right before the legislative break, it may be a while before the situation is straightened out.

Judge holding gavel in courtroom

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A Case About Compensation Caps

The case in question, Nora Clower vs. CVS Caremark, was brought by an employee of CVS who suffered a permanently disabling back injury on the job. Had Clower suffered total temporary disability (TTD), or partial temporary disability (PTD), her compensation would have been indexed to Alabama’s average weekly wage. However, since her disability was permanent partial disability (PPD), her compensation was capped at $220 a week—a figure that had not changed since 1987. Clower argued that this cap violated her right to equal protection under the law.

Jefferson County Circuit Court Judge Pat Ballard agreed, ruling that the Act created two groups of injured workers who were treated differently without a rational basis. This is unconstitutional both under Article 1, section 13 of the Constitution of Alabama (1901) and under the Fourteenth Amendment guarantee of equal protection found in the U.S. Constitution.

The case also challenged Alabama’s 15 percent cap on attorneys’ fees, on the grounds that they violate the due process rights of injured workers. A recent Florida decision, the Castellanos decision, considered this same issue, ruling that mandatory fee schedules for attorneys were a violation of due process protections in the U.S. Constitution. Judge Ballard cited that ruling, noting that:

Statutes will not survive challenges under the federal guarantee of due process if they deny rights and benefits on the basis of facts presumed to exist and to be true … in the absence of affording an individual the opportunity of defending those facts.

Alabama’s cap on attorneys’ fees “will be declared to fall for the same reason,” Judge Ballard ruled.

Unfortunately for the state of Alabama, the legislature inserted a nonseverability clause into the state’s Workers’ Compensation Act in 1984—which means that finding one provision of the Act unconstitutional renders the entire Act unconstitutional. “Because of the drastic result that the nonseverability statute produces,” the Judge wrote, “this Order is hereby STAYED for a period of 120 days.” The purpose of the stay was to allow the Legislature to act, but Alabama’s legislative session adjourned on May 19, 2017, and it isn’t scheduled to reconvene until February 2018.

What could happen, in a state with no valid workers’ compensation regulation? Keep watching developments in Alabama; we may get to find out.