I. Undoing the Bargain with Compensability Hurdles
A. “Major Contributing Cause” and the Exclusive Remedy in Florida
One of Professor Burton’s main concerns with compensability under current workers’ compensation laws is “increasingly stringent compensability rules.” He expressed particular concern about situations involving “dual denial”—where tightened workers’ compensation eligibility standards lead to a denial of workers’ compensation benefits, yet the exclusive remedy rule still bars access to a tort claim for the injury. Dual denial is a possibility in Florida, thanks to the “major contributing cause” (MCC) rule originally ushered into the workers’ compensation statute by the Florida legislature in 1993 and tightened further since then. The effect of the MCC compensability rule is to relieve the employer of the obligation to provide benefits if the claimant cannot establish (using medical evidence only) that a workplace accident is “more than 50 percent responsible for the injury as compared to all other causes combined for which treatment or benefits are sought.”
Dual denial of compensation occurs under Florida’s MCC rule where an employer/carrier acknowledges that an injury occurred in the course and scope of the worker’s employment—and therefore is purportedly subject to the workers’ compensation regime as an exclusive remedy—yet, the worker cannot establish that work was the MCC (greater than fifty percent cause) of the worker’s injury that requires treatment or benefits.
Payne v. J.B. Hunt Transport, Inc. is a simple case that illustrates the potential dual denial bind for workers. Carl Jeffery Payne worked as a delivery driver for the employer, J.B. Hunt. Payne had pre-existing conditions, including diabetes, gout, and rheumatoid arthritis, that were relevant to his eventual injury. He alleged that damp work boots and other unsafe working conditions imposed by J.B. Hunt caused him to get blisters on his feet. He alleged that he complained, but J.B. Hunt did not fix the conditions. His blisters did not heal, and eventually one of his big toes needed to be amputated. The workers’ compensation insurer denied the claim completely (no medical costs and no disability benefits) on the basis that Payne’s work was “not the major Contributing Cause of claimant’s injuries, or disability.” Payne initially filed a petition for workers’ compensation benefits with Florida’s Office of the Judges of Compensation Claims (JCC), in response to which the insurer again completely denied compensability. Given this response, Payne decided to voluntarily dismiss his workers’ compensation petition and instead bring a tort claim alleging that J.B. Hunt negligently caused his injury. A federal district court sitting in diversity and applying Florida law granted summary judgment to J.B. Hunt on the basis of workers’ compensation immunity from tort suits for injuries in the course and scope of employment, and the appellate court affirmed. J.B. Hunt was not estopped from raising workers’ compensation immunity in the tort suit, because its claim denial was based on the MCC rule, not on a contention that the injury happened outside the course or scope of Payne’s employment.
So long as an employer is careful to avoid denying a claim on the basis that an injury did not happen in the course or scope of employment, and is therefore still within the overall realm of the workers’ compensation statute, then a denial on MCC compensability grounds will not estop an employer from later raising the exclusive remedy defense. The apparent result is dual denial—no recovery in tort due to workers’ compensation immunity, but no benefits paid in workers’ compensation due to the MCC hurdle—even if the employer’s negligence actually did causally contribute (fifty percent or less) to an employee’s condition requiring treatment.
As Emily Spieler points out, this result runs contrary to the traditional rule in workers’ compensation that employers “took workers as they found them.” It also runs contrary to the fundamental tort rule that a negligent defendant generally must take the plaintiff as it finds them, including pre-existing bodily conditions that make the plaintiff especially sensitive or susceptible to more severe damage that might reasonably be expected to result from the tortious conduct. Likewise, the tort rule in Florida is that a “tort feasor takes the plaintiff as he finds him.” Dual denial resulting from Florida’s MCC rule kept Carl Payne from the opportunity to even present his case that J.B. Hunt’s negligence caused him a severe injury and amputation of a toe, even though preexisting conditions made him more susceptible to that serious injury.
B. Compensability and Employer Opportunism
The central claim of this article is that compensability hurdles like Florida’s MCC rule create room for opportunistic behavior by employers that undermines the Grand Bargain as well as the micro-level bargains between individual employees and employers. One definition of “opportunistic behavior” in a contract setting is: “when a performing party behaves contrary to the other party’s understanding of their contract, but not necessarily contrary to the agreement’s explicit terms . . . .” The combination of nonsimultaneous performance in a relational contract like the employment contract, together with the opaque effect of compensability thresholds like the MCC rule, create the key problem.
The Grand Bargain of workers’ compensation sets the foundational background expectations of workers. Former Florida Supreme Court Justice Lewis aptly described those basic expectations: “Florida families presume that when they report to work every day and perform their duties with dedication and diligence, a valid Workers’ Compensation program will be in place should they ever become injured on the job and be precluded from seeking access to our courts.” This is the general expectation that sets the employee’s “understanding of their contract” relating to workplace injuries.
Against this general backdrop, individual workers come to negotiate their individual employment arrangements—i.e., their micro-level bargains with employers. These individual bargains may include compensating wage differentials for work that involves higher risk of injury or disease. But any negotiations or decision-making by employees on risk avoidance or on accepting compensating wage differentials in exchange for taking on riskier work operates on the presumption set forth by Justice Lewis—while an employee later injured on the job would not expect full tort remedies, they would expect a valid workers’ compensation system that would provide some compensation for medical costs and some degree of replacement of lost earnings for either short-term or long-term disability. The MCC rule, and especially dual denial situations, deprive the employee of the benefit of that bargain.
What allows for employers to engage in opportunistic denial of workers’ compensation benefits is the non-simultaneity of performance. The denial comes only after the employee has performed their end of the bargain. As Justice Lewis put it, the employee reported to work every day and performed their duties with dedication and diligence in exchange for the negotiated compensation. The staggered performance obligations in the employment relationship, particularly as it relates to injury or disease resulting from the work, generally lends itself to the likelihood of opportunistic behavior by employers. Rules like Florida’s MCC rule exacerbate the opportunism problem by their opacity. Employees entering the workforce and negotiating their individual micro-level bargains are unlikely to be familiar with the complex (and frequently refined, at least in Florida) MCC rule for compensability of workplace injuries.
Opportunistic denial of a workers’ compensation claim under a tightened compensability rule like Florida’s MCC rule results in a wealth transfer from employee to employer. Scholars (whether or not adherents of relational contract theory) tend to argue that the law should attempt to enforce the relational norms or the parties’ expectations in employment relationships and to deter self-interested opportunism, rather than open the door to opportunism. But the MCC rule does the opposite, creating space (and providing explanatory cover) for the employer/insurer’s denial of benefits to the worker after having accepted the worker’s diligent performance prior to the injury.
II. The Illusory Bargain on Occupational Diseases
The second compensability concern that Professor Burton pointed to when reflecting on the National Commission’s work was the lack of compensation for occupational illness or disease. Burton acknowledged that the National Commission was mistaken when it concluded in 1972 that forty-one states were in compliance with Essential Recommendation 2.13: “That all States provide full coverage for work-related diseases.” Studies have since shown that most occupational diseases and deaths caused by occupational disease or illness are not compensable or are not being compensated under existing state workers’ compensation laws.
A. Florida’s Approach to Disease Compensability
The complete failure of workers’ compensation systems to adequately address occupational diseases, as well as the recent tightening of compensability rules on occupational diseases, can once again be illustrated by Florida’s approach. Florida’s compensability provisions relating to occupational disease are so stringent and onerous that they are exceedingly difficult to satisfy by their literal terms, and more difficult than the standards applicable to toxic exposure cases in civil tort claims.
To start, Florida’s statutory definition of “accident” in the workers’ compensation law provides:
An injury or disease caused by exposure to a toxic substance . . . is not an injury by accident arising out of the employment unless there is clear and convincing evidence establishing that exposure to the specific substance involved, at the levels to which the employee was exposed, can cause the injury or disease sustained by the employee.
While the coverage provisions theoretically reach diseases, a demanding standard of proof is incorporated: “In cases involving occupational disease or repetitive exposure, both causation and sufficient exposure to support causation must be proven by clear and convincing evidence.”
The specific subsection addressing occupational diseases goes even further. It provides that an occupational disease will not be compensable unless “such disease has resulted from the nature of the employment in which the employee was engaged . . . was actually contracted while so engaged, and the nature of the employment was the major contributing cause of the disease.” The “nature of the employment” is then further defined to mean that in the worker’s occupation “there is attached a particular hazard of such disease that distinguishes it from the usual run of occupations, or the incidence of such diseases is substantially higher . . . than in the usual run of occupations.” As an apparent reminder of the coverage language, the provision indicates that “[b]oth causation and sufficient exposure to a specific harmful substance shown to be present in the workplace to support causation shall be proven by clear and convincing evidence.” From there, the statute ratchets up the required proof with this subsection:
(2) Whenever used in this section the term “occupational disease” shall be construed to mean only a disease which is due to causes and conditions which are characteristic of and peculiar to a particular trade, occupation, process, or employment, and to exclude all ordinary diseases of life to which the general public is exposed, unless the incidence of the disease is substantially higher in the particular trade, occupation, process, or employment than for the general public. “Occupational disease” means only a disease for which there are epidemiological studies showing that exposure to the specific substance involved, at the levels to which the employee was exposed, may cause the precise disease sustained by the employee.
One problem with the Florida statute’s heightened causal proof requirement is that it ignores the practical reality of how epidemiological evidence is gathered for exposures to hazardous substances in the workplace, when such evidence may be unavailable, and what exactly epidemiological evidence can and cannot be expected to “show.”
Epidemiology is “the field of public health and medicine that studies the incidence, distribution, and etiology of disease in human population.” Most epidemiological studies are observational rather than experimental. For good reason, we do not intentionally expose human beings to hazardous substances that are not potentially beneficial drugs. We do not run randomized, controlled, double-blind experiments on human beings to measure the impact of (for example) chemical degreasers or other industrially useful workplace chemicals. Epidemiological evidence drawn from human exposures is instead obtained from observation of existing exposures and statistical analysis of observed health results. Observational epidemiological studies are not perfect; they come with problems for drawing definitive conclusions about dose-response relationships. Often, observational epidemiological studies are drawn from case reports of accidental exposures or monitoring the health effects of individuals with known exposures taking place before more significant restrictions on the substance were imposed (e.g., lead, asbestos, benzene, hexavalent chromium, polychlorinated biphenyls (PCBs)). These studies are limited to observing the individual people who were actually exposed—without the ability to control for (or randomize across) diet, exercise, risk behavior, other health factors, other environmental exposures or factors, and genetic susceptibility—and comparing the incidence of the disease in question to groups of individuals who were not similarly exposed.
Although the Florida workers’ compensation statute specifically requires epidemiological studies, they are not the only scientific evidence that may be probative of a causal connection between exposure to a substance and a resulting occupational disease. Animal toxicology studies involve randomized, controlled, blind experiments on non-human animals. They have their own drawbacks, including questions about when it is appropriate to extrapolate from animals to humans and to extrapolate from very high experimental exposure levels (given the animals’ shorter lifespans) to lower levels. In vitro studies use human or animal cells grown in laboratories and exposed to substances. For these studies, the primary concern is extrapolation from the laboratory setting with only groups of cells or tissues to the far more complex complete human being. Finally, an emerging field of study called toxicogenomics studies specific, observed genetic changes in DNA after exposure to substances and attempts to ascertain the specific pathways or genetic effects of exposure that can lead to higher probability of disease. Toxicogenomics holds the potential to eventually provide even stronger evidence of causal linkage between an exposure and an individual’s disease than observational epidemiological studies. Given that each kind of study has drawbacks, interpretive limitations, and potential extrapolation issues, a combination of different types of studies would be ideal. But the practical realities of available scientific evidence in this area counsels against a statutory limitation requiring only one specific type of evidence before a claim for benefits can be considered.
The demanding causal standards of the Florida statute also seem to ignore the limits of what epidemiological studies can and cannot prove. While such studies have been accepted as probative on the question of “general causation” (i.e., can exposure to this agent cause the disease?), the question of “specific causation” is beyond the limits of epidemiological evidence. Yet, the statute requires a claimant to show by clear and convincing evidence that the nature of claimant’s work “was the major contributing cause of the disease.” Presumably, the Florida legislature expects claimants to buttress their required epidemiological evidence with differential diagnosis or similar evidence related to the specific claimant. Yet, proof of specific causation in toxic exposure cases is almost always fraught with some level of uncertainty. No method of proof—epidemiological, toxicological, toxicogenomic, differential diagnosis—is going to completely remove any uncertainty. In such situations, imposition of the “clear and convincing” standard, combined with the “major contributing cause” requirement, make the workers’ compensation proof structure virtually insurmountable. And, as the following subsection shows, this statutory proof structure is far more challenging than the analogous tort standard.
B. The Illusory Bargain
What is the benefit of the Grand Bargain to workers in the context of occupational diseases? What is the trade-off for the limited remedies available under workers’ compensation? At least in Florida, near the bottom of the workers’ compensation hierarchy, the benefit seems to be negative. The combination of (1) the epidemiological study requirement; (2) the MCC rule; and (3) the “clear and convincing” standard in place of the preponderance standard make pursuit of workers’ compensation benefits for occupational disease more daunting for a worker than pursuit of tort damages in a non-employment toxic tort case in Florida.
Epidemiological evidence is often unavailable, because it is usually observational for workplace hazards—available only by chance, not by designed experiment. In those situations, the best available evidence on general causation is often toxicological studies, such as animal or in vitro studies. The Florida workers’ compensation statute would block compensability where an epidemiological study is unavailable. Yet, Florida’s tort law recognizes that epidemiological studies are not required to establish a causal link between an exposure and plaintiff’s disease. In Castillo v. E.I. Du Pont De Nemours, the Florida Supreme Court permitted expert testimony based on in vitro evidence from human lungs and rats, when used in conjunction with other reliable data. This was despite the plaintiff’s expert’s assertion that there were no valid epidemiological studies on point, because of the inability to conduct controlled experiments on humans involving the substance at issue. The court concluded: “It is clear that the Castillos do not need to present epidemiological studies to meet their burden.”
The standard of causal proof in tort is also more manageable for plaintiffs. As the Castillo court noted, plaintiffs are required to establish the causal connection by the normal civil standard—preponderance of the evidence. The Grand Bargain of workers’ compensation earns the worker a significantly more stringent standard—clear and convincing—as well as the MCC rule. Yet, claimants are not meaningfully relieved of any difficult problems of proving an employer’s fault. In occupational disease cases, the critical questions in dispute are most often about identifying exposure levels and establishing general and specific causation, not about an employer’s degree of fault or negligence. By nature, exposure litigation tends to focus on the details of the worker’s exposure and the scientific evidence that can connect such exposure to the resulting disease. On these questions, the workers’ compensation regime is now worse for workers than the otherwise applicable Florida tort law.
One oft-cited benefit of the Grand Bargain for workers is the quick and efficient method of administration, providing immediate benefits for disability and avoiding the time and expense of civil tort litigation. But even this benefit is illusory in the occupational disease context. Occupational disease claims are more often contested and take longer to resolve than accidental injury claims. If workers were given the choice between the tort system and the workers’ compensation system for resolution of an occupational disease case, it is difficult to see why a Florida worker would consider choosing the workers’ compensation regime given its substantially higher standards of proof, limited remedies, and equally inefficient administration.
C. Employer Opportunism in Avoiding Disease Costs
Occupational diseases present nearly ideal conditions for employer opportunistic behavior. Performance is not only sequenced and nonsimultaneous, but the time lag between performance by the worker and performance (or non-performance) by the employer is especially long. For many occupational diseases, exposure happens during the worker’s on-the-job performance for several years or even multiple decades prior to the disease manifestation. Workers and their doctors may never detect the connection or may not be able to establish causation due to the loss of evidence of exposure to particular substances at particular levels.
Knowing the relative unlikelihood that a worker will (years or decades) later be able to successfully claim workers’ compensation benefits for an exposure, employers are positioned to engage in riskier behavior while transferring the costs of that risk onto workers. Stringent disease causation rules, like Florida’s, make self-interested opportunistic behavior even more economically appealing. Again, compensability hurdles open the door to opportunism by employers in the relational contract of employment. Any reform of workers’ compensation law should have the objective of enforcing the relational expectations of workers and employers, including an expectation that workers suffering disease as a result of their job will receive adequate and equitable compensation from a valid workers’ compensation system.
III. Paths to Upholding the Bargain
If Professor Burton is correct that restrictive compensability standards and occupational disease are two areas that render current state workers’ compensation laws inadequate and inequitable, what can or should be done to change that? This Part briefly considers potential judicial and legislative responses.
A. State Legislatures and Federal Intervention
Most obviously, but also perhaps least likely, state legislatures could address the compensability issues directly by reversing course on the “reforms” enacted in the name of cost-saving over recent decades. At the bottom of the workers’ compensation hierarchy, though, it is unrealistic to expect state legislatures to expand compensability for injuries or diseases without a renewed implied threat of federal action. A legislative self-correction seems implausible in states like Florida. For this reason, convening a second National Commission is an idea worth exploring. Despite the likelihood of partisan divisions, a National Commission focused primarily on these two compensability issues might be able to make progress. And if consensus can be reached in a new National Commission, then we might expect to once again see rapid movement in the states to comply and avoid more intrusive federal steps to solve compensability.
A more aggressive federal intervention could include federal floors on compensability issues. For example, a new National Commission might recommend federal legislation that requires state workers’ compensation systems with exclusive remedy provisions to require only proof of a substantial causal connection to recover benefits (rather than MCC); or proof by a preponderance of the evidence using the best available scientific evidence (rather than clear and convincing evidence that must be supported by specific epidemiological studies). Federal legislation might also prohibit dual denial by requiring state systems to permit resort to civil tort suits for non-compensable claims.
One item that state legislatures ought to consider is whether occupational diseases fit at all under the workers’ compensation regime. Workers may get no meaningful benefit of the Grand Bargain in occupational exposure cases, at least in states with the most restrictive causal proof standards. It may be time to recognize that occupational disease cases simply do not fit well in a no-fault, limited remedy workers’ compensation insurance regime.
B. Judicial Enforcement of the Bargain
Stronger judicial enforcement of the relational expectations of the parties could help uphold the principles of the Grand Bargain. As Justice Lewis suggested, when the legislature enacts a statutory “reform” to the workers’ compensation regime that crosses the line and denies workers and their families the benefits of the Grand Bargain, the judiciary must be prepared to invalidate the provision. In connection with an arbitrary temporal cut-off for temporary disability benefits, even where permanent disability benefits were not yet recoverable, Justice Lewis wrote:
The judicial branch must terminate the practice of rewriting the statute. . . . Where totally disabled workers can be routinely denied benefits for an indefinite period of time, and have no alternative remedy to seek compensation for their injuries, something is drastically, fundamentally, and constitutionally wrong with the statutory scheme.
Rules like the MCC rule leading to dual denial can be challenged as violating state constitutional provisions guaranteeing access to courts, guaranteeing access to a remedy, or similar state constitutional provisions. In Florida, article I, section 2 of the state Constitution protects the rights of all natural persons “to be rewarded for industry.” Article I, section 21, further guarantees that the “courts shall be open to every person for redress of any injury, and justice shall be administered without sale, denial or delay.” Regressive state workers’ compensation laws are also potentially subject to challenge under the Fourteenth Amendment to the U.S. Constitution.
C. Strengthening Regulatory Prevention Tools
Finally, the federal legislature could strengthen regulation of workplaces and front-end enforcement designed to prevent injuries and diseases from occurring in the first place. A recognition that state workers’ compensation rules in states toward the bottom have created space for opportunistic behavior by employers justifies stronger enforcement efforts. As I have argued elsewhere, one view of the role of OSHA is as enforcer of an anti-opportunism principle.
Possible reforms frequently suggested here range from creation of a private right of action to enforce OSHA standards to stronger penalties for standard violations. In prior work, I advocated tying the existence of (and compliance with) an OSHA Permissible Exposure Limit (PEL) standard to a shift in the burden of proof on causation for occupational diseases in state workers’ compensation laws. Under the current regulatory and compensatory regime, employers and chemical manufacturers have an incentive to remain relatively uninformed about the risks posed by exposure to their chemicals. With onerous burdens of proof on causation falling on the claimant, there is little incentive for manufacturers or employers to help generate scientific evidence (expensive animal studies or toxicogenomic studies) that could establish causal connections and support an OSHA PEL. This is one reason that OSHA has been unable to establish new PELs for more than a handful of substances in industrial use.
One possible reform would be to shift the burden of proof on causation onto employers/insurers in exposure cases involving substances for which there is no existing OSHA PEL. The goal would be to incentivize the production of more and better scientific evidence, which could include epidemiological studies, animal studies, or toxicogenomic studies, to help OSHA support and defend new proposed PELs, and fill the gap in scientific evidence that makes the burden of proof in occupational disease cases so onerous.
Workers negotiate the terms of their individual-level employment agreements (including demand for compensating wage differentials) against background expectations of a valid and adequate workers’ compensation regime that will provide them medical treatment benefits and disability benefits should they get injured or sick from their work. As workers’ compensation statutes at the bottom of the hierarchy are “reformed” in ways that create more space for employer opportunistic behavior, those background expectations are more frequently going to be unmet. The effect is a collapse of the Grand Bargain. If the response does not come via the state legislature, federal intervention, or judicial decisions that give force to the relational expectations of the parties, then more effective and intrusive front-end regulation may be the best remaining option.
Conclusion
In Professor Burton’s view, state workers’ compensation laws remain inadequate and inequitable, despite initial progress following the 1972 Report. From the perspective of a state operating near the bottom, this certainly appears to be true. Compensability holes created by the MCC rule, dual denial situations, and occupational disease causation standards that unrealistically impose stricter proof requirements than general tort law largely deprive workers of the benefit of the Grand Bargain. Employers, though, dodge tort liability for the health costs that they impose on workers thanks to the operation of the exclusive remedy bar.
Perhaps it is time to convene a new National Commission to help chart the course forward. Not all symposium participants agreed with this prescription, and there is general acknowledgment that current political divisions could undermine the type of unity on recommendations that was reflected in the 1972 National Commission Report. But the fiftieth anniversary of the National Commission does present an opportunity to call renewed attention to an old problem. Without a new National Commission, there is little reason to expect the race to the bottom to subside. We will likely see further cost-cutting “reforms” in states like Florida that limit compensability and undermine the Grand Bargain. Workers performing their job duties in states like Florida are justified in expecting a valid and equitable workers’ compensation system to provide them with basic medical treatment and disability benefits if they are injured in the performance of their work. Unfortunately, it may require a new National Commission to uphold those expectations.
