Oregon Law’s Deprivation of Remedy without Counterbalance Hits State Constitution Snag

Case File

An immunity provision under Oregon law that applied to workers' compensation coverage ran afoul of the state's constitution because it left workers without a counterbalance hefty enough to offset the common-law remedy taken away by statute. Simply Research subscribers have access to the full text of the decision.

Case

Crandall v. State of Oregon, No. SC S070647 (Or. 01/22/26)

What Happened?

A worker alleged that two employees of a state department negligently caused him to suffer physical injury while he was working for a private employer. At issue in the case was a "tension" between a guarantee of a "remedy by due course of law" under the Oregon Constitution and an immunity provision of the Oregon Tort Claims Act that eliminates the right to recover damages for an injury caused by a negligent public employee for a person covered by any workers' compensation law at the time injury.

The trial court dismissed the worker's claims, and he appealed. The Court of Appeals concluded that the immunity granted by the Tort Claims Act, by its terms, precluded the imposition of tort liability on either the state or the individuals. The Court of Appeals also held that the grant of immunity to bar the worker's claims against the individual state employees did not violate Oregon's constitution.

The worker appealed to the Oregon Supreme Court.

Rule of Law

In general, the Tort Claims Act reflects a carefully crafted accommodation through which the state waived its immunity from liability for its torts and committed to indemnify state employees for their tortious acts, while placing a cap on the damages that an injured person may recover in a common-law negligence action. But individuals injured while covered by any workers' compensation law are excluded from that accommodation and denied the remedy of a common-law negligence claim against either the state or its negligent employees.

What the Oregon Supreme Court Said

The Oregon Supreme Court detailed that Horton v. OHSU, 376 P.3d 998 (Or. 2016) "derived three fundamental principles regarding the meaning of the guarantee that 'every man shall have remedy by due course of law for injury done him in his person, property, or reputation'" under the state constitution:

(1) The remedy clause grants injured persons a substantive right and places a substantive limit on the legislature's ability to alter or adjust common-law remedies.

(2) The substantive right that the remedy clause protects is the common law right to recover for injury to one's person, property, or reputation as the Horton case explained that "common-law causes of action and remedies provide a baseline for measuring the extent to which subsequent legislation conforms to the basic principles of the remedy clause—ensuring the availability of a remedy for persons injured in their person, property, and reputation."

(3) The remedy clause does not entirely "preclude the legislative from altering either common-law duties or the remedies available for a breach of those duties."

With these principles from the Horton case in mind, the Oregon Supreme Court pointed out that the Tort Claims Act represented a legislative departure from the common-law model by eliminating the common-law remedy for every plaintiff covered by any workers' compensation law at the time they are injured by a negligent public employee while also retaining the state's immunity from liability for its employees' actions.

Workers' Comp 101: Under Oregon's workers' compensation law, compensation is available to a covered worker who has suffered a "compensable injury." In general, a "compensable injury" means an "accidental injury ... arising out of and in the course of employment [and] requiring medical services or resulting in disability or death."

The benefits available under Oregon's workers' compensation law include payment for medical care and compensation to address a portion of the impairment that a compensable injury causes to the worker's temporary or permanent ability to work. See ORS 656.206 (providing that, "[i]f permanent total disability results from a worker's injury, the worker shall receive during the period of that disability" compensation amounting to two-thirds of their wages with a cap based on statewide average wages); ORS 656.210 (providing for compensation under the same formula when the total disability is only temporary); ORS 656.214 (providing for compensation under a formula determined by the agency director if the worker is permanently partially disabled); ORS 656.245 (specifying that worker is entitled to "medical services for conditions caused in material part by the injury for such period as the nature of the injury or the process of the recovery requires," subject to specified limitations).

Noneconomic damages are not available as benefits under Oregon's workers' compensation law. Vasquez v. Double Press Mfg., Inc., 437 P3d 1107 (Or. 2019). But for workers injured by the "the negligence or wrong" of third-party tortfeasors (tortfeasors employed by someone other than the plaintiff's employer), Oregon's workers' compensation law expressly preserves the worker's right to pursue a negligence claim against that third party to recover the full measure of their noneconomic and economic damages, regardless of whether the negligent tortfeasor is a state employee.

The court explained that the immunity granted to public employees under Tort Claims Act eliminates for an entire class of persons injured by negligent public employees the common-law remedy of full economic and noneconomic damages that otherwise existed and thus represented a "substantial departure from the common-law remedy available before adoption of the Tort Claims Act."

The court went on to point out that "all persons subject to the immunity provision ... are deprived of the right to recover the full measure of their economic damages, or any part of their noneconomic damages, even though Oregon's workers' compensation law expressly preserves that right for workers injured by negligent third parties who are not public employees."

The court's problem with the removal of the common-law remedy in the Tort Claims Act was that it left would-be claimants without recourse.

"Unlike the legislature's effort to craft the damages cap of the Tort Claims Act, in the context of eliminating the remedy of a common-law negligence action for individuals covered by any workers' compensation law, there is no indication that the legislature considered whether the 'substitute' remedy—benefits available under workers' compensation laws—would 'provide a complete recovery in many cases,'" the court wrote. "More significantly, it could not have reached that conclusion, because Oregon's workers' compensation law provides no compensation for the noneconomic loss that is part of the common-law remedy the legislature eliminated."

Workers' Comp 101: Oregon's workers' compensation law requires employers to provide "coverage" (either as a "carrier-insured" or "self-insured" employer) for "compensable injuries" to their "subject workers"—a category that essentially encompasses all workers except for specifically identified "nonsubject workers." ORS 656.017; ORS 656.027. In general, a "compensable injury" under Oregon's law "is an accidental injury ... arising out of and in the course of employment requiring medical services or resulting in disability or death." ORS 656.005(7)(a).

Because the Tort Claims Act did not provide the "heft" needed to counterbalance the substantive right that the state constitution granted, the court held that it could not be applied constitutionally to deny entirely the remedy of recovery through a common-law negligence action to people who are injured on the job by negligent state employees.

Verdict: The Oregon Supreme Court reversed the Court of Appeals judgment and remanded the case to the trial court for further proceedings.

Takeaway

The workers' compensation immunity provision of Oregon's Tort Claims Act exceeds the substantive limits that state's constitution imposes on the legislature's authority to modify common-law remedies.

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