Micro Versus Macro Analysis

"micro economics is the study of an economic behavior of a particular individual, firm, or household, i.e. it studies a particular unit. On the other hand, macro economics is the study of the economy as a whole i.e., not a single unit but the combination of all, firms, households, nation, etc."

Similarly, students of the legal system generally, and workers' compensation specifically, might as validly consider this system of economic compensation in both "micro" and "macro" senses.

A recent post provided a review of the early twentieth century aversions to American worker's compensation. In The Quid Pro Quo, there is discussion of the concerns of constitutional protection of property rights that were a precursor to the Supreme Court of the United States' (SCOTUS) determination that one set of burdens and benefits could supplant some other set. That discussion of Ives v. South Buffalo Railway Co., 201 N.Y. 271, 94 N.E. 431 (NY Ct. App. 1911) and New York Central Railroad v. White, 243 U.S. 188, 37 S.Ct. 247, 61 L.Ed. 667 (1917) is foundational to what follows. In one sense, as the original SCOTUS authority on workers' compensation, one might expect that any discussion of constitutionality in workers' compensation would reference White.

Within the context of determining workers' compensation is constitutional, The SCOTUS has concluded that there must be a "moderate compensation," afforded by the system that replaces the right to instead seek damages in civil court proceedings.  

"If the employee is no longer able to recover as much as before in case of being injured through the employer's negligence, he is entitled to moderate compensation in all cases of injury, and has a certain and speedy remedy without the difficulty and expense of establishing negligence or proving the amount of the damages." 243 U.S. at 201.

This language employed by the Court is singular, "the employee." Certainly, this is an "any man" reference, not specific to "the employee" involved in White. There, the employee had passed away as a result of a work injury. The individual who sought compensation in White was Sarah White, the wife of the injured worker, Jacob White. Even absent that obvious distinction, the context of the Court's discussion is clearly in the broad context of workers' compensation and those it affects in a general sense. 

The issue addressed therefore clearly regards employees and employers generally. It is not a discussion specific to the worker injured as a subject of that litigation and challenge, Jacob White, or his particular employer, but a general determination of the constitutionality of supplanting a common law tort system of recovery and defenses with a substitute system of alternative statutory benefits and defenses. 

There is no discussion in White of specifics of benefit adequacy. The Court specifically noted that  

"In this case, no criticism is made on the ground that the compensation prescribed by the statute in question is unreasonable in amount, either in general or in the particular case. Any question of that kind may be met when it arises." 243 U.S. at 205-206. 

That is, a recognition that adequacy might be challenged and could be problematic or fatal to the balanced equities of mutual renunciation of rights. And, the Court clarified that benefit adequacy does not stand alone. The Court recognized that what is a benefit to one party may likewise be characterized as a burden or detriment to the other. Thus, in addressing benefit adequacy, the Court concluded that substitution of one system (workers' compensation) for another (tort) is constitutional, but cautioned:  

"This, of course, is not to say that any scale of compensation, however insignificant, on the one hand, or onerous, on the other, would be supportable." 243 U.S. at 205.  

In June 2016, the Florida Supreme Court rendered an interesting determination of constitutionality in Westphal v. City of St. Petersburg, 194 So. 3d 311 (2016). That decision has been the subject of prior discussions on this blog. In Westphal, the Court decided that a 104 week cap on temporary indemnity entitlement was unconstitutional. It was not a new issue. 

The Florida First District Court of Appeal had thrice attempted to address the impact of this statutory cap upon particular injured workers. That is, to address the "micro" affect of the statutory structure. At least in the view of the Supreme Court of Florida (SCOF), the District Court efforts were unsuccessful. The District Court effort in its own review of Westphal is discussed in Westphal is Decided. 

That includes the origins of analysis from City of Pensacola Firefighters v. Oswald, 710 So.2d 95 (Fla. 1st DCA 1998) decided only four years after the 104 week cap was instituted in a 1993 special legislative session that significantly reformed Florida workers' compensation. From Oswald, the law evolved thirteen years later in an en banc decision of the District Court in Matrix Employee Leasing, Inc. v. Hadley, 78 So. 3d 621 (Fla. 1st DCA 2011). 

The SCOF analysis acknowledges the jurisprudence maxim that  

"statutes come clothed with a presumption of constitutionality and must be construed whenever possible to effect a constitutional outcome.” 194 So. 3d at 320. 

The SCOF determined that the District Court efforts in Hadley and Westphal were attempts "to save the statute's constitutionality." But, the Court concluded that the proper interpretation of the statute was in fact in 1998 in Oswald, later adopted in Hadley. 

In Westphal, the SCOF does not cite nor discuss the SCOTUS decision in New York Central Railroad v. White. The Westphal decision instead references the right of access to courts guaranteed by "Article I, section 21, of the Florida Constitution." This guarantee was interpreted by the SCOF in 1973 in a different White case, Kluger v. White, 281 So.2d 1 (Fla.1973). In Kluger, the SCOF concluded that workers' compensation, as a substitute for common law tort remedies, is a:  

“'reasonable alternative' to tort litigation—and therefore does not violate the access to courts provision—so long as it provides adequate and sufficient safeguards for the injured employee." 

And, when the Florida legislature in 1990 reduced entitlement to "temporary total disability benefits from 350 weeks to 260 weeks," the SCOF concluded workers' compensation remained "a reasonable alternative to tort litigation.” 194 So. 3d at 323. 

In Westphal, the SCOF quoted in that regard from Martinez v. Scanlan, 582 So.2d 1167, 1176 (Fla.1991). The analysis in Martinez reinforced a holistic analysis of the Florida workers' compensation system. The SCOF explained in Westphal that:  

"the Kluger analysis, the law at the time of Martinez, which provided for 260 weeks for temporary total disability, continued to provide adequate and sufficient safeguards for injured employees." 

Thus, a holistic, or systemic, analysis of the overall nature of the system. The question addressed in Martinez and quoted by the Court in Westphal is focused on the quid pro quo in a macro, or system, sense. 

The SCOF concluded that the real question is whether workers' compensation is a "reasonable alternative to tort litigation." (Citation omitted). This so-called “reasonable alternative,” the Court held, "is then the linchpin and measuring stick," in the analysis of whether the system is adequate to provide meaningful access to courts consistent with the guarantees of the Florida Constitution. 194 So. 3d at 323 (emphasis added). 

Curiously, the same Court had two months earlier concluded that "a reasonable attorney's fee has always been the linchpin to the constitutionality of the workers' compensation law." Castellanos v. Next Door Co., 192 So.3d 431, 435 (Fla. 2016)(emphasis added). There has been little discussion as to how multiple discreet factors might each be "the" (singular) "linchpin" as characterized by these two nearly contemporaneous opinions of the same Court. 

The analysis in Westphal is not a macro analysis of workers' compensation, but instead a micro analysis of the individual circumstances of one injured worker. Upon that micro analysis, the SCOF struck the 104 week cap that many contend is nonetheless a sufficient measure of temporary indemnity in some proportion of all claims. Because that quantum was insufficient for one worker, Mr. Westphal, the Court struck the limitation and reverted temporary indemnity to more than double, five years (260 weeks) in place of two years (104 weeks). 

Because of one micro effect, the Court acted with a macro methodology affecting thousands of workers and employers. Would the same approach be appropriate if a single employer challenged the constitutionality of workers' compensation? What if there were a claim of tremendous financial cost to the employer in an instance of unquestionably appropriate and non-negligent employer behavior? There, the system might be deemed to be so "onerous" as to be inappropriate in the analysis of the Due Process Clause, Ives. If that claim were raised, would the Supreme Court of Florida reduce all injured workers' benefit entitlement, that is ameliorate all employer's liability, in a macro reaction to a micro analysis? 

There is perhaps an interesting discussion that could be had regarding whether constitutionality will be determined by the courts on a case-by-case basis; should the system be conformed and realigned by the courts in reaction to micro observations? Or, should the constitutionality of this system be determined on a holistic analysis that considers, overall, the totality of benefit and burden exchanged by each party to this bargain, employees and employers? 

Wherever one finds individual conclusions, it is a fascinating discussion when workers' compensation and the Constitution are the subject.

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