Case Law Update: Alabama Workers’ Comp Act Unconstitutional?

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Alabama Jefferson County Circuit Court Judge Pat Ballard declared the entire Alabama Workers’ Compensation Act unconstitutional. Judge Ballard heard the case of Clower v. CVS Caremark Corporation. He took issue with the attorney fees cap of 15 percent and the permanent partial disability (PPD) benefits provision. The fact that PPD has been capped at $220 per week for 30 years and not indexed for inflation has long been a point of contention for injured workers. Among other things, Judge Ballard said this was “arbitrary, capricious, irrational” and “a clear violation of equal protection of the laws” under the U.S. Constitution. He added that the attorney fees cap of 15 percent violated the separation of powers doctrine. However, recognizing the severity of his ruling, Judge Ballard stayed enforcement of his order for 120 days. This was to give lawmakers a chance to cure the deficiencies he identified.

The obvious question is, “Why is the entire Alabama workers’ comp Act unconstitutional?” The answer is because Alabama Code §25-5-17 has a non-severability provision. It basically says that if one part of the Act is stricken, the entire Act is stricken. Because of this, Judge Ballard did not believe he could just strike the sections regarding the attorneys fees cap and PPD benefits. He had to strike the entire Act.

A major problem is that the Alabama legislative session closes on May 22. So there is very little time left to meet and hammer out attorney fee and PPD benefit provision changes.

As I look at the situation going forward, I believe one of three scenarios is likely:

  1. The defendants will seek an immediate appeal to the Alabama Court of Civil Appeals (seeking an expedited process) to overturn Judge Ballard’s ruling.
  2. There is still time (until May 22) for the Alabama Legislature to make the attorney fees cap and PPD changes to the Alabama Act in an expedited manner.
  3. Alabama Governor Robert Bentley could potentially call a special session for the Legislature to meet even after the May 22 end of the regular legislative session to propose changes to the Act.

An interesting paragraph at the end of the opinion says that the plaintiffs are to report back to Judge Ballard at the end of the 120 day period. At that time, they will report “on any efforts underway to amend, salvage, or modify the Act such that this Order need not be made effectual and implemented.” My interpretation of that edict is that Judge Ballard would prefer to not implement his order finding the Act unconstitutional. It appears that what he really wants is for the Alabama Legislature to amend the sections with respect to the attorney fees cap of 15 percent and PPD benefits provision.

At UR Nation, we will continue to closely track this case, as it has significant implications for all Alabama workers’ comp system participants.

Tom Swiatek

Tom Swiatek

As Assistant Vice President of Regulatory Services, General Counsel, and Editor in Chief of UR Nation, Tom Swiatek draws on his experience as an insurance attorney on both the general liability side, as well as on workers’ compensation matters. As a California Workers’ Compensation Section Member, Tom is leading the discussion with respect to the regulatory challenges and opportunities facing the workers’ compensation system.