Workers’ comp changes that slash payments to injured Kansans could lead to huge lawsuits, some fear

Tim Voegeli is worried about workers’ compensation, the state system for paying medical bills and lost wages for injured workers in Kansas – and he isn’t even hurt.

After 30 years as owner of a small-town grocery store chain, he’s now dealing with chains of a different sort, working with his brother to get a new bike-parts company, Tubeless Solutions, rolling in Wichita.

Three weeks ago, he was part of a group testifying to a state Senate committee, ringing alarm bells about changes in the workers’ compensation system that dramatically reduce payments for many injured workers. He fears that changes that took effect Jan. 1 could get the law overturned in court, potentially exposing businesses to multimillion-dollar lawsuits that they’re now shielded from.

“Once it gets into the trial lawyers’ hands, then you’re in a whole different realm of payout,” Voegeli said. “It sounds like a good deal, being able to reduce the amount of claims that maybe someone is willing to file, but the problem is all it would take is a couple of big claims and boy, they’d stay with you almost forever.”

Constitutional law experts as diverse as Secretary of State Kris Kobach and Washburn University law professor Bill Rich say that’s a perfectly valid concern.

“We’re usually on opposite ends of the issue, but on this one, we’re 100 percent in alignment,” said Kobach, who taught constitutional law at the University of Missouri, Kansas City before being elected to his current job.

Kobach and Rich say the state’s switch to a new medical guide will slash, or in many cases eliminate, payments to injured workers. That, they say, could bring down the entire compensation system and throw workers’ cases into the courts, where damage awards could run into the millions, rather than the thousands they’re capped at now.

“I think the most apt analysis is a train wreck seems to be coming,” Kobach said. “We’ve seen courts in Florida and now Oklahoma take work comp systems that were actually more generous than Kansas’ and say, ‘That’s not enough, the worker now has a right to bring a lawsuit.’ … This is going to happen in Kansas. I don’t think it’s a question of if, it’s a question of when.”

It’s too soon to see the effect on individual injured workers because the changes in state law just took effect in January and cases haven’t had time to work their way through the system. Lawyers estimate it will take the rest of the year for the first test cases to come to court.

The workers’ compensation system acts as a legal substitute for the right to a jury trial for damages from work-related injuries. A century ago, workers essentially gave up their right to sue their employers, in exchange for a promise that their medical bills would be paid and they’d get some compensation for lost wages if they could not work.

Rich said the benefits have to provide adequate compensation to injured workers, and the state Supreme Court would likely rule that the recent changes made by the Legislature have cut payments too much, making the system unconstitutional.

The workers “will have a perfectly valid claim that the Legislature has taken their right (to a trial) away and hasn’t given anything back in return,” Rich said.

Business disputes

Many of the state’s business associations disagree with the Kobach/Rich analysis.

Lower payouts to injured workers means lower insurance premiums for businesses, and they like that.

The Kansas and Wichita chambers of commerce both testified in the Senate opposing a bill that would restore damage awards for injured workers to what they were until this year.

“I get where they (Kobach and Rich) are coming from. This does reduce the judgments on awards,” said Jason Watkins, a former state representative who is now a legislative consultant to the Wichita Metro Chamber of Commerce. “That doesn’t mean the courts are going to say it’s not constitutional.”

“If and when we do meet that test, the Legislature can deal with it and make whatever changes the courts say they need to make,” he said.

Mike O’Neal, the former speaker of the House who now heads the state Chamber, did not return messages seeking comment.

In his Senate testimony, he scoffed at Kobach’s and Rich’s stance, saying “constitutionality arguments are a dime a dozen.”

He said those who want larger payouts for workers “seem to lament the fact that advances in medicine and improved outcomes for injured workers may have the effect of reducing costs and overall monetary awards.”

“They forget or ignore that the promise of workers’ compensation is that it creates a no-fault system of wage-loss replacement and optimal medical care for injured workers,” O’Neal said.

The goal isn’t to hand out money, but to restore workers’ health to the point where they can either go back to their original job or find another job they can do, he said.

Joining the chambers of commerce were the Kansas Livestock Association, the National Federation of Independent Business and Spirit AeroSystems.

The ‘Grand Bargain’

To understand the issue, you first have to know a little bit about how workers’ compensation came about.

In the early 1900s, injured-worker cases were decided on a case-by-case basis. The worker would sue the employer and/or co-worker who caused their injury, often resulting in lengthy lawsuits.

But the system was inconsistent. Workers who won in court could get huge payouts. Those who lost or didn’t have the wherewithal to pursue a case got nothing.

The workers’ compensation system evolved to solve that problem with what is traditionally called the “Grand Bargain.”

It was essentially a no-fault system, where both labor and employers got something they wanted.

Workers gave up the right to sue their employer for damages, in exchange for a system where compensation for injuries would be based on the extent of the injuries, not who was at fault. Payouts would be systematic and assured, if substantially less than individual injured workers might have gotten if they won a jury trial.

Employers gained the certainty that they wouldn’t be bankrupted by a big lawsuit judgment or have their bank accounts drained from having to defend themselves in court.

While the Kansas Constitution guarantees the right to have disputes settled by a jury trial, courts have ruled that workers’ compensation doesn’t violate that right because it is an acceptable substitute for a jury trial.

However, the state Supreme Court has warned that for workers’ compensation to remain the exclusive remedy for injured workers, the balance between workers and employers has to be a fair one.

In a 1997 opinion, the court warned that the Legislature isn’t allowed to “emasculate” the system “to a point where it is no longer a viable and sufficient substitute remedy.”

A new book

The current controversy revolves around the book used to rate medical injuries and assign a percentage value for loss of bodily function, the first step in determining how much money an injured worker should get.

State law requires that the injury ratings follow the American Medical Association Guides to the Evaluation of Permanent Impairment.

Until Jan. 1, state law specified the use of the book’s fourth edition, which all sides agree was more generous to the injured worker than the sixth edition that replaced it.

Numerous types of injuries met the thresholds in Kansas law for a payment to the injured worker in the fourth edition, but don’t in the sixth, lawyers say.

James L. Madara, chief executive of the AMA, defended its new guide in testimony to the state Senate: “Consider that the fourth edition of the Guides was published in 1993, and medical technology and science has dramatically improved since then. This has led to better procedures that produce more positive outcomes. … To require physicians and other health care professionals to evaluate patients based on outdated science is not in patients’ best interests.”

Lawyers who represent injured workers say that’s not the issue.

Mike Snider, a longtime workers’ compensation attorney in Wichita, said the main difference with the sixth edition isn’t the advance of medicine, but who wrote the book. “The authors were primarily employed as medical doctors with insurance companies,” he said.

Legal implications

Senate Bill 167, which would have reverted Kansas law to the fourth edition of the AMA Guide, has stalled in the Senate Commerce Committee. It is unlikely to pass this year.

Jeff Cooper, a Topeka workers’ compensation lawyer and adjunct professor at the Washburn law school, said attorneys will be “teeing up cases to get it before the Kansas Supreme Court.”

Rich said he would expect the Supreme Court to overturn the law, rather than try to rewrite it, which would throw injured-worker cases back into the court system.

“It really does create exposure for the employers from what might result from that kind of litigation – in addition, in the meantime, telling the whole category of workers that they can’t expect to be protected,” Rich said.

Trial courts in Florida and Oklahoma have already reached that conclusion, he said, and “the Kansas (Supreme) court has really sent about as clear a signal as one could imagine that they’re most likely to agree with that.”

But as with all things legal, there’s a counterargument.

Douglas Hobbs of the Wichita law firm Wallace Saunders said he thinks the Supreme Court would be unlikely to overturn the workers’ compensation law.

“I think there’s a lot of hysteria, a lot of hyperbole being bantered about … about the Kansas courts following the same path as the lower courts have done in Florida and Oklahoma,” he said. “I don’t think it’s really legitimate.”

He said the Florida Supreme Court has already ruled the state’s workers’ compensation adequate in one case and that the Oklahoma case hinged on language that isn’t part of Kansas law.

“I think that there’s yet to be a state that has its top appellate court overturn the workers’ compensation system based on inadequate compensation,” he said. “I don’t see Kansas being the first.”

This story was originally published March 14, 2015 at 3:12 PM with the headline "Workers’ comp changes that slash payments to injured Kansans could lead to huge lawsuits, some fear."