Why Oklahoma’s Title 85A Has Been Right for the Sooner State Since 1917

by Daryl Davis                                                                                                May 26, 2016

—Part 1—

Put Briefly: Due Process Was Never a Deal Breaker for the Grand Bargain

On March 6, 1917, the Grand Bargain was sealed when the Supreme Court of the United States (SCOTUS) affirmed our nation’s historic agreement concerning occupational injuries—a deal that policymakers had been working on for decades. In New York Central Railroad Co. v. White, Justice Mahlon Pitney rationally cut through what had appeared to be a Gordian knot of due process challenges to clear the path for state legislatures to pass special laws[1] that took the name of “workmen’s compensation.” Pitney characterized the legislative underpinnings of the Grand Bargain as “a just settlement of a difficult problem” and contended (with unanimous support from his peers) that “the particular rules . . . affecting the subject matter are not placed by the Fourteenth Amendment beyond the reach of” state lawmakers. Some jurists who currently pay lip service to the Grand Bargain are eager to forget—perhaps even to obscure—the fact that this landmark SCOTUS decision allows a “method of compensation” to “substitute” for due process considerations in the interest of the greater social and economic good. The purpose of this essay is to remind such jurists that invoking the Grand Bargain without paying attention to the context of how and why it came to be embraced does a tremendous disservice to our legal history as well as the employees and employers whom the Grand Bargain was designed to protect.

On March 1, 2016, we saw just how far our modern workers’ compensation (WC) systems have strayed from the Grand Bargain ideals that originally shaped them when the Supreme Court of Oklahoma ruled a prominent subsection of the state’s WC law unconstitutional.[2] That the court sided strictly with lawyers over lawmakers[3] in Torres v. Seaboard Foods, LLC was obvious. Less obvious was the extent to which three of the court’s justices blatantly misrepresented how the Grand Bargain managed to overcome a complex array of due process hurdles for the benefit of employers and employees alike. In so doing, they squandered multiple opportunities to tell the whole story—despite invoking the Grand Bargain repeatedly throughout their opinions concerning Torres.[4]

The historical record on this subject is crystal clear: When it comes to handling disputes within the framework of the Grand Bargain, we can and should set aside our concept of pristine, constitutional due process—with its reliance on attorneys and judges, extended litigation periods, substantial overhead and animosity. The permissible substitute for due process[5] granted to employers and employees under the Grand Bargain knowingly (and pragmatically) tramples on the Fifth, Seventh, and Fourteenth Amendments of the U.S. Constitution—because that’s exactly what the Grand Bargain needed to do in order to provide economic relief to hardworking citizens who were injured on the job in the early 20th century. This special adjudication of the Grand Bargain was recognized by SCOTUS, legislators, workers and business owners as a necessary development in the employer/employee relationship. Employers take the first hit under the Grand Bargain’s special adjudication when the state seizes their property (money via insurance) without any trial proving fault or negligence. This curtailment of employer rights is acceptable to society because it assures employees of modest compensation for injuries arising "out of and in the scope of employment" (with predictable exceptions for accidents stemming from horseplay or intoxication). However, in disputes relating to WC benefits, both employers and employees routinely give up traditional rules of evidence within simplified administrative procedures prescribed by state legislatures and designed to minimize litigation (so that most or all of the money spent by employers on behalf of injured workers serves to benefit those employees instead of being siphoned into the pockets of attorneys).

Justices Edmonson, Combs and Colbert of Oklahoma conveniently omit this critical component of the Grand Bargain—special adjudication—in their transparent attempts to preserve the privileged standing attorneys have too long enjoyed within the state’s WC system. That faltering system has, for decades now, perversely incentivized stakeholders to inject more litigation into a process that was always—according to the Grand Bargain’s most celebrated spokespeople—supposed to minimize litigation. One example of this concerted effort to rationalize a terrible policy is found in Colbert’s concurring dicta. Colbert emphasizes the Grand Bargain as the foundation of WC—making an astute distinction between the two. His astuteness ends, however, when he shifts his focus to Oklahoma’s WC system, which he suggests—despite overwhelming evidence to the contrary—was functional until recently:

[W]ith the enactment of the [AWCA], the balance is now off kilter and has become one-sided to the benefit of the employer. . . . This Court, fully aware of the rapid demise of the Grand Bargain, assured Oklahoma workers that we would address the Act's constitutionality, provision by provision, "as a case or controversy or a justiciable issue is presented to this Court. . . ." We are forced by our jurisprudence to insure that claimants and employers in the workers' compensation system have their day in court and receive a fair shake. [Emphasis added.]

This logic may seem persuasive to uneducated readers, but a comprehensive survey of the literature surrounding the Grand Bargain demonstrates that Colbert’s “day in court” argument is sheer heterodoxy.

Nevertheless, we shouldn’t be too hard on Colbert and his accomplices. They are merely repeating what the legal community has been beating into our heads ever since we were far enough removed from the Grand Bargain to forget its details. Five generations later, we are, collectively, oblivious to the fact that bypassing constitutional due process concerns was one of the linchpins of the Grand Bargain.[6] Although historians provide abundant clarity on this point, most insurance professionals and industry regulators neglect the relevant literature.[7]

Alarmingly, our lack of interest in[8] and attention to historical context leaves today’s citizenry asking legal professionals, “Now, what do we do at this point in the WC dispute process?” This is akin to asking a barber if you need a haircut. Predictably, our lawyers and judges take over and pat themselves on the back for their commitment to constitutional due process. Of course, if we can’t trust attorneys to act with impartial disregard for their own pecuniary interest, whom can we trust to remind us of the proper dispute resolution process in WC? (One answer: “Any barber with access to a decent library.”)

As our policymakers forgot about the special adjudication of the Grand Bargain, attorneys began to attack permanent partial disability (PPD) benefits as inadequate. By the 1960s and 1970s, attorneys had morphed PPDs into pain and suffering—wink, wink, nudge, nudge—effectively shoehorning tort liability into WC.[9] Highly intelligent attorneys and judges don’t have to use tort nomenclature to get tort results. This reintroduction of liability into a system built on a no-fault cornerstone was an abomination against the Grand Bargain’s emphasis on exclusive remedy.

Employers don’t object to paying medical and wage benefits for employees with legitimate workplace injuries. They do, however, object to having their property unconstitutionally seized to fund the bloated costs of a litigious process that was never supposed to be part of the deal. Regrettably, as matters stand today, attorneys and judges would have to be crazy to stop biting the corporate hands that are statutorily obliged to feed them.

Prior to the passage of Senate Bill 1062 in 2013, over 90% of WC claims in Oklahoma were litigated[10] with judges and attorneys (not employers and employees) at the center of the system. Despite the obfuscating opinions of Edmonson, Combs and Colbert, that bill wasn’t the beginning of the erosion of the Grand Bargain; it was a decades-late attempt to stop the erosion.

Readers familiar with the circumstances under which the Grand Bargain was struck will have no trouble accepting that last assertion. Readers who do have trouble accepting it will benefit from consulting the primary and secondary sources cited in the next section of this argument (which is less an argument than a summary of existing records and laws organized in such a way as to demonstrate, beyond any doubt, that the position espoused by Justices Edmonson, Combs and Colbert is historically, legally and constitutionally misinformed).

 

—Part 2—

Put More Comprehensively: The Story of the Grand Bargain Is Most Instructive When Placed in Context

The Grand Bargain between employers and employees regarding workplace injuries has always been bigger than WC. Beginning around 1910, legislatures throughout the U.S. acted on a mandate from the general public to execute one of the most sweeping and impressive legal transformations the country has ever seen.[11] In less than a decade, U.S. courts stopped fearing Grand Bargain principles as revolutionary and began embracing those principles as commonplace. This dramatic transformation was necessary because of how obviously flawed common law, negligence-based solutions for workplace injuries were during the second half of the 19th century. While the inequities of those solutions would occasionally manifest themselves by bankrupting employers found liable of tort, the bigger problem was the devastating economic distress suffered by injured workers and their dependents. Collectively, state legislators and courts devised a superior method of handling occupational injuries—the Grand Bargain—founded on four primary tenets: 1) injured employees’ medical bills and lost wages are covered by their employers; 2) employers cannot be sued by their injured employees; 3) fault is a non-factor in applying this remedy; and 4) employers and employees occupy a world of special adjudication designed to expedite the resolution of injury-related claims. To be sure, that fourth tenet is rarely mentioned in 2016—but it was absolutely part of the deal, as an examination of the relevant literature demonstrates.

Too frequently, WC is equated with the Grand Bargain. The two are distinct. One (the Grand Bargain) is conceptual in nature, with ideals that will survive generations. The other (WC) is but a common name[12] given to dozens of systems—at once distinct and similar[13]—designed to implement those ideals. WC systems throughout the country warrant some examination because they provide an important backdrop for what happened in the Sooner State, but this essay focuses on the WC systems that have existed in Oklahoma (in one form or another) for roughly a century.

Systems come and go; they are abused, policed, overhauled and, eventually, replaced.

In essence, the name we give a particular system is less important than our understanding of what the Grand Bargain is supposed to accomplish. To gain this understanding, we need to better contextualize the process by which the Grand Bargain—despite seemingly insurmountable legal challenges—eventually came to be. Readers will then be able to see why the classic ideals of the Grand Bargain can and should continue to be distributed with the same legislative authority and constitutional latitude that was allowed when the Grand Bargain was initially struck.

Rationalizing the Grand Bargain: Standing on the Shoulders of Giants[14]

The U.S. was a little late to the WC party. Pressure had been building on policymakers since the second half of the 19th century to address lopsided legal workplace accident arrangements. Beginning in the 1880s, well-intentioned legislatures passed laws that lacked consistency and substance.[15] Finally, it was the Pittsburgh Survey by the Russell Sage Foundation (released in 1910) that catalyzed the rapid adoption of WC laws throughout the country between 1911 and 1920. Anecdotes (such as the shocking revelations in Upton Sinclair’s The Jungle) helped, but legislatures needed statistically compelling factual evidence to reform the legal schemes governing workplace accidents. For that purpose, Crystal Eastman stood and delivered. In her groundbreaking study, Work-accidents and the Law,[16] Eastman gathered and reported on workplace accident data for a 12-month period between 1906 and 1907 from the small but industrially relevant sample of Allegheny County, PA. She rightly and importantly spent the first two hundred pages of her study explaining the devastating effects of workplace accidents on individuals, families, and communities.[17] After reviewing dozens of case studies concerning widows, orphans and maimed workers, she dove into the legal and logistical aspects of the problem.

The root of the difficulty was that common law systems couldn’t keep up with the changes stemming from the Industrial Revolution—especially in the U.S.[18] When sued by injured employees in tort, employers could rely on three extremely powerful common law defenses: assumption of risk, contributory negligence and the fellow-servant rule. This “unholy trinity”[19] of affirmative defenses for the employer made for a completely unfair arrangement against the employee. To help even things out, some exceptions were made by individual judges, but such a hodgepodge approach from one jurisdiction to the next only made an unreliable system that much worse.[20]

Eastman summarized the problematic common law system on page 206 of her study as follows:

  1. It is wasteful:
    1. The state expends a large amount in fruitless litigation.
    2. Employers expend a large amount, as the result of work-accidents, only a small part of which is actually paid in settlement of accident claims.
    3. The injured employees spend nearly half of what they get in settlements and damages to pay the cost of fighting for it.
  2. It is slow; recovery is long delayed, while the need is immediate.
  3. It fosters misunderstanding and bitterness between employer and employees.
  4. It encourages both parties to dishonest methods.
  5. The institutions which have been resorted to as an escape from its evils, liability insurance and relief associations based upon a contract of release, are often advantageous to employers, but disadvantageous in important respects to employees.

Although the fifth of Eastman’s five points is irrelevant today, the irony regarding her first four points is too obvious: These objections to a failing system might have been used verbatim by the Oklahoma legislature to justify the passage of the OEIBA in 2013.[21]

Of course, there was substantially more urgency for Eastman when she originally created this list—since the deaths per 100,000 hours worked were at all-time highs. Today, that statistic is at an all-time low. As significant as our modern occupational accident problems are, they are a different breed from—even if similarly described to—what Eastman studied.

Eastman’s study was so powerful that state legislatures throughout the country used it in outlining their original WC laws. But these new laws were met with substantial resistance from political groups representing all stakeholders. It was commonly thought that constitutional amendments—at the state and/or federal levels—would be required to enact WC statutes that would effectively implement the ideals of the Grand Bargain. Eastman’s contemporaries reasoned (wrongly) that absent such amendments, the equal protection and due process hurdles created by WC statutes would be insuperable. Perhaps most surprising for today’s legal community is that outcries concerning WC’s abridgment of due process rights came overwhelmingly from employers rather than employees.

New York’s 1910 Act: Due Process and Equal Protection Addressed

Though you wouldn’t know it by listening to legal-minded WC stakeholders in 2016, traditional due process—the type that we are taught in high school civics—was deliberately set aside by SCOTUS to expedite the passage of Grand Bargain legislation. In the landmark decision on this subject in 1917, SCOTUS argued that traditional due process parameters could be modified, within reasonable limitations, by state legislatures.

Prior to the Grand Bargain, the primary legal liability of employers for workplace accidents was determined within (or settled outside) the courtroom of common law—a courtroom steeped in constitutional due process. This tradition was founded in common law, memorialized in the Fifth, Seventh, and Fourteenth Amendments and honored by attorneys, judges and juries. Many employers argued WC statutes would deprive them of due process by taking their property (money) regardless of fault.[22]

Nonetheless, legislators in New York—determined to lead the nation in the implementation of Grand Bargain ideals—passed one of the first WC laws in the country in 1910.[23] That law was struck down in 1911 by a New York Court of Appeals that ruled in favor of the employer’s constitutional due process challenge in the case of Ives v. South Buffalo Railway. Judge William Werner wrote for the unanimous court, finding that the statute was “plainly revolutionary” by creating a “rule of liability . . . that the employer is responsible to the employee for every accident in the course of employment.” Werner was confounded by this nascent precept of the Grand Bargain, as he knew “of no principle on which one can be compelled to indemnify another for loss unless it is based upon contractual obligation or fault.”[24]

To be sure, employees and their representatives, who did not know what to expect from these systems, also voiced Fourteenth Amendment concerns. However, given the circumstances, they were much more receptive to morphing due process protections through WC legislation that “discarded traditional rules of evidence, simplified the procedure, established presumptions of fact and law in favor of the claimant, and otherwise provided for a summary proceeding so as to bring about a speedy recovery without long drawn out litigation”[25] (emphasis added). To that end, in 1913, New York doubled down and passed a new compulsory WC law that would eventually stick after several court battles.

Texas’ 1913 Act: Elective on Its Face[26]

Texas passed a WC law in 1913—the core of which still stands today—by using a different (though much more popular) model than New York. Contrary to the assumptions of WC stakeholders in 2016, most state legislators believed there would be fewer constitutional challenges to a WC statute that allowed an option. Even more contrary to present-day understanding, the “option” in Texas was specifically designed to fail.

The Texas legislature wanted employers to “subscribe” to its statutory scheme. Employers who chose instead to turn their backs on the state system and stick with common law were referred to as “nonsubscribers,” an unfortunate term that to this day causes angst in the option community. Current detractors of Texas nonsubscription[27] paint a very inaccurate picture of this arrangement when they characterize it as a throwback to the Industrial Era. Recall the unholy trinity of employers’ affirmative defenses: assumption of risk, contributory negligence and the fellow-servant rule. Prior to 1913, Texas employers were in an incredibly powerful legal position to defend themselves against injured employees because they could rely on all three of those common law defenses. The Texas legislature stripped nonsubscribers of those defenses—which effectively turned the legal table completely around. The pressures these disincentives placed on employers led Ernst Freund to categorize such elective alternatives to WC as “optional in name and not optional in fact.”[28] To characterize Texas nonsubscription as a 19th-century throwback is to pretend that Texas employers can still rely on defenses that haven’t been available to them since 1913. In fact, a nonsubscribing employee need only prove a mere 1% negligence on the part of her employer for her bodily injury to win in tort.

Oklahoma’s 1915 Act: Compulsory on Its Face

The original WC statute passed by the 1915 Oklahoma legislature was crafted by the elected officials who were closest (at least in temporal terms) to the ideals of the Grand Bargain. In Article 1, Section 2, the reader will note that this law did not apply equally to all citizens or even to all kinds of Oklahoma employers, since the compensation it mentions is “payable for injuries sustained by employees engaged in [eight industry-specific] hazardous employments.” Like New York’s scheme, this law—though only aimed at certain classes of employers—was compulsory. Or was it?

In Article 3, Section 1(d), we find a stunning caveat: the original Oklahoma option. No employer was required to adhere to the Act, as is commonly assumed.[29] 

Subject to the approval of the Commission, any employers may enter into or continue an agreement with . . . their workmen to provide a scheme of compensation, benefit or insurance in lieu of the compensation and insurance provided by this Act; but such scheme shall in no instance provide less than the benefits here secured nor vary the period of compensation provided . . . except that sums required may be increased. [Emphasis added.]

Plainly, when WC legislation was first being passed in Oklahoma, opponents had ample room to file due process, special law, equal protection and opt-out complaints. Such complaints, however, were correctly overwhelmed by the force of the Grand Bargain’s emphasis on the public welfare.

The language of the 1915 opt-out provision is eerily similar to that of the 2013 legislature’s effort:

85A, 203. A. [A] qualified employer shall adopt a written benefit plan that complies with the requirements of this section. . . . B. The benefit plan shall provide for payment of the same forms of benefits included in the [AWCA] . . . on a no-fault basis, and with dollar, percentage, and duration limits that are at least equal to or greater than the dollar, percentage, and duration limits contained in Sections 45, 46 and 47 of this title. [Emphasis added.]

Indeed, in Article 2, Section 10 of the original statute, we find non-binding arbitration: “The commission may, before making an award, require the claimant to appear before an arbitration committee.” The concept of due process within the Grand Bargain framework is nebulous. Out of the gate, we can scrap the traditional notions of constitutional due process, since the Grand Bargain pointedly settles for special adjudication, which is both flexible and indelicate. For those of us searching for solutions to WC in 2016, there is nothing new about relying on an informal arbitration committee before we even reach the special adjudication standards found at the level of the Commission.

Did the original Oklahoma WC act create unequal protection under a special law? Did it strip employees and employers of due process? Did it contain an opt-out provision? If so, are any of these issues unconstitutional?

These were questions for the Supreme Court of Oklahoma to answer—which it did in 1917.

Oklahoma’s Highest Court Reviews “Entirely Inadequate” Benefit and the Original Option

On January 9, 1917, the Supreme Court of Oklahoma ruled unanimously that the state’s original WC law from 1915 was indeed constitutional. In Adams v. Iten Biscuit Co., the claimant was severely injured upon the explosion of an oven, “such . . . as to incapacitate him from performing manual labor during the balance of his life.” The oven exploded due to the negligence of a fellow worker. The court’s order stipulated that the act passed was a statute (not an amendment) and that the legislature acted within its authority. Moreover, the court dismissed the claimant’s assertions that the law violated various sections of the Oklahoma Constitution.

In so doing, the court took the time to dismiss a common misinterpretation of Article 2, Section 6 that the legislature is barred from adjusting legal proceedings. That misinterpretation frequently leads plaintiff attorneys and their ilk to jump out of their chairs upon hearing anyone suggest that there may be times when due process must take a backseat to more important considerations. Nevertheless, according to the ruling, that section of the Constitution

relates to the Judiciary and does not constitute a limitation upon the power of the Legislature to abolish the rules by which heretofore the liability of a master for injuries to his servant was determined, nor the defenses of fellow servants’ contributory negligence and assumption of risk.

Further, Oklahoma’s high court ruled that the WC statute “does not deprive an employee of property without due process of law [or] deprive such employee of the equal protection of the law”—a pronouncement that was plainly formulated to undercut “day in court” arguments at the time (though it’s less plain why some justices assume that it doesn’t undercut such arguments now).

The opinion penned by Justice Hardy acknowledged that the court was following precedent that had been established over the previous few years: What “appear[ed] to be revolutionary” just six years prior to appellate judge Werner in New York had since settled in as “an enlightened modern public opinion.” That opinion, Hardy explained, held that the costs of workplace accidents “should be borne by the industries causing them . . . and that thereby wasteful and unnecessary litigation, with all of its resultant evils, could be eliminated” (emphasis added). The only reason the “revolutionary” principles of the Grand Bargain became prevalent in the first place was because the common law principles they replaced were outrageously inefficient at solving problems related to occupational injuries. Those who refused to be outraged by such inefficiencies (like Judge Werner of New York) ended up on the wrong side of history.

Hardy offered impressive specifics on the failings of the previous system: “[T]he remedy under the common and liability laws . . . did not afford compensation of any kind to more than 12 per cent of the cases where employees were injured . . . and it was further shown that no modification of the common-law remedy by action would materially improve conditions.” The inescapable relevance of the public welfare became plain when Hardy added: “The economic results disclosed demonstrate conclusively that the public has an interest in the proper solution” (emphasis added). He would presumably have reached a different conclusion if he had focused on the interests of the legal community.

Regarding optional acts (think “opt-out” provisions), Hardy argued that they “are not unconstitutional [in the same way] as denying the employee the right to a trial by jury.”[30] Hardy further contended that legislators are entitled, within reasonable limitations, to abrogate certain rights of citizens for the sake of promoting the general welfare.[31]

As for the facts of the Adams claim, the court concluded that the schedule of benefits detailed in the law allowed for “50 per cent of the weekly wage for a period of not to exceed 500 weeks,” plus the allotted amount for the loss of use of the claimant’s hands. With a nod that such a financial outcome might have lacked delicacy and fairness, Hardy acknowledged: “Plaintiff claims and the Attorney General concedes that the compensation provided is, in many instances, entirely inadequate but with the wisdom or policy of the legislation we have no concern, our inquiry being limited to the one of power upon the part of the Legislature to enact such legislation.” In 1917, it was possible for members of the Supreme Court of Oklahoma to recognize legal provisions as “entirely inadequate” without declaring the laws behind such provisions unconstitutional. This perfectly ordinary sense of the legislature’s role in addressing bad laws led Hardy to conclude: “We do not doubt that experience in the practical working of the law will prove the necessity for changes therein; and, as those conditions arise, relief may be had at the hands of the lawmaking body.” The upshot was that the court upheld Oklahoma’s new WC law, inclusive of the original Oklahoma option (which it recognized in the first paragraph of the opinion).

Of course, Adams challenged the state and federal constitutionality of the act. The Oklahoma high court made this ruling only a couple of months before SCOTUS erased most remaining question marks by addressing some earlier WC cases that had wended their way to the docket of the nation’s highest court.

New York Central Railroad Co. v. White

By the end of 1915, thirty-three states had passed at least one WC statute—and legal challenges were flying. No state passed any such law in 1916[32] because a spate of WC cases crowded SCOTUS’ docket that year: New York Central Railroad Co. v. White, Mountain Timber Company v. Washington, Hawkins v. Bleakley and the Arizona Employers’ Liability Cases. Lawmakers and courts nationwide watched and waited to see how all of these legal issues would pan out.

Using the New York Central Railroad case as the landmark, the Supreme Court unanimously upheld New York’s 1913 WC act. Justice Mahlon Pitney penned the famous opinion, including this key point:

The act evidently is intended as a just settlement of a difficult problem, affecting one of the most important of social relations, and it is to be judged in its entirety. We have said enough to demonstrate that, in such an adjustment, the particular rules of the common law affecting the subject matter are not placed by the Fourteenth Amendment beyond the reach of the law making power of the State; and thus we are brought to the question whether the method of compensation that is established as a substitute transcends the limits of permissible state action.

As it turns out, constitutional amendments are not needed for a state legislature to act rationally on behalf of the public. When it comes to solving difficult problems that affect our most important social relations (such as the one between employers and employees), legislatures can and should get plenty of leeway from the courts.

When SCOTUS issued its unanimous ruling in the New York Central Railroad case, its newest member was Justice Louis Brandeis, who would later popularize the notion of individual states serving as “laboratories of democracy.” Since 2013, the country has been watching Oklahoma perform a limited laboratory experiment that could realistically help WC escape from its current “downward spiral”[33] nationwide. The spirit of Brandeis—along with living employees and employers[34] around the world—may very well be cheering for the Oklahoma legislature to be trusted with the latitude it was granted a century ago.

 

—Part 3—

Put Conclusively: The Life Once Breathed into the Grand Bargain By Special Adjudication Shouldn't Be Choked out by Due Process

What Grand Bargain were Justices Edmonson, Combs and Colbert talking about in Torres—with their insistence on giving employees and employers a “day in court” that WC systems throughout the country were built specifically to avoid? It’s impossible to say. The recognition of special adjudication in the Grand Bargain throughout this essay is perfectly orthodox, as any reader can confirm by following the relevant hyperlinks and/or consulting a local library.

The Grand Bargain began with an act of good faith by employers, who took the first financial hit under WC by allowing the state to seize their property without first proving them guilty of fault or negligence. What was supposed to happen next—quick, efficient and inexpensive resolution of claims without litigation—hasn’t been happening for decades in Oklahoma. Perhaps the justices who harp on the “day in court” argument are referring to some newer arrangement concerning the Grand Bargain within their own fraternity—an arrangement that wasn’t discussed with or agreed upon by other members of society.

Such a bargain isn’t grand at all; it’s petty—with the petty objective of reintroducing culpability into a system built on a no-fault cornerstone. The original Grand Bargain sensibly excluded culpability as a consideration because that was the most straightforward way to keep attorneys from jamming the gears and raising the costs of any WC system.

In 1989, Texas legislators stumbled onto an escape from the “downward spiral” of WC by implicitly endorsing the aforementioned nonsubscription option bequeathed to them by some of the original architects of the Grand Bargain in 1913.[35] That provision may not have been designed for the success it currently enjoys in Texas, but it was plainly crafted to help the state break out of a patently inefficient system for handling occupational injuries. Similarly, in 2013, after evaluating over two decades of data collected from Texas’ functional and modernized option for WC nonsubscribers, Oklahoma legislators realized that the best way to eliminate patent inefficiencies from their own occupational injury system was to return to the formative principles of the Grand Bargain—by using language and logic lifted from the Sooner State’s 1915 legislature.

Because the primary purpose of any WC system should be to provide relief to citizens injured on the job, the revolutionary statutes written by authoritative and informed legislatures in both 1915 and 2013 shared the aim of minimizing litigation within the WC process. Admittedly, the 2013 statute (like its 1915 analogue) provided some benefits that were “entirely inadequate” and required subsequent modification by the legislature (as evidenced by this year’s House Bill 2205). But more importantly, the new statute is precisely like the one formulated by the original architects of Oklahoma’s Grand Bargain in that it allows employers to opt out of WC as long as their private plans provide benefits that are at least as good as those in the state’s WC system.

In its 1917 ruling on WC, the Supreme Court of Oklahoma didn’t allow rigid due process ideals to invalidate the Grand Bargain—in part because the justices (who put the interests of the state as a whole ahead of the interests of their own profession) recognized the importance of providing relief to injured workers and of ameliorating relations between employers and employees. In 2016, however, some justices are eager to allow due process concerns to keep us mired in a system that provides work for injury lawyers and fosters animosity between employers and employees.

The principles of the Grand Bargain are imperiled—not advanced—by the cockeyed argument of Edmonson, Combs and Colbert. Their “day in court” approach will be hard to sell to citizens who are increasingly informed about geography and politics. Luring lawyers into the state while driving employers and employees out of it is no way to build a sustainable economy. The people of Oklahoma have spoken through their representatives. They want to return to the ideals of the Grand Bargain—not some insiders’ petit bargain[36] between lawyers and judges. If certain justices want a standoff with the general public, they can use their power to prop up a malfunctioning WC system that will continue to drive employers out of business or south of the Red River. If they want a standoff with lawmakers, they can defy the legislature to pass just the sorts of constitutional amendments that proved unnecessary when the Grand Bargain was originally being struck. But if they want to help Oklahomans with the hard work of improving one of the most bloated and inefficient WC systems in the country, all they have to do is take a page from the Supreme Court’s own playbook circa 1917.



[1] Oklahoma’s prohibition against “special laws” finds its roots in two particular provisions of Article V of the Oklahoma Constitution (both unchanged from over a century ago). Section 46 prohibits certain types of special laws on a variety of expressly identified topics, most notably for purposes of this essay prohibiting any special law “regulating the practice or jurisdiction of, or changing the rules of evidence in judicial proceedings or inquiry before the courts, justices of the peace, sheriffs, commissioners, arbitrators, or other tribunals.” Section 59 declares a broader prohibition of special laws: “Laws of a general nature shall have a uniform operation throughout the State, and where a general law can be made applicable, no special law shall be enacted” (emphasis added). In order to determine whether a particular law is a “special law,” the Oklahoma courts have developed a three-pronged test: 1) Is the statute a special law or a general law? 2) If the statute is a special law, is a general law applicable? and 3) If a general law is not applicable, is the statute a permissible special law? Thus it is clear that some “special laws” are permissible. Indeed, arguably, the adoption of “workmen’s compensation” statutes in the early twentieth century in Oklahoma and elsewhere as part of the Grand Bargain was due to recognition that no “general law” was capable of addressing the societal issues resulting from the rapid proliferation of occupational injuries in the wake of the Industrial Revolution. The unique relationship between employer and employee virtually demanded that “special laws” be adopted to govern that relationship when workplace injuries were involved.

[2] Specifically, the court found Subsection 14 of Section 2 of Title 85A unconstitutional. Title 85A consists of three major acts: 1) the Administrative Workers’ Compensation Act (AWCA); 2) the Oklahoma Employee Injury Benefit Act (OEIBA); and 3) the Workers’ Compensation Arbitration Act. This famous Oklahoma statute (born from the passage and enactment of Senate Bill 1062 in 2013) replaced the now obsolete Title 85. The subsection deemed unconstitutional defines a bright-line rule for cumulative trauma claims. Effectively, the legislature fixed 180 days of continuous employment for one employer as the “line” for whether or not an employee had any recourse against that employer for bodily injury caused by repetitive physical activities.

[3] See Andrew Spiropoulos’ remarks as a guest columnist in The Journal Record from March 9th, 2016, especially this passage: “I don’t think these wrong-headed judgments are caused by political partisanship. The judges don’t rule this way because they’re biased in favor of Democrats. They do it because they are biased in favor of lawyers and the legal status quo. The only way to fix this problem is to reform our system of judicial selection so that the organized bar doesn’t have an effective veto over who serves on the Supreme Court.”

[4] In the opinion for the court concerning Torres, Justice James Edmonson referenced the Grand Bargain thirteen times (sometimes referring to it as “the Industrial Bargain”). Justice Tom Colbert and Vice-Chief Justice Douglas Combs each penned concurring opinions and used such terminology three times each.

[5] As indicated in footnote 1, WC laws are "special laws," which suggests that they require special legal and administrative processes. Arguments about the role of "due process" within the framework of WC fail to recognize the fundamental distinction that the Grand Bargain acknowledged between two kinds of relationships: 1) the general relationship of citizens, both individual and corporate, to each other in non-employment settings (to which the traditional attributes of due process sensibly apply); and 2) the special relationship between employers and employees (for which special processes may be required to promote the general welfare, though these processes may not conform with all traditional notions of due process). Accordingly, this essay will refer to the approximation of due process within the framework of WC as "special adjudication." 

[6] When the Supreme Court of Oklahoma upheld the legislature’s first WC act in 1917 in Adams v. Iten Biscuit Co., it quoted SCOTUS’ Holden v. Hardy decision of 1898, according to which: “[T]he methods by which justice is administered are subject to constant fluctuation, and . . . the Constitution of the United States, which is necessarily and to a large extent inflexible and exceedingly difficult of amendment, should not be so construed as to deprive the states of the power to so amend their laws as to make them conform to the wishes of the citizens as they may deem best for the public welfare without bringing them into conflict with the supreme law of the land. Of course, it is impossible to forecast the character or extent of these changes, but in view of the fact that from the day Magna Charta was signed to the present moment, amendments to the structure of the law have been made with increasing frequency, it is impossible to suppose that they will not continue, and the law be forced to adapt itself to new conditions of society, and, particularly, to the new relations between employers and employes [sic], as they arise.” (Note to readers: Although “employes” appears according to its archaic spelling in this passage, similar archaisms in quoted materials are silently modernized elsewhere in this document.)

[7] This essay should help synthesize the too-extensive-to-be-practically-digested work of responsible historians into a more concise, readable portrayal of the original ideals of the Grand Bargain. If representatives of the legal community wish to change their arguments for the sake of keeping up with the times, so be it. But it is high time someone challenged their self-serving distortions of the historical underpinnings of the Grand Bargain.

[8] In 1980, Gustave H. Shubert, Director of the Institute for Civil Justices, offered incredible insight into this seemingly impenetrable subject in his Foreword to The Law and Economics of Workers’ Compensation: “[T]oday most Americans accept WC as a fixed feature of the civil justice scene—so essential and obvious as to be beyond policy debate. Only rarely does this pervasive instrument of social and economic policy emerge from its technical cocoon into the publicly visible portion of the policy arena. Except for those involved in its administration and the periodic struggles over its benefit schedules, few citizens—or legislators—have more than the haziest knowledge of how the system works or what policy issues it presents.”

[9] In “How Should Workers’ Compensation Evolve?,” the prolific and celebrated Mark Walls (founder of the highly influential Work Comp Analysis Group on LinkedIn) observed that PPD “benefits represent a tort element injected into this no-fault benefit delivery system.” Although Walls’ pronouncement appeared in Insurance Thought Leadership in April of 2016, the reliance of attorneys on this PPD-based perversion of Grand Bargain principles has drawn criticism for decades, as in this passage from 1980: “The National Commission found the problems surrounding partial disability benefits so complex and ‘intractable’ that it recommended a special followup commission. . . . Insurance industry representatives have frequently voiced alarm over the inconsistent handling and rising costs of [PPD] claims, urging legislative and judicial restraint, particularly in the case of injury which does not necessarily interfere with the worker’s wage-earning ability. [PPD] cases continue to present such problems as inappropriate payments for the level of disability, great frequency of contested claims, and numerous compromise and release settlements” (Linda Darling-Hammond and Thomas J. Kniesner, The Law and Economics of Workers’ Compensation, pp. 23-25).

[10] A Form 3 was filed with the state when a workplace injury was properly reported. Any claimant filing a Form 3 was establishing jurisdiction for the claim with the Workers’ Compensation Court, a branch of the judiciary in Oklahoma. Whether a claimant chose to use a lawyer or represent herself, the Form 3 created a court claim number; it was a petition for suit.

[11] See G. Edward White’s Tort Reform in the Twentieth Century: An Historical Perspective (1987) for a demonstration of how substantial the widespread enactment of WC laws was. In A Study of Judicial Decisions in New York Workmen’s Compensation Cases (1920), Leon S. Senior offered this prescient summary regarding court rulings when applying the revolutionary WC laws: “The truth of the matter is that in these decisions there is a visible clash between two opposing ideas: the eighteenth century philosophy of individual rights seeking to impress its point of view upon twentieth century legislation” (p. 95; title shortened hereafter to Judicial Decisions).

[12] Actually, the term “WC” took some evolving before it became almost universal. European countries influenced by Germany referred to their pre-20th century solutions as “workmen’s insurance,” while countries influenced by the United Kingdom used “workmen’s compensation.” It took until the late 1970s for these monikers to consolidate into “workers’ compensation.” See "Occupational Accident—What’s in a Name?" for further discussion.

[13] According to Massachusetts’ Report of the Commission on Compensation for Industrial Accidents (1912), “The details of these systems vary in the different countries, but one principle underlies them all and gives a certain degree of unity to all such laws, however much they may differ in form or in method of operation. Accidents are regarded as a necessary incident of industrial operations, and the cost of compensation is considered a fixed charge of the business to be added to the cost of the product and to be finally borne by the whole community as consumers” (p. 55).

[14] I use this phrase (made famous by Isaac Newton) to recognize the heroes of the Grand Bargain in this country: Paul Kellogg, Crystal Eastman, Mahlon Pitney, Louis Brandeis, Matthew Kane, Carl Hookstadt and many others.

[15] For a brief explanation of some efforts by states early on, see Report of the Maine State Bar Association for 1910 and 1911 (pp. 28-41), in which Frank Streeter addressed how substantial the challenge was: “In other words, there suddenly arises from all sides an apparently just claim that a common law system of rules that has occupied more than 300 years in building up, is ethically bad and economically unsound, should be thrown into the scrap-heap with other worn out machinery and there should be substituted a new system based on wholly different principles—principles unknown to the common or any other law until about twenty-five years ago. And yet, gentlemen of the bar, we have men about us who cannot see and do not believe that the world moves” (p. 33).

[16] Eastman’s study (a component of the Pittsburgh Survey) was published in 1910.

[17] Sensitive readers beware, as Eastman focused on gruesome accounts of deaths and dismemberments rather than stories of aching necks and lingering back pain.

[18] In the Foreword to Case Studies of Unemployment (1931), Paul Kellogg recapped comments by Canon Burnett circa 1910: “He pointed out that England in the old time had finely ordered the business of life, with liberty of self-dependence ingrained therein; but all this had been caught in the grappling mechanisms of the Industrial Revolution. These were taking generation after generation of English youths, squeezing them for what they had to give, throwing them aside. Theirs had become a ‘scrap-heap civilization.’ Somehow or other, he said, England must work out a new balance between liberty and life. So must the rest of us. Germany had not found the answer under her autocratic arrangements, nor had we in America in our impetuous foray into industrialism” (p. xix).

[19] William Prosser, Handbook of the Law of Torts (1971, p. 512).

[20] For context, consult John Fabian Witt’s “The Transformation of Work and the Law of Workplace Accidents” from The Yale Law Journal (1998, p. 1484).

[22] For a sample of this rationale from 1910, see “Argument of Theodore W. Reath, Esq., General Solicitor Norfolk & Western Railway Co.” from Hearings Before the Employers’ Liability and Workmen’s Compensation Commission (pp. 91-101; title shortened hereafter to Hearings).

[23] In 1909, Governor Charles Evans Hughes of New York appointed Eastman to the Wainwright Commission, which stressed the amelioration of employer-employee relations in its report to the state legislature the following year: “Not the least of the motives moving us [to enact this law] is the hope that by these means a source of antagonism between employer and employed, pregnant with danger for the State, may be eliminated” (reprinted in James Harrington Boyd’s A Treatise on the Law of Compensation, for Injuries to Workmen under Modern Industrial Statutes [Vol. 2, p. 95]).

[24] Public opinion matters. The Ives ruling was delivered on March 24, 1911. The next day, the famous Triangle Shirtwaist Company fire killed 145 workers in New York City, galvanizing the citizenry to address various Industrial Era problems, such as enacting a compulsory WC system. That zeitgeist led to an amendment to the state’s constitution aimed at overcoming Werner’s concerns. As seen below, that amendment—though impressive—proved unnecessary.

[26] In establishing the Grand Bargain context for Oklahoma, New York initially played the biggest role, but in recent decades, Texas’ role has eclipsed that of any other state.

[27] Despite the focus here on Texas nonsubscription, it’s worth noting that the emphasis on options was a nationwide phenomenon. In fact, 80% of all WC laws passed in the U.S. between 1910 and 1920 were elective.

[28] Hearings, p. 23.

[29] Although this faulty assumption is pervasive among insurance professionals and industry regulators, the members of the Supreme Court of Oklahoma plainly know better, as footnote 13 in Robinson v. Fairview Fellowship Home for Senior Citizens, Inc. demonstrates.

[30] In his opinion, Hardy cites such cases as Young v. Duncan (Massachusetts) and Hunter v. Colfax (Iowa) to illustrate the constitutionality of elective statutes.

[31] “[P]roviding that the right of trial by jury shall be and remain inviolate except as modified by the Constitution itself, means the right as it existed at the time of the adoption of the Constitution.” Attorneys in 2016 have something very different in mind when they make their “day in court” argument concerning WC claims.

[32] Some historians count Kentucky as an exception because it passed its second such effort in 1916. Its first effort, passed in 1914, was struck down in 1915. Price Fishback and Shawn Kantor sketch the national backdrop for WC legislation in Chapter 4 of Prelude to the Welfare State (2000).

[33] A recent issue of Best’s Review (March, 2016) featured a roundtable discussion in which the renowned John F. Burton, Jr. was asked what single word best described “the state of the WC market.” Burton, who chaired the 1972 National Convention on State Workmen’s Compensation Laws and is a Distinguished Professor Emeritus in the School of Management and Labor Relations at Rutgers University, replied: “Depressing. It’s into what I think is a vicious downward spiral and I don’t see a solution to it” (p. 44—access restricted to subscribers). Dr. Burton's opposition to the opt-out movement suggests that he may not understand what opt-out proponents are attempting to accomplish, but it is imperative to try something new when experts as brilliant as Burton cannot see an escape from the path that is crumbling beneath our feet. Consider this apposite quotation from Franklin Delano Roosevelt’s “Address at Oglethorpe University” delivered in May of 1932: “The country needs and, unless I mistake its temper, the country demands bold, persistent experimentation. It is common sense to take a method and try it: If it fails, admit it frankly and try another. But above all, try something. The millions who are in want will not stand by silently forever while the things to satisfy their needs are within easy reach.”

[34] Perversely incentivized WC stakeholders have no reason to want real reform. The message of the legal, medical and insurance communities within WC is consistent: “Just leave it to us, and certainly don’t allow anyone to opt out.” The Grand Bargain, however, was never about such profiteering intermediaries; it was about employers and employees. And in the Oklahoma experiment underway since 2013, those two key constituencies have fared exceptionally well.

[35] In July of 2014, former Texas Supreme Court Justice and current Texas Governor Greg Abbott told the Texas Tribune: “There are several things that have led to Texas growing jobs more than any other state. One was the reform that allowed employers to choose whether or not they were going to purchase [WC] insurance.” For a comprehensive survey of data relating to Texas nonsubscription among large employers, see Alison Morantz’ Rejecting the Grand Bargain: What Happens When Large Companies Opt Out of Workers’ Compensation? (2016),which I had the pleasure of summarizing earlier this year.

[36] Florida case law presents a fairly linear view of how the legal community has pursued the petit bargain of WC. In Tampa Aluminum Products Co. v. Watts (1961), Chief Justice William Terrell cited records from 1959 showing how very infrequent contested WC claims were: Out of 190,000 claims, 6,615 (3.5%) were “reviewed, adjusted or settled.” Terrell reminded readers in footnote 7 that “the workmen's compensation act was pitched on the theory that the claimant could litigate his own cause.” In footnote 8, he issued the prescient warning that attorney fees “are liable to grow and grow until they kill the goose that laid the golden eggs.” Such reasoning is consistent with the Grand Bargain’s stance concerning attorney involvement presented throughout this essay. In 1968, the Florida high court recognized the growing legal trend in WC in its majority opinion on Lee Engineering & Construction Co. v. Fellows, penned by Chief Justice Millard Caldwell: “One salutary effect of substantial fees being awarded [in the WC system] has been that in this state we have been able to build up a strong bar for both employment and management.” That’s bad. Attorneys and judges have added complexity to the special adjudication of WC over the decades—to the bewilderment of injured employees and at the expense of employers. Predictably, the frequency of disputed claims more than quadrupled in the Sunshine State by the early 2000s (as indicated in Florida's 2011-2012 Annual Report of the Office of the Judges of Compensation Claims, pp. 9-14). In the Castellanos v. Next Door Company decision from April of 2016, Florida Supreme Court Justice Barbara Pariente wrote: “It is undeniable that without the right to an attorney with a reasonable fee, the workers’ compensation law can no longer ‘assure the quick and efficient delivery of disability and medical benefits to an injured worker.’” Figures such as Crystal Eastman, Mahlon Pitney, and Louis Brandeis would be shocked by Pariente’s language, since any WC system that requires increased attorney involvement to provide “quick and efficient delivery of disability and medical benefits” has completely missed the point of the Grand Bargain.