VASQUEZ v. DILLARD'S, INC.

¶1 With the constitutionality of the Oklahoma Employee Injury Benefit Act, 85A O.S. Supp. 2014 §§201-213, squarely before this Court in the instant cause, we determine that we have authority to address the special law issues presented pursuant to the legislative directive contained in 85A O.S. Supp. 2014 §213(A)¹ and under Robinson v. Fairview Fellowship Home for Senior Citizens, Inc., 2016 OK 42, 371 P.3d 477. The core provision of the Opt Out Act, 85A O.S. Supp. 2015 §203² creates impermissible, unequal, disparate treatment of a select group of injured workers. Therefore, we hold that the Oklahoma Employee Benefit Injury Act, 85A O.S. 2014 §§201-213, is an unconstitutional special law under the Oklahoma Constitution, art. 2, §59.³

PROCEDURAL POSTURE

¶2 Vasquez, Dillard's employee, injured her neck and shoulder as she lifted shoe boxes while working on September 11, 2014.⁴ On that date and on September 24th, she filed claims for benefits under Dillard's Opt-Out plan. Dillards denied the claims on October 3 and 10, 2014, respectively. The employee appealed to the Workers' Compensation Commission, filing a Notice of Claim for Compensation on December 5, 2014.

¶3 The employer sought removal to federal court on August 6, 2015 on grounds that the federal court had exclusive jurisdiction under the Employee Retirement Income Security Act (ERISA). The United States District Court for the Western District disagreed and remanded the cause to the Commission on September 30, 2015. The Commission heard arguments in the cause in February, issuing an order in the cause on September 26, 2015. It found that the Opt Out Act: 1) constituted an unconstitutional special law;⁵ 2) denied equal protection to Oklahoma's injured workers;⁶ and 3) denied injured workers the constitutionally protected right of access to courts.⁷¶4 On March 17, 2016, Dillard's filed a petition for review with this Court. Extensive briefing ensued by the parties, the Attorney General,⁸ and various amici curiae. The most recent filing in the cause, the employee's Submission of Supplemental Authority, occurred on the afternoon of July 30th. We issue today's opinion in conjunction with the Legislature's directive that appeals alleging constitutional challenges to the Opt Out Act should be expedited ⁹ and in recognition that multiple cases concerning challenges similar to the one presented here have currently been stayed by the Commission.

DISCUSSION

¶5 a. Constitutional issues are properly before this Court
pursuant to the legislative mandate of 85A O.S. Supp. 2014 §213(A)
and Robinson v. Fairview Fellowship Home
for Senior Citizens, Inc., 2016 OK 42, 371 P.3d 477.

¶6 Dillard's assertions that this Court lacks jurisdiction to hear the instant cause are unconvincing. In §213(A) of the Opt Out Act,¹⁰ the Legislature directs that whenever the constitutionality of the Act is challenged, the Supreme Court shall¹¹ retain the appeal. Furthermore, we are instructed to expedite review.

¶7 We have recently determined in Robinson v. Fairview Fellowship Home for Senior Citizens, Inc., 2016 OK 42, 371 P.3d 477, that the Commission has no authority to determine the facial constitutionality of the Opt Out Act as a special law. Therefore, the Commission's determinations of constitutionality were not authorized as a blanket strike of the Opt Out Act.

¶8 The portion of Robinson important to these proceedings is found at ¶14. It provides that "this Court has a duty to review the constitutionality of a challenged legislative enactment when presented with a justiciable case or controversy. . . ." We are presented with such a cause here.

¶9 At issue is a challenge to the constitutionality of the Opt Out Act. Robinson confirms that it is this Court's responsibility to address the issue currently before us. Furthermore, the Legislature has directed us to do so in a timely manner. Therefore, we determine that issues related to the constitutionality of the Opt Out Act are properly before this Court.¹²

¶10 b. The Opt Out Act is an unconstitutional special law,
creating an impermisible select group of employees
seeking compensation for work-related injuries
for disparate treatment, in violation of
art. 5, §59 of the Oklahoma Constitution.

¶11 Before addressing the various arguments of the parties, it is helpful to understand the test for determining whether a law violates the special law prohibition of art. 5, §59. Its terms are that:

"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."

Statutes facing an art. 5, §59 challenge are considered pursuant to a three-part test to determine constitutonal muster. First, is the law special or general? Second, if the law is special in nature, does a general law apply? And, finally, if a general law is not applicable, is the statute a permissible special law?¹³

¶12 The first prong requires us to identify the class. If the statute relates to all persons or things within the class, it is a general law. Where the law singles out less than an entire class of similarly affected persons or things for different treatment, it is a special law. Under the second prong, the question is whether the legislation is susceptible of general treatment or if some special situation makes treatment by a general law impossible. Third, it must be determined whether the special law is so substantially related to a valid legislative objective that it will survive the constitutional challenge.¹⁴

¶13 The above analysis was posited by this Court in Reynolds v. Porter, 1988 OK 88, 760 P.2d 818. We consider the arguments of the parties, in which many of the concerns of the Attorney General are subsumed, in making our determination as to whether the Opt Out is general or special in nature.

¶14. 1) The defined class for special law analysis
is made up of injured employees.

¶15 Dillard's contends that there is no disparate treatment of the class at issue in the Opt Out Act. It does so by alleging that the relevant stautorily-created class is composed of "all employers" rather than injured employees. Vasquez insists that the class at issue is that of "injured employees." We consider the employer's argument unconvincing and agree with the employee.

¶16 The employer relies on Grimes v. City of Oklahoma City, 2002 OK 47, 49 P3d 719 for the propisition that the defined class should be considered to be employers rather than employees. Grimes upheld, against a special law attack, the municipality's right to determine the manner in which to support economically the schools within its corporate limits. In so doing, we recognized that the members of the class were the municipalities, all of which were given the same option.

¶17 Grimes is distiguishable on its facts and provides no assistance to the employer's arguments. It did not address any issue related to the workers' compensation scheme or rights among injured employees. Rather, it concerned the authority of municipalities to manage tax revenues in support of select public schools. In determining that no special law was involved and in defining the class at issue, the Grimes court looked to the title of the legislative act, "Municipal support of public school systems." It determined that the title of the act, referring to municipalities, indicated that the class at issue was made up of all municipalities of the state and was general in nature.

¶18 Here, the title of the Opt Out Act makes no mention of employers. Rather, the legisation is entitled as the "Employee Injury Benefit Act." Furthermore, the title of the Administrative Act refers to "workers" rather than employers. Just as the title of the act was considered to encompass the identified class in Grimes, it also serves as legislative intent here that the identified class is that of "injured employees."¹⁵

¶19 2) The Opt Out Act does not guarantee members
of the subject class, all employees, the same rights
when a work related injury occurs.
Rather, it provides employers the authority to
single out their injured employees for inequitable treatment.

¶20 The employer makes the rather incredible argument that the Opt Out Act provides a baseline of Core Coverage requirement in §203(B) guaranteeing individual injured employees equal treatment. Vasquez relies on the same statutory provision for the proposition that inequitable treatment is specifically allowed. We are convinced by the very language of the statutory provision that the employee's position is viable.

¶21 Title 85A O.S. Supp. 2015 §203(B) provides:

The benefit plan shall provide for payment of the same forms of benefits included in the Administrative Workers' Compensation Act for temporary total disability, disfigurement, amputation or permanent total loss of use of a scheduled member, death and medical benefits as a result of an occupational injury, 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 §§45, 46, and 47 of this title. For this purpose, the standards for determination of average weekly wage, death beneficiaries, and disability under the Administrative Workers' Compensation Act shall apply under the Oklahoma Employee Injury Benefit Act, but no other provision of the Administrative Workers' Compensation Act defining covered injuries, medical management, dispute resolution or other process, funding, notices or penalties shall apply or otherwise be controlling under the Oklahoma Employee Injury Benefit Act, unless expressly incorporated. [Emphasis supplied.]

¶22 Rather than providing employees of qualified plan employers equal rights with those of employees falling within the Workers' Compensation Act, the clear, concise, unmistakeable, and mandatory language¹⁶ of the Opt Out Act provides that, absent the Act's express incorporation of some standard, such employers are not bound by any provision of the Workers' Compensation Act for the purpose of: defining covered injuries; medical management; dispute resolution or other process; funding; notices; or penalties. The statutory language itself demonstrates that injured workers under the Opt Out Act have no protection to the coverage, process, or procedure afforded their fellow employees falling under the Administrative Workers' Compensation Act. There is little question that §203 specifically allows the employers creating their own plans to include conditions for recovery making it more difficult for the injured employee falling within to recover for a work-related injury than a counterpart covered by the Administrative Act.

¶23 Analysis under the first prong of the three part test in determining the nature of a law as general or special in nature is accomplished. The class being that of "all employees" rather than "all employers" coupled with the reality that "all employees" are not guaranteed the same rights when injuries occur, we determine that the Opt Out Act is a special law.

¶24 3) The applicable general law is the
Administrative Workers' Compensation Act.

¶25 The second prong of the test requires a determination of whether a general law applies. Dillard's contends that there is no generally applicable legislative provision. Vasquez insists the general law exists in the form of the Workers' Compensation Act. We agree with the employee.

¶26 There is undoubtedly a general law covering the issue of compensation for individuals injured during the course of their employment. Absent the existence of the Opt Out Act, all injured employees, not specifically excluded from the Workers' Compensation Act's coverage, could proceed to seek redress for work-related injuries. The Administrative Workers' Compensation Act defines, with enumerated exceptions, an "employee" as "any person in the service of an employer under any contract of hire or apprenticeship."¹⁷ Section 3 of 85A O.S. Supp. 2014 provides that "every employer" and "every employee" shall be bound by the Administrative Act absent exclusivity enumerated in the Act. "Every" ordinarily means "any" or "all" and suggests a broad, expansive meaning inclusive in nature.¹⁸ There is no question that its subject is "general" in nature and that all employees covered by its provisions may seek relief thereunder.

¶27 3) The Opt Out Act is not a constitutionally
permissive special law.

¶28 Dillard's final contention is that even if the Opt Out Act is a special law, it is constitutionally permissible because the Act is substantially and reasonably related to a legitimate government objective. Some of the identified underlying goals posited by the employer include: providing a more effective system of identifying and treating workplace injuries; improving access to medical treatment; improving worker health and safety; and encouraging job creation. Dillard's argues that the Legislature intended to accomplish these goals by giving employers the freedom to manage and administer the provision of benefits to their injured employees. Vasquez points to the general law as the Administrative Workers' Compensation Act and argues that there is no distinctive characteristic which warrants treating less than all injured employees similarly. We agree with the employee's reasoning.

¶29 We remain convinced that the employer-enumerated goals of the Opt Out Act cannot save it from the constitutional challenge presented. This Court has previously made it clear we will not accept the invitation of employers to find a discriminatory state statute constitutional by relying on the interests of employers in reducing compensation costs.¹⁹

¶30 This Court recently visited an argument similar to the one presented here in Maxwell v. Sprint PCS, 2016 OK 41, 369 P.3d 1079. The Maxwell employer insisted that deferral of permanent partial disability benefits to a subclass of injured workers under the Administrative Workers' Compensation Act was a constitutionally permmissive special law.

¶31 In Maxwell, we recognized the Legislature's authority to exclude entire classes of employees from coverage under the workers' compensation system generally. Nevertheless, the Court also acknowledged that the Legislature was without power to vary the effect of an award by excluding one group of claimants from benefits accorded other recipients. In so doing, we relied upon the following statement from Grant v. Goodyear Tire & Rubber Co., 2000 OK 41, ¶10, 5 P.3d 594, 598, wherein this Court wrote:

For a special law to be permissible, there must be some distinctive characteristic warranting different treatment and that furnishes a practical and reasonable basis for discrimination.... If there is neither a distinctive characteristic upon which a different treatment may reasonably be founded nor one which furnishes a practical and real basis for discrimination between the two groups within the class, the distinction becomes arbitrary and without relation to the subject matter. (citations omitted.)

¶32 The class at issue here is composed of workers seeking compensation for their work-related injuries. No distinctive characteristic exists for the disparate treatment of injured employees simply upon the basis that the employer has opted out of the general workers' compensation system.

¶32 The heart of the Opt Out Act is §203.
Simple excision of the offending provision would
eviscerate the very foundation of the
Oklahoma Employee Injury Benefit Act.

¶33 The Attorney General argues that the Compensation Commission and, presumably, this Court, should either read §203 to provide identical benefits as found within the confines of the Administrative Act, eliminating the disparate treatment of the class, or merely sever the unconstitutional portion of the statute. Although we recognize that the Opt Out Act contains a severance provision providing for severance of any offending provision,²⁰ the suggestion that the Act can be saved by simply requiring that qualified employers treat their employees exactly as the Administrative Act requires, would effectively frustrate any rational reason for an employer to go to the trouble and expense of developing a plan required to mirror the surviving statutory scheme. Such employers would be liable to the same extent as an employer having complied with the Administrative Act.

CONCLUSION

¶34 A general law encompasses all of a class. A special law is one that rests on a false or deficient classification.²¹ We do not correct the Legislature nor do we take upon ourselves the responsibility of legislating by judicial fiat. However, we are compelled to apply Oklahoma's Constitution.²²

¶35 Since the passage of the dual workers' compensation system, this Court has been asked to rule on a multitude of challenges to the new scheme's constitutionality. In each of those causes, we have begun with the premise that such statutory provisions are presumed to be, and should be construed so as to be, constitutional whenever possible. Often over vigorous special writings, the Court decided the causes on the narrowest grounds possible. Nevertheless, this cause squarely presents the issue of whether the Opt Out Act is an unconstitutional special law demonstrated by the language of a statutory provision which is the heart of the Act's premise. As we consider this issue dispositive, we have not reached other constitutional challenges to the Opt Out Act based on denials of equal protection, due process, and access to courts.

¶36 The constitutionality of the Oklahoma Employee Injury Benefit Act, 85A O.S. 2014 §§201-213 is squarely before this Court in the instant cause. Therefore, we determine that we have authority to address the special law issues presented pursuant to the legislative directive contained in 85 O.S. Supp. 2014 § 213(A)²³ and under Robinson v. Fairview Fellowship Home for Senior Citizens, Inc., 2016 OK 42, 371 P.3d 477. The core provision of the Opt Out Act, 85A O.S. Supp. 2015 sec. 203,²⁴ creates impermissible, unequal, and disparate treatment of a select group of injured workers. Therefore, we hold that the Oklahoma Employee Benefit Injury Act, 85A O.S. 2014 §§201-213, is an unconstitutional special law under the Oklahoma Constitution, art. 2, §59.²⁵

¶37 This action is a direct attack on constitutional grounds pursued because the employee believed her rights were denied under an unconstitutional statutory provision. Neither the United States nor the Oklahoma Constitution delineates the effective date of judicial opinions. We are cognizant that there are a number of causes currently pending in the Commission which have been stayed because they concerned issues similar to those presented here. Therefore, this decision is to be given effect in the immediate cause, in the causes currently being challenged before the Commission and in the appellate pipeline, and prospectively to all future cases after the issuance of mandate.²⁶

¶38 The cause is remanded for proceedings consistent with the provision of the Court's opinion.

¶1 I concur in the majority's determination that the Employee Injury Benefit Act (Opt Out Act), 85A O.S. Supp. 2014 §§ 200-213 is an unconstitutional special law within the meaning of Okla. Const. art. 5, § 59. Determining the special law issue to be dispositive, the majority declines to address other constitutional infirmities present in the Opt Out Act.

¶2 I write separately to emphasize that I would expand on the majority's special law analysis and address other areas in which the Opt Out Act is constitutionally deficient. Specifically, in addition to being an unconstitutional special law because it subjects injured workers to disparate court procedure and process, the Opt Out Act fails to provide adequate due process protections. My reasons remain the same as those I set out previously in my separate writing in Coates v. Fallin, 2013 OK 108, 316 P.3d 924.

¶1 The bottom line in the case before us is this: The state of Oklahoma can either allow an employer to opt out¹ of the state's workers' compensation system entirely and lose exclusive remedy protections; OR the state can require an employer to provide coverage for work-place injuries under the state's workers' compensation system and be given the protections of exclusive remedy. Because the system as it stands now seeks to allow an employer to both opt out of the workers' compensation system and still be provided with exclusive remedy protections, I concur with the majority in concluding that the Oklahoma Employee Injury Benefit Act (OEIBA)² is inoperable as a matter of law and must be found unconstitutional in its entirety. However, I write separately to explain several additional concerns.

Texas Opt-Out System vs. Oklahoma Opt-Out System

¶2 Texas has, since the inception of its workers' compensation system, allowed employers to opt out.³ Under the Texas Workers' Compensation Act (TWCA),⁴ an employer can choose whether or not to "subscribe" to workers' compensation insurance.⁵ If an employer subscribes to workers' compensation insurance under the TWCA, an injured employee "may recover statutorily-prescribed benefits without regard to the employer's fault or the employee's negligence."⁶ "In exchange, the employee may not bring common-law claims against the subscribing employer."⁷ Additionally, under the Texas system employees also have the option of opting out--"an injured employee may retain the right to assert common-law claims against a subscribing employer if the employee timely elected in writing to waive workers' compensation insurance coverage."⁸ When an employee timely waives workers' compensation insurance coverage, "the employer may raise all common-law defenses."⁹ Thus, under the Texas system, participation in the workers' compensation system is "voluntary and elective as to both employer and employee."¹⁰

¶3 However, the Texas system also gives an employer the option to not subscribe to workers' compensation insurance at all, i.e. opt out.¹¹ If an employer provides no benefits for an on-the-job injury, the "[n]onsubscribing employers' employees retain the right to bring personal-injury claims against their employers" in the courts.¹² In defending against such claims, however, a nonsubscribing employer loses all traditional common-law defenses, thus, "encourag[ing] employers to subscribe and penaliz[ing] those who do not."¹³

¶4 In addition, employers in Texas who opt out can also establish an alternative benefit plan to provide certain benefits for on-the-job injuries. Importantly, such plans are not required to provide the same benefits as provided for in the TWCA, and the plans are not regulated in any way by the TWCA. Thus, "[w]hile some plans provide adequate coverage, others do not primarily because the State does not regulate the adequacy of the benefits received under the plans. A nonsubscribing employer has the unfettered discretion in determining the amount of benefits it will provide employees under an alternative plan."¹⁴ Such alternative benefit plans are, generally speaking, covered by the Employee Retirement Income Security Act (ERISA), and do not "guarantee substantive benefits."¹⁵ In Texas, injured workers seeking to recover benefits under such alternative plans may end up in federal court as such claims are removable under ERISA's civil enforcement provision.¹⁶

¶5 Under Oklahoma's newly created workers' compensation system, enacted under Title 85A and effective February 1, 2014,¹⁷ employers may continue to provide coverage for workplace injuries under the traditional no-fault workers' compensation system, now governed by the Administrative Workers' Compensation Act (AWCA).¹⁸ Employers are provided immunity from civil liability, and "[t]he rights and remedies granted to an employee subject to the provisions of the [AWCA] [are] exclusive of all other rights and remedies of the employee . . .