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Cypen & Cypen
NEWSLETTER
for
January 19, 2012

Stephen H. Cypen, Esq., Editor

1.      FLORIDA TASK FORCE ON PUBLIC EMPLOYEE DISABILITY PRESUMPTIONS RENDERS ITS REPORT:  The Task Force on Public Employee Disability Presumptions was established pursuant to Chapter 2011-216, Laws of Florida, to review data related to operation and fiscal impact of statutory disability presumptions, review how other states handle disability presumptions, review evidentiary standards and burdens of proof for overcoming statutory disability presumptions and consider risk factors and epidemiological data and provide its findings and proposals for changes to existing statutory disability presumptions.  The Task Force issued its report to the Governor, Legislature and Chief Financial Officer on January 1, 2012.  The Task Force found generally that for all governmental entities represented, the incurred average cost per workers’ compensation claim is lower than the incurred average cost per disability presumption claim.  In addition, for all governmental entities, the percent of incurred cost for presumption claims relative to all workers’ compensation claims is higher than the percent of the number of presumption claims when compared to all workers’ compensation claims.  Among the 50 states, 35 have some form of disability presumption law.  These laws vary in coverage to include firefighters, emergency medical technicians, law enforcement officers and correctional officers.  In 26 states, including Florida, the presumption arises only if the claimant passed a pre-employment physical examination that did not reveal the presence of the disease or condition for which the benefits are claimed.  In 20 states, not including Florida, presumption compensability only arises after a first responder has served in the covered occupation for a specific number of years.  In 32 states (like Florida), the law provides for a rebuttable, rather than an absolute, presumption.  As could be expected from composition of the Task Force members, no consensus was reached on all of the findings and recommendations made by the Task Force, with the exception that members agreed a wellness program could help reduce group health claims and workers’ compensation claims generally, with the consequence of also reducing disability presumption claims.  Unless we misread the report, several “recommendations” were supported by less than a majority of Task Force members.  Here are some recommendations that were supported by at least five of the eight members: 

  • An individual must be under 37 years old to be eligible for a disability presumption.
  • So that the requirement successfully to pass a physical examination is uniform, §175.231, Florida Statutes (fire), and §185.34, Florida Statutes (police) should be amended to conform with §112.18(1)(a), Florida Statutes. 
  • Any evidence of elevated blood pressure (defined as systolic pressure of 130 or higher or diastolic pressure of 80 or higher), as well as any EKG or other cardiac, coronary artery or heart abnormality, or positive tuberculosis test identified on the physical examination performed upon an employee entering into service with the employer against whom the disability presumption is being sought, shall be considered evidence of hypertension, heart disease or tuberculosis as a basis for denying application of a disability presumption. 
  • To be eligible to receive benefits for any disability presumption, a person would be required to be incapacitated from performing work for a minimum of 14 contiguous days as a result of treatment for a covered condition. 
  • Risk factors and epidemiological data relating to non-work-related conditions unique to an individual, such as blood cholesterol, body mass index, history of alcohol use, family history of hypertension or heart disease, diabetes or other medical conditions or behaviors that are associated with the disease or condition subject to a disability presumption shall be considered as a basis for denial or rebuttal of the application of a disability presumption. 
  • An individual shall forfeit a disability presumption if the individual has been or is a user of tobacco products. 
  • A disability presumption shall be overcome by a preponderance of the evidence (instead of the current clear and convincing evidence). 
  • The provisions of section 112.18(1)(b), Florida Statutes, relating to workers’ compensation claim and departure from a prescribed course of treatment shall apply to firefighters (the provisions are already applicable to a law enforcement officer, correctional officer or correctional probation officer). 
  • Amend §633.34(5), Florida Statutes, and §943.13(6), Florida Statutes, to provide that a medical examination for any person applying for employment as a firefighter may include, but not be limited to, history and profile review and analysis of risk factors and epidemiological data related to non-work-related conditions such as tobacco products use, body mass index, high cholesterol, alcohol use, family history of heart disease or hypertension and provisions of the National Fire Protection Association Standard 1582. 
  • Add a new provision as §633.34(7), Florida Statutes, requiring that employees hired after July 1, 2012, must continue to be a non-user of tobacco products with the employing entity during employment as a firefighter. 
  • Minimum fitness standards as to body mass ratio, lifting strength, cardio vascular endurance, alcohol consumption and tobacco product use should be required to be established by all governmental employers for all employees benefitting from disability presumption.  Fitness for duty should be determined before an employee is selected and hired, and should be incorporated as a routine part of continuing employment. 
  • Minimum hiring standards for fitness should be developed and provided to physicians assisting with pre-employment evaluation. 
  • Health and wellness promotion should be incorporated by design into agency operations, and health and wellness information should be available and accessible to employees at work and away from work.  Wellness programs should be instituted by agencies employing officers who are covered by presumption claim statutes. 
  • Personal contact and interactive support systems among colleagues, such as a mentoring program, should be developed as part of a wellness program to provide employees a vehicle to address traumatic events and release anxiety and frustration in a mutually supportive environment. 
  • That the Legislature provide funding for an actuarial special study to determine funding costs of presumption claims for in-line-of-duty disability presumptions.  

 
The Task Force consisted of the following:  an attorney representing injured workers, a county commissioner and the Governmental Relations Director of the Florida Professional Firefighters (all appointed by the President of the Senate); an attorney representing governmental entities, a city attorney and a municipal firefighter/engineer (all appointed by the Speaker of the House of Representatives); the assistant general counsel of the Department of Management Services (appointed by the Governor); and the Director of the Division of Risk Management (appointed by the Chief Financial Officer).  Despite the legislative mandate under Chapter 2011-216, Florida Statutes, that a member of a pension plan under Chapter 185, Florida Statutes, be a part of the Task Force, no such member was appointed.  Consequently, no input from this protected class was received by the Task Force. 
 
2.      THIRTY SIX PERCENT OF INSTITUTIONAL INVESTORS MAY DUMP STOCKS:  
Pionline.com has reviewed Cogent Research’s Institutional Investor Brandscape 2011 study, which finds that Institutional investors are likely to reduce their holdings in U.S. public entities significantly over the next three years.  Thirty-six percent of fund executives surveyed plan to decrease U.S. equity allocations, while only 9% anticipate an increase in the holdings.  Most of the equity decrease will come from active strategies.  Interestingly, half of investors said they are going to make changes to U.S. public entities, mainly active managers.  Alternatives appear to be the big winner over the next three years, with a net 20% of respondents planning to increase their holdings in the asset class.  A lot of movement also is expected in fixed income, but not much change in net assets, with about 40% of respondents each saying they will increase or decrease holdings.  Corporate plans are much more likely to decrease holdings in U.S. equity and increase allocations to fixed income; public plans are expected moderately to decrease equity holdings with more substantial anticipated increases into alternatives.  This scenario may be driven by the fact that public pensions are being more aggressive and are under significantly more pressure to deliver, as their overall funding status is lower than for corporate pensions.  The study highlights problems that large broad-based money managers could face.  With more money leaving equities for alternatives, niche managers could become beneficiaries, while large broad managers may have to alter strategies in product development. 
 
3.      CLARIFICATION FROM NYSTRS:  We recently published a piece on a New York pension fund not releasing certain data (see C&C Newsletter for January 12, 2012, Item 2).  A representative of New York state Teachers’ Retirement System has provided us with the following clarification, which we gladly publish here: 
 
We continue to release information on pensions paid to our retirees, except for the names of retirees.  In order to protect names from disclosure as permitted in the court decision cited, we will not respond to certain requests where the response would in effect identify a pension amount to a specific retiree.  Nothing in our policy, however, prevents the requester from restructuring its request in a way that allows for the release of information about retiree pensions in a way that would not identify a specific retiree.  For example, nothing prevents requesters from obtaining a list of all the pensions we are paying, the highest 25, the highest 100, all pensions over $100,000 a year, etc.
 
Thank you, NYSTRS. 
 
4.      HATCH(ET) JOB?:  United States Senate Committee on Finance ranking member Orrin Hatch (R-Utah) issued a report entitled “State and Local Government Defined Benefit Pension Plans:  The Pension Debt Crisis that Threatens America.”  Concluding that a new public pension plan structure is necessary, Hatch says
 
It is not necessary at this juncture to assess blame for the public pension debt crisis.  Regardless of the cause of the crisis, the current public defined benefit pension system in not sustainable for taxpayers or retirees.  A solution is needed.  A legislative solution for consideration by Congress will be introduced in the Senate in the near future.  It will be a serious proposal to solve what has become an intractable problem.  The proposal will warrant serious consideration and, hopefully, support of Congress and the states. 
 
Don’t bet the farm on it. 
 
5.      WISCONSIN PUBLIC WORKERS RETIRE IN DROVES:  Record numbers of government employees rushed to retire late last year, as Wisconsin Governor Scott Walker and the Republican Legislature rolled back public employee unions rights, reduced take home pay and increased medical co-pays.  According to the Wisconsin StateJournal, last year the state pension fund received a record 18,780 retirement applications from employees of state agencies, school districts and local governments, compared to an average of about 10,500 in each of the previous seven years.  New federal labor statistics also show Wisconsin lost a bigger slice of its public sector workforce than any other state from April through June, nearly 8,000 jobs, or a 10 percent decline from the same quarter in 2010.  Conditions are ripe for another big year in 2012, and if hiring of new workers does not keep pace, public services could suffer, says a professor who specializes in government operations.  Valuable know-how is lost when departing employees cannot train the next generation, and morale suffers when smaller staffs are forced to shoulder a steady or growing workload.  Walker and a Republican legislative majority took office about a year ago.  They eliminated almost all collective bargaining rights from most public sector unions, and forced government workers to pay more for benefits, saying the changes were needed to cut spending.  Liberals said the actions were designed to gut unions because they are a key Democratic Party constituency, and massive demonstrations rocked the Capitol for weeks.  The state retirement system had about 570,000 participants, with nearly three-quarters employed by local governments.  Now, about 267,000 are still on the job.  The remainder are split nearly evenly between retirees and those who are not working, but are not yet collecting benefits. 
 
6.      FIRST AMENDMENT BARS EMPLOYMENT DISCRIMINATION SUITS BY MINISTERS AGAINST THEIR CHURCHES:   Hosanna-Tabor Evangelical Lutheran Church and School is a member congregation of the Lutheran Church-Missouri Synod.  The Synod classifies its school teachers into two categories:  “called” and “lay.”  “Called” teachers are regarded as having been called to their vocation by God.  To be eligible to be considered “called,” a teacher must complete certain academic requirements, including a course of theological study.  Once called, a teacher receives the formal title of “Minister of Religion, Commissioned.”  “Lay” teachers, by contrast, are not required to be trained by the Synod or even to be Lutheran.  Although lay and called teachers at Hosanna-Tabor generally performed the same duties, lay teachers were hired only when called teachers were unavailable.  After Perich completed the required training, Hosanna-Tabor asked her to become a called teacher.  Perich accepted the call and was designated a commissioned minister.  In addition to teaching secular subjects, Perich taught a religion class, led her students in daily prayer and devotional exercises, and took her students to a weekly school-wide chapel service.  Perich developed narcolepsy, and began the 2004-2005 school year on disability leave.  She notified the school that she would be able to report to work in February, but was told the school had already contracted with a lay teacher to fill her position for the remainder of the school year.  The congregation offered to pay a portion of Perich’s health insurance premiums in exchange for her resignation as a called teacher.  Perich refused to resign, presented herself at the school and refused to leave until she received written documentation that she had reported to work.  The principal later called Perich and told her that she would likely be fired. The congregation then voted to rescind Perich’s call, and she was terminated.  Perich filed a charge with the Equal Employment Opportunity Commission, claiming that her employment had been terminated in violation of the Americans with Disabilities Act.  The EEOC brought suit against Hosanna-Tabor, alleging that Perich had been fired in retaliation for threatening to file an ADA lawsuit.  Perich intervened in the litigation.  Invoking what is known as the “ministerial exception,” Hosanna-Tabor argued that the suit was barred by the First Amendment because claims concerned the employment relationship between a religious institution and one of its ministers. The District Court agreed, granted summary judgment in favor of Hosanna-Tabor.  The Sixth Circuit vacated and remanded, and although recognizing existence of a ministerial exception rooted in the First Amendment, concluded that Perich did not qualify as a “minister” under the exception.  On certiorari, a unanimous Supreme Court reversed.  The Establishment and Free Exercise Clauses of the First Amendment bar suits brought on behalf of ministers against their churches, claiming termination in violation of employment discrimination laws.  Because Perich was a minister within the meaning of the ministerial exception, the First Amendment requires dismissal of the employment discrimination suit against her religious employer.  And very importantly, the Court held only that the ministerial exception bars an employment discrimination suit brought on behalf of a minister, challenging her church’s decision to fire her. The Court expressed no view on whether the exception bars other types of suits.  Hosanna-TaborEvangelical Lutheran Church and School v. Equal Employment Opportunity Commission, Case No. 10-553 (U.S., January 11, 2012). 
 
7.      CLAIMANT SEEKING BENEFITS UNDER OUTER CONTINENTAL SHELF LANDS ACT REQUIRED TO ESTABLISH SUBSTANTIAL NEXUS BETWEEN INJURY AND EXTRACTIVE OPERATIONS ON THE SHELF:   Pacific Operators Offshore, LLP operated two drilling platforms on the Outer Continental Shelf off the California coast and an onshore oil and gas processing facility. Valladolid spent 98 percent of his time working on an offshore platform, but was killed in an accident while working at the onshore facility.  His widow sought benefits under the Longshore and Harbor Workers’ Compensation Act pursuant to the Outer Continental Shelf Lands Act, which extends LHWCA coverage to injuries occurring as the result of operations conducted on the Outer Continental Shelf for purpose of extracting natural resources from the shelf.  An Administrative Law Judge dismissed the claim, reasoning that Valladolid’s fatal injury was not covered because his accident occurred on land, not on the Outer Continental Shelf.  The Labor Department’s Benefits Review Board affirmed, but the Ninth Circuit reversed.  Rejecting tests used by the Third and Fifth Circuits, the Ninth Circuit concluded that a claimant seeking benefits under the OCSLA must establish a substantial nexus between the injury and extractive operations on the shelf.  Upon certiorari review by the United States Supreme Court, the judgment was affirmed.  The Ninth Circuit’s substantial-nexus test is faithful to the text of the statute.  That test requires an injured employee to establish a significant causal link between his injury and his employer’s on-OCS extractive operations.  The test may not be the easiest to administer, but Administrative Law Judges and courts should be able to determine if an injured employee has established the required significant causal link.  Whether an employee injured while performing an off-OCS task qualifies will depend on circumstances of each case.  It was thus proper for the Ninth Circuit to remand the case for the Benefits Review Board to apply the substantial-nexus test.  Pacific Operators Offshore, LLP v. Valladolid, Case No. 10-507 (U.S., January 11, 2012). 
 
8.      GOLF WISDOMS:  One good shank deserves another.  
 
9.      PARAPROSDOKIAN:  (A paraprosdokian is a figure of speech in which the latter part of a sentence or phrase is surprising or unexpected in a way that causes the reader or listener to reframe or reinterpret the first part.  It is frequently used for humorous or dramatic effect.):  “There’s a bunch of different crunches that affect the abs … my favorite is Nestle.” — Shmuel Breban 
 
10.    QUOTE OF THE WEEK:   “The man who is swimming against the stream knows the strength of it.”  Woodrow Wilson
 
11.    ON THIS DAY IN HISTORY:  In 1991, Eastern Airlines shuts down operation. 
 
12.    KEEP THOSE CARDS AND LETTERS COMING:  Several readers regularly supply us with suggestions or tips for newsletter items.  Please feel free to send us or point us to matters you think would be of interest to our readers.  Subject to editorial discretion, we may print them.  Rest assured that we will not publish any names as referring sources. 
 
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Items in this Newsletter may be excerpts or summaries of original or secondary source material, and may have been reorganized for clarity and brevity. This Newsletter is general in nature and is not intended to provide specific legal or other advice.


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