E. Destroying Traditional Exclusive Remedy Balance

Circumventing Workers' Compensation through Intentional Tort Claims

Much of the system of legal entitlements consists of balances carefully crafted over time. Many of these balances exist within the common law (such as, for example, the balance between contributory negligence and joint and several liability described earlier). Others are established by statute, especially if there is a political sense that the existing common law scheme distributes legal entitlements too unevenly. The classic example of a statutorily-imposed balance is the system of workers' compensation.

Prior to the advent of workers' compensation, an injured employee had to prove employer negligence in order to recover for injuries on the job. In bringing such a suit, the employee faced numerous difficult hurdles, such as assumption of the risk, contributory negligence, and the fellow-servant doctrine. Of course, if the employee succeeded in overcoming those hurdles, the employer could be held liable for full damages. The employer also faced the prospect of a possible full law suit every time one of her workers incurred an injury at work. The system seemed inequitable in its response to workplace injury. Most injured workers could not recover from the employer, while a few could recover substantial damages. The employer was faced with the constant threat of escalating legal costs.

In response to this perceived lack of proper legal balance, legislatures throughout the nation decided to establish a special balance of their own – workers' compensation. Under this system, employees would always recover for workplace injury, regardless of whether the employer had fault or not. In exchange, the employer would only be liable for medical costs and lost wages (with the latter capped at legislatively set limits). The entire dispute resolution system would be taken out of the courtroom and placed into an administrative setting that could operate more swiftly and simply. In order to make this system work, workers' compensation would become the exclusive remedy for the employee to recover for workplace injuries.

For the most part, this carefully developed balance has remained intact. In recent years, employees have found a way to get extra recovery for workplace injuries by suing third parties contributing to the injury, such as manufacturers or architects. There was also a mostly-theoretical, seldom-used intentional tort option available to the employee in grievous circumstances where the employer intentionally hurt the employee on the job. But in everyday practice, the employer was protected from suit outside of the workers' compensation system due to the exclusive remedy provision – until, that is, tile case of Beauchamp v. Dow Chemical Company. [42]

Plaintiff Beauchamp claimed physical and mental impairment due to exposure to the "agent orange" chemical manufactured by Dow, Using a standard "kitchen sink" approach to suit (where a plaintiff uses every conceivable theory of recovery in his complaint), Beauchamp claimed fraudulent concealment, breach of an implied contract to provide safe working conditions, assault, and intentional infliction of emotional distress. Beauchamp hit paydirt with the intentional tort claims. In reaffirming the intentional tort exception to the exclusive remedy clause in workers' compensation, the court established a standard so broad that it had the potential to include virtually any workplace accident involving employer negligence.

The Michigan Supreme Court established this broad standard by adopting the "substantial certainty" test for intentional tort, as opposed to the "true intent" test. The Court of Appeals had applied the latter standard to the case, under which "the plaintiff must allege that the employer intended the injury itself and not merely the activity leading to the injury." But the Supreme Court rejected this strict standard, preferring instead the following:

If the actor knows that the consequences are certain, or substantially certain, to result from his act, and still goes ahead, he is treated by the law as if he had in fact desired to produce the result. It does not matter whether the employer wishes the injury would not occur or does not care whether it occurs. If the injury is substantially certain to occur as a consequence of actions the employer intended, the employer is deemed to have intended the injuries as well.

In adopting this standard, the court was fully aware of the dramatic difference between "true intent" and "substantial certainty". Citing the facts in an Arkansas case where the "true intent" standard was applied to deny liability, the court admitted that the case would probably have been decided differently under the "substantial certainty" standard. In the Arkansas case, the employer had ordered a protective grate removed from an auger. The surface near the auger sloped toward the opening and was usually slippery because of grain particles and residue resting thereon. The plaintiff employee was placed by the employer near the auger. The plaintiff slipped, fell into the auger and was mangled. Under the "substantial certainty" test, the employer would have been found guilty of an intentional tort.

The court also cites the facts in an Arizona case, where two men were killed when a ditch caved in and buried them alive. Inspectors had warned the employer that the sides of the ditch were not sloped properly, the side was sandy, more shoring was needed, and escape ladders should be placed every 25 feet. The employer had ignored all of these warnings. As in the Arkansas case, the employer did not intend to injure or kill the plaintiffs. Yet, under the "substantial certainty" test, the court intimates, defendant employer would have been found liable.

By citing these factual examples, the court makes clear that it consciously wants to shift the concept of intentional tort toward something looser and more readily accessible to plaintiffs. In fact, intentional tort is really no longer intentional at all, but more akin to gross negligence, without calling it that. Why is the court making this shift? The answer appears to be simply, 1) to expand the ability of individuals to recover in court, and 2) to manipulate the behavior of employers so that they act more the way the court would like them to act.

The problem with the "substantial certainty" test is two-fold. First, it permits any employee with a modestly colorable claim of employer negligence to maintain a lawsuit outside of workers' compensation. Every case where the employer might have been even slightly wrongful in her behavior will end up in court. Second, "substantial certainty" has to be decided by a jury, which will usually have a very hard time denying an injured plaintiff compensation against a business if the jury detects any negligence at all an the part of the business.

If a machine is not functioning properly and the employer asks a worker to use the machine, is a resulting injury not substantially certain to occur? If a particular work setting has produced injuries in the past and is not changed by the employer, is any subsequent injury not substantially certain to occur? If the employer receives a complaint about the operation of his business, and a subsequent injury can be tied to the object of the complaint, was the injury not substantially certain to occur? In the eyes of a sympathetic jury, the answer almost always will be yes.

It is at this point that the protection afforded the employer by workers' compensation is completely destroyed. The very purpose of the exclusive remedy provision is destroyed. Instead of a balance between employee and employer rights, we have instead a one-way street: If the employee is injured due to his own negligence or tile negligence of a fellow employee, the injured employee recovers workers' compensation. If the employee is injured due to employer negligence, the employee recovers even more by filing a separate lawsuit.

The reaction of the plaintiffs' bar to the Beauchamp decision was swift and uniform. Within weeks of the decision, scores of intentional tort claims had been filed for workplace injuries; within months, the courts had hundreds of case filings. To some extent, plaintiffs' attorneys representing workers injured on the job were obligated to file these suits in order to avoid possible malpractice claims. The Michigan Supreme Court had opened a litigation door so wide that it was impossible for attorneys not to enter. The decision created such a litigation crisis that the Michigan Legislature responded in just five months to partially restore the exclusive remedy provision within the workers' compensation act. Because of the need for political compromise, however, it was not possible to completely restore the exclusive remedy provision to its former position, leaving Michigan with a curious hybrid somewhere between "true intent" and "substantial certainty." [43]