DILLARD v. INDUSTRIAL COMM'N

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Argument of John M. Levy

Chief Justice Warren E. Burger: We’ll hear arguments next in Dillard against Industrial Commission, 73-5412.

Mr. Levy, you may proceed whenever you’re ready.

Mr. John M. Levy: Mr. Chief Justice and may it please the Court.

I represent the appellants.

The issue in this case is whether the procedures in Virginia for the suspending of Workmen’s Compensation benefits meet the requirements of procedural due process.

The procedures which are in effect now in Virginia under Rule 13 of the Rules in Industrial Commission require that an employer or a Workmen’s Compensation carrier submit to the Commission a verified application for a hearing and whatever evidence it has as to the workers’ disability or lack of disability.

The Commission will then make an ex parte determination that probable cause exists to believe that the worker is no longer eligible.

The lower Three-Judge Federal Court with one judge dissenting held that since there was a post suspension hearing which all parties agreed does provide due process, is a judicial-type hearing, that since there was this hearing after the suspension that was all the due process required.

Appellants’ position is that opportunity -- notice which is adequate and timely must be given to the worker and that he has an opportunity to present his side of the dispute.

Justice William J. Brennan: And that meanwhile payments continue?

Mr. John M. Levy: And meanwhile payments continue, yes.

Justice William J. Brennan: Until?

Mr. John M. Levy: Until a determination is made after a due process hearing.

Justice William J. Brennan: And if adverse to the employee at that stage?

Mr. John M. Levy: At that stage they may be terminated.

Justice Byron R. White: What about written participation?

Mr. John M. Levy: In Some instances we would think that written submission of documentary evidence would certainly suffice.

Justice Byron R. White: But only if he didn’t ask for more?

Mr. John M. Levy: No, I think --

Justice Byron R. White: Would he have the right -- would he have the right always to evidentiary hearing to cross-exam previous witnesses?

Mr. John M. Levy: No.

No, I do not think.

No, that is not our position.

An example would be where the insurance carrier says that he can no longer be located.

Obviously, all that would be required would be a submission in writing, what have you, that in fact he can be located.

There are a myriad of different factual situations in which it arises and our position is only that adequate and timely notice must be given and an opportunity to present his side of the dispute.

The main plaintiffs in this suit were both injured on their job, received Workmen’s Compensation and award of Workmen’s Compensation approved by the Commission.

Both had their compensation discontinued.

One for a 116 days, one for 100 days and then had it restored retroactively after the post due process hearing was had.

Justice William J. Brennan: Is there any more usual or common ground of discontinuance?

Mr. John M. Levy: I would think in the amicus brief it says that medical evidence that the doctor who treated the workers says, he is able to go back.

This is the most usual I think statistically evidence.

Justice William J. Brennan: Well now on cases like that, what kind of hearing would you think is required?

Mr. John M. Levy: I think in most instances, what would be required would be the ability of the worker to submit time to get his own medical evidence and submit it possibly a doctor’s report, an evidentiary documentary report.

Possibly there would be instances where he would need oral argument.

There are doctors, the most, the example that comes to mind would be psychiatric report where oral argument, I think by his counsel or even his presence before the decider of fact would be essential.

Justice William J. Brennan: And who do you think should be the decider?

Mr. John M. Levy: Well, the decider is under Virginia law, the Industrial Commission or an employee of --

Justice William J. Brennan: And there is no problem in that respect?

Mr. John M. Levy: No problem in that.

Justice William H. Rehnquist: What's the difference in the position of Williams and Dillard with respect to the continuing dispute in this case?

Is there any?

Mr. John M. Levy: Mr. Dillard settled his individual claim with Aetna, his employer’s comp carrier.

Mr. Williams has taken his case all the way through.

He has been denied at the subsequent due process hearing.

He has appealed that is in it's adversary situation as opposed to his compensation carrier.

Justice William H. Rehnquist: Well, he appealed to the Supreme Court of Virginia?

Mr. John M. Levy: Right, which was denied, he has noted or has filed a petition for certiorari in this Court.

Justice William H. Rehnquist: Did he raise before the Supreme Court of Virginia his due process contentions that he made before the Three-Judge District Court?

Mr. John M. Levy: No, that was not before the Supreme Court of Virginia since all he was appealing was a finding by the Commission that he was no longer disabled.

It was not raised below.

The Industrial Commission of Virginia has considered itself that issue and on the strength of the lower court opinion here found it.

Justice William J. Brennan: Well, the Commission I gather the post termination hearing?

Mr. John M. Levy: At a post termination.

Justice William J. Brennan: Would you agree provides due process?

Mr. John M. Levy: Most definitely.

The post termination hearing provides --

Justice William J. Brennan: And that was before the Virginia Supreme Court in this case?

Mr. John M. Levy: No.

Justice William J. Brennan: The appeal from its determination adverse to him?

Mr. John M. Levy: Correct.

A factual question whether Mr. Williams is disabled or not.

Justice Harry A. Blackmun: Well, wasn’t that affirmed by the Virginia Supreme Court?

Mr. John M. Levy: Yes it was, Your Honor.

Justice Harry A. Blackmun: And what conceivably are your grounds in the petition for certiorari here from that affirmance?

Mr. John M. Levy: That there was no evidence before the court -- before the Commission to hold that his evidence -- that his disability had ended and therefore denied him due process.

Justice Harry A. Blackmun: So to sufficiency of the evidence point in turn?

Mr. John M. Levy: Yes, Your Honor.

Justice Byron R. White: But even if you lose there, there’s still a live of controversy here?

Mr. John M. Levy: I believe that this case is not moot.

There’s declaratory relief asked for one thing.

Second of all, this was brought as a class action, was determined as such on remand from this Court.

Justice Byron R. White: Are you arguing that even if that were later determined that he was validly terminated, aren’t you claiming that this initial termination wasn’t proper because of inadequate procedures that you are entitled to payment until proper procedures were provided?

Mr. John M. Levy: Yes, Your Honor.

My mootness or my response to moot --

Justice Byron R. White: If you’re right on that this isn’t moot, then he have some back -- he had some so-called back pay.

Mr. John M. Levy: That was not asked for in our complaint.

We did not ask for damages.

Justice William H. Rehnquist: Well, you didn’t enjoin Travelers so you really couldn’t enjoin and ask for any money, could you?

Mr. John M. Levy: Right.

Justice Byron R. White: So, it really is a question about mootness, isn’t it?

Mr. John M. Levy: Your Honor, we feel that this case fits precisely within what Mr. Justice Blackmun spoke of in Roe v. Wade.

It is capable of repetition yet evading review.

The case would always moot out as the facts show within one month or to a year or maybe eight months.

A hearing will be held, a due process hearing will be held.

Justice William H. Rehnquist: But here if you enjoin Travelers and preserve the claim for money judgment, it wouldn’t have mooted out?

Mr. John M. Levy: That would have been a possibility.

Our question is whether any injured worker cannot be mooted out by having his insurance company resist and withdraw, pay him off, moot him out.

And this is specifically the type of case which will evade review forever.

If when a valid class representative goes his -- has his procedure done, has his welfare benefits, or her pregnancy terminated, there can be no life in the sense that I think this Court was talking about in the case before us, a life plaintiff.

Justice William H. Rehnquist: But that was too in Burns versus Indiana Employment Security Commission too, wasn't it, that was decided last year?

Justice Byron R. White: Burney.

Justice William J. Brennan: Burney.

Mr. John M. Levy: Burney.

Justice William H. Rehnquist: Burney.

Justice Potter Stewart: Burney.

Mr. John M. Levy: The distinguishing factor in Burney and I do not know whether this is what the Court meant in Burney was here there was an intervention of a new member of the class, Mr. Williams.

After this Court remanded back to the lower Court, to the Three-Judge Court they made a finding there’s a proper class, allowed intervention.

Now, I think arguably the intervener is in the same position as the original named appellant was.

But if this Court holds that this case is moot on those facts, I think it will be flying in the face of an opinion which is just rendered I think in January, American Pipe and Construction Company dealing with class actions and the statute of limitations.

Where the Court said that a Federal class action is truly a representative suit designed to protect against unnecessary motions for intervention and joiner.

What any counsel bringing a class action, a civil right, a B2, Rule 23 (b) (2) class action would have to do if this case is moot would be to file endless motions to intervene other members of the class and hope that by the time the case reach the highest, appellate level it would, there would still be someone who has “alive”.

Justice William J. Brennan: Now will you say again why it is that these cases disappear in the course of litigation?

Mr. John M. Levy: Because a hearing is held.

Justice William J. Brennan: That is post termination?

Mr. John M. Levy: Post termination hearing.

Justice William J. Brennan: And the time limits within which that must be held is so short --

Mr. John M. Levy: Is so short.

Justice William J. Brennan: -- that inevitably it will have been concluded before the case can get to us?

Mr. John M. Levy: Correct Your Honor.

Justice William J. Brennan: I see.

Justice Byron R. White: Well, I am not sure about that.

At the hearing your claim would be sustained or not.

If it’s sustained he’s going to get retroactive benefits.

Mr. John M. Levy: Correct.

Justice Byron R. White: For the entire period.

If it’s terminated, if his claim is rejected then it isn’t going to disappear if somebody has preserved the claim against the insurance company that meanwhile, that meanwhile pending a due process hearing he is entitled to payments because they weren’t terminated with due process?

Mr. John M. Levy: I would have to agree that that would be one solution to this problem.

Justice Byron R. White: Well the issue doesn't just washout.

Anybody in some subsequent case who claims against the insurance company for interim benefits, where they have been terminated without due process as you claim could preserve his claim.

Mr. John M. Levy: Correct.

They could preserve the claim by asking for monetary damages.

Justice Byron R. White: That’s right.

Mr. John M. Levy: Correct.

The issue of due process would have been -- would be moot.

Justice Byron R. White: No, no.

It wouldn’t be moot because he wouldn’t -- if he, if this present procedure complied to due process, he could not get his interim payments.

Mr. John M. Levy: Correct.

Appellant’s position is that -- I think it is beyond argument that Workmen’s Compensation benefits or property under a long line of cases that this Court has cited, I think Board of Regents v. Roth gives the best definition and that once this has found that it is property within the meaning of the Fourteenth Amendment that whatever process is due has to precede the deprivation.

The fatal defects in Virginia system is that there is absolutely no notice required to be given to the injured worker.

The first notice that he will probably get is going to his mailbox expecting his weekly Workmen’s Compensation check and find that it is not there or he will get a copy of a letter to the Commission saying that it wants a hearing.

Justice Byron R. White: Does each employee in Virginia enter into some kind of agreement when he goes to work covering his Workmen’s Compensation?

Mr. John M. Levy: Under the statute in Virginia, every contract of employment, the whole Workmen’s Compensation system is read into every contract of employment.

There is no -- well, I do not think employers require a employee to sign their master --

Justice Byron R. White: So that the worker’s contract is with the employer?

Mr. John M. Levy: For employment, correct.

Justice Byron R. White: And he is the one who has the obligations imposed by the Workmen’s Compensation system?

Mr. John M. Levy: Yes sir.

Justice Byron R. White: So, it’s really the employers that owes -- it’s the employer who really owes the payments?

Mr. John M. Levy: The statutes of Virginia provide for two ways to fulfill the duty.

The duty is primarily on the employer.

Justice Byron R. White: Well even if the employer gets an insurance carrier to carry his loan form, it is the -- the worker who hasn't any relationship with the insurance company?

Mr. John M. Levy: Except possibly third party beneficiary.

Justice Byron R. White: No, but his contract is with the employer?

Mr. John M. Levy: But each contract of employment in Virginia by statute has read into it.

Justice Byron R. White: Well, my real question is whether this employee if he was denied procedural due process in connection with termination of his benefits has a claim against the employer?

Mr. John M. Levy: Yes, Your Honor.

Justice Byron R. White: Well, you didn’t need to enjoin Travelers then?

Justice William H. Rehnquist: Well, did you enjoin his employer?

Mr. John M. Levy: No, Your Honor. [Laughter]

Justice William H. Rehnquist: They can opt out of this thing, can’t they by an affirmative action?

Mr. John M. Levy: No, the Statute of Virginia, as the brief of the amici for the insurance industry pointed that as of January 1, 1974 neither the employer nor the employee can opt that.

Justice William H. Rehnquist: It’s mandatory on both?

Mr. John M. Levy: It’s mandatory on both sides.

It used to be that the employee could opt out.

The second defect we find is that without notice, there is no opportunity for the employee for the injured worker to present his side of the case.

As was brought out earlier, the questions in Workmen’s Compensation cases can be very complex.

For example, whether an employer, an employee has unjustifiably refused medical treatment.

What the decider of fact that Workmen’s Compens -- the Industrial Commission of Virginia has before it in this probable cause procedure is merely one side's, the employer or carrier side of the evidence.

There is nothing before it under this procedure as to the workers' justification for refusing a further medical treatment.

I think what this Court said in Bell v. Burson is opposite in this sense.

It is a preposition which hardly seems to need explication that a hearing which excludes consideration of an element essential to a decision does not give due process.

In Bell v. Burson it was fault in taking away the driver’s license.

Here, Virginia’s procedure excludes in this instance whether the worker is justified or unjustified.

An example cited at Page 8 of appellants apply to the amici for the Industry, the case of Thompson v. United Piece & Dye Works, the carrier had said the injured worker was unjustifiably refusing a back operation.

When it got to the Commission and the worker was able to submit his side, it was shown that this worker had undergone three prior back operations with no improvement and the Commission I think obviously found, of course, he was justified in refusing to go through another one.

Also, there are questions which are able to be determined very summarily such as the example I gave of whether the worker is no longer can be found.

What we are asking this Court to do as it is done in most of the procedural due process cases, is to set the broad perimeters of what due process requires notice and the opportunity to be heard in a meaningful manner.

As I think the Court said in Fuentes, it is peculiarly the state's function to set the procedures exactly, balance the interest as to how much -- how close to a judicial type proceeding it should be.

And this Court though I feel should give the broad outlines, the basic fundamental and basic fairness as the Court reasonably said in Groppi which procedural due process has always required.

I'd like to reserve the rest of my time.

Justice Harry A. Blackmun: Mr. Levy, I think there’s a suggestion somewhere in the briefs perhaps that if you prevail here, employers might be less willing to commence payments and to reach settlements at the end of the disability period.

Do you agree with that?

Mr. John M. Levy: I would not agree with it.

I am no expert on the insurance industry side.

I would not think that the lack of good -- I would not pose it a lack of good faith on the insurance industry.

I think the amicus brief shows that there is 95% of Workmen’s Compensation benefits at all ends of its inception and termination are voluntarily settled, and I do not see any reason to believe that any or much greater percentage would -- this percentage would change with the decision in this case.

Justice Harry A. Blackmun: What are we talking about as a practical matter?

How much delay is there between the date of suspension and in the Virginia system, the actual post termination hearing?

Mr. John M. Levy: There is some ambiguity in the record.

What the lower court found was an average of one month delay.

The answers to interrogatory is I think would -- in the Appendix would bear a reading that there is probably more delay, probably closer to three or four months.

The interrogatories were framed in a variety of fact situations, but the lower court found one month delay.

Thank you.

Chief Justice Warren E. Burger: Very well.

Mr. Dunn.

Argument of Stuart H. Dunn

Mr. Stuart H. Dunn: Mr. Chief Justice and may it please the Court.

I will address myself to the question basically of the due process aspect of the case.

Mr. Brame, representing Aetna with the permission of the Court will address himself to the jurisdictional points with respect to whether or not there is a property right here and whether or not it has been taken.

At the outset, I would refer the Court to the yellow brief of the amici of American Insurance Association and the American Mutual Insurance Alliance, Page 15 where there is factual error.

This is in the guidelines where they set out five guidelines, and the statement is found on line four.

“The doctor’s medical report must indicate that the employee can return to work within seven days.

Speculation as to the employee’s condition further in the future will not support a probable cause finding.”

Apparently, there is simply a lack of communication between the amici in this case and the Industrial Commission.

The Industrial Commission takes the position that this is in fact not true.

There is no ability for prospective determination.

No doctor can say, I believe that this employee will be able to go back to work in three or four days or seven or fifteen days and obtain a probable cause finding on that.

There is absolutely no prospective result.

There are other less substantial errors, but I think this only one that bears a comment.

Justice Potter Stewart: In other words the doctor’s report has to say that he is able to go back to work now?

Mr. Stuart H. Dunn: Yes, sir.

Perhaps the seven days is a confusion between this process and the process whereby an employee must be off work more than seven days before he ever gets into being eligible for Workmen’s Compensation benefits.

That’s just speculation of my part.

Justice William J. Brennan: I know you are right, but the guideline as proceeded by a sentence the Commission uses the following guidelines and you just suggest that’s not the case?

Mr. Stuart H. Dunn: Your Honor that’s --

Justice William J. Brennan: That's not the case.

Mr. Stuart H. Dunn: That is not the case Your Honor with respect to this comment with the -- and also with respect to several others that are not as substantial, but this was apparently based on communications between the amici and the Commission which we were not a party to.

I believe the important note -- what we think is important about this case in that is fairly unique and it's unique for this reason.

First of all, there is the probable cause determination under Rule 13. The second thing is with respect to the what amounts to a tripartite rights and property.

We have the interest of course of the employee, the interest of the employer and we have the interest of the Government.

I think to understand the way that this system actually works, one needs to look at what exactly Workmen’s Compensation is and if I may spend just a few moments outlining the way the system works in Virginia.

Of course Workmen’s Compensation is basically a substitute for common law tort and under this procedure, the basic changes regarding the fact the employee no longer has a certain tort and therefore would not get as much money perhaps in particular cases on the Workmen’s Compensation he would get under common law.

On the other hand, the employer gives up certain defenses such as the doctrine of fellow servant, of contributory negligence, and so forth and therefore there is at least compensation on every case in industrial accident.

The system provides basically for two types of payment: One a medical; the second is temporary compensation.

Now, they may in fact be permanent incapacity.

The provision on the law, there will be a rating of a percentage of capacity and there will be payments on the basis of that, but up until a doctor is able to rate an employee, there will be temporary compensation.

The statute provides for payment during incapacity.

The award in the case of Mr. Williams and Mr. Dillard provides for payment during incapacity.

So then as to be anticipated that this payment will not go on forever and that in fact there are generally three ways in which it will end, one is of course that the employee recovers and is able to go back to work.

Secondly, it is clear that he has progressed to whatever point he is going to with respect to his incapacity and is rated.

Or third, he may have been partially incapacitated for the entire statutory period of 500 weeks and essentially his famous will run out under that system.

Now, with respect to a question that Justice Blackmun raised, this gets me really to my next point.

This is what we think is the touchstone of the system of Virginia and what makes it work as well as it does and that is voluntariness.

As counsel for the appellants have already suggested roughly 95% of the cases are decided without any opinion or handled by the employer, the employee and the insurance companies act in good faith.

Now, Mr. Levy has suggested in his reply brief and also he suggested in response to Mr. Justice Blackmun’s question that he would not impute any bad faith.

We submit that’s not the problem.

The problem is that at the present time it is in the insurance company’s self-interest and in the employers’ self-interest to very properly undertake payment to an employee and in Workmen’s Comp situation.

This is done because it is a moral factor for the employee.

The employer likes to get the employee getting favor soon and in fact the Commission knows that often payment is made to the employee prior to there even being an award.

Now, this is also based on the fact that if the employer finds out that there’s been some sort of mistake, the representation of the employer turns out to be something different from what has been represented, it is readily easy to terminate this.

Of course under the present system where there has been change of condition, he can terminate it and set it for hearing.

We submit that the problem will be not simply as you have in Goldberg, you will have a hearing every time somebody wants one, that’s not all you’ll have.

You'll have all of the extra hearings from the people who want them and then on top of that you will have all the hearings with a cause on the front end, not because of any bad faith, but simply because it has become in the insurance companies and employers' economic self interest to look much harder at the claim before they ever take it to be sure that this is a compensable claim.

Justice William H. Rehnquist: Are the interests of the insurer and the employer always identical in this situation?

Does the employer’s premium depend on his experience?

Mr. Stuart H. Dunn: The system in Virginia is that it's value rated by industry.

For example, all employers of bricklayers would pay a sum of a premium as all other employers of bricklayers, but they might not pay the same premium as metalworkers.

So that an individual company's experience will not affect its insurance premium, but the industry experience will.

Now, to that extent, I think Mr. Justice Rehnquist, you raise a good point to separate the insurance company from the self-employer or self-insured employer.

The self insured employer of course across the street from each to competitors, one having a claim and they although not may be in a competitive situation such that he can’t absorb.

It maybe a small business, just simply cannot absorb it.

This, of course, wouldn’t happen were they were insurance companies because the competitive angle is then gone.

That is every other bricklayer has got to pay the same premium if they are inflated as this bricklayer does.

Justice William H. Rehnquist: Well that I should think of that situation, particularly a small employer might not have an identical interest with the insurer.

He might have an interest in obtaining compensation for an employee perhaps even when the literal provisions of the law weren't complied with if it is not going to affect his premium.

Mr. Stuart H. Dunn: He would not, but his carrier of course would have a legitimate interest in it and the employer has the interest to the extent that he would not want his premium to go up which it necessarily would as a result of this system.

It would be quite easy for any employee of simply to say no when asked of his change of condition had occurred and ask for the hearing.

I might further respond as far as the time limit is concerned, I don’t think in fact that the interrogatories reflect with the time limit is.

I think it is interrogatory number 14 is the answer to the question about what is the time limit for change of condition hearings and that is what is the delay between their request for the hearing at the time of the hearing and the answer of this is to refer it back to answer six and answer six refers the interrogatory to the fact that these records are simply not available in that form and they could come to the office.

So what we end up with is simply no statistics in the record to show what the delay is.

The Commission was unable to obtain them without going through all of its files.

There are some other statistics with respect to the one month and the one to three months and I might say based on my own knowledge having been advised by my client that these are probably in the ballpark for these types of hearings as well, but they are not, there has been no statistics in the record as such.

The important thing, we think from the point of view of the voluntariness with respect to the increased litigation which the commission expects to occur is the fact that this is not in the employee’s best interest.

The Commission in a sense is biased towards the employee, that is really has raised on deterrence.

That’s what is there for the rules and the statute make it very clear it’s very liberal for the employee, heresy evidence can be presented by the employee, all sorts of loosening of normal judicial constraints of their -- and the commission believes it will not be in employee’s best interest in the sense that the employee for example often will have returned to work by the time he will have ever got his hearing if the insurance company denies that they have a claim.

Often, these actions don’t incapacitate the employee for more than several weeks or several months and he is likely to be back at work.

If he of course has been living on his income and he has no savings he is not going to be able to get to that.

The very argument which the appellants made for having the benefits continue comes back on the front end to show that it’s a very good reason for not having it work that way.

Now, as far as the -- again, the employer or insurance company’s ability to abuse this process, one can’t lose sight of the fact that there is a probable cause to termination by a disinterested, perhaps even biased towards the employee party.

And another important thing to note is with respect to this case is that all of the actions which took place with respect to these two appellants took place prior to amended Rule 13.

That is under old Rule 13, there was no probable cause in finding.

The Commission simply in a ministerial fashion received applications for hearings and set them without making any finding with respect to the probable cause of the determination.

For example in the case of Mr. Dillard, the letter fairly read from the doctor Sibling indicates that Mr. Dillard was predicted to be able to go back to work in a couple of weeks under present procedures there would have been no probable cause finding in this respect.

And Mr. Levy for the appellant suggests in his brief that there is no reason to think that the employee will not go back to work when he is able because it’s not in his economic self-interest to do so.

I think the statistics show that this is apparently probably not a reasonable conclusion.

First of all, his has 66 and two-thirds percent is very close to -- being tax-free is very close to situation for a person who is not earning more than the maximum anyway of wage taken home.

Further, the statistics would show that indeed a great number of these employees do ask for hearings and our footnote 8 in our brief, we setup for the court of what was a representative sample of a six-month period.

Not all of the hearings in the six-month period, but a representative sample in which over 91% of the claims in which probable cause had been found were affirmed by the Court, excuse me, by the Commission.

Now, this would suggest that there are great number of employees who although able to return to work at least as found by the Commission are willing to ask for these hearings.

I would like to very briefly highlight a couple of very important protections for the employer under this case.

First of all is the problem of cause determination as I have already mentioned.

Secondly, as we’ve said in our brief there is a fact that the employee himself is able to choose the doctor from a panel pre selected by the employer and in fact the Commission is very liberal in permitting the employee to have another doctor, if he wishes one as was done both in the case of Mr. Dillard and Mr. Williams.

Justice William H. Rehnquist: Mr. Dunn.

Mr. Stuart H. Dunn: Yes, Your Honor.

Justice William H. Rehnquist: In some States, I believe the Commission does not only administers the system but also has its own insurance program so that in effect the Commissioners can work two-halves when they are making a decision to compensation.

Now, does Virginia have a State Insurance Fund which covers some employers or is it all privately insured?

Mr. Stuart H. Dunn: It’s all privately insured.

Justice William H. Rehnquist: So, all of the Commission does basically is find the facts.

They don’t act as actuarial managers of an insurance fund?

Mr. Stuart H. Dunn: No, they do not.

As a matter of fact and this was one of the points I was going to get to.

They cannot even enforce their own decree.

Section 65.1-100, the Virginia Code provides enforcement of these decrees in the court of record so that the Commission cannot require an employer to pay.

The only ability it has in this respect is that under Rule 13, it could refuse to grant a hearing to an employer who had not complied with the constraint of that rule, that is they had not paid up to the time this probable cause of determination is made.

But it does not control the fund, it cannot order that employer to pay.

It can only -- if he refuses to pay an initial award for example they could assess attorney’s fees when it got to hearing, but it cannot essentially make the judgment good for the employee.

It has no ability to do this and this is the important factor that these funds or private funds, they are controlled by the Commission and every dollar was taken from the employer or its insurance company, and given to the employee is a dollar that he doesn’t have anymore for the private purposes.

I would like to mention one more point with respect to the protection for employee and that’s this question of notice.

I would note to the Court that both parties receive notice.

Mr. Levy has suggested that often the employee only finds out that his payment has been cut when he goes to the mailbox and it is not there.

There is absolutely no evidence in this record to suggest that anybody finds it in that way.

All the evidence that we have is that both of these employees did receive notice.

One got the letter specifically that is Mr. Williams.

Mr. Dillard, it is noted at the bottom of his form which is in the record received the copy.

Justice William J. Brennan: Mr. Dunn, anything in the record which indicates whether there is a post termination hearing or how soon the ultimate determination, whether it is made or made at the hearing or --

Mr. Stuart H. Dunn: Typically -- well, I should withdraw that word.

Based on my own reading, it appeared that there are substantial number of cases in which it is not.

I don’t know that what they said --

Justice William J. Brennan: Would they set up the time before the final decision?

Mr. Stuart H. Dunn: Yes, just as at court does.

Justice William J. Brennan: I see.

Mr. Stuart H. Dunn: Obviously, it depends to an extent on the complexity of the matter before the Commission.

Justice William J. Brennan: And those decisions, are they written in form?

Mr. Stuart H. Dunn: They are.

For example, the opinions with respect to Mr. Dillard are in the record.

We submit to the Court that the appellants on the basis of a number of rather speculative assumptions about what the Commission is doing now on the Rule 13, recognizing that we have no evidence on the operation of Amended Rule 13 because the case was actually decided only a couple months after it came into effect.

That on the basis of these speculative assumptions for which there is no evidence, asking the Court to conclude that these laws are ineffective in Virginia and by presenting their argument for hearing in a vacuum they ignore the substantial effect which this is going to have on the entire system.

We submit that the appellants are asking this Court to dismantle a carefully structured system, by balancing -- which balances very many interests and very many factors and we respectfully request that this Court decline to do so.

Justice Harry A. Blackmun: Well, do I gather from the last remark that if this case is reversed, that Virginia will have to revise its systems substantially?

Mr. Stuart H. Dunn: The gravamen of my remark was toward the effect which it would have upon the operation of the system.

If Your Honor is asking a question, would there have to be a change in state law and procedure, is that your question?

Justice Harry A. Blackmun: Well, I just wondered if you’re going to have entirely a new world in which to live?

Mr. Stuart H. Dunn: Well, I think it’s difficult to determine because under the brief, the argument seem to be by the appellants that they were entitled to a Goldberg hearing.

Now, here today before this Court they suggest that they are all a myriad of types of due process that might be available in any particular case.

We thought we were arguing about a Goldberg type hearing and that is the way we’ve argued this case all along.

Now, under that assumption we think it would be a serious disruption of the entire system for the reasons that we stated with regard to increased litigations and so forth.

I don’t mean to suggest that there is going to be a wholesale change of legislation necessarily which would require this, simply that the system will not function as it has and we think is a detriment to Court.

Chief Justice Warren E. Burger: Well, when you speak of a Goldberg type of hearing, are you suggesting that the hearing officer who could consider the matter in the Goldberg case would be more objective, more neutral than the Commission here?

Mr. Stuart H. Dunn: Depending on the state --

Chief Justice Warren E. Burger: Or do you -- were you addressing yourself to the content of the hearing?

Mr. Stuart H. Dunn: I was addressing myself to the procedure, that is cross-examination, presentation of evidence etcetera.

Chief Justice Warren E. Burger: I see.

Very well Mr. Dunn.

Mr. Stuart H. Dunn: Thank you.

Chief Justice Warren E. Burger: Mr. Brame.

Argument of J. Robert Brame Iii

Mr. J. Robert Brame Iii: Mr. Chief Justice and may it please the Court.

I think the argument before this Court already indicates the reason that we ask the Court to grant us the right to argue to split the appellee’s argument.

You heard about the interest of the employee and you’ve heard about the interest to the state, but our position here is the interest that has been forgotten is the interest of the employer.

This Court has long held that the Fourteenth Amendment as a shield which protects the liberties and properties of our citizens.

What the appellant’s today ask is that the shield be converted into a sword and this sword, they use to deprive the employers of their property without due process of law.

Appellants ask this Court to weigh the private competing interest of the employer on one hand and the employee on the other and upon finding that the employees need is greater to order that the employer yield up his funds to an employee for whom you had an independent finding or probable cause that the employee is not entitled to these funds.

And after the employer has established his defense the -- plus the fact that under Virginia law all the funds that are paid to an employee, whether under mistake or whatever by an employer under the Workmen’s Compensation system can never be recouped.

There is no right of employer to recoup any funds, but yet if the employee’s suspension is later found to be erroneous then the employee is immediately paid up to date.

Justice William H. Rehnquist: Of course, as I read appellants’ brief they agree that Virginia could change the law if this thing were reversed and permit recoup?

Mr. J. Robert Brame Iii: They could permit recoup, but I think probably the answer and this gets again to the state's arguments that delicate balance here that state has struck.

And they have weighed it against the employers because I think they have found it was not -- the state found it was not in the state’s interest to have the employer pursuing persons who just come off of Workmen’s Compensation.

This is I think an indication of the state's concern for the well-being of the employees.

It’s something we employers have to live with, but today it hasn’t become access, if it does we may be in this Court on the other side of the case.

Chief Justice Warren E. Burger: Has there ever been any attack on that Virginia statute on the grounds that it’s a denial of due process, the irrebuttable presumption in effect about the recoupment?

Mr. J. Robert Brame Iii: Not -- no, Your Honor.

Not that the annotation show.

It's not a presumption, it just says well and it may be helpful to explain this because I don’t think that the Court -- it hadn’t been explained the Court exactly how this system operates.

In Virginia, if there’s an accident, it appears to be a compensable accident and the disability has to run more than seven days or there has to be medical expenditures, the employer and employee in 95% of the cases enter into a stipulation and it is entered -- then entered by the Commission as an order.

The order speaks that the employer shall pay specified benefits during incapacity.

By statue, this order continues until it is amended or altered by the Commission after a full due process hearing.

Any amounts paid there under are not recouped by the employer.

What the Rule 13 that that you’ve heard about is a procedural addition or enhancement of employee’s rights.

As it was stated earlier, these Commission awards are not enforceable by the Commission and must be enforced in the court of record.

So, if the employer or the insurance carrier didn’t pay it have to go in the court and sue.

The Industrial Commission, in the 30’s created Rule 13 which says in effect the only way that employer can check and alter this award is to come to us for a hearing.

But we’re not going to receive an application for a hearing until you pay that employee up until the date of the application.

And the subsequent amendments have said we are not going to give you a hearing until you have given us evidence which shows probable cause to believe that there’s been a change in condition.

What they have done -- what the Commission has done is to limit the employer’s right to this due process hearing.

And a by-product of this has been to give the employee some additional claims to funds without having to go to a court.

And what they are claiming is their property right is this future extension which they have never had.

And the Roth case, I think recognizes that it’s a sort of a unilateral wish, but it’s nothing that’s found in the state statute that you can really complain as property rights.

A couple of corrections on the error on the record.

Coverage does not extend to all employers and all employees in state.

That statute applied is mandatory for employers of three or more employees.

Employers of smaller in numbers can come under the Act but they do so voluntarily.

Coverage, thus, is not mandatory and further more, the contract does issue to the employee.

It doesn’t get a written copy, but the Virginia Code Section 65.1-111 says in effect that the employee shall be allowed to bring an action his own name against the insurance company on the contract.

The real question here I think is the property that the employer is going to lose.

You’ve got a system where the employer, his natural interest is to suspend payment.

Now, the fact that he suspends payment after this initial hearing doesn’t mean that the employee cannot go into the Court and enforce it because he can.

He can always go into court and enforce it even after Commission has found probable cause to believe that there is a changing condition.

Chief Justice Warren E. Burger: That doesn't meet the time problem that was involved for example in Goldberg, does it?

Mr. J. Robert Brame Iii: Well, Your Honor if you read Goldberg together with Roth, I think it does.

The right that they have got -- the enforceable right is in this award and this award must be enforced in the court of record.

And even after the employer has gotten a hearing until that order issues out of the Commission at some later date, that award continues to be enforced.

And he gets -- it can be sued on and get judgment, almost a confession of judgment even up until the day the Commission rescinds that order or amends that order.

So, he still has the enforceable right in court.

What he is asking for is some sort of decision by the Commission to call up the employer and say, “Well, we got a favorable decision for this man is not entitled the money but we are not going to release this decision until you pay him up to date.”

And that's the time situation -- you get to the problem.

There are two competing claims of the contract in nature between the employer and the employee.

Every dollar the employer pays comes out of his pocket or his insurance company’s pocket and they’ll get it back from it, but what -- the money he pays that’s unjustified he can never recover from the claimant.

Justice Thurgood Marshall: And the employee has a lot of trouble recovering this late too, doesn’t he?

Mr. J. Robert Brame Iii: Well, that would be a problem of disability, Your Honor and there is no probation for any payment for cessation of payment.

Chief Justice Warren E. Burger: Simply pick another one.

Mr. J. Robert Brame Iii: Oh!

Justice Thurgood Marshall: (Inaudible) you suspend him afterward after you give it?

Mr. J. Robert Brame Iii: That’s right.

It's the same type of --

Justice Thurgood Marshall: And suspending it without him knowing a thing about it?

Mr. J. Robert Brame Iii: In case, well, he is notified but even assuming that’s true --

Justice Thurgood Marshall: Well, will he know anything about it before you suspend it?

Mr. J. Robert Brame Iii: It depends on the circumstances, Your Honor.

But I am assuming that he is not.

I mean, I am willing to assume for the purposes of my argument that he is not, that the employer doesn't tell the employee, but our argument is that there is no jurisdiction under 1983 because our suspension is pursuant to the right of a person in free society to do that which is not by law prohibited.

The law does not prohibit us from suspending under certain --

Justice Thurgood Marshall: That’s why the case is here to see if you want to prohibit it?

Mr. J. Robert Brame Iii: That’s right.

The case is here to determine whether or not state in action is -- state action under 1983 and as we read 1983, it requires either a positive state law requiring someone to terminate or such a degree of intertwining between the employers in the state so that the employers actions are the state's actions.

Justice William H. Rehnquist: Supposing the Commission as of May 15 finds their probable -- finds there is probable cause to terminate and then the employee goes into the circuit court and seeks to recover payments due under the award from May 15th to June 1st.

Now, can the circuit court make any independent review of whether there was cause to terminate in that sort of an action as was found by the Commission’s determination of probable cause?

Mr. J. Robert Brame Iii: It will -- the Commission’s determination of probable cause is completely irrelevant.

It has no relationship to the award.

The award is still outstanding.

The award has not been modified.

Hence, it is enforceable of right under Section 100 or 101.

Justice William H. Rehnquist: Do you mean the employee could recover the payment on a circuit court action?

Mr. J. Robert Brame Iii: Yes.

And the employer as far as we can feel, has no real defense.

It’s a system that has not been abused and so it hasn't been protectively attacked but that’s our point.

That he always has that right even after the determination of probable cause to go into court and to enforce a judgment on the award itself.

Justice Potter Stewart: Mr. Bram, as I understand it, it’s in 90% or so of the cases compensation is agreed upon between the employer and the employee and they never go to the state agency, is that right?

Mr. J. Robert Brame Iii: Well, they go to the state agency, Your Honor, the 95% figure I believe is a question of initial entitlement.

Justice Potter Stewart: Right.

Mr. J. Robert Brame Iii: Any agreement between the employer and the employee respecting compensation payments after an injury must be approved by the Industrial Commission.

The employer and employee if they agree to entitlement, it’s really just a question was there compensable acts beyond seven days, sign a form which I believe is in the record entitled a memorandum of agreement.

That memorandum of agreement is submitted to the Industrial Commission which if they review it and find it to be in satisfactory order and properly protecting the interest of the employees will enforce it.

Then it will issue as an order of the Commission requiring compensation payments to be made during incapacity.

Justice Potter Stewart: And then termination in the 90% or so the cases are also by voluntary agreement, is that right?

Mr. J. Robert Brame Iii: I am not sure if the figure is that high.

It’s very high.

It’s very, very much an informal system in the sense that you don’t have a lot of play by counsel.

It works pretty much with voluntary system overseen by the Industrial commission which significantly favors the employee.

Justice Potter Stewart: And then on those cases, in the vast majority of cases you say they are in which termination of compensation is by voluntary agreement.

Must that agreement then go to the Industrial Commission to be approved often?

Mr. J. Robert Brame Iii: Yes.

If it’s not.

There had been some cases where the agreement was not approved by the Commission.

The Commission, unless they approve it and enter an order affecting the initial award, the initial award remains outstanding.

As in the Manchester case which I think everybody has cited to the Court the award remained outstanding for perhaps a year-and-a-half after the employee went back to work.

The question was is an enforcement of these circumstances because of harsh results to the employer and the Court held that you can only get to the Commission through Rule 99.

The employer had not done it to specify date in that year-and-half's award.

Although perhaps he wasn’t entitled it, it was enforceable in the court of record.

Justice Lewis F. Powell: Mr. Brame to sum it up an order is added in every case authorizing or proving the payments and the order must be entered in every case to terminate?

Mr. J. Robert Brame Iii: That’s right Your Honor.

And that order is effected only by a hearing which I believe everybody admits is a due process hearing.

Justice Lewis F. Powell: I understand that.

Would you clarify for me the apparent confusion as to whether not notice was given in this case to the two appellees -- appellants rather?

Mr. J. Robert Brame Iii: Notice was given to Mr. Dillard, Your Honor.

One of the papers filed in the record shows a carbon copy to Mr. Dillard, that was not under Rule 13.

The Rule 13 as it now stands has been changed.

That was sort of old Rule 13 thing.

He did get notice on it nevertheless and then Mr. Williams, the exhibit Mr. Williams’ case which is exhibit “A” on page 75 of the record also shows that he gets a notice.

It’s not in the record but the Industrial Commission has a practice that if they receive an application for a hearing on change of condition and there is no indication that the employee has been notified, they have a form on which they immediately notify the employee.

Justice William H. Rehnquist: And what’s the purpose of notifying the employee if he does not have an opportunity to participate in the probable cause determination?

Mr. J. Robert Brame Iii: I am not sure that -- how -- if I can answer that completely.

If the employee calls up and submits a medical report I think they would consider it.

They want him to know as soon as possible and I think probably as a practical matter if it turns out to be a mistake on the part of the employers what I understand in the Industrial Commission’s working, that application is going to be withdrawn right quickly and things will be restored in status quo.

Chief Justice Warren E. Burger: Well, the letter that you have referred to at page 75 calls for the employee if he agrees to indicate agreement and I suppose in a great many of the cases, if not on majority the employee does agree and he indicates that in response to this notice, is that correct?

Mr. J. Robert Brame Iii: Your Honor, there is a fair degree of response.

I can’t characterize it as a high degree or low degree.

I think the answer is that only, maybe 10% of these go to a hearing and eventually go to a hearing where both parties appear.

Hearing is automatically scheduled.

The employer has the obligation in scheduling the hearing as this shows the obligation of coming forward.

The number of these that go to hearing are not substantial, So one way or another there is an agreement reached.

Sometimes it’s difficult for practical matter to get people in that wage bracket to sign an agreement to anything.

Chief Justice Warren E. Burger: Well, in any event if after receiving this notice and he has the opportunity to respond to it if he wishes to, but if he goes back to work on the following Monday then there’s no problem I take it.

Mr. J. Robert Brame Iii: There -- well, there is no problem under the situation as it now exists although that award continues and he can go into court presumably and enforce it even then up until the hearing.

Now, after the hearing and the order issues confirming that he is back at work --

Chief Justice Warren E. Burger: As the letter states that it does not terminate the award, does it not?

Mr. J. Robert Brame Iii: Right.

I am not sure the letter does.

Chief Justice Warren E. Burger: Yes, it does?

Mr. J. Robert Brame Iii: It does.

Well, the Court is ready to look close and I --

Justice Thurgood Marshall: Do I understand it correctly that there is nothing in the record on fees on this one way or the other and you don’t know if you’re own person or not?

Mr. J. Robert Brame Iii: No.

As to what Your Honor?

Justice Thurgood Marshall: Did I get you correctly?

Mr. J. Robert Brame Iii: As to what?

Justice Thurgood Marshall: As to the number of these that are signed and the number that are agreed.

Mr. J. Robert Brame Iii: That’s right.

There is nothing in the record.

Justice Thurgood Marshall: There is nothing in the record and you don’t know either?

Mr. J. Robert Brame Iii: No.

Justice Thurgood Marshall: Would you interpret that as a valid employee that “by the night by the sleep you had it?"

Mr. J. Robert Brame Iii: Yes.

Justice Byron R. White: You say, he is entitled for court pending the appeal under the hearing?

Mr. J. Robert Brame Iii: Yes.

Justice Byron R. White: So to prevail he would have to show there was a probable cause to termination?

Mr. J. Robert Brame Iii: No, it has no relationship Your Honor.

The probable cause --

Justice Byron R. White: You just show the award if they pay me?

Mr. J. Robert Brame Iii: It’s in the Appendix to our brief which is a green brief that’s Virginia Code Section 65.1-100 and all he has to do is show the court that he’s got an award by the Commission that’s outstanding and it has not been modified and the amounts that have been paid and he gets an order immediately.

Justice Byron R. White: Well, why hasn’t it been modified by termination based of probable cause?

Mr. J. Robert Brame Iii: The termination based on probable cause does not -- has no relationship to the award.

If the award continues until the due process hearing, what the Commission says in that rule, we will not let the employer even file an application for a hearing.

We won’t give the employer a standing to even argue a change in condition until he has paid the employee up to date and shown probable cause.

It's a device of controlling as much as anything controlling the number of cases which they receive. It is like the old common law of court requiring it to be on oath.

Justice Potter Stewart: But at anytime until after the so-called due process hearing and the final official termination by the Industrial Commission, the employee can go into court and collect under the award?

Mr. J. Robert Brame Iii: Yes.

I can construe this section no other way.

Justice Potter Stewart: And the employer has no defense?

Mr. J. Robert Brame Iii: That’s right.

That’s the holding in the Manchester.

Justice Byron R. White: After the due process hearing, after the court hearing and the award is terminated, I would suppose the employee if he hasn’t been paid meanwhile could still go back and sue for the interim period?

Mr. J. Robert Brame Iii: No, the --

Justice Byron R. White: Because it wasn’t terminated during that period?

Mr. J. Robert Brame Iii: It wasn’t terminated during that period but the Commission’s order in most cases dates back to the date the application was received.

Now, if it’s been enforced meantime then the employers -- [Laughter Attempt]

Justice William J. Brennan: Well, I thought is this procedure that you say operate that the employer never gets to post termination hearing until he has paid up to the date of that hearing?

Mr. J. Robert Brame Iii: Not to the date of hearing, to the date of the application.

Justice Potter Stewart: No, no date of the application.

Justice William J. Brennan: Date of the application?

Mr. J. Robert Brame Iii: That’s right.

Justice William J. Brennan: I see.

Mr. J. Robert Brame Iii: In answer to the question on the --

Chief Justice Warren E. Burger: What's the precise the probable cause?

Mr. J. Robert Brame Iii: Your Honor we ask the same question.

Justice Byron R. White: One of the facts is you never been -- the employer has never been paying, the employer doesn’t pay anymore, that’s it?

Mr. J. Robert Brame Iii: That’s right.

Justice Byron R. White: He doesn’t pay at all although he is legally obligated to, you’re telling me.

Mr. J. Robert Brame Iii: That’s the way we read this Section.

Justice Byron R. White: The Commission hasn’t told them not to pay?

Mr. J. Robert Brame Iii: No, that’s --

Justice Byron R. White: You said there’s probable cause to terminate.

Mr. J. Robert Brame Iii: That’s right.

Justice Byron R. White: And he is terminated.

Justice Potter Stewart: Right.

Mr. J. Robert Brame Iii: Right.

Justice Byron R. White: And he is put to act and nevertheless he is legally obligated to be paid.

Justice Potter Stewart: If the Court orders him to do so.

Mr. J. Robert Brame Iii: That’s right.

As this section the --

Justice Byron R. White: But the awarding what the Court would say is the award have never got effected.

Justice Potter Stewart: Right.

Justice Byron R. White: Mainly, that you got ordered before let say if you put up the warrant.

Now, why we have this --

Mr. J. Robert Brame Iii: At what point in time now?

Justice Byron R. White: Before you go to the court.

Mr. J. Robert Brame Iii: Right.

Justice Byron R. White: Pending the hearing.

Mr. J. Robert Brame Iii: Right.

Justice Byron R. White: And he wins in the court.

The court says, “Pay according to the award it’s never been terminated.”

Mr. J. Robert Brame Iii: That’s right.

Justice Byron R. White: I assume there was a legal obligation to pay whether the Court sets the order or not?

Mr. J. Robert Brame Iii: Well, in the sense there is -- in the sense there’s a contractual.

Justice Byron R. White: Well, while the employer is just ignoring his legal duties, what do you suggest?

Mr. J. Robert Brame Iii: I almost have just after -- well, it’s a contractual duty now whether the moral onus is something else, but they do have a continuing award requiring them to pay and they don’t pay.

Justice Harry A. Blackmun: Well, do you have a Virginia decided case that says that?

Mr. J. Robert Brame Iii: The one, the decision on this -- the best I can find from quickly looking at the annotations, one called Parrigen v. Long, 134 Southeast 562 which says that under Section 100 which is the enforcement section that the court’s duty is strictly ministerial.

It can inquire --

Justice Potter Stewart: Excuse me, excuse me.

Mr. J. Robert Brame Iii: It can inquire into the whether or not the employee was actually entitled.

It goes back to what we said before.

We have got a system that has worked on a voluntary basis.

The employees, the hearing is on a fairly short basis and there have not been a large number of suits of this type.

But I think the answer is most the determination particular under the new Rule 13 are justified.

Employees are back at work.

Justice Potter Stewart: And then you told us I think of a case where the court awarded compensation for a period of a year-and-half after have been back at work simply because there have been no official termination.

Was this understood?

Mr. J. Robert Brame Iii: That was the Manchester case which is cited in our brief; it was cited in everybody’s brief.

Justice Potter Stewart: Right.

Mr. J. Robert Brame Iii: Manchester Board and Paper Company.

Chief Justice Warren E. Burger: Mr. Levy, do you have anything further?

Rebuttal of John M. Levy

Mr. John M. Levy: I might --

Justice William J. Brennan: Tell us why you are here Mr. Levy?

Mr. John M. Levy: Pardon me?

Justice William J. Brennan: Can you tell us why you’re here if that’s --

Mr. John M. Levy: First of all there has absolutely no litigation under Section 100 under a Rule 13 procedure.

If the employer and the employee went to court --

Justice Byron R. White: Pending a hearing.

Mr. John M. Levy: Pending a hearing, once the benefits are suspended, there has been no determination as to what the court would do.

After the due process hearing, the court might look at it this way.

After the due process hearing the Commission terminates the award retroactively, therefore, there would be nothing.

It would be like going into enforce something which there is a preliminary injunction on.

Justice Byron R. White: Yes, but you have to get into court before the hearing and if the court wasn't very busy and heard your case right away.

Do you agree that the employer would be ordered to pay pending a hearing?

Mr. John M. Levy: The Court under that statute -- the language of that statute would have to enter a judgment.

The employee would then have to try to collect under that judgment and I would assume that there would be no law --

Justice Byron R. White: Let's actually have this -- there would be an order to pay or the employer would just say “I am awfully sorry, I know you’ve got a judgment, but I won’t pay you?”

Justice William H. Rehnquist: In my years of practice, a judgment against Travelers or against the Aetna always thought to be a pretty valuable thing? [Laughter]

Mr. John M. Levy: Well you have -- before you a judgment of the Commission to pay until disability is --

Justice William H. Rehnquist: But then you have a judgment of the Circuit Court, don’t you, after you go to court?

Mr. John M. Levy: But still you have a judgment and I would assume that court would say if there is a hearing -- when this hearing comes effect, we are not going to force Travelers to pay since the very basis for that decision will be terminated retroactively.

Justice William H. Rehnquist: Really, then it is your submission that there is an undecided question of Virginia law in the case as to what the effect of a suit in the Circuit Court during this period of time would be?

Mr. John M. Levy: Well, I think it is clear that the whole intent of that statute could be interpreted in no other way.

Justice William J. Brennan: I suppose by the time you got your suit filed, the time for the post termination hearing would have arrived and have been concluded with it?

Mr. John M. Levy: That is another aspect.

Justice William J. Brennan: Then what happens to the law suit in the Circuit Court?

Mr. John M. Levy: That is an undecided question of state law, certainly.

Justice William J. Brennan: That’s the way they do things in Virginia? [Laughter]

Justice Potter Stewart: But it is decided apparently that until there is an official termination by order of the Industrial Commission, the award is in effect as the Manchester case holds, doesn’t it?

Mr. John M. Levy: This is prior to rule 13.

Justice Potter Stewart: Giving a man compensation for a year-and-half after he is back at work simply because the award has not been officially terminated.

Mr. John M. Levy: But there has been no litigation first under the old Rule 13 and certainly under the new Rule 13 and it would defy common sense for the Virginia courts to hold that you will give a judgment and let it be collected when that judgment is going to be or possibly will be retroactively terminated.

Justice Potter Stewart: Well, it doesn’t seem to be common sense, but let’s close all the interrogation from the bench. [Laughter Attempt]

Justice Byron R. White: What do we -- the commission have probable cause.

Mr. John M. Levy: Correct.

Justice Byron R. White: Now, that's meaningless.

Mr. John M. Levy: It is not meaningless to the injured worker.

This order --

Justice Byron R. White: I know but if the employer relies on (Inaudible) but apparently it doesn’t affect the guy were involved.

Mr. John M. Levy: It affects legally before a court, a Circuit Court in Virginia that is a question of what the effect that is, but in actuality he suspect --

Justice Byron R. White: Now you brought it up. [Laughter]

Mr. John M. Levy: One other response that I would like to make --

Chief Justice Warren E. Burger: Before you go to the response, aren’t you really asking some kind of a judicial command from someone, some court somewhere to keep up the payments until there has been a full adversary hearing?

Mr. John M. Levy: Yes, Your Honor.

Chief Justice Warren E. Burger: In other words sort of a specific performance, equity relief?

Mr. John M. Levy: We are asking that this Court say that Rule 13 does not provide due process by in reality terminates suspending benefits.

Justice Thurgood Marshall: As I understand Mr. Brame he said he is going to circuit court, you will get just that, we want the money ahead of time?

Mr. John M. Levy: We will get another judgment which is a ministerial act of the court which any insurance company will treat the same way as the judgment of the Commission.

And --

Justice Thurgood Marshall: Do you mean the judgment -- do you mean there is no way in Virginia to enforce a judgment against the insurance company?

Mr. John M. Levy: Yes, there are the traditional common law remedies --

Justice Thurgood Marshall: Well, I thought so.

Mr. John M. Levy: Yes attachment.

Justice Thurgood Marshall: So should they give another judgment?

Mr. John M. Levy: Correct, Your Honor.

Justice Thurgood Marshall: Well then the Court will give you what you want the Commission to give you, what would you want us to give you?

Mr. John M. Levy: No, Your Honor.

What --

Justice Thurgood Marshall: Well, what do you want?

Do you want money in between the two hearings, right?

Mr. John M. Levy: We want a notice.

First of all the fact that there is --

Justice Thurgood Marshall: Or is it, if you get your money, do you want a notice?

Mr. John M. Levy: No. [Laughter]

Justice Thurgood Marshall: So you are asking us to order the company to pay you the money until they have the due process hearing?

Mr. John M. Levy: No.

What we --

Justice Thurgood Marshall: Will you be satisfied with it?

Mr. John M. Levy: Certainly, but I don’t think --

Justice Thurgood Marshall: Well, as I understand all you have to do is file a piece of paper at a court and you get just that?

Mr. John M. Levy: I think that is not clear in Virginia law.

Second of all, that does not solve the problem of notice.

Justice Thurgood Marshall: If you get the money?

Mr. John M. Levy: Yes, but you have to have, you have to go --

Justice Thurgood Marshall: If you give me the money, I don’t care about the notice? [Laughter]

Mr. John M. Levy: No, but the filing of the Court -- the papers in the Court does not give you the money.

That is --

Justice Thurgood Marshall: If you owe me money and you pay me money, you can even deny me due process, if you give me my money, am I right? [Laughter]

Mr. John M. Levy: The procedure is -- Yes, you are right. [Laughter]

No, I am sorry no that is, of course, not our position.

The procedures which in reality are, in effect, in Virginia show that benefits are paid, this goes to the voluntariness of the system.

If this is the position that is being required or would be required in the Court then you would have a procedure which would draw the Workmen’s Compensation system all out of quilters as the national commission on Workmen’s Compensation said.

The Industrial Commission of Virginia does not have “enforcement power” meaning that the State of Virginia setup their system so that the Commission would not go out and attach insurance company’s property.

They gave that that power or they left that power alone in the court and that is the only thing that Section 100 of the Code gives.

It’s just the very rare instance and the only litigation that could be found under that is 30 years old.

This is just leaving with the traditional common law of court, the power to garnishee, to attach property and all of that.

This system works under a voluntary system with penalties which are assessed against insurance companies for not paying when due with the ability of the state corporation commission to pull an insurance company's license if they are not meeting their obligation under this procedure.

Chief Justice Warren E. Burger: It sounds to me as though what you are doing is conceding that you have an adequate remedy at law, but it is too complicated and takes to long.

Therefore, you want something, you want a shortcut?

Mr. John M. Levy: No, by the very fact that it is complicated and takes too long, the plaintiffs in Goldberg had a procedure.

They could have gone in to Federal Court and enforced their welfare.

Chief Justice Warren E. Burger: But that was not a contractual case, was it?

Mr. John M. Levy: No.

Chief Justice Warren E. Burger: Welfare.

Mr. John M. Levy: It was not a contractual case.

The plaintiffs in point at the time is what we are talking about and that is what procedural due process within a prior hearing is what we are talking about and we do not have that in Virginia.

Chief Justice Warren E. Burger: Very well Mr. Levy.

Thank you gentlemen.

The case is submitted.