*1 Virginia, 2814, 2825, L.Ed.2d 973 BAKSALARY, Jones,
Richard William Tucker, In
Morris and Charles Samuel
dividually and on behalf of all others situated, Plaintiffs,
similarly SMITH, Jr., Urling,
Paul J. C. John Wil Sloan, Sheppard,
liam J. Grace M. Fund, Workmen’s Insurance
State
Pennsylvania Manufacturers’ Associa Company,
tion Insurance American Liability Company,
Mutual Philadelphia,
The School District of Bi Casualty Corporation,
tuminous and all insurance carriers
other self-in and/or similarly situated, employers
sured De
fendants.
Civ. A. No. 76-429. Court,
United States District Pennsylvania.
E.D.
Feb. *2 ADAMS, Judge,* and
Before Circuit POLLAK, Judges. District and GREEN OPINION POLLAK, Judge. H. District LOUIS I. initiated this action
Plaintiffs constitutionality challenging the of certain Workmen’s provisions of Act, tit. Compensation Pa.Stat.Ann. §§ (Purdon Supp.1982). 1952 and 1-1031 allege plaintiffs that the “au- particular, In provision of section supersedeas” tomatic § Act, tit. 413 of the Pa.Stat.Ann. (Purdon permits employers Supp.1982), compensa- to terminate insurers worker’s according tion without Mark B. (argued), I. Goodman Harold are termi- of law to those whose benefits Bernstein, Rudovsky, Rita L. Segal, David nated, the Fourteenth violation Services, Inc., Philadel- Legal Community The automatic Amendment. Pa., plaintiffs. phia, for notice to the terminates benefits without requires only receiving It person benefits. T. (argued), Robert H. Nuttall Robert petition reciting employer’s or insurer’s an Philadel- Lear, Dept., Law School Dist. recipient has returned to that the benefit Pa., Philadelphia, for defendant phia, higher pay peti- or a the same or work at Philadelphia. Dist. of School by physician’s affidavit accompanied (argued), Rawle & Henry H. Janssen recipient has recovered. averring that Pa., Henderson, Philadelphia, for defendant process claim in make their due Plaintiffs Corp. Bituminous Cas. Rights Act of under the Civil an action (argued), Philadel- Christopher J. Pakuris 1981). (Supp. V 42 U.S.C. Pa., Pennsylvania Man- phia, for defendant three-judge panel of this ago A decade ufacturers’ Ass’n Ins. Co. challenge section 413’s heard a court Smith, (argued), Philadel- Joseph Thompson R. predecessor. Silas Pa., Liberty (E.D.Pa.1973), Mut. Ins. the court con- for intervenor phia, F.Supp. the case of an individual whose Co. sidered termi- compensation benefits were worker’s Zimmerman, K. Wallet Leroy S. Debra under the employer’s his insurer nated Warshaw, Harrisburg, (argued), Allen C. then in ef- supersedeas provision automatic Paul Pa., defendants for “Commonwealth” state action in The court found no fect. Jr., Smith, Urling, William J. C. John J. further stated The court this termination. M. Sloan. Sheppard, and Grace action, it would had it found state that even (argued), Steppacher State William C. of the due not have found a violation Pa., Fund, Scranton, for Ins. Workmen’s court, however, cess clause. Silas Fund. Workmen’s Ins. defendant State em- at a time when questions faced these opt out of the Hanna, Jr., Marshall, ployers employees could Denne- Robert G. P.A., Pa., Pennsylvania Workmen’s Warner, Philadelphia, for hey & Further, court was not Act. the Silas Liability Mut. Ins. Co. American defendant * Circuit, Adams, by designation. sitting Cir- the Third M. United States Honorable Arlin Appeals Judge, States Court of cuit United 41(b) until evi- on the motion defendants’ problem consider
called on to
Defendants
pub- dence had been submitted.
application to
supersedeas’
put
by stipulations
evidence
employers
then
their
employees
or to
lic
plaintiffs
affidavits. Because
offered
Workmen’s
by the State
insured
evidence,
by state offi-
the entire case was
Fund,
administered
no rebuttal
insurer
fully
Therefore,
explain more
on the merits. This
as we
before us for decision
cials.
*3
controlling
below,
findings
is not
of fact and
ruling
opinion
in Silas
constitutes our
the
in the
advanced
respect to the claims
of law.
conclusions
with
Because the
court.
the
lawsuit now before
II.
controlling
not
in
prior decision
Silas
that,
action
here,
after this
proper
it was
challenge
to one of
This case involves
commenced,
Fogel ordered that
Judge
was
employer
or in-
the methods
which
in
...
convened
three-judge
“a
court be
the
obligated
pay
to
benefits under
surer
§§
that,
pursuant
to 28 U.S.C.
Pennsylvania Workmen’s
con-
raises substantial
complaint
paying those benefits.
Act can cease
requests as relief the
issues
stitutional
Through
procedures
pertinent
not
a set of
enforcement, operation and
enjoining of the
action,
by the
to this
an individual covered
of a state statute.”
execution
employ-
his
injured
Act and
in the course of
weekly
right
receive
ment can obtain the
to
27, 1978, an order was entered
March
On
employer. The
payments
benefits
from his
proceed
plain-
as a
this case to
permitting
against
obliga-
employer must insure
action under
defendants’ class
tiffs’ and
§77,
(Purdon
tit.
tion. Pa.Stat.Ann.
23(b)(2).
plaintiff class
The
Fed.R.Civ.P.
This
Supp.1982); Stipulations of Fact 16.H
or will
persons who have been
includes “all
in one of
requirement
be satisfied
to the Penn-
receiving
pursuant
(1)
employer may retain a
ways:
three
Compensation Act and
sylvania Workmen’s
to
private insurance carrier licensed
have such benefits
have had or will
who
insurance; (2)
compensation
terminated,
or other- vide worker’s
suspended, reduced
through the State
employer may
and the
insure
deprived
advance notice
wise
without
Fund, an insurance
evidentiary hear- Workmen’s Insurance
opportunity
prior
for a
state;
(3) the
fund administered
class includes “all
ing.” The defendant
When an
employer may self-insure.
Id.
companies, mutual associations
insurance
insurance,
purchases
the insurer
employer
authorized
employment establishments
un-
employer’s
all of the
liabilities
payment of
assumes
to insure the
and,
effect,
who der the Act
stands
Compensation benefits
Workmen’s
terminate,
respect
em-
acted,
act,
employer’s shoes with
to the
to
sus-
have
or will
compensation.
reduce,
ployees receiving worker’s
deprive benefits
pend,
or otherwise
§§ 501,
(Pur-
tit.
eligible
without ad- See Pa.Stat.Ann.
previously
to
claimants
Thomas,
Pa.
Supp.1982);
opportunity for a
don
Cease
vance notice and
Thus,
Super.
principally state; notice of the November 22 any (3) localized in in Pennsylvania hired employment filing later, with on 4. years December Three principally localized in another state on December a referee determined which injury does not cover that in its ground that PMAIC had been on sound law; own compensation (4) workers’ discontinuing payment of benefits to in Pennsylvania hired employment for Baksalary Mr. but that it still remained outside the United States or Canada. liable for treatment costs related to Stipulations of Fact 5.H Mr. Baksalary’s injury, subject to a credit payments
Before for benefit made after June employers option had the of declining coverage under 1974. upon parties’ Stipula-
2. We base this account and Defendant Manufacturers’ As- Concerning Baksalary tions Plaintiff Company. Richard sociation Insurance Insurance, inju- Disability employ- Plaintiff WilliamJones3 suffered and his wife’s ment. ry employed while as a truck driver for the
Tri-County Hauling Company. American experiences Charles Samuel had two with Liability Company in- Mutual supersedeas provision the automatic of sec- Tri-County against compen- worker’s sured Mr. tion 413.5 Samuel worked for the liability. Mr. Jones and American sation Pennsylvania Liquor Control Board when agreement payment Mutual entered an he hurt his back. The State Workmen’s compensation beginning on De- (“SWIF”) Insurance Fund insured the Li- stopped cember 1973. American Mutual quor Control Board. As described more 5, 1974, paying May and filed a benefits on 111(B)(2)(b) fully opinion, in section of our petition to terminate. Mr. Jones’ benefits on legislatively “S.W.I.F. is a created and physician’s 11. upon June Based affida- state-operated insurance carrier from May that an examination of 29 showed vit which workers’ insurance recovery, Mr. Jones’ American Mutual in- policies purchased by employers voked at the Act, liability cover all risks of under the petition. time of its June 11 The Bureau of including employers reject- who have been Worker’s mailed notice of by private ed or cancelled insurance carri- Mr. termination on Three Jones’ June 16. Stipulations ers.” of Fact H later, August years a referee began paying compensation SWIF to Mr. that Mr. had not found Jones recovered February Samuel as of 1975. SWIF May of and ordered American Mutual payments first terminated these on October pay retroactive benefits to Mr. Jones 7, 1975, on the basis of an examination of percent per with interest at ten annum. peti- Mr. Samuel Dr. Williams. SWIF tioned to Mr. compen- terminate Samuel’s injured
Morris Tucker4 his back while sation on October 17 and invoked the auto- Sons, packing meat for Lotman S. & Inc. supersedeas. matic The first notice that Casualty Corporation Bituminous insured Mr. received of the Samuel was Lotman. Mr. Bituminous and Tucker copy to him the mailed Bureau on No- agreed that Mr. Tucker Bituminous owed peti- 7. A referee vember denied SWIF’s compensation payments beginning Novem- *6 compensation tion and awarded retroactive 9, 17, 1974, July ber 1973. On Bituminous benefits with interest almost eleven months petition filed a to terminate Mr. Tucker’s later, 20, September on 1976. super- benefits invoked the automatic sedeas. Bituminous had not attached a 27, 1977, again June filed a On SWIF affidavit, physician’s typewritten but had petition to terminate Mr. Samuel’s benefits. petition Hoffman, on the that “J. David Stiffel, SWIF attached the affidavit of Dr. M.D. certifies that T. Morris Tucker was who had conducted an examination on June 3, July able to return to work on 1974.” 21, super- and SWIF invoked the automatic sufficed, apparently This because Bitumi- copy petition A sedeas. of this was mailed paid nothing nous to Mr. Tucker until a July Mr. Samuel on 1. A referee denied referee issued a August decision on petition January SWIF’s 1975, in favor of Mr. Tucker. Bituminous appealed. SWIF SWIF did not resume decision, appealed that parties but the set- payments appeal until the administrative tled on During December 1977. board remanded the case to the referee on termination, period April of his Mr. Tucker re- 1978. The referee clarified his welfare, Security January ceived income from March Social order on Stipulations Stipulations Concerning 3. We base this account on the Charles Con- 5. See Plaintiff cerning Plaintiff William Jones and defendant Samuel and Defendant S.W.I.F. Liability Company. American Mutual Stipulations 4. We take this account from the Concerning Plaintiff Morris Tucker and Defend- Casualty Corporation. ant Bituminous summarily suspend retroactive benefits
to award Mr. Samuel or insurer employer percent per annum interest. compensation payments and ten worker’s to an in-
jured employee formerly those entitled to III. employee may protest benefits. alleging suspension may hearing A claim section 1983 a and he obtain a under process clause of the violation of the due may, a referee. The referee before requires proof of Fourteenth Amendment course, employee determine that was First, claim- three elements. a section 1983 longer no entitled to benefits at the time of deprivation ant must show a constitu- However, petition.6 the referee tionally protected liberty property inter- employee continuing find that had a Second, that est. the claimant must show disability or that he had not returned to accomplished deprivation was “under finding work. This would dictate a deci- color of state law” and as result of “state sion that or insurer should action;” these turn out to mean the same employee’s not have terminated the bene- Third, thing. the claimant must show that case, fits. the referee will award deprivation the method which the was payment of retroactive benefits under effectuated involved a denial of due (Purdon Supp. Pa.Stat.Ann. tit. case, procedural process. cess—in this 1982). Referees, though, typically take one proceed We to consider each of these ele- year Stipulations or more to decide a case. ments in turn. of Fact If Deprivation A. We find that when an individual must forego the use of his previous por
As we discussed in the permits opinion, long year, an for as as one tion of this section even if he receives 110-116; parties 6. The devoted considerable effort to es- tions of Fact ¶¶ Defendant’s Exhibit tablishing (Survey Study the rate at which Report referees find for D-5 Submitted employee Jackson). when the contests a termi- L.V. Mr. Jackson concludes that Pro- petition involving superse- only nation support finding fessor Siskin’s data employee deas. It is to be noted that the unfavorably employers cannot decide referees or in- effectively challenge itself. surers in 9% contested automatic Rather, employee D-5, underlying p. contests the cases. Exhibit 8. Professor Siskin’s terminate; supersedeas operates statistical tests allow him to be 99% confident in the interim. substantially that the actual "reversal” rate ex- Stipulated p. ceeds 9%. Exhibit 5. Mr. Plaintiffs commissioned two statistical stud- disagreement Jackson’s with ies, Professor Siskin Stipulations one in 1978 and one in 1981. assertedly superior comes not from an statisti- rely only of Fact 102. Plaintiffs now on the ¶ Rather, analysis. cal Mr. Jackson and Professor report by Bernard Professor Siskin of disagree proper Siskin on the classification of Temple University Department. Statistics See outcomes; cases and Professor Siskin counts Stipulated (Supplemental Exhibit 58 Statistical *7 employee some results as “wins” which Mr. Study Supersedeas of the Automatic Process Un- Jackson counts as favorable to the insurer. See Compensation der the Act). Worker’s files, Stipulations of Fact 117-120. sample ¶¶ Based on a of 211 Professor We do not need to resolve the technical issues Siskin calculates the "reversal” rate—the rate of parties’ dispute. referee awards more involved statistical The favorable to (1) complete undisputed than data show that in contested auto- termination —at of all 41.7% con- supersedeas rarity tested automatic matic terminations it is not a cases. Professor suggest ultimately higher Siskin’s for the referee to calculations also a much determine that the employee legal employee "reversal" rate when the is entitled to an award more favorable representation: complete Professor Siskin estimates a "re- than the termination of benefits au- (2) employee time-lag versal” rate of 77.9% where the thorized section represented, only but of 24.6% where the em- between automatic termination and the refer- ployee lawyer. averages year. has no ee’s curative award one We con- dispute study. deprivation enjoyment Defendants Professor Siskin’s clude that the interim Stipulations statutory See of Fact 117-121. Defend- of benefits to which a worker has a ¶¶ Jackson, employed frequently enough ants Mr. V. Lester a former entitlement occurs and lasts PMAIC, operations long enough director of claims tique to cri- to rise to a level of constitutional analysis. Stipula- significance. Professor Siskin's See who, [e]very person any period,7 at the end of under color of reimbursement that statute, ordinance, custom, undergone depriva- regulation, that individual has protected property usage, any territory State or or the constitutionally of a termination, Columbia, subjects, or During period District of causes interest. subjected, any citizen of significant he income. He will find the United has lost replace through person jurisdic- or other within the income difficult to bor- States this deprivation any tion thereof to the rowing in the market because he has no rights, privileges, or way convincing a lender that a referee immunities secured laws____ him; eventually the Constitution and will award benefits likely other- most lenders are to assume § 1981). (Supp. 42 U.S.C. V Plaintiffs involving In a similar case termina- wise. complain superse- here that the automatic Security Disability Insurance tion of Social fails to accord them their deas constitution- hearing, pending a final Su- benefits right process depriving al to due before im- stated that it “has been preme Court property them of their interest. Because prior plicit in our decisions ... the Fourteenth Amendment creates this an individual continued re- interest of right, right only runs statutorily is a creat- ceipt of these benefits Thus, against plaintiffs a “state.” must protected by the Fifth ‘property’ ed interest deprivation by show a defendants which Eldridge, Amendment.” Mathews satisfies both section 1983’s “under color of 893, 901, 319, 332, 47 L.Ed.2d requirement state law” and the Fourteenth (citations omitted).8 (1976) We see no requirement. Amendment’s “state action” purpose between the distinction for stated, however, Supreme Court has issue Math- disability at benefits federal challenged conduct ... consti- “[i]f ews disability the state benefits at is- tutes state action as delimited our sue in this case.9 decisions, then that conduct was also action support under color of state law and will Action B. State § Lugar v. Edmondson suit under 1983.” Co., Oil Rights The Civil Act of 1871 creates 457 U.S. (1982); accord Jack-
private right
against
of action
son v. F.2d 457 U.S. 102 S.Ct. 73 Medi- Community Cir.1983); Rendell-Baker v. (3d (1982);10 932-933 L.Ed.2d 482 Emergency Kohn, v. Medical Servic- 2764, cal Center 830, 457 U.S. 73 es, 878, (3d Cir.1983). Yaretsky, Blum v. n. We F.2d 879 3 (1982);11 712 L.Ed.2d 418 only one unified need embark on 991, 2777, therefore 102 73 L.Ed.2d 534 purposes the due inquiry for of (1982).12 Supreme Court’s state Since the and section 1983. clause trilogy, Appeals for of action Court guid- further given Third Circuit some inquiry guidance in that primary Our 13 See action. ance on the issue of state Supreme three from recent comes Temple University, v. Lugar Edmondson Oil Jackson opinions. See v. 721 F.2d Virginia pre- dining question adverting Lugar challenge decide but to involved a to a to issue). judgment attachment statute. prejudgment procedure re- attachment Both Professor Moore and Confederated respondents allege, only an ex quired that in following phrase from Tribes cite Jehovah’s petitioner dis- parte petition, belief was a that Washington King County Hospi- v. Witnesses might property posing dispose his of or of tal, (W.D.Wash.1967), F.Supp. 278 488 aff’d Acting upon his to defeat creditors. order mem., 20 390 L.Ed.2d a petition, clerk court issued a of the state (1968): special three-judge "In 158 court attachment, executed was then writ of by which by any judicial we are not case bound decisions county sheriff. Supreme than those United States other 924, 102 2747. The Court U.S. at S.Ct. at 457 F.Supp. 278 The Jehovah’s Court." 504-505. in this state involvement found sufficient court, however, Witnesses used this statement to private creditor's attachment cess to make precedents a of state court introduce discussion Virginia action. under the statute state Further, question on a of federal law. state suit involved a teacher’s 11. Rendell-Baker precedents supported the district court's court employer. em- against her former The former support We no case conclusion. have found maladjusted high-school ployer, dents, for stu- a school proposi- for the other than Jehovah’s Witnesses virtually from received all its income three-judge need not follow its tion that a court by governmental paid au- state local tuition fact, appeals. we have found con- court pertinent Under the Massachusetts thorities. statute, authority contrary. See Finch v. to the siderable had an these state local authorities Ass’n, Inc., 585 F.2d Mississippi State Medical through provide special obligation education to Cir.1978) ("the (5th three-judge court 773 public private were not schools where schools carefully analyze required [a to court of was provide equipped The Court such education. because, district appeals as a court decision] relationship insufficient between found Circuit, it was bound fol- the Second within government authorities to make and the school circuit’’); Lewis v. law of the low the Rockefel- of the teacher state action. termination Cir.1970) (no (2d ler, reason F.2d 371 431 challenge to the Court a 12. In Blum considered three-judge when decision of court to convene by nursing homes procedures which New York issue); appeals case determines court of pa- whether to transfer Medicaid determined (N.D. Hathaway, F.Supp. 835 Russell v. higher-care facilities. tients from to lower-care 1976) analyzing (three-judge reasons Tex. court (a) though received most such institutions Even appeals); Hopson following v. the court of (b) funding, large the state amounts of state Schilling, F.Supp. 1234-1235 n. 15 (c) carefully, regulated institutions (a (N.D.Ind.1976) three-judge court would be adjusted typically patients’ Medicaid bene- point, opinion appeals so court of bound nursing transfer the basis of the homes’ fits on panel); necessary three-judge not convene decisions, the Court no state action. found Grosso, F.Supp. v. Athanson court, ("As although (D.Conn.1976) suggested a district context have in another 13. Plaintiffs required appeals judges, composed do not three we are that decisions of our court of three-judge district us when we sit as it is bind law of circuit insofar follow the our own court; only plaintiffs suggest fol- we need prece- earlier pertinent.’’). For discussion Court, Supreme the court to decisions of the low question, NAACP Alabama State dent on the see appeal lies. Memorandum which Plaintiffs' Wallace, F.Supp. Branches Conference of argument support from Law at 11. The draws court). (M.D.Ala.1967)(three-judge We contention, suggestion, to that albeit not flat only perti- feel therefore ourselves bound IB J. advanced Professor Moore. See effect Moore, Court, Supreme but also nent decisions n. 17 Federal 0.402[1] Moore’s Practice ¶ Appeals by pertinent the Court decisions of (2d 1983); see also Tribes Ed. Confederated for the Third Circuit. Washington, F.Supp. Colville (E.D.Wash.1978) (three-judge de- court n.
227
(3d Cir.1983);14 Nguyen
v.
United
employers
931
whether
insurers who in-
Conference,
Catholic
States
F.2d 878
(1)
right
privilege
State-created
or
Lugar
particular
has
relevance to this
employer
An
or
insurer who be
Lugar
In
case.
Court
refined the
employee
receiving
lieves that
worker’s
Jack-
analysis propounded
nexus”
“close
compensation benefits has completely re
Co.,
Metropolitan
son v.
Edison
covered or has
to work
returned
at
L.Ed.2d 477
higher pay
same or
must nevertheless
con
Lugar
analy-
court divided state-action
pay compensation
tinue to
benefits unless
parts:
into two
sis
employer
qualifies
or insurer
for a su
First,
deprivation
by
must be caused
persedeas under section 413.
In order to
right
privilege
the exercise of some
or
qualify for an
supersedeas,
by
by
created
the state or
a rule of
employer or insurer
must
file a
imposed by
by
conduct
the state or
a with the Bureau of
Worker’s
person for
responsi-
whom the state is
(a) accompanied by the affidavit of a doctor
ble____ Second,
party charged
with
averring complete recovery
(b)
or
reciting
deprivation
person
must be a
who
employee
has returned to work at
may fairly be said to be a state actor.
wage
at
equalling
least
wage.
his
457 U.S. at
employer
2754. We
If an
suspends
insurer
com
begin
analysis
by
our
of state
pensation payments
action
con-
without qualifying for
sidering Lugar’s
prong.
first
We then
this automatic
and without a
question
move
to the more difficult
adjudication,
referee’s
the employer or in
Jackson,
termination,
plaintiff,
14. In
after his
University
stitutional status of the
Pittsburgh,
of
sued his union and
recently
his former
under
since a district court has
determined
Appeals’
section 1983 and under the
that the Court
analysis
National Labor Re-
of
Braden
University
Pittsburgh’s relationship
lations Act.
of
Jackson contended that the union
with the
improperly
Commonwealth
press
grievance
by
has been
had
failed to
his
undercut
Su
preme
er,
Lugar,
Court’s decisions
Appeals
arbitration. The Court of
Rendell-Bak
found no
Krynicky University
and Blum.
v.
Pitts
state action in the union’s actions. The court
of
burgh,
F.Supp.
(W.D.Pa.1983),
appeal
accepted
assumption arguen-
the district court’s
docketed,
(3d Cir.1983).
No. 83-5471
We men
by Temple University
do that an action
consti-
tion these matters to make clear that the instant
proceeded
tuted state action and
to determine
opinion, which does not rest on a Burton state-
University
deprived
that the
had
Jackson of no
analysis,
action
reflects no view the members
rights.
problem shortly
of this court on the
to be ad
appropriate
point
this context we feel it
Appeals
dressed
the Court
Krynicky.
panel
recently
out that one member of this
that,
Temple University’s
held
because of
“state
Nguyen
involved
claim that
the United
(involving
related" status
substantial state fund-
States Catholic Conference violated the Fifth
ing
appointment
of one-third of the trustees
Amendment
in its distribution of benefits to
officials),
high
Temple
"symbiotic
has a
refugees. Although
Indochinese
the federal
relationship"
with
sufficient under
government
reimbursed some benefits under
Wilmington Parking Authority,
Burton v.
Migration
Refugee
the Indochina
Assistance
(1961),
L.Ed.2d
through
Act of 1975
relationship
a contractual
Temple's
make all
actions "state action.” Schier
Conference,
with the Catholic
Ap-
the Court of
Temple University,
Civil
No.
Action
82-3554
peals found no state action.
(E.D.Pa.
1983) (bench opinion per
Dec.
Pol-
iak, J.); accord Isaacs v. Board
Trustees
Community
plaintiff
16. In
Medical Center the
(E.D.Pa.
Temple University,
F.Supp.
challenged designation
hospital
of another
1974). The decisions in Schier and Isaacs are
hospital"
the "resource
Defendant,
Scranton area.
harmonious with
the decision of our Court of
private non-profit corporation,
ex-
Appeals
University
in 1977 that actions of
isted to contract with the state and federal
institution,
Pittsburgh, another "state related"
governments
agency”
as a "lead
under several
University
Nevertheless,
grants
are "state action." Braden
programs.
Pitts-
the Court of
(3d
burgh,
Cir.1977).
Appeals
judication.
If the
insurer did
111(B)(2)(c)
through
of this
SWIF. Section
terminate,
the Workmen’s
so
opinion considers whether SWIF is a state
only award damages,
not
Act would
but
actor when it invokes
on behalf
section 413
penalties.
impose
also
private employer.
would
of a
Flagg
here,
Flagg
expressly
discussion
17. In our
Brothers
Brothers did
con-
we
not
anachronistically
separate
have somewhat
assumed that
sider as
the issues of whether a state-
opinion applied
Flagg
right
Lugar’s
privilege
Brothers
two-
created
or
existed and whether
analysis.
Court,
person
state-action
pronged
course,
responsible
deprivation
the
fairly
for the
could
yet
actor,
expressly
not
had
formulated this
be said to be a state
one could
Therefore,
analysis in 1978.
Flagg
Flagg
holding
Brothers
instead read
Brothers as
that the
expressly
actor,
does
opinion
hold that
the U.C.C.
warehouseman was not
though
even
right
no state-created
privilege.
employed
involved
or
We
the warehouseman
a state-cre-
Flagg Brothers
resting
right
privilege.
prefer
read
result as
on this
ated
We
the first read-
Lugar
prong of
analysis.
ing.
first
Because the
111(B)(2)(d)
Finally,
section
Arg.
give
considers
at 20.
this concession
We
close
private
whether a
insurer or a self-insuring
precedents
consideration
recent
because
*11
private employer is a state actor when it
cast some
doubt on
existence of state
invokes the
provi-
government agency
action when a
“con-
responsibilities.
sion.
tracts out” its
Ren-
See
Kohn,
830,
dell-Baker v.
(a)
Public Employers
2764,
(1982) (education
Lugar,
matic
insurer).
do not find these
private
We
(d)
Insurers and
Private
Self-Insured
dispositive here.19
precedents
Employers
Private
of section 413’s
action, then,
We hold that invocation
when-
have found state
We
provision by
pri-
a
supersedeas
entity
and when-
automatic
public
a
insures itself
ever
complaint without
process
ruling
dismissed a
which had
court also found that
18. The Silas
ground
three-judge
convening
on the
conformity
a
court
was in
with
accorded
panel
prior three-judge
a
three-judge
that a decision of
court
Prior to Silas a
standards.
controlling. The Court of
was
the same district
Georgia’s
un-
had held
three-judge
initially
Appeals
held that the earlier
insurer/private
private
em-
constitutional in the
ques-
completely
opinion
determine the
Caldwell,
did not
ployer
v.
ficiaries of other ments within the of due Eldridge, in Mathews v. Subsequently, 424 This determination must be made in the (1976), “time, specific place U.S. 96 S.Ct. L.Ed.2d 18 context of the challenged pro- held that certain termination circumstances” of the Court McElroy, ceedings Security disability Workers for Social bene- cedure. Cafeteria 886, 895, 1743, 1748, despite fits could discontinued the ab- U.S. S.Ct. Brewer, (1961); Morrissey evidentiary hearing sence of and not L.Ed.2d 1230 long 471, 481, 2593, 2600, process violate due so as the termina- 408 U.S. procedures sufficiently Mathews were reliable. L.Ed.2d 484 Thus under reviewing compelled Because workers’ is mani- court is to balance the festly comparable disability following more to the factors: benefits involved Mathews than the more in First, private interest that will be Goldberg, protected AFDC benefits in I action; second, affected the official believe that further elaboration of the due deprivation the risk of an erroneous process question presented in this case inis through procedures such interest order. used, value, probable any, if procedural additional or substitute safe-
I.
guards;
finally,
the Government’s
Recipients
statutorily
created
interest,
including the function involved
property
have a
interest
in the continued
and the fiscal administration burdens
receipt of those benefits. Board
Re-
proce-
the additional or substitute
Roth,
gents v.
564, 576-578,
408 U.S.
requirement
dural
would entail.
2701, 2708-2709,
quirement
of due
opportu-
is the
*16
nity to
meaningful
be heard “at a
time
II.
meaningful
in
and
manner.”
Mathews
Supreme
weighed
In
the
Court
332-33,
Taking
the lead from
this
allow for the cessation of benefits without
Court must determine whether
evidentiary hearing.
the Penn-
a full
The Court
sylvania supersedeas provision
recip-
potential
offers
injury
found that the
to a discon-
of
payments
recipient
ients workmen’s
was the same as in Gold-
tinued
“meaningful
berg:
“meaningful
time” and
interrupted receipt
man-
the
of income
challenge
pay-
pending
ner” to
terminations
such
final administrative review of the
premised
8.
is
critical
Final determination
Two
factors
termination decision.
technical,
in
class
distinguished
affected
Mathews
medical evaluation which
the
First, as in the
Goldberg.
that
in
require
from
not
adversarial
does
case,
recipients are not as
disability
present
beyond the submission of affidavits
recipients and therefore
destitute AFDC
documentary
and
evidence.
likely
here is
“potential deprivation
the
337-38,
Auxier v. Woodward State
require
law to
additional reliance on state
cert,
1978),
(Iowa
School,
N.W.2d
266
139
hearing
any
if
material fact is dis-
formal
denied,
58
439 U.S.
Compensa-
puted).
Laird v. Workers’
Cf.
(1979).
Mathews,
Relying on
L.Ed.2d 324
Bd.,
Cal.Rptr.
Cal.App.3d
195
in Auxier held:
the court
(1983)(termination requires preliminary
that, prior to ter-
process demands
[D]ue
hearing).2
of workers
bene-
mination
Pennsylva-
deficiency
The second
fits, except where the claimant has dem-
arrangement
provides
is that it
no inde-
nia
work,
returning
recovery by
onstrated
by state authorities on the
pendent check
which, as
he
she is entitled to a notice
or
physician.
termination certification
minimum,
following:
requires
physician employed
an insurance
Thus a
termination,
(1)
contemplated
carrier,
a disabled worker must
to whom
certify
report, may
any point
periodically
(2) that
the termination of benefits
disability
ceased. As noted
that the
specified time not less
was tb occur at a
above,
immediately
that certification alone
notice,
days
than 30
after
under the
terminates benefits
(3)
the termi-
the reason or reasons for
not re-
provision. Although Mathews does
nation,
evidentiary hearing, the Su-
quire a full
(4)
recipient
opportu-
that the
had the
observed,
nevertheless
preme Court has
nity
any
evidence of documents
submit
requires
of law
“[ojrdinarily, due
disputing
contradicting
the reasons
hearing’
opportunity for ‘some kind of
termination, and, if
evi-
given for
such
significant
deprivation of a
to the
submitted, to be
dence or documents are
Memphis Light
&
property interest.”
Gas
termination is still con-
advised whether
1,19, 98 S.Ct.
Craft,
Div. v.
Water
templated,
(1978).
gen-
56 L.Ed.2d
See
(5)
right to
recipient
that the
had the
Friendly,
Hearing,
Kind
erally,
Some
for review....
We need not
123 U.Pa.L.Rev.
Virginia
safeguards
Similarly,
precise
the West
minimum
Id. at 142-43.
set forth
not accom-
protect
a termination
Appeals
held that a state
would
Supreme Court
Turner,
(Fla.
Corp.
So.2d
systems
Marine
which avoid the
2. Other
Dist.1983) (employer/carrier
procedure
App.
has burden
problems present
in no-notice
cess
disability
Washington,
proof
termination
contested
see Herron
include those
Maine,
McClanahan,
proceeding),
v. Han-
Wash.App.
see
625 P.2d
Merrifield
Co.,
(S.Ct.Me.1980)
(1981)
documentary
depo-
ever, comment that the it bears reliability in testimony that insured
medical inde- followed two tiers of was
Mathews agency and federal review
pendent short, of benefits. to termination unchecked recommendation use of the interest- employ of an physician
aof terminate a benefit which party to
ed property interest cognizable
recipient has process concepts set the due at odds with Goldberg.
forth in Mathews
IY.
Because the party no the affected affords
proceeding provide it fails to and because
notice insuring the relative relia-
mechanism proceedings, the its termination
bility of must fall.
challenged Pennsylvania statute and the centrality of the notice defect im- guarantee of decisionmaker
insufficient requires this Court to hold
partiality claim,
prospect of future settlement payment of interest and an
even with fee, satisfy the consti-
attorneys’ does requirements process. of due Ac-
tutional
cordingly, join I in the result reached majority. have au-
Judges GREEN and POLLAK say they join
thorized me to
statement. STOUT, Jr., Plaintiff,
Philip James HECKLER, Secretary
Margaret M. Services,
Health and Human
Defendant. No. 83-1319.
Civ. Court, States District
United
D. Idaho. 1, 1984.
Feb.