Opposition Brief — Trust v. Perry (No. 06-36)

No. 06-36 SEP g - 2006

OF THE CLERK

In The

Supreme Court of the Gnited States

¢

PUBLIC AGENCY COMPENSATION TRUST (PACT),

Petitioner,

COLIN PERRY ET AL..,

Respondents.

2

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On Petition For A Writ Of Certiorari

To The Supreme Court Of Nevada

+

BRIEF IN OPPOSITION

e

LAURIE A. YOTT

BECKETT, YOTT & MCCARTY

6130 Plumas Street, Ste. 200

Reno, NV 89519

(775) 322-3366

COCKLE LAW BRIEF PRINTING CO. (800) 225-6964

OR CALL COLLECT (402) 342-2831

QUESTION PRESENTED

NRS 617.457 benefits Nevada police officers and fire

fighters who have been so employed for at least five years

prior to becoming disabled by heart disease with a conclu-

sive presumption that their heart problems arose out of

such employment. In addition to the prerequisite five

years of continuous full-time employment, the officer or

firefighter must have submitted to annual physicals and

must have corrected any predisposing conditions such as

obesity, smoking, diabetes, high cholesterol or blood

pressure when ordered by the examining physician.

The question presented is whether this presumption

violates the Due Process Clause of the Fourteenth

Amendment.

ii

CORPORATE DISCLOSURE STATEMENT

Respondent Employers Insurance Company of Nevada

(EICN) is a private insurance corporation wholly owned by

Employers Insurance Group, Inc. Employers Insurance

Group, Inc. is a corporation wholly owned by EIG Mutual

Holding Company, a mutual company owned by EICN’s

policyholders. None of these entities are publicly traded

and no publicly held company owns 10% or more of their

stock.

At the time of certain relevant events, EICN was an

agency of the State of Nevada known as the State Indus-

trial Insurance System (SIIS) which administered the

state’s workers’ compensation fund. On January 1, 2000,

by legislative authorization and proclamation of the

Governor of Nevada, the state agency became a private

mutual insurance company. Both entities will be referred

to as EICN in this brief, unless otherwise specifically

stated.

lil

TABLE OF CONTENTS

Page

I. RESPONDENT'S BRIEF IN OPPOSITION... 1

II. STATEMENT OF THE CASE......................... 1

III. REASONS FOR DENYING THE WRIT......... 4

A. PACT DOES NOT HAVE STANDI? G TO

BRING A FEDERAL DUE PROCESS

See PIER badaisiicisrieiscteintennipntietaninanstecs 4

B. NO COMPELLING REASON TO RE-

ITE niihicadindicihcsnidiins ctlddasae i pilcdnaeapearinbeneaosven 5

C. PACTS FISCAL IMPORT ARGUMENT

Be TE hii dcsni enpcubcidaschimeiasivckisiinonsis 9

IV. CONCLUSION

iv

TABLE OF AUTHORITIES

Page

CASE LAW

Arizonans for Official English v. Arizona, 530 US.

43, 1178.Ct. 1055, 137 L.Ed.2d 178 (1977)................066 5

Bakelaar v. West Haven, 475 A.2d 283 (1984).........ccccc000000 8

Board of Cnty. Com’r of Sweetwater v. Geringer, 297

Bp A CREA, BED iciisiinn side cucincocichinibvniniiiodesionionncs 4

Branson School District R-82 v. Romer, 161 F.3d

Re RR ish tai chenicesiscninptecsnicosaspdinestcireketnincesiinies 4

City and County of San Francisco v. Workers’

Compensation Appeals Bd., 22 Cal. 3d 103, 583

R2d 151, 148 Cal. Rotr. 626 (1978)..........:.c.eccccecsccccree 6, 7

City and County of San Francisco v. Workers’ Comp.

Appeals Bd., 583 P.2d 151 Cal. 1978..............cccccessereeeeces 7

Ducharme v. City of Putnam, 285 A.2d 318 (Conn.

PE iidieb ci iichchelnt soneaasueintsvnciccuilatsadantanisukpineiaalitiiieends tai 8

Fairfax County Fire and Rescue Servs. v. Newman,

ee Cs OE ivtntte shah percssesenzivincindciegzaedcsenotede 7

Graham v. Richardson, 403 U.S. 365 (1971) ..............cceceee 6

Grover v. Manchester, 357 A.2d 922, appeal dis-

SG, Te OL, TF CL I oes dncntenccnecnendevesnccotcccesetesssnutts 8

Hernandez v. New York, 500 U.S. 352, 111 S.Ct.

Dy BEG Bek GO CA) sccsiscicancsccatsisansseisucseseieners 6

Howard v. City of Las Vegas, 121 Nev. Adv. Op. No.

Se Be Be ibis cs ivccectssecinshidvtstexesalenniscaitiasess 9

INS v. Chadha, 462 U.S. 919, 103 S.Ct. 2764 (1983)......... 5

Lujan v. G & G Fire Sprinklers, Inc., 532 U.S. 189

CID isis histciccticicacaibiiien sas hacsiicnincineiabiaapcuniets tibiand omni pmeistod 5

TABLE OF AUTHORITIES — Continued

Page

Matter of Passino v. Jefferson-Lewis, 277 A.D.2d

SODE, TEG FEV. Be BE OOO vncvecccnctenstccesesevssvqeveesavessens 4

Robertson v. North Dakota Wkr. Comp. Bur. 616

Se ae i cechenscsennlictodscccsnnnedncdrnintdinintiaieevel 7

Schave v. Department of State Police, 227 N.W.2d

SESE TEE eR O Rane eee aes eT 7

Stephens v. Workmen’s Comp. Appeals Bd., 97

Cal. Rntr. 713 (Cal. Ct. App. 1971) ......cccccccsessescscsereseseeeeess 7

Swanson v. City of St. Paul, 526 N.W.2d 366 (Minn.

IRIS vcccscicssss sa anes dsm tie aaa daahaeibaeibeisioneestasaniesesaniebioat 7

Trenton v. New Jersey, 262 U.S. 182 (1923).......... eee 4

United States v. Salerno, 481 U.S. 739 (1987)...............006 5

Usery v. Turner Elkhorn Mining Co., 428 U.S. 1,

RETIN didincictsibdbdesenGainibbeiendaintsbddicassianadoabidusunaaabupieiesaenions 7

Williams v. Mayor & City Council of Baltimore, 289

US. 36, 53 S.Ct. 431, 77 L.Ed. 1015 (1933).................6. 4

CONSTITUTION

I a I a lining 1, 4,5

RULE

SNE SUIS SID BPs ine. sininnsscaereevnsvivacnsdevsaresiatonsionndicuinnts 5

STATUTORY LAW

SER ETO Ree OME De PITTI Taine Bede 4

aE EINE ka spdihicAinisloass cessicaniedninstesctieda tein ceksawnbedbatianenee 4

TABLE OF AUTHORITIES -— Continued

Pe Fei cignincsemen vie sanscnasvitasicedinasciabaleianicoisuimadchcnbapnantics 7

PP DET ANT siitntsncticicihsticesinsiiatilsibiitieiaimmainabiiciasaibenain 1, 2, 6, 8

I. RESPONDENT’S BRIEF IN OPPOSITION

Respondent Empl. «3 Insurance Company of Ne-

vada (EICN) respectfu.zy asks this Court to deny the

Petition for Writ of Certiorari filed by Petitioner Public

Agency Compensation Trust (PACT). There is no compel-

ling reason to review the state court findings.

HW. STATEMENT OF THE CASE

Respondent Colin Perry was employed in law en-

forcement by various rural Nevada cities and counties for

twenty-four years. App. [IX 1704. Between July 1, 1986 and

February 17, 2000 he worked as a Deputy Sheriff for the

Elko County Sheriff’s Department. In 1992 he suffered an

episode of unstable angina or lesion in his right coronary

artery producing chest pain. App. IX 1641. He underwent

angioplasty and continued to work. At that time Elko

County was insured by EICN’s predecessor SIIS. SIIS

accepted the 1992 heart claim. In 1998 Mr. Perry suffered

another episode of unstable angina, but this episode

involved his left coronary artery. App. [IX 1641. The work-

ers compensation coverage for Elko County had at that

time been taken over by PACT. Mr. Perry made a claim for

the 1998 heart incident with PACT and requested reopen-

ing of his 1992 heart claim with SIIS. PACT’s rejection of

the claim was overturned by a workers compensation

appeals officer, under Nevada’s Last Injurious Exposure

Rule. Pet. la — 14a. SIIS’s denial of reopening was af-

firmed. These rulings were affirmed on review by a state

district court (Pet. 1b — 12b) and the Nevada Supreme

Court (Pet. 1c-6c). ;

The dispute is whether NRS 617.457 violates due

process rights of PACT under the Fourteenth Amendment.

PACT is a non-profit unincorporated association exclu-

sively made up of self insured political subdivisions (Pet.

ii), permitted by Nevada Statute to provide workers’

compensation to its public employer members. PACT is not

entitled to assert a federal due process claim because the

Fourteenth Amendment was written to protect individual

rights, as opposed to collective or structural rights, and

does not apply to a claim by political subdivisions against

the state that created them.

Even if PACT is found to have standing to bring a due

process challenge, the statute stands up to constitutional

scrutiny. The constitutionality of occupational health

presumptions have been upheld by this Court where they

bear a rational relationship to a legitimate governmental

purpose. The Nevada Supreme Court acknowledged the

legislative history showed police officers and firefighters

are at an increased risk of developing heart disease

because of chronic stress on the job, and could have en-

acted the statute to encourage officers to remain in public

service or to eliminate costly “battles-of-the-experts” in

proving causation. Pet. 4c.

A presumption of constitutionality applies, and PACT

has not met its burden of proving NRS 617.457 is uncon-

-stitutional. The fact the Nevada Legislature decided to

resolve doubts in favor of police officers and firefighters

regarding the causal connection between heart disease

and employment does not mean it was irrational to do so.

Conflicting medical evidence regarding a causal connec-

tion between the stress incidental to police work and heart

disease was presented to the Nevada Legislature, and to

the administrative court below in connection with the

Perry claim. See, e.g., App. [IX 1661-1703 and App. IX

1629-1660, 1724-1785; App. VIII 1360-1573, 1574-1594,

1595-1601; App. X 1786-2019; App. XI 2027-2087.

The Nevada Legislature did not leave the political

subdivision employers without recourse in these heart

claims. Strict prerequisite conditions must be met before

the presumption becomes conclusive which provide the

public employers a defense to the heart claims by officers.

The officer must establish at least five years of uninter-

rupted full time service in the law enforcement capacity.

He or she must also have undergone annual physicals

arranged by the employer, and have corrected any condi-

tions identified by the examining physician that would

predispose him or her to heart disease. They could be

required to undertake corrective health measures such as

quitting smoking, losing weight, controlling diabetes or

high blood pressure and/or reducing cholesterol.

Finally, PACT attempts to show fiscal impact by an

article in a Las Vegas newspaper that was not properly

admitted into the record. That article was published before

a 2005 Nevada Supreme Court case that significantly

reduced the potential workers compensation liability in

many of these police and fire heart disease cases. Any

officer who otherwise qualifies but becomes disabled from

the heart disease after retirement will only receive medi-

cal treatment and not wage replacement compensation

benefits.

It is respectfully submitted this Court should deny

PACT’s Petition for Writ of Certiorari.

4

III. REASONS FOR DENYING THE WRIT

A. PACT DOES NOT HAVE STANDING TO

BRING A FEDERAL DUE PROCESS CHAL-

LENGE

PACT exists by virtue of Nevada statutes which

enable public entities to set up unincorporated nonprofit

associations for the purpose of providing self insured

workers’ compensation to their employees. See, e.g., NRS

616A.055, 616B.350. PACT’s membership is exclusively

made up of Nevada cities, counties and towns. Pet. ii, n.1.

At the time of his 1998 heart incident, Mr. Perry was a

Deputy Sheriff with Elko County. Pet. 1. The County and

its Sheriff’s Department cannot claim a violation of due-

process rights under the Fourteenth Amendment by virtue

of the application of a Nevada statute. Williams v. Mayor

& City Council of Baltimore, 289 U.S. 36, 53 S.Ct. 431, 77

L.Ed. 1015 (1933), Trenton v. New Jersey, 262 U.S. 182

(1923) “[Mlunicipalities and counties may not sue a state

for alleged violations of the Fourteenth Amendment,

because ... that Amendment ‘was written to protect

individual rights, as opposed to collective or structural

rights.’” Board of Cnty. Com’r of Sweetwater v. Geringer,

297 F.3d 1108, 1116 n.1 (10th Cir. 2002) [quoting from

Branson School District R-82 v. Romer, 161 F.3d 619, 628

(10th Cir. 1998). Citing Williams v. Mayor & City Council

of Baltimore, 289 U.S. 36, 53 S.Ct. 431, 77 L.Ed. 1015

(1933)].

PACT should be considered a public entity for pur-

poses of this challenge because it was created to benefit

public employers by allowing them to share the costs of

self-funding workers compensation plans. See, generally,

Matter of Passino v. Jefferson-Lewis, 277 A.D.2d 1028, 716

N.Y.S.2d 229 (2000). PACT exists only to benefit public

employers in their effort to provide workers’ compensation

to their employees, and therefore it is more akin to a

public entity than a private insurance company. There is

no reason to allow a political subdivision to get around the

state’s immunity from Fourteenth Amendment violation

claims, simply by banding together with other public

entities into a self-insured, unincorporated association.

There is no reason to give the group of public entities

making up the PACT self insured association better rights

than those available to a self insured public entity stand-

ing alone.

PACT lacks standing to bring this due process challenge.

B. NO COMPELLING REASON TO REVIEW

PACT has not presented any compelling reason for

discretionary review of the state court findings, as re-

quired by Supreme Court Rule 10.

Statut2s are presumed to be constitutional. INS v.

Chadha, 462 U.S. 919, 944, 103 S.Ct. 2764 (1983). As suck.

“the party challenging the statutory ... scheme... bears

the burden of demonstrating its unconstitutionality.”

Lujan v. G & G Fire Sprinklers, Inc., 532 U.S. 189, 198

(2001).

“A facial challenge to a legislative Act is, of course, the

most difficult challenge to mount successfully, since the

challenger must establish that no set of circumstances

exists under which the Act would be valid.” United States

v. Salerno, 481 U.S. 739, 745 (1987). Federai courts defer

to state court interpretations of state statutes. See, e.g.,

Arizonans for Official English v. Arizona, 530 U.S. 43, 48,

117 S.Ct. 1055, 1059, 137 L.Ed.2d 178, 181 (1977). Factual

6

findings receive similar deference Hernandez v. New York,

500 U.S. 352, 364-369, 111 S.Ct. 1859, 1968-1870, 114

L.Ed.2d 395, 409-412 (1991). All arguments in support of

the Petition would require this Court to review and over-

turn the state court’s factual findings and interpretations

of state workers’ compensation law. When considering the

validity of legislation which is under constitutional attack,

the state enjoys a wide range of discretion to make rea-

sonable classifications for enacting laws over matters

within its jurisdiction. Graham v. Richardson, 403 U.S.

365, 371 (1971).

As indicated by the Nevada Supreme Court below, the

legislative history of NRS 617.457:

... Suggests that police officers and firefighters

are at an increased risk of developing heart dis-

ease because of chronic stress on the job. As a re-

sult, the Legislature could have enacted NRS

617.457 for the purpose of encouraging firefight-

ers and police officers to remain in public service

or to eliminate costly “battles of the experts” used

to prove or disprove a causal connection between

firefighting and police work and heart disease.

Pet. 4c. The Nevada Court therefore concluded a rational

basis exists for NRS 617.457 and that the statute is

reasonably related to achieving a legitimate government

purpose. Pet. 3c and 4c. PACT cannot accordingly over-

come the statute’s presumption of constitutional validity.

A very similar statute was found constitutionally

justified by the California Supreme Court. City and

County of San Francisco v. Workers’ Compensation Appeals

Bd., 22 Cal.3d 103, 583 P.2d 151, 148 Cal.Rptr. 626 (1978).

Noting the pronounced dichotomy in medical opinion

regarding heart disease in the police work context, the

7

California Court believed “substantial justice” and equal

treatment were widely thwarted in practice because the

compensability of similar heart attacks varied fortuitously

on the basis of which competing school of medical thought

administrative officials ... chose to credit in a particular

case.” Id., at 115." That Court justified compensability of

cases involving pre-existing heart di ease by noting

aggravations by work exposure are covered. /d., at 115-

-116. Nevada workers’ compensation law also covers occu-

pational aggravations of pre-existing disease. NRS

617.366.

Not every conclusive presumption is constitutionally

infirm. In Usery v. Turner Elkhorn Mining Co., 428 U.S. 1,

33-34 (1976) this Court found a rational connection sup-

porting employment duration based conclusive presump-

tions relating to black lung disease, as a result of

conflicting medical evidence on the issue considered by the

legislature. Nevada’s legislature also considered the well-

documented debate relating to whether stress resulting of

law enforcement or fire fighting work causes heart dis-

ease. See, e.g., IX App. 1660-1703. The fact such medical

* As acknowledged in Robertson v. North Dakota Wkr. Comp. Bur.,

616 N.W.2d 844, 854 (ND 2000): “Other courts have recognized a split

_ in the medical community about the causal relationship between law

enforcement employment and heart disease, and have said the enact-

ment of similar law enforcement presumptions represents a legisla-

tively adopted premise that work stress of a law enforcement officer

causes heart disease. See, City and County of San Francisco v. Workers’

Comp. Appeals Bd., 583 P.2d 151, 155-56 Cal. (1978); Stephens v.

Workmen’s Comp. Appeals Bd., 97 Cal.Rptr. 713, 715 (Cal.Ct.App.

1971); Swanson v. City of St. Paul, 526 N.W.2d 366, 368 (Minn. 1995);

Linnell, 305 N.W.2d at 601; Schave v. Department of State Police, 227

N.W.2d 278, 282 (Mich. 1975); Fairfax County Fire and Rescue Servs. v.

Newman, 281 S.E.2d 897, 900 (Va. 1981).”

8

debate regarding the heart disease continues to exist

today was shown by the conflicting medical opinions and

scientific articles presented to the administrative appeals

officer in Mr. Perry’s hearing, below. See, e.g., App. IX

1629-1660, 1724-1785; App. VIII 1360-1573, 1574-1594,

1595-1601; App. X 1786-2019; App. XI 2027-2087.

PACT cites a 1971 Connecticut decision, Ducharme uv.

City of Putnam, 285 A.2d 318 (Conn. 1971) for the proposi-

tion the heart disease presumption is a “gift or special

benefit” to police and firefighters, and as such must be

done by legislation outside of the Nevada Industrial

Insurance Act. Pet. 10. Although Connecticut took that

route and indistinguishable benefits were ultimately

enacted and constitutionally upheld,’ there is no reason to

force this distinction as to form rather than substance on

Nevada.

The public employers of police officers and firefighters

retain defenses to the heart disease claims, based upon the

prerequisites to the applicability of the presumption. The

presumption of occupational heart problems does not

apply unless the officer has at least five continuous, full

time years of service before the manifestation of the

disability. NRS 617.457(1). During the officer’s entire

tenure of employment he or she must also have submitted

to annual physicals of the heart arranged by the employer.

NRS 617.457(3). The statute also requires the officer to

-correct predisposing conditions which led to the heart

disease, where ordered by the examining physician. NRS

617.457(6). The occupational connection between the

? See, Bakelaar v. West Haven, 475 A.2d 283 (1984), citing Grover v.

Manchester, 357 A.2d 922, appeal dismissed, 423 U.S. 805 (1975).

@- Qe

-9

service and the heart problems is therefore narrowed

considerably by these prerequisites.

C. PACT’S FISCAL IMPORT ARGUMENT IS

FLAWED

PACT attempts to demonstrate a compelling fiscal

impact as a result of figures given in a July 31, 2005 Las

Vegas newspaper article discussing the statute.’ Subse-

quent to that article, however, on October 6, 2005, the

Nevada Supreme Court came down with Howard v. City of

Las Vegas, 121 Nev. Adv. Op. No. 70, 120 P.3d 410 (2005)

which will significantly reduce the extent of public em-

ployer fiscal liability in these claims. Howard holds that

officers who do not become disabled by their heart disease

until after retirement are not entitled to wage replacement

or other money compensation benefits. Such recipients are

only entitled to medical treatment through their workers’

compensation claims. The fiscal impact of the legislation is

therefore not accurately shown by the July 2005 newspa-

per article.

PACT’s complaint regarding the fiscal impact also

belies the fact it had notice of the heart legislation at the

time the association of public entities was formed. The law

enforcement heart presumption has been in effect since

1989, while the enabling legislation for self insured groups

of public employers was not enacted until 1993. PACT

* Consideration of the facts in this article may be procedurally

inappropriate, since it was not in the record on appeal. The article was

inappropriately contained in PACT’s motion for en banc consideration

before the Nevada Supreme Court. NRAP 40A(c).

10

should have been assessing its group members accordingly

and is presumably prepared for future fiscal impact.

IV. CONCLUSION

It is respectfully submitted the Petition should be

denied.

Respectfully submitted,

LAURIE ALEXANDRA YOTT

BECKETT, YOTT & MCCARTY

6130 Plumas Street, Ste. 200

Reno, NV 89519

(775) 824-8833

Attorneys for Respondent