High court rejects plea to resolve ‘excessive fines’ comp dispute

The U.S. Supreme Court on Monday denied a petition for review over whether fines levied against a hotel for failing to carry workers compensation insurance were constitutionally “excessive.”

In Dami Hospitality LLC v. Colorado Department of Labor and Employment, Division of Workers' Compensation, the Supreme Court was asked: How is an offender’s ability to pay relevant in determining whether a fine is unconstitutional under Excessive Fines Clause of the Eighth Amendment?

Denver-based Dami Hospitality LLC, which owns a motel, allowed its workers compensation coverage to lapse off and on between 2005 and 2014, ultimately accruing fines of more than $840,000, which the company argued was constitutionally excessive. The company has an annual payroll of less than $50,000 and claimed that the “aggregate fine proposed … exceeded the business’s gross annual income.”

On June 3, the Supreme Court of Colorado held in a 2-1 decision that the Excessive Fines Clause of the Constitution does afford corporations protection against constitutionally excessive fines. The court found that the evaluation of fines should consider the company’s ability to pay the fine, and remanded the case back to the Colorado Division of Division of Workers Compensation to determine whether a daily fine imposed by the state on Dami for each day it violated workers compensation laws was constitutionally excessive.

The state sought a rehearing in the Colorado Supreme Court, which was denied June 18, before filing a petition for a writ of certiorari with the U.S. Supreme Court on Dec. 6. The state argued that the Colorado Supreme Court “erred in sharply limiting the manner in which an offender’s ability to pay is relevant in determining whether a fine is excessive under the Eighth Amendment.”