Guest post by Workers’ Compensation Attorney Michael McCabe:

On April 28, 2016, the Florida Supreme Court entered its long-awaited decision in the case of Marvin Castellanos v. Next Door Company, et al. The Court held that the statutory limitations on Workers’ Compensation attorney’s fees created by the Florida Legislature violated the Due Process clause of both the Florida and United States Constitutions. Rather than a limited fee based on a percentage of the benefits actually secured, attorneys representing injured workers may now be awarded an hourly fee for time and effort reasonably spent litigating Workers’ Compensation benefits.

Out with the Old (Formula)

In 2009, the Florida Legislature amended Florida Statutes Section 440.34 to create an irrebuttable presumption that only allowed a judge to award a statutory guideline fee in a Workers’ Compensation case, instead of giving a judge the discretion to award either the statutory guideline fee or an hourly fee. This “guideline” resulted in the following formula that limited the amount an injured worker’s attorney could be paid to:

  • a fee based on 20% of the first $5,000 of the amount of benefits secured by the attorney;
  • 15% of the next $5,000.00 of the amount of benefits secured;
  • 10% of the remaining amount of benefits secured to be provided during the first 10 years after the date the claim is filed; and,
  • 5% of the benefits secured after 10 years.

In Castellanos, this statutory formula resulted in an attorney’s fee of $822.70, despite the fact the worker’s attorney reasonably spent 107.2 hours litigating a complex case to secure benefits for his client. This made the effective rate for the attorney $1.53 per hour. The First District Court of Appeal affirmed the result, noting it was constrained to abide by the statutory formula, but it certified the question to the Florida Supreme Court.

In considering the constitutionality of the statutory attorney fee limitation, the Florida Supreme Court addressed:

  1. whether the Legislature “was reasonably aroused by the possibility of an abuse which it legitimately desired to avoid;”
  2. whether there was a reasonable basis for a conclusion that the statute would protect against the abuse’s occurrence; and
  3. whether the expense and other difficulties of individual determinations on attorneys’ fees “justify the inherent imprecision of a conclusive presumption against an award of fees to an injured worker’s attorney,” that would not be limited to the statutory formula.

Analysis of the Decision

The Court held that with regards to the first question, the Legislative intent was to standardize fees and avoid excessive fee awards and frivolous litigation. However, the Court held that the Legislature’s formula did not accomplish this goal.  Instead, the Court explained that by requiring that all fee awards be limited to the statutory formula, it not only brought down fees on cases where a minor benefit was secured, but also resulted in excessive fees when the attorney spent only a limited amount of time securing a large amount of benefits. The Court held that the irrebuttable presumption created by the Legislature eliminated the authority and discretion of the Judges of Compensation Claims, to alter fee awards either upward or downward under the circumstances of each case.

Having found that the fee limitation did not achieve the expressed intent of the amendment, the Court then addressed the third question of whether the fee limitation was justified and a permissible infringement upon the constitutional rights of injured workers’ rights to Due Process. The Court held that by limiting the amount either an injured worker (or the employer’s insurance carrier) could pay the worker’s attorney, it impaired an injured worker’s ability to obtain an attorney, which in turn limited the injured worker’s ability to obtain benefits or treatment that had been denied. The Court explained that “to navigate the current workers’ compensation system” after a denial of benefits “would be an impossibility without the assistance of an attorney.” The Court held that this was the result, or “risk” of requiring a fee award that was “entirely arbitrary, unjust, and grossly inadequate.” Based on this analysis, the Court concluded that the statutory limitation on fees violated the state and federal constitutional guarantees of due process. The opinion was either joined in, or concurred to, by five or the seven Florida Supreme Court Justices, with two dissenting.

How does this effect employers in Florida?

Employers and their insurance carriers will continue to apply the statutory requirements for workplace accidents, in determining the type and amount of benefits and medical treatment to which an injured worker is entitled. Our concern is that rather than litigating claims based on the desire for benefits, certain claims may now be litigated for the purpose of securing attorney’s fees. We suggest that employers in Southwest Florida – and the entire State of Florida – maintain open communications with their insurance carriers to make sure that each company is complying with the Workers’ Compensation Statute, and avoid a situation where an attorney is motivated to enter into protracted litigation on a relatively minor benefit. Contact your Workers’ Compensation attorney to discuss procedures and strategies that can be implemented to avoid issues that result in large attorney fee awards for minor corrections in workers’ compensation benefits.