The Florida Supreme Court is considering whether to declare the state’s workers’ compensation attorney fee schedule unconstitutional.
The court recently heard oral arguments in a case (Castellanos v. Next Door Company, SC13-2082) addressing the attorney fee schedule passed in 2003 as part of a comprehensive rewrite of the state’s workers’ compensation law.
The attorney fee schedule was designed in part to end the practice of attorneys filing multiple benefit claims on a single case in order drive up their hourly fees. Proponents of the fee reform argued that a high rate of attorney involvement was one of the main reasons Florida’s workers’ compensation rates then were among the highest of the nation.
Since then, rates have dropped by more than 50 percent including a statewide average 5.2 percent decrease scheduled to take effect January 1, 2015.
The case before the court involves Marvin Castellanos who was injured in an altercation with another employee in 2009.
At the time, Castellanos’ employer and its insurer, Amerisure Insurance, paid for Castellanos to see a doctor. However, the employer/carrier subsequently denied his claim for additional medical treatment that included three physical therapy visits for two weeks.
Castellanos then hired an attorney who prevailed in the case and won him additional benefits in the amount of $822.70.
Based on the state’s statutory fee schedule, Castellanos’ attorney was awarded $164.54 for 107 hours of work. That equaled a rate of roughly $1.53 per hour. By comparison, the state’s minimum hourly wage is $7.93 per hour.
Richard Sicking, representing Castellanos, told the court that the statutory fee schedule is unconstitutional because it hinders an injured worker’s right to due process and access to courts since attorneys would not work on such small claims.
Additionally, he argued that the Legislature overstepped its authority by preventing workers’ compensation judges from weighing-in on what should be “reasonable fees.”
“The judge is now a mechanical calculator,” said Sickling. “(Attorneys) can’t tell him about the time, the community standard; they can’t tell them any of the things that you have held in the rules regulating the Florida bar as to the way a fee is suppose to be determined.”
Raoul Cantero, representing the Next Door Company and Amerisure, said this case has little to do with injured workers and rests solely on the desire of attorneys to increase their compensation.
“No matter what you do in this case, if you declare the statute unconstitutional, Mr. Castellanos would not get one more penny,” said Cantero. “What happens is the attorney would get more money.”
But several justices questioned whether injured workers could realistically represent themselves in such cases due to the complexity of the workers’ compensation law.
Asked whether he would represent an injured worker for $1.54 per hour, Cantero answered, “I can’t say whether I would or not.”
The attorney fee schedule has helped reduce workers’ compensation costs as supporters hoped.
In 2003, state lawmakers set the fee schedule so that attorneys receive 20 percent of the first $5,000 in benefits they secure for an injured worker and 15 percent of the next $5,000 in benefits. The attorneys also can receive 10 percent of any benefits awarded during the 10 years after the claim is filed and five percent for any subsequent benefits awarded beyond 10 years.
In fiscal year 2003-2004, injured workers attorneys received a total of $215 million in fees. That amount has dropped every year since then, including since state lawmakers in 2009 recodified the law because the state Supreme Court found a provision ambiguous.
That change alone had a significant effect on claimant attorneys fees. Between fiscal year 2009-2010 and fiscal year 2010-2011, fees dropped by more than 11 percent, from $177 million to $157 million. At the same period, defense attorneys, whose fees are not restricted, saw their fees drop by only 3.08 percent from $271 million to $264 million.
According to the state’s Office of Judges of Compensation Claims, in fiscal year 2012-2013, injured workers’ attorneys were awarded $152 million in total fees. In comparison, insurers reported they spent almost $267 million in attorney fees.
According to an amicus brief submitted on behalf of the Property Casualty Insurers of America (PCI), the Florida Insurance Council and other insurance trade groups, those numbers and the reduction in rates showed the necessity of the fee schedule.
“If this court were to overturn the legislation, the result would significantly impact the workers’ compensation market in Florida and will directly impact the availability and affordability of workers’ compensation insurance,” states the brief.
However, the high court justices, who are currently hearing three separate challenges to the workers’ compensation law, are questioning whether the legislative reforms are still justified by the cost considerations and circumstances cited back in 2003.
Judge Barbra Pariente rebutted Cantero’s contention that there is still an overwhelming need to limit attorneys fees based on those justifications.
Pariente said that insurers are operating profitability and noted that the Legislature recently exempted workers’ compensation insurers from the state’s excess profits law. She also noted the rise in defense legal expenditures.
“To pick on this particular issue where claimants need attorneys and say that was the reason that’s the overpowering public necessity, I think that reasoning is flawed,” said Pariente. “It sounds good, but it doesn’t really hold up in anything that’s in the public record.”
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