The constitutionality of claimant attorney fees in workers’ compensation cases has been a hot topic in the state of Florida since the 1960s starting with Lee Engineering v. Fellows, continuing on with legislative changes in 2003, and more recently specific cases like Murray v. Mariner Health (2008) and Kauffman v. Community Inclusions (2009). The issue at hand deals specifically with the "reasonableness" of claimant attorney fees in workers' compensation cases.
Starting with Lee Engineering v. Fellows in 1968, the Florida Supreme Court held that “it is obvious that fees should not be so low that capable attorneys will not be attracted, nor so high as to impair the compensation program.” In their brief, the Justices outlined six criteria for determining the reasonableness of claimant attorney fees in workers’ compensation cases.
Moving forward to 2003, Florida had one of the highest workers’ compensation rates in the country, which many argued was the driving factor in why business and industry was leaving, or avoiding, Florida altogether. As a result, the Florida Statute was amended to include a subsection that outlined a schedule that judges were to follow when determining the reasonableness of claimant attorney fees based on a percentage of the settlement. The result was lower claimant attorney fees and dramatically decreased workers’ compensation rates to where Florida then maintained one of the lowest rates in the country. However, this created an interesting conflict within the statute with a subsection that spells out the actual fee schedule, and another which simply calls for “reasonable” claimant attorney fees. What was to occur when the fee awarded per the schedule was in clear conflict with the definition of a “reasonable” fee?
Enter Murray and Kauffman. To summarize, the court in the Murray opinion acknowledged the conflicting statements in 440.34, however they felt the specific language regarding “reasonable employer/carrier paid attorney’s fees in 440.34(3) outweighed the schedule of fees outlined in 440.34(1). Because 440.34(1) was silent regarding its interpretation of employer/carrier paid fees, the specific language trumped the general language resulting in, some would argue, more reasonable hourly fees for claimant attorneys. Due to the noted conflicting language, legislators worked to remove the word “reasonable” from the law in July of 2009. Despite tremendous opposition from the claimant attorney community, lawmakers successfully revised 440.34, which left the fee schedule as the guiding language in determining claimant attorney fees.
The Kauffman case stepped forward in 2010, and was referred to by some as Murray II. This was another case that highlighted the potential “unreasonable” fee a claimant attorney would receive based on the fee schedule outlined in 440.34. The fee awarded to the claimant attorney was $684.41, or about $6.84 per billable hour. In his Order, the Judge of Compensation Claims (JCC) E. William Spangler, Jr. stated “While the undersigned is constrained to follow the legislatively mandated scheme, I cannot help but question whether this scheme is consistent with the otherwise stated legislative intent…”, also stating in a footnote that, “Based on the testimony presented by the claimant, the undersigned would find a reasonable fee to be a factor of the stated 100.3 hours and an appropriate billable rate for this particular matter to be $250 per hour, totaling $25,075.” This argument was then heard by the 1st District Court of Appeals (DCA) in January of 2011, but in its opinion held that the provisions of Florida Statute 440.34, as amended in 2009, limit claimant attorney fee awards, and rejected the plaintiff’s argument that 440.34 is unconstitutional. The resulting landscape for workers’ compensation in the State of Florida then mirrored that which was created in 2003…until last week.
In Castellanos v. Next Door Company, et al, Marvin Castellano received benefits totaling $822.70. His attorney, having worked 107 hours on the case sought a fee of $36,817.50, but received $164.54 ($1.53/hour) based on the fee schedule outlined in 440.34. The Florida Supreme Court accepted jurisdiction to determine whether or not the mandatory fee schedule was constitutional. On April 28, 2016, Justice Barbara Pariente, while writing for the court, stated that 440.34 was “unconstitutional under both the Florida and United States Constitutions as a violation of due process.” The court added that the “conclusive fee schedule prevents all injured workers, whether they have small-value or high-value claims, from presenting evidence to prove that the fee is inadequate in any given case and, therefore, is in violation of the state and federal constitutional guarantees of due process.”
So where does this leave us? It can only be assumed that a lengthy battle will once again be waged in Tallahassee in the coming years. Does this latest decision set the State of Florida back to pre-2003, or will both sides work together to ensure amicable fees and settlements while preserving a beneficial workers’ compensation environment for Florida business and industry? Stay tuned, as one can only assume this issue is far from over.