Over the last decade there has been a nationwide trend of changing the rules when it comes to workers’ compensation. There has also been a trend of these changes not being in the best interests of the employees workers’ compensation seeks to protect. If you were told that Florida has substantially limited the amount an employee’s attorney can receive in fees in a workers’ compensation case, you’d probably think that Florida was bucking this unfortunate trend. What if I told you that this was actually a serious blow against employees in workers’ compensation cases…and the Florida Supreme Court agrees?
Attorney Fees in Workers’ Compensation Cases
So I’m obviously crazy, or at a minimum, a lawyer trying to pull the wool over your eyes. How could lowering attorney’s fees be a bad thing? The answer lies in the nature of fee agreements in worker’s compensation cases and how attorney fees work when an employee wins a workers’ compensation case.
In most states, the law limits a lawyer’s fee to a percentage of the amount their client, the employee suing, receives in workers’ compensation benefits. This way, hiring an attorney can’t cost more than the employee receives out of their services. However, despite this, attorneys will still track of their hours and tell clients their hourly rate.
Many states allow for situations where the employer or the employer’s insurer essentially pays the employee’s attorney fees. This usually occurs where the employee wins the case after the employer substantially slowed down the legal process—often by attempting to litigate the employee into the ground. In most states, the fees the employer has to pay aren’t subject to the limitations that would apply if the employee was paying. This means that, when an employer is particularly aggressive in a case, they run the risk of getting stuck with the full bill based on the hours they made the attorney work.
Florida Fees: A Trip Down Legislation Lane
Rules requiring employers to pay their employees attorney fees in certain situations have been a part of Florida law since 1941. Statutory limitations on attorney fees have cropped up in Florida law for nearly as long. Percentage based caps on attorney fees have been repeatedly introduced in statutes passed by Florida legislators, only to be subsequently rejected by the Florida courts.
Each time a court has questioned a statute requiring percentage caps, the Florida legislators have tightened their grip and made a stricter version of the law. In 2009, Florida legislators introduced the current, and strictest, version of the law. The 2009 version removed any mention of a requirement of “reasonableness” in fees, instead requiring all fees to follow a percentage formula in the statute. The statute left no way to dispute the statutory scheme for attorney’s fees. The only awards that could be accepted by an attorney, or even awarded by the court, were fees capped at a percentage based on the amount and duration of the award for benefits. Florida law actually made it a crime for a lawyer to accept any other type of fees, whether their client agreed to them or not. Most importantly, the new statute applied these caps in almost every situation where an employer would have to pay an award of attorney fees to their employee.
The Case of Castellanos
This new version of the law was the point of contention in the recent Florida Supreme Court case Castellanos v. Next Door Company. The case started as a fairly straightforward workers’ compensation case. Marvin Castellano was injured on the job, and Next Door authorized him to seek medical treatment. The doctor Castellano’s employer sent him to said he had injuries to his head, neck and right shoulder. The doctor recommended a course of treatment. However, Next Door and their insurer Amerisure refused to authorize the recommendations of their own doctors. Castellano sought benefits in court.
This is where things got nasty for Mr. Castellano. Next Door and Amerisure raised, according to the Florida Supreme Court, between 13 and 16 defenses refuting Mr. Castellano’s claims. His attorney worked around 107 hours refuting these defenses while Next Doors attorneys worked 113 hours.
When the dust settled, Mr. Castellano was victorious. He received his benefits of $822.70. Even better, he was awarded attorney fees due to Next Door’s vigorous refutation of his claims. Castellano’s attorney asked for the value of his hours worked—$36, 817.50. However, with his recovery capped to a percentage of benefits by statute, the attorney fees paid by Next Door were slightly less than this—$165.54. This is an equivalent to $1.53/hour. To put that in context, the average attorney fee is $200-$400/hour.
However, while many experts testified to the “manifest unfairness” of this award, the Florida Supreme Court didn’t make its ruling based on “unfairness.” A lawyer is free to simply not represent a client with a case that won’t make money. Instead, the court found the statute unconstitutional for violating due process.
Due Process in Paying What’s Due
Due process is a Constitutional right, protection against being deprived of life, liberty, or property without due process of law. The Florida statute regarding attorney fees workers’ compensation cases required attorney fees to always match the amount provided by the formula in the statute. There was no way a court or party could present evidence to change this amount. The Florida Supreme Court took issue with this, stating that this made the statute violate constitutional due process as an irrebuttable presumption.
An irrebuttable presumption is where a law says that something will always be the case, regardless of any evidence to the contrary. They are generally considered constitutional no-nos. The Florida Supreme Court said the statute stated that its formula would always produce a reasonable fee.
However, if the goal of the statute was to standardize and prevent excessive fees, it failed. The statute also had the possibility to issue unreasonably high fees where a lawyer received huge benefits on a simple case.
As the statute didn’t actually achieve its goal, there wasn’t a reasonable basis for such an unyielding rule. In fact, the court argued the scheme created more difficulties than it solved. When an employer or insurer can be certain that they will never be held responsible for greater attorney’s fees than the statutory amount, there is no disincentive against attempting to bury a plaintiff under numerous defenses and filings.
With the Florida Supreme Court ruling the statute unconstitutional as it was, the current statute couldn’t continue as law.
So What's Next?
Castellanos wasn’t the only case with this issue. The Florida Supreme Court noted that they had 18 other cases dealing with very similar fact patterns. Without the potential of a reasonable attorney fees award, there was nothing to stop employers from denying workers’ compensation, then drowning that employee in defenses they couldn’t hope to overcome without legal assistance.
The Florida Supreme Court’s change won’t let lawyers steal benefits out from under the nose of unsuspecting clients. Instead, it will protect those clients against employers looking to abuse the complexity of workers’ compensation claims.
Authored by Jonathan Lurie, LegalMatch Legal Writer and Attorney at Law
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