Monday, November 4, 2013

Annual Report Installments - Attorney Fees

The 2013 Annual Report of the Office of Judges of Compensation Claims will be published soon. The fiscal year of the OJCC and other state agencies runs from July 1st through the following June 30. So fiscal 2013 ended last summer. The fall of the year is always busy with compiling last year's (2012-13) statistics while also planning for the next fiscal year (2014-15) in the budget process, and simultaneously managing the current (2013-14) operations. There is never a dull moment.

There are a multitude of statistics reported in the OJCC Annual Report each year. One that seems to be discussed often is the attorney fee amounts and allocation. Attorneys fees are divided into Claimant's fees and Defense fees. The two are reported to the OJCC differently. Claimant's fees are documented as each motion, stipulation or determination is made. A pleading is filed, and when the assigned JCC uploads the order related thereto the amount of attorneys fees is keyed into the database and captured. 

Defense counsel do not submit their fees to the OJCC in the payment process, though some argue that this should be required. So, each September all of the carriers and self-insured employers log into a web portal and report what they have paid to defense counsel for the past year. Neither is a perfect data collection system.

In  2012-13 the claimant's attorney fee total decreased again. It has decreased in each of the last nine fiscal years. in 2003-04, the aggregate claimant attorney fees was $215,322,360. In 2012-13, that had decreased to $151,889,627. The annual decreases have been of varied percentages. The decrease from 2011-12 to 2012-13 was the lowest percentage decrease of the nine years, at less than one percent from the $152,848,003 in claimant's fees in 2011-12. 

By comparison, defense fees reported in 2003-04 were $231,150,559. The employer/carrier fees over the last nine years have increased overall, although there have been years during that period in which defense fees have decreased.  The trend upward for these E/C fees has been less consistent than the downward progression of claimant's fees. The result after nine years, though, has been notable. Defense fees in 2012-13 were $266,885,472. An aggregate increase over the decade of about $35M.

Obviously, there is a difference in the fee allocation, when comparing total fees in workers' compensation. In 2003-04, the total fees paid in workers' compensation were $446,472,919, with the claimant's share 48% and the employer/carrier share 51.77%. In 2012-13, the aggregate total had decreased to $418,775,099, and the allocation had shifted to 36% claimant's and 64% employer/carrier. 

Comparing the 2012-13 fees for claimant's and employer/carriers to those reported in 2002-03, a ten year comparison that is coincident with a decade following the 2003 statutory amendments, illustrates the shift in fees. 

Fiscal Year
Claimant Attorney Fees
Percent Change
Defense Attorney Fees
Percent Change



Over the decade since the 2003 amendments, claimant's fees have decreased overall by about 28% while employer/carrier fees have increased about 21%. 

The explanations of these shifts may come from a variety of directions. There are those who attribute the changes to the statute amendments in 2003, while others argue that at least some of that effect was nullified by the Kaufman decision in 2008. There are those who attribute the changes to decreasing frequency of injury in the marketplace. There are those who attribute the changes to the overall economic decline that we have experienced in the long-running recession and economic uncertainties, and the effects on employment and economic opportunity generally. 

I cannot determine the cause or causes, but merely note these arguments that others have raised in conversations. What I know is that the total attorney's fees reported in workers' compensation cases has decreased in the last ten years overall, and the allocation of those fees has shifted significantly more to the employer/carrier side. 

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