Monday, January 26, 2015

Workers Compensation Attorney Fees in the News

Florida workers' compensation is sometimes a polarizing subject. The process of workers' comp was designed for the benefit of employees and their employers. Much has been written on the subject of the "grand compromise" and whether this proverbial handshake between labor and business remains balanced and sufficient. 

Some allege that the "reforms" of the last several decades have tilted the system too far and this compromise is no longer constitutional. That debate will play out in the courts. The case that has become known as Padgett concluded that the balance is not sufficient, and that therefore exclusive remedy in Florida is unconstitutional. The Third District Court is considering that now, in case 3D14-2062. Briefs have been filed, but no oral argument has been set. The court does not have to hold such an argument, time will tell. Intellectually, we live in an interesting time

Another constitutional challenge is proceeding in Florida regarding the more specific subject of workers' compensation claimant attorney fees. Castellanos v. Next Door Company has been under review at the Florida Supreme Court for several months. Oral arguments were held November 5, 2014. Shortly thereafter, the parties in some other attorney fee challenges were asked to brief those cases as well. They are being called collectively the "companion cases." Some feel it is likely the Court will rule on all of these fee constitutionality challenges collectively.

So, attorney fees are a topic on the minds of many in Florida right now. The subject is not isolated to Florida though. Last week, WorkCompCentral (subscription) reported that Texas is having discussions about how attorneys are compensated there. Texas, like Florida, has a limitation on attorney's fees. 

According to WorkCompCentral, claimant's attorneys in Texas "are limited to 25% of an injured worker's recovery." In Florida, the limitation is "20 percent of the first $5,000 of the amount of the benefits secured, 15 percent of the next $5,000 of the amount of the benefits secured, 10 percent of the remaining amount of the benefits secured to be provided during the first 10 years after the date the claim is filed, and 5 percent of the benefits secured after 10 years." At the outset, one might conclude that the Texas formula is easier.

Florida's provision requires us to do a bit more math in some cases than the Texas law. If the benefits are $5,000 or less, the process is similar in each state. The fee on $5,000 in Florida is 20% of this, or $1,000; in Texas 25%, or $1,250. Some might argue this is not a significant difference. The difference would be more pronounced as the value of the recovered benefits increased. 

Without the intricacy of hypothesizing how many years after the claim, for simplicity, compare a recovery of $100,000 in benefits. The Texas calculation would be 25% or $25,000. Under the Florida calculation, without regard to the time definition, would be 20% of $5,000, or $1,000; then 15% of the next $5,000, or $750; then 10% of the remaining $90,000, or $9,000; the total in Florida would be $10,750 ($1,000 + $750 + $9,000). The fee in Florida ($10,750) is about 43% of the fee in Texas. That disparity would become more pronounced as the value of recovered benefits increased.

WorkCompCentral reports that Texas also allows hourly attorney fees in some instances. Their current issue with that topic is whether to increase their cap on hourly fees. Since 1991, the hourly rate has been capped at $150.00 per hour. Last year, the Texas Division proposed raising that cap to $175.00 per hour. Incidentally, WorkCompCentral reports that this cap applies in Texas to claimant fees and to defense attorneys in workers' compensation indemnity disputes. Defense attorneys are not limited by the cap in other disputes. It also appears from the context that claimant fees in this regard are payable by the injured worker.

After Texas published its proposal to increase this hourly cap, comments were received from the public. Some of the quoted comments were focused on the level of the cap. One commenter suggested the hourly cap should be $400 per hour. The Texas Bar suggested that the cap should be the "median billing rate for all attorneys (in Texas) at $238.00."

The cap change was not thereafter "adopted," and so it is no longer on the table for discussion or adoption. In Texas, after "publication of a proposed rule" the agency, similar to our Florida Division, has six months "to adopt it, amend it or withdraw it." Thus, the passage of time without action essentially allowed the proposed increase to expire. 

The crux of the WorkCompCental article is when and whether the Texas Division may address the subject again. Their interview with the Texas Division supports that no further administrative or rule action is anticipated during the current term of the Texas legislature, which ends in June. So, for now, attorneys fees are a subject of discussion in Texas. The discussion seems focused on when they may know more. 

In this regard, the discussion is similar to Florida. Here the system participants question when they will know more, and what they will know. In Texas, they seem to be asking the same questions. In Florida, the wait is for a decision by the Supreme Court. In Texas it is for action by the Texas Legislature or the Division perhaps reopening the cap discussion. 

In Florida, the decision could go either way. I long ago gave up prognosticating on how any given court would rule on a particular topic. Assuming that the Court finds Fla. Stat. §440.34 (2009) unconstitutional, that decision would be retrospective. In other words, it would affect cases in the past. That is precisely what occurred in 2008 when the Court interpreted the statutory language of Fla. Stat. §440.34 (2003), finding that the language was ambiguous in Murray v. Mariner Health. That 2008 interpretation affected all claimant fee claims dating back to the effective date of the statute language, July 1, 2003.

Similarly, a conclusion of the Court that the current statute is unconstitutional would render it unenforceable. The current statute was passed in the 2009 legislature, and became effective July 1, 2009. Thus, the immediate effect of a conclusion that it is unconstitutional could be on those cases with a date of accident between July 1, 2009 and the date upon which the Florida Court renders it's decision. The decision could be limited to the facts of a prticular case, that is unconstitutional "as applied" to the facts in that case, or the decision might address the statute in all contexts, that is unconstitutional "on its face."

The Court's decision likewise may apply to all cases thereafter,  or to all cases thereafter in which the application of the statute is similar. To whichever population such a decision applies, that application will continue thereafter until and unless the legislature addressed attorney fees through legislation. 

There are those who vow the legislature will act should the court determine Fla. Stat. §440.34 (2009) is unconstitutional. Some even prognosticate that a legislative "special session" might be called for that purpose in the event the Court's decision comes after the regular session. It seems logical that the extent and application of the Court's decision, as well as the decision itself, might influence whether the legislature acts and how rapidly. 

Many eyes on Tallahassee, and the wait continues. But, Florida is not alone. 


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