Thursday, October 15, 2015

A Procedural Progeny Potential of Castellanos

The Florida workers' compensation community waits and watches the Florida Supreme Court for a decision in Castellanos v. Next Door Co.. The claimant in that case is seeking a determination that Fla. Stat. §440.34 is unconstitutional. The contention is that the fee formula in that statute results in fees in that are insufficient to compensate the attorneys that pursue workers' compensation benefits on behalf of recovering workers. 

The analysis is academically interesting. I have heard so many excellent discussions of how the statute is or is not unconstitutional. I know many brilliant attorneys and judges and their impressions and analysis of this dispute are fascinating. The prognostications and legal analysis have made the last couple of years very interesting, as I noted in No other Place I Wanna be

Constitutional decisions can be grouped into two main categories, "facial" and "as applied." A determination that a statute is "facially" unconstitutional is a conclusion that it cannot render an appropriate outcome no matter the facts involved. That is, that the formula in Fla. Stat. 440.34 would not render an acceptable fee in any case under any circumstances. I have not heard many predict that such a determination is likely from Castellanos. The "as applied" conclusion is more specific to the facts of a particular case; it is a determination that the statute is unconstitutional in a particular case because of the way it applies to the facts of a particular case. 

Castellanos can be viewed as a continuation of the dispute regarding attorney’s fees that was litigated extensively in the first decade of the twenty-first Century. That litigation culminated in the October 2008 decision of the Florida Supreme Court in Murray v. Mariner Health, 994 So.2d 1051 (Fla. 2008). 

The Supreme Court in Murray did not address the constitutionality of Fla. Stat. §440.34, but instead relied upon a statutory interpretation centered on the continued presence therein of the word "reasonable." Concluding that "reasonable" was inconsistent with the percentage formula restrictions of the 2003 statute, the Court concluded that attorneys were entitled to "reasonable" fees despite the seeming limitation of the statutory percentage calculation.  

Following rendition of the Supreme Court Murray decision, in the spring of 2009, the Florida Legislature amended Fla. Stat. §440.34 to remove "reasonable," and thus to (again?) forbid hourly fees. Murray applied only to cases interpreting the 2003 statute, and thus affected fee cases for the period July 1, 2003 through July 1, 2009. This 6 year period was seen at the time as a significant population of cases. 

Castellanos reiterates the allegation of constitutional infirmity, seeking determination of essentially the same question that the Florida Supreme Court deferred in Murray, by electing to resolve the issue by statutory construction. The Supreme Court held the Castellanos oral argument on November 5, 2014. We are rapidly approaching the one year anniversary of the argument. Many are frustrated and they repeatedly ask "when will the Court rule?" I spoke with one recently who lives in another time zone to the west; she says she gets up early every Thursday to check the Supreme Court decisions for the week in anticipation of a decision.

The Court, after the Castellanos oral argument, allowed issues to be briefed and argued in additional cases challenging the application of Fla. Stat. §440.34 (collectively referred to as “the companion cases”). It is not uncommon for a group of similar cases to develop on a similar subject, such as attorney fees, though the facts of those cases may not be identical. 

A decision on Castellanos or some combination of the "companion cases" was anticipated in fiscal 2014-15 (ended June 30, 2015). Some prognosticators believed that the Court would rapidly dispatch the challenges following the end of the 2015 legislative session. There is no end to prognosticators and predictions about what the Court might do and when.

However, the decision remains pending. The delay in rendition of a final decision regarding attorney’s fees has created anxiety and expectation in the Florida workers’ compensation marketplace for two years. It began when people prognosticated as to whether the Court would accept jurisdiction over Castellanos. I have attorneys and others ask me to venture a guess as to what the Court will do and when it will do it. I like to remind them that the Supreme Court, however, has far broader responsibilities than workers' compensation. It is responsible for cases involving redistricting involved for elections, death penalty cases, and so much more. 

Workers’ compensation is also important. It is a massive enterprise, paying $60.21 billion in benefits in 2011. Florida is the 6th largest market in the country, responsible for 4.5% of those benefits, or about $3 billion dollars annually. The impact of Castellanos may be that decisions and resolutions today remain pending until the Supreme Court renders its decision in this case. In other words, there may be some volume of attorney fee claims that are being withheld at this time until claimant's attorneys know what the Court will decide. 

Castellanos could result in a determination that Fla. Stat. §440.34 is unconstitutional "on its face" or "as applied." It is probable that a determination that the statute is unconstitutional "as applied" would apply only to that case (Castellanos specifically or one of the "companion cases"). Everyone needs to remember, though, that the Courts have consistently concluded that as statutory judges, the Judges of Compensation Claims lack authority to decide a statute is unconstitutional either "on its face" or "as applied."

A decision by the Florida Supreme Court holding Fla. Stat. §440.34 unconstitutional “as applied” to some set of facts could create a procedural challenge for the Florida workers' compensation litigation system.

If the Court in Castellanos determines that the fee in that factual setting is unconstitutional, a Judge of Compensation Claims (JCC) thereafter (the day after the Court rules), presented with nearly identical facts in the "next case," does not have statutory authority to declare the application of Fla. Stat. §440.34 unconstitutional in that "next case." JCCs are not constitutional judges, not part of the judiciary as defined in the constitution (though a great many insist on referring to us as "court"). We are statutory judges and are part of the executive branch of government. JCCs cannot declare statutes unconstitutional. 

In the "next case" the JCC may be compelled by the plain language of Fla. Stat. §440.34 to deny any fee beyond that resulting from the language of the statute, the formula, applied to that next case, unless that statute has been held facially unconstitutional. Even if the parties in the "next case" agree that their facts are sufficiently similar to some Supreme Court's (hypothetical) "as applied" decision, and stipulate to a fee outside the plain language of Fla. Stat. §440.34, it is possible that the JCC may decline to approve the parties' stipulated fee. 

The claimant's attorney in that "next case" may then face the expense associated with seeking review of the First District Court of Appeal. That Court is part of the judiciary of Florida. Unlike the JCC, the District Court could, following such a hypothetical Supreme Court decision of "as applied" unconstitutionality in Castellanos (or one of the "companion cases"), find the application of Fla. Stat. §440.34 unconstitutional "as applied" in that "next case."

Any hourly attorney fee determination deemed appropriate by the Florida Supreme Court in Castellanos, therefore could lead to the necessity of many more attorney fee challenges before the First District in the years following. Certainly, the Florida legislature might thereafter react to a conclusion of "as applied" unconstitutionality in Castellanos. But that legislative reaction might apply only to cases that arise after that hypothetical new law is enacted, just as the 2009 reaction to Murray only affects cases after July 1, 2009.

A great deal can be said about appellate practice. It is intellectually challenging, and it is different from trial practice. In trial of workers' compensation cases, there is no filing fee for petitions for benefits or for motions seeking the award of attorney fees. An injured worker can seek benefits and there will be a hearing before a JCC. There is expense associated with serving the petition by certified mail, but no filing fee per se

The First District Court does have a filing fee for review of decisions, $300.00. In addition to that cost, an attorney seeking review of a JCC fee decision would have to pay for a record (the typed copy of all that was said at the fee trial, and copies of the documents submitted to the JCC). These are both out-of-pocket expenses. That attorney would also have to write a brief explaining to the appellate court why review is appropriate and why the Court should award a fee different than that determined by the JCC, that is, an explanation of how a fee award "as applied" in that "next case" is unconstitutional. 

It is likely that the filing fee and record would be at least $1,000 per appeal. The time for a brief might be at least 10 hours. At a rate of $150.00 per hour (the hourly rate mentioned in Fla. Stat. 440.34 for "medical only fees"), the cost of an appeal might easily be $2,500. As the time involved or that hourly rate increased, this could perhaps make the expense of an appeal as high as $5,000 or more. 

There are a fair number of fee determinations processed by the OJCC each year. Some are by adjudication, many more are by stipulation. But for a determination of "as applied" unconstitutionality, in any of these, it would seemingly have to proceed through the adjudication path, and proceed through the appellate path. 

If 1,000 of these fee disputes each year proceeded to the First District Court of appeal it would impact that Court's workload. Currently about 500 workers' compensation appeals are reviewed by that Court annually. The cost of those 1,000 cases at the $2,500 guess above would result in an aggregate cost of litigation of $2.5 million in appellate costs and attorney fees (at the $5,000 figure, this doubles to $5 million). This would be in addition to whatever fees would be awarded based on the trial-level work, on the basis of an "as applied" determination of unconstitutionality in those "next cases."

If the claimant's attorney prevails on that fee challenge at the First District, it is likely that the cost of such appeals, as well as appellate attorney fees for their prosecution, would be assessed against the employer/carriers in those cases.

So, hypothetically, the Supreme Court could conclude that Fla. Stat. 440.34 is unconstitutional "as applied" to some set of facts. An employer thereafter might interpret the Court's decision in Castellanos (or one of the "companion cases") as dictating a higher fee that rendered by the formula in Fla. Stat. 440.34. 

But, that employer might find that the assigned JCC is unable or unwilling to deviate from the statute language, and the fee dispute might be forced to the First DCA. The resulting costs and fees of such appeals may then be assessed against the employer. The statute in that setting could result in unwanted litigation and expense.

The hypothetical $2,500,000 for such appellate fees and costs is a guess. There are a great many fee stipulations and adjudications in the OJCC system annually. It is difficult to determine which of these would be viewed by the appellate courts as appropriate or inappropriate. There is every potential that the Court in Castellanos and the "companion cases" might determine that there is no constitutional infirmity in Fla. Stat. 440.34, and therefore the foregoing procedural progression of appeals might not come to pass. It is also possible that the foregoing could come to pass, and that the volume of fee disputes in those "next cases" might be higher than the 1,000 guess, perhaps much higher. This is all hard to predict, hard to quantify and at this stage simply hypothetical.

There is no basis on which to intelligently guess how many such appeals might be required in coming years. If it turns out to be 1,000 per year, the impact on the appellate system may be noticeable. The financial impact could be significant. 

It is worth remembering that any decision in Castellanos (or the "companion cases") will apply to any fees related to accident dates since the legislative reaction to Murray on July 1, 2009. The decision that is coming would apply to a population of cases spanning at least 6 years, and would affect cases occurring in the future, unless the legislature reacts again. Such a legislative reaction to Castellanos (or a "companion case") would be in 2016 at the earliest, with an effective date potentially of July 1, 2016, making the population of Castellanos fee entitlement 7 years of cases. Thus, a potentially greater population of cases than affected by Murray

To review, Florida waits for the Court's decision regarding the constitutionality of Fla. Stat. §440.34. There are few who predict the Court will find this statute unconstitutional "on its face." That remains a possibility, however remote. The debate seems to be between the Court finding the statute constitutional as did the First District Court in Castellanos, or the Court finding it unconstitutional "as applied" to some facts. 

The outcome of the case will likely affect workers' compensation in Florida either way. A conclusion that the statute is unconstitutional "as applied" may create a population of cases that are similar, but over which the JCCs perceive or conclude they have no discretion regarding constitutionality. The result could be a significant volume of cases requiring trial by the JCCs and review by the First District Court, and the expense and time associated with that review.  The effect of doubling or tripling the annual workers' compensation appellate cases at that Court are also hard to predict or quantify. It is possible that appellate decisions from that Court might take longer after such an increase. 


There are some who therefore see Castellanos' outcome as potentially affecting the very self-executing nature of the Florida Workers’ Compensation Law for some population of fee cases for dates of accident after the 2009 legislative amendments. A population of factual situations "as applied" that require trials and expensive appeals. 

It appears that there are at least ten such fee cases already decided by the First DCA following Castellanos, and concluding there is no constitutional infirmity of Fla. Stat. 440.34. They are Richard E. Zaldivar v. Prieto, ___ So.3d ____ (Fla. 1st DCA 2015);  Gallagher Law Group v. Vic Renovations, ___ So.3d ____ (Fla. 1st DCA 2015); Zaldivar v. Dyke Industries Inc., 168 So.3d 336 (Fla. 1st DCA 2015); Flores v. Vanlex Clothing Corp., 160 So.3d 962  (Fla. 1st DCA 2015); Mayorga v. Sun Electronics, 159 So.3d 1032 (Fla. 1st DCA 2015); Leon v. Miami Dade Schools, 159 So.3d  422 (Fla. 1st DCA 2015); Gonzalez v. McDonalds,  156 So.3d 1127 (Fla. 1st DCA 2015); Diaz v. Palmetto General Hospital, 146 So.3d 1288 (Fla. 1st DCA 2014);Pfeffer v. Labor Ready Southeast, So.3d  (Fla. 1st DCA 2014); Richardson v. Aramark, 134 So.3d 1133 (Fla. 1st DCA 2014). It is unknown how many others may be pending at the First DCA, awaiting that court's action. 

No comments:

Post a Comment