Wednesday, November 16, 2016

Florida Attorney Fees 2016

Every year, the Florida Office of Judges of Compensation Claims submits a report regarding the state of Florida's adjudication system. This year's report is in the proofing stage and will be published close to November 30, 2016. The following is an excerpt from that report.

Attorneys' fees increased in Florida in fiscal 2016 (July 1, 2015 through June 30, 2016). The increase has been described as modest, but an increase nonetheless. 

The OJCC is required by law to approve all attorney fees paid by or on behalf of an injured worker. §440.34. Fla. Stat. There is no such specific requirement for the approval of fees paid by employer/carriers for their defense counsel representation. Despite the absence of such specific requirement for defense fee approval, the broad language of section 440.105(3)(b), Florida Statutes arguably could require OJCC approval of defense attorneys’ fees. 

However, this statutory authority has historically not been interpreted to require approval of defense attorneys’ fees. There have been those who question this interpretation. With recent rulings regarding section 440.105, the authority of that statute may be further questioned. 

The OJCC has required insurance carriers to report their respective total annual expenditures for aggregate defense fees. Because these defense fee figures are reported in the aggregate, it is impossible to discern whether cost reimbursement to E/C attorneys has been included in the figures reported by the various carriers. Furthermore, this information regarding defense fees expended during the fiscal year, does not provide any edification regarding the respective dates of accident involved in the cases for which those fees were paid during that fiscal year. In short, the defense fee data is less specific than the claimant fee data.

The OJCC gathers claimant attorneys’ fee data through a computer program (part of the system that includes the JCC Application database, electronic filing, and Internet publication of data) that simultaneously uploads fee approval orders to the Internet case docket and captures the data regarding claimant fee and cost amounts. The district staff is responsible for the input of the fee and cost amount data for each individual fee approval order entered, resulting in more detailed data. 

The annual aggregates resulting from this data collection are as follows:

During 2015-16, a total of three hundred seventy-eight million, five hundred seventy-three thousand nine hundred two dollars ($378,573,902) was expended on combined claimant attorneys’ fees and defense attorneys’ fees (and perhaps defense “costs”) in the Florida worker’s compensation system. This represents a small overall increase, about 2%, from the 2014-15 aggregate fee total of three hundred seventy million, seven hundred seventy-two thousand seven hundred eighty-three dollars ($370,772,783). 

The 2015-16 aggregate fee total is also very similar to the 2013-14 aggregate total of three hundred seventy-nine million two hundred twenty-two thousand three hundred thirty seven dollars ($379,222,337). Thus, both claimant and defense fees decreased in 2014-15, more significantly on the claimant side; both figures increased in 2015-16, more significantly on the defense side. And the net effect is a 2015-16 aggregated very similar to that of two years ago.

The 2012-13 OJCC Annual Report noted that the decrease in claimant fees documented there was the most modest decrease in the eleven years since the 2003 legislative reforms. The 2013-14 decrease of over six and one-half percent was more notable, and was followed in 2014-15 by an additional four percent decrease. So, the 2015-16 figures increasing could demonstrate an anomaly. But in light of Castellanos, it is more likely an indicator of a trend change to increasing fees. 

The aggregate attorneys’ fees in Florida workers’ compensation are detailed in this chart. This chart illustrates the total fees for both claimant and defense, and provides the percentage that each make of the whole. This delineation was close to 50/50 in the early years of the comparison, 2002-03, but as aggregate claimant fees have decreased and employer/carrier fees first increased markedly and then decreased at more moderate pace, a disparity between claimant and defense fees has developed and been somewhat consistent. Since 2009-10, the defense portion has exceeded 60%. In 2015-16 the defense share was 63.95%, the highest since the 2003 statutory reforms. 

In the 2012 annual report, this Office first noted the inflation effect. Considering inflation over the last decade, this difference is more pronounced. According to the U.S. Inflation Calculator, the 2002-03 aggregate ($427,359,212), in 2015 dollars, adjusted for inflation, would have been $560,741,738. This is $182,167,836 more than the 2015-16 aggregate of $378,573,902. Adjusted for inflation in 2016 dollars, aggregate attorneys’ fees in Florida workers’ compensation have decreased almost two hundred million dollars in the last fourteen years. 

In sum, over the eleven year period between 2002-03 and 2014-15, overall claimant fees decreased about thirty-five percent (35.36%). The aggregate defense fees in 2015-16 ($242,112,498) are higher than the aggregate defense fees in 2003-04 ($226,585,434). The aggregate defense fees of $216,698,474 in 2002-03 adjusted for inflation would be equal to $284,331,952 in 2016 dollars, compared to the actual figure of $242,112,498, a difference of about $42 million. The 2002-03 claimant fees of $210,660,738 would be equivalent to $276,409,786 in 2016 dollars, compared to the actual figure of $136,461,404. Claimants’ fees in 2015-16, in real dollars, are more than 50% lower than in 2002-03. 

The claimant attorneys’ fee aggregate for 2014-15 marked the 11th consecutive decrease in claimant fees, though the 2015-16 figures demonstrate a minimal increase in claimant fees. A comparison of the last fourteen fiscal years of claimant and defense attorneys’ fees and the overall rates of change are set forth in this table. 

It is unclear whether any portion of the increased defense fees in this chart (in the period 2004-05 through 2009-10) are attributable solely to more effective data collection and carrier compliance following the implementation of the Internet-based defense fee reporting system/process in 2003. It is also notable that some portion of overall defense fees reported, may relate to cases in which no claimant fees were paid, such as, charges for preparation and approval of pro se settlement documents or instances in which the E/C sought and paid for legal advice that ultimately did not result in the filing of any workers’ compensation dispute. 

The Department of Labor and Employment Security (“DLES”) compiled data regarding the attorneys’ fees paid to claimants’ counsel for a number of years. In the DLES 2001 Dispute Resolution Report, fees for calendar years 1988 through 2000 were reported. These figures are helpful for broad comparisons with current fees and trends. However, it is important to note that the DLES figures may be for calendar years, not fiscal years. 

It is further instructive to note that the DLES figures for attorneys’ fees paid for claimants’ counsel likely include costs, as the ability to easily differentiate fees from costs did not exist until the OJCC database was deployed in 2002. The figures compiled and reported by the OJCC, since October 2001, do not include claimant costs. With those two caveats, the following graph represents the claimant fees (perhaps fees plus costs) paid from 1988 through 2000 and the claimant fees paid from fiscal 2002-03 through 2015-16. The level of aggregate claimants’ attorneys’ fees in 2015-16 remains close to the lowest it has been since 1991.

This may be significant in light of the history of Florida workers’ compensation. Workers’ compensation was enacted in Florida in 1935. There have been statutory modifications thereafter. A major revision of the law was passed in 1979, which has been referred to as the “shift to wage loss.” In a 1994 legislative special session, there was a “retreat to an impairment-based system.” As discussed above, the effect of the 1994 legislation was a marked period of growth in Petition for Benefits filings. 

Contrary to the Legislature’s intent of decreasing litigation in 1994, litigation increased. The data above supports that aggregate fees also increased after 1994 but that the increase did not match that of petition filing. This may be explained by the election of claimant’s counsel not to file fee claims after the award of benefits in the past. It is possible a significant volume of such fee issues remain outstanding, including entitlement and/or amount. These may remain outstanding for determination, and thereafter payment, for years or decades.

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