Sunday, March 12, 2017

The Litigation Funnel

Litigation volumes are a frequent topic of conversation in Florida workers' compensation. It feels like it has been discussed more in the last 12 months. Since the Florida's Supreme Courts interesting decisions last year in Castellanos and Westphal, along with the First District Court's decision in Miles, there is an expectation that litigation volumes will rise in Florida. 

The evidence indicates that petition volumes increased in fiscal 2016 (July 1, 2015 through June 30, 2016). That increase was significant, just over twelve percent. There are those who expected that the trend of increasing would continue. By mid-year 2017 (July 1, 2015 through June 30, 2016), petition filing for 2017 may be up as much as 6.5%. It is impossible to predict with certainty, but it does not appear that petition filings will again increase by double digits in 2017. 

In 2016, there were 67,265 petitions filed. That total volume certainly did not proceed to trial; it never does. In fact, there were only about 600 petition trials in fiscal 2016, although there were many other evidentiary hearings. One judge even held an evidentiary hearing in 2016 on a motion for continuance. For the sake of analysis, it is important to remember that it is very probable that some of the trials in 2015-16, particularly early in the fiscal year, resolved petitions that were filed in the prior fiscal year. 

It may take 210 days or more for a petition to reach trial in Florida. In 2015-16, the average for all trials was 234 days. And, the entry of a final order may be up to thirty days after trial. A final order entered on the first of the year, July 1, 2016, might have therefore been filed 264 days earlier, or on October 11, 2015. It is therefore difficult to draw direct analysis between what was filed in a year and the trials that year. However, the following is offered as what is known, and how meaningful that is may be decided by the reader.

Many of the petitions filed in Florida must be mediated. There are two main exceptions to this requirement. Parties may seek waiver of mandatory mediation, which can only be granted by the Deputy Chief Judge. Each year, there are very few of those waiver orders entered, likely less than 20 such orders in any fiscal year. There is also provision in the law for some claims and petitions to be scheduled for "expedited final hearing," instead of mediation. Those issues are valued monetarily at less than $5,000. 

There was a time in Florida that many petitions were set each month for expedited final hearing. During the years I presided in Pensacola, there were periods when thirty to one hundred petitions were scheduled for expedited hearing each month. Over the several years that such volumes were set for expedited hearing, I can recall actually hearing less than ten. It turned out that scheduling such hearings provided a deadline, and perhaps we all work better when we have a deadline? With the pending deadline, there tended to be resolution. 

This "deadline" hypothesis is perhaps illustrated in the path and process of petitions in Florida today. In fiscal 2016 (2015-2016) there were 67,265 petitions for benefits filed. 

Of those, 12,208 were dismissed before the state mediation, which statutorily was within 130 days (the vast majority of state mediations occurred within this statutory deadline). These petitions were filed because someone felt they were not getting that to which they were entitled. 

One might hypothesize that those workers' asked for these benefits before filing a petition, that a "good faith effort" was first made, and then the petition was filed as a "last resort. See Section 440.192(4), Fla. Stat. Others might hypothesize that perhaps the "good faith" in some instances was less than clear, or misdirected or misunderstood and that receipt of the petition was sufficient to result in benefit delivery. Or, that some petitions were filed that were ineffective, against the wrong party, for benefits not actually ripe due and owing, etc. For whatever reason 12,208 of those filed petitions were dismissed. 

Another 14,201 petitions were also not mediated; their mediations were precluded by the parties reporting that either the issues in that petition or the case itself had either "resolved" or "settled" prior to mediation. Of the 67,265, these two outcomes together account for 26,409, or about 39% of all petitions filed. This is the "funnel of litigation," in which many cases come into a system at the beginning of the litigation process, but over the course of litigation they are thinned. Few complaints proceed all the way to trial. The concept of a "funnel" is illustrated in this graphic of 2015-16.

Mediation was successful at resolving another 23,592 petitions, 35% of the filed volume. Thus, by the conclusion of mediation the parties have worked out 74% of the petitions filed. It is worth noting that more of those resolutions (39%) have been worked out or dismissed by the parties without assistance of any formalized process than those that have required intervention of formal mediation (35%). 

It is possible, however, that the "deadline" of that pending mediation brought attention to various petitions and stimulated resolution or dismissal in the 39% as well. Some would argue that mediation should be credited with such resolution. In this argument, they might be disregarding the anecdotal evidence that the "deadline" of an expedited final hearing has exceptionally high resolution and dismissal results also. 

Notably, there remain a significant volume of petitions at the conclusion of the mediation process. But, only 600 cases will proceed to trial on average. It is worth noting that each trial may involve more than one petition for benefits. In my experience, I can recall a few trials that involved only one petition, but that was not my perception of the "norm." I can recall one exceptional trial that involved more than 15 petitions, but that is also aptly described as uncommon. It is perhaps fair to conclude that generally three petitions in each trial is a reasonable average. Thus, the 600 trials likely represents about 1,800 petitions for benefits. That number is a guess, educated perhaps, but a guess nonetheless.

So, a question may be, how do the 17,264 petitions remaining at the conclusion of mediation reach the estimated 1,800 petitions that actually proceed to trial. Somehow another 15,464 petitions that could not (or were not) resolved at mediation somehow become resolved or dismissed prior to trial.

I hear anecdotal explanations for this. Some complain that parties do not appear at mediation with all of their evidence ready. They have perhaps postponed certain discovery or documentation, to delay the cost of it, until after mediation. Therefore, they present at mediation with what they believe a particular physician may or may not testify. They present at mediation with medical records or reports, but without the deposition of that physician. Through lack of certainty, perhaps resolution potential in some cases is enhanced while in others that uncertainty is an obstacle. 

There is also anecdotal suggestion that what is said at mediation is not like what happens in Vegas. This is not to suggest that there is not confidentiality in the mediation process. The parties have certainly shown over the years that mediation confidentiality works. But, mediation includes difficult discussions about claims, in which any party may have previously only heard their own attorney's perspective upon various issues. At mediation, that party may first hear another perspective or perception of issues, proof, probabilities, potentialities and more. What is said at mediation, by the opposing party or the mediator may not persuade at mediation. However, as weeks pass after mediation those comments, criticisms and ideas may "sink in," and persuade a party towards conciliation. 

For whatever reason, in the eighty days or more (mediation must occur within 130, and trial within 210 days, but many mediations occur far sooner), the parties come to possess better information or perspective. They obtain testimony of experts and fact witnesses, they consider prognostications from mediation, and they work toward the challenge of actually trying the case. And, many trials are therefore cancelled. Unfortunately, a fair number of those cancellation happen on the day before or day of trial. And those late-notice cancellations make docket management and judicial calendars a real challenge. 

So, the sides of the "litigation funnel" may be steep, or shallow, depending on the timing imposed by "deadlines" and volumes of a particular system. The pace at which litigation enters or leaves any system will vary. But, in a general sense, the "funnel" concept is likely to remain consistent with far more claims or complaints entering the top than culminate with a full trial at the bottom. It is an intriguing method for illustrating the dispute process. 

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