Jeffrey P. Gale, P.A. // The Case Against Amending Florida’s Workers’ Compensation Attorney’s Fee Statute (440.34)

On April 28, 2016, the Florida Supreme Court declared unconstitutional the mandatory fee schedule in section 440.34, Florida Statutes (2009), which eliminated the requirement of a reasonable attorney’s fee to a successful claimant. The ruling, in Castellanos v. Next Door Company, et al., sent shock waves through the workers’ compensation community. Many within the business and insurance industries instantly began howling that the sky was falling. Their protestations, amounting to hyperbole, are overblown.

Marvin Castellanos was injured in the course and scope of his employment. His employer’s workers’ compensation insurance carrier denied benefits, raising twelve defenses. Through the assistance of an attorney, Mr. Castellanos prevailed in his workers’ compensation claim. The Judge of Compensation Claims (JCC) determined that claimant’s attorney devoted 107.2 hours of “reasonable and necessary” time litigating the complex case. However, because section 440.34 limited a claimant’s ability to recover attorney’s fees to a sliding scale based on the amount of workers’ compensation benefits obtained, the fee awarded to Castellanos’ attorney amounted to $164.54, or $1.53 per hour.

The JCC had no choice. Section 440.34 barred him from awarding a reasonable attorney’s fee. The Florida Supreme Court considered this arbitrary and capricious constraint as unconstitutional under both the Florida and United States Constitutions.

The Supreme Court’s ruling unbinds JCCs from the mandatory attorney’s fee schedule. They must now consider an assortment of otherwise longstanding guidelines in awarding fees, including:

• The quality and quantity of the workers’ compensation benefits secured
• A detailed chronological listing of all time devoted to the claim
• The difficulty, novelty, and complexity of the issues involved
• The skill requisite to perform the legal service properly
• The hourly rate customarily charged in the locality for legal services of a comparable or similar nature
• The experience and reputation of the lawyer
• Whether the fee is fixed or contingent

The Castellanos court explained the important role reasonable attorney’s fees play in the system:

• In 1935, the Legislature adopted the workers’ compensation law to provide “simple, expeditious” relief to the injured worker. Lee Eng’g & Constr. Co. v. Fellows, 209 So. 2d 454, 456 (Fla. 1968). As an integral part of that goal from 1941 until 2009, the Legislature provided for an award of a reasonable attorney’s fee to an injured worker who was successful in obtaining workers’ compensation benefits. See Murray v. Mariner Health, 994 So. 2d 1051, 1057-58 (Fla. 2008).
• From its outset, the workers’ compensation law was designed to assure, as the current legislative statement of purpose provides, “the quick and efficient delivery of disability and medical benefits to an injured worker.” § 440.015, Fla. Stat. (2009). It is undeniable that without the right to an attorney with a reasonable fee, the workers’ compensation law can no longer “assure the quick and efficient delivery of disability and medical benefits to an injured worker,” nor can it provide workers with “full medical care and wage-loss payments for total or partial disability regardless of fault and without the delay and uncertainty of tort litigation.” Martinez v. Scanlan, 582 So. 2d 1167, 1172 (Fla. 1991).
• The workers’ compensation system has become increasingly complex to the detriment of the claimant, who depends on the assistance of a competent attorney to navigate the thicket. Indeed, the First District has stated that, especially in a “lengthy and expensive contest” with an E/C, a claimant proceeding “without the aid of competent counsel” would be as “helpless as a turtle on its back.” Davis v. Keeto, Inc., 463 So. 2d 368, 371 (Fla. 1st DCA 1985) (quoting Neylon v. Ford Motor Co., 99 A.2d 664, 665 (N.J. Super. Ct. App. Div. 1953)).
• The Florida Supreme Court long ago observed that allowing a claimant to “engage competent legal assistance” actually “discourages the carrier from unnecessarily resisting claims” and encourages attorneys to undertake representation in non-frivolous claims, “realizing that a reasonable fee will be paid for [their] labor.” In addition, if the worker has a meritorious case, an attorney will be inclined to represent him, realizing that a reasonable fee will be paid for his labor and not deducted from perhaps a modest benefit due the claimant. Ohio Cas. Grp. v. Parrish, 350 So. 2d 466, 470 (Fla. 1977).
• A reasonable attorney’s fee has always been the linchpin to the constitutionality of the workers’ compensation law. Castellanos.

The main talking point being propagated by the enemies of Castellanos is that it permits “unbridled hourly rate attorney fees.”* Those folks are misinformed or disingenuous.

This evidence debunks the talking point:

• Section 440.34(1), Florida Statutes provides that “A fee, gratuity, or other consideration may not be paid for a claimant in connection with any proceedings arising under this chapter, unless approved by the judge of compensation claims or court having jurisdiction over such proceedings.” This means that every attorney’s fee paid in a case, including those awarded under Castellanos, must be approved by a JCC. In fact, it is a crime for an attorney to accept any fee not approved by the JCC. See § 440.105(3)(c), Fla. Stat. The JCC is the gatekeeper of attorney’s fees.
• JCCs are constrained by well-defined, longstanding guidelines (some of which are bullet-pointed above) in awarding fees. The guidelines have been established to assure that fees are reasonable rather than “unbridled.” An award of fees which fails to rely on the guidelines will, as a matter of law, be reversed on appeal. (The guidelines are contained here:  4-1.5(b) of the Rules Regulating the Florida Bar; Lee Eng’g & Constr. Co. v. Fellows, 209 So. 2d 454, 458 (Fla. 1968) (applying Canon 12 of the Canons of Professional Ethics, the predecessor to rule 4-1.5(b); Florida Silica Sand Co. v. Parker, 118 So. 2d 2 (Fla. 1960); Section 440.34, Florida Statutes.)
• Fee hearings are adversarial proceedings presided over by a JCC. Each side is represented by legal counsel and evidence is presented. Rulings must be supported by evidence and can be appealed to the Florida First District Court of Appeal and, in some instances, the Florida Supreme Court. Fee hearings are not fertile ground for “unbridled” results.
• JCCs are appointed and reappointed by the Governor for a term of four years. Section 440.45, Florida Statutes. Every sitting workers’ compensation judge in the state today (June 26, 2016) has been appointed or reappointed by a Republican Governor. (Jeb Bush, 1999-2007; Charlie Crist, 2007-2011; Rick Scott, 2011-2019), making them a conservative group. Only a foolish JCC would consider awarding “unbridled hourly rate attorney fees.” Not only would the award be reversed on appeal, but the judge would be looking for a new job come reappointment time.
• Castellanos fees do not accrue unless and until the employer or its workers’ compensation insurance carrier wrongly denies benefits and the claimant is successful in securing the benefits through legal proceedings with the help of a lawyer. See section 440.34(3)(a), (b) & (c), Florida Statutes. In other words, the E/C have near total control over whether they will ever owe a Castellanos fee. This point is rarely mentioned by those who oppose Castellanos. Granted, on occasion there will be genuine disputes with regard to entitlement. However, given that the Employer/Carrier control the selection of all treating doctors and are allowed to engage in private conversations with those doctors (440.14(4)(c)) — a scenario unique in Florida to the workers’ compensation system — those occasions should be infrequent. For the most part, Florida workers’ compensation doctors are veterans of the system, receiving a steady and sizeable stream of income from employers and carriers for handling their workers’ compensation cases. Those doctors who wish to continue being fed know better than to bite the hand that feeds them. They know what is expected of them and deliver. Hence, when a hand-picked provider renders an opinion (e.g., on the issue of causation or physical restrictions) or prescribes a procedure (e.g., MRI or pain management), the E/C should not be taking issue.
• “The workers’ compensation system has become increasingly complex to the detriment of the claimant.” Castellanos. The complexity insulates the E/C against paying section 440.34(3)(a), (b), or (c) attorney’s fees. In footnote 3. of its opinion, the Castellanos court listed some of the complexities facing injured workers:

“(1) the elimination of the provision that the workers’ compensation law be liberally construed in favor of the injured worker, § 440.015, Fla. Stat.; (2) reductions in the duration of temporary benefits, § 440.15(2)(a), Fla. Stat.; (3) an extensive fraud and penalty provision, § 440.105, Fla. Stat.; (4) a heightened standard of “major contributing cause” that applies in a majority of cases rather than the less stringent “proximate cause” standard in civil cases, § 440.09(1), Fla. Stat.; (5) a heightened burden of proof of “clear and convincing evidence” in some types of cases, §§ 440.02(1), 440.09(1), Fla. Stat.; (6) the elimination of the “opt out” provision, §§ 440.015, 440.03, Fla. Stat.; and (7) the addition of an offer of settlement provision that allows only the employer, and not the claimant, to make an offer to settle, § 440.34(2), Fla. Stat.”

CONCLUSION

Castellanos does not open the door to “unbridled hourly rate attorney fees”! Rather, it recalibrates the system back to a level of fairness absent for many long years. Sadly, fairness is unacceptable to certain elements within the workers’ compensation industry, who will pressure the Florida Legislature to eviscerate Castellanos through amendments to section 440.34, Florida Statutes. Rest assured, the good guys will fight back.

*This quote is attributed to Associated Industries CEO Tom Feeney, in the  newspaper article, Workers-comp rates could jump in Florida. Here is my rebuttal to the article: Jeffrey P. Gale, P.A. // Right-Wing Propaganda Machine Wasting No Time Condemning the Florida Supreme Court’s Castellanos v. Next Door Company Decision.

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