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Recent state court rulings place workers' comp attorney fee schedules in question

W.J. Kennedy Nov. 15, 2016, 9:55am

TALLAHASSEE — Workers’ compensation laws that impose caps on claimants’ attorney fees may be vulnerable with recent state supreme court decisions toppling fee schedules in Florida and Utah.

“The claimant’s bar is very well networked,” William W. Large, president of Florida Justice Reform Institute, told the Florida Record. “And the Florida ruling cited a violation of due process, an argument that can be made in any state.”

Nearly all states impose some limits on claimants’ attorney fees. The two topping the list with fee schedules nearly as restrictive as Florida and Utah include New Mexico and Kentucky. What remains unclear is how the ruling might affect other states that cap fees to a lesser extent.

Massachusetts attorney Allan Pierce, president of the Workers’ Injury Law & Advocacy Group (WILG), said the Florida and Utah cases have gotten a fair amount of attention, which could trigger similar interest in other states.

“So if there are issues such as these in other jurisdictions, and I surmise there might be, the rationale both in the briefs filed including the amicus as well as the opinions of the respective supreme courts will enable very cogent constitutional arguments to be advanced,” Pierce told the Florida Record. 

The Florida Supreme Court ruled in April in the case of Marvin Castellanos, who suffered head, neck and shoulder injuries while working for Next Door Co. Castellanos won his workers' comp case and received benefits of $822.70.

His lawyer sought a fee of $36,817.50, but under the state’s fee schedule he received $164.54, which he complained was equivalent to just $1.53 an hour.

Under Florida law before Castellanos, a claimant attorney would be entitled to a fee equal to 20 percent of the first $5,000 in benefits secured for a client, 15 percent of the next $5,000 secured and 10 percent of any amount secured in excess of $10,000.

The Utah Supreme Court’s ruling in May held that the court had exclusive authority to govern law practice under the state constitution, including the regulation of attorney fees. That separation of powers doctrine bars the legislature from giving that power to the labor commission, the court said.

Utah’s attorney fees are set at 25 percent for the first $25,000 of the award, 20 percent for the next $25,000 of the award, and 10 percent for awards of more than $50,000. The overall fee was capped at $18,590.

The Utah legislature approved the fee schedule to protect “unsophisticated litigants.”

Despite good intentions, the court said, many attorneys are economically unable or unwilling to take on injured workers’ cases. The schedule limits not only the quantity of workers’ comp lawyers, it also limits their quality, the court said.

The case was brought by The Injured Workers Association of Utah and several of its member attorneys.

In a WILG statement regarding the Utah ruling, Pierce said that appellate courts are recognizing the rights of “unsophisticated litigant” to have, as the Utah Court put it, access not only to a wider choice of  attorneys but also of qualified attorneys.

“Since there is no regulation or limitation on the legal fees insurers pay to their counsel, we applaud the Utah Supreme Court in restoring a measure of balance to its compensation act,” he said. 

In New Mexico, lawyers on both sides top out at $22,500; Kentucky’s cap is $12,000.

The Kentucky law also says that no fee can be paid until it is approved by an administrative law judge, and that the judge must consider "the extent, complexity and quality of services rendered" in deciding whether to grant approval.

Chuck R. Davoli, with the Baton Rouge, Louisiana firm of Moore, Thompson & Lee, APLC, said that in most states the amount paid to claimants’ attorneys is determined by taking a percentage of the gross recovery and that on average is 20 percent.

“If the laws in some of theses states get shot down, then it will come down to what amounts to a reasonable recovery," Davoli told the Florida Record.

In Florida, what is reasonable was determined by the courts in the 1968 Lee Engineering & Const. Co. v. Fellows decision, which listed the factors to be considered in determining fees.

But faced with runaway costs in the workers’ compensation system, the Florida legislature in 2003 approved sweeping changes to the law, the fee schedule among them. In general, the caps amount to about 10 percent of the award.

Then in Murray v. Mariner in 2008, the Supreme Court ruled that the caps did not permit a “reasonable” recovery for attorneys; and they could receive awards above the caps. So in 2009, the legislature struck the word “reasonable” in relation to attorneys fees, again limiting attorneys to only those amounts allowed under the caps.