Supreme Court Says Attorney Fee Statute Is Unconstitutional

April 29, 2016/in WorkCompCentral

Friday, April 29, 2016

Supreme Court Says Attorney Fee Statute Is Unconstitutional

by Sherri Okamoto (Legal Editor) State: Florida

A divided Florida Supreme Court on Thursday struck down the state’s mandatory fee schedule as unconstitutional, but the court passed on a chance to decide if the comp system itself is a constitutionally adequate substitute for a tort remedy.

In its long-awaited ruling in Castellanos v. Next Door, the court found Florida Statutes Section 440.34 did not comport with due process because it creates an “irrebuttable statutory presumption” that a fee calculated in accordance with its provisions is “reasonable,” even when such fee is “clearly inadequate” to compensate an attorney for his work.

The court said the statute was unconstitutional on its face, even though it could generate constitutionally adequate fees in some cases because it precludes every injured worker from challenging the reasonableness of the fee award in every single case.

However, the court declined to entertain a facial challenge to the entirety of Chapter 440, presented in another case titled Stahl v. Hialeah Hospital.

While the court did not explain its reasons in its two-paragraph order revoking its grant of review and discharging its jurisdiction, the justices had questioned counsel at oral argument earlier this month about whether the case was in an appropriate procedural posture for the court to rule on the merits of Daniel Stahl’s arguments.

Stahl’s position was that legislative amendments have so eroded the rights and remedies available to injured workers that it was inequitable to bar them from seeking redress through a civil suit.

Section 440.34 has been limiting the fees available to attorneys who represent injured workers since the 1990s, but the Legislature amended the statute in 2003 to make the fee schedule mandatory.

The schedule provides compensation on a sliding scale, depending on the amount of benefits obtained. Under this formula, a claimants’ attorney is entitled to a fee equal to 20% of the first $5,000 in benefits secured for a client, 15% of the next $5,000 secured, and 10% of any amount secured in excess of $10,000.

But Marvin Castellanos got an award of only $822.70, even though the highly contentious litigation of his claim required his attorney to put in more than 107 hours of work. So application of the fee schedule to his attorney yielded an award of only $1.53 per hour.

Judge of Compensation Claims Gerardo Castiello found Section 440.34 left him with no choice but to issue an award in that amount, and the 1st District Court of Appeal affirmed the judge’s ruling three years ago.

The Florida Supreme Court agreed to grant review to the matter in March 2014. It heard oral argument in November 2014.

After pending for nearly a year and a half, the court on Thursday found the limits imposed by Section 440.34 did not pass constitutional muster.

Justice Barbara Pariente wrote for the majority, and she said the right of a claimant to obtain a reasonable attorney fees when successful in securing benefits has been “critical feature of the workers’ compensation law since 1941.”

Pariente explained that the point of the comp law is to provide an expedient remedy for injured workers, but she observed that the process of getting that remedy “has become increasingly complex to the detriment of the claimant, who depends on the assistance of a competent attorney to navigate the thicket.”

In light of this, she said it is “undeniable” that “without the right to an attorney with a reasonable fee,” the workers’ compensation law can no longer serve its purpose.

She observed that the Legislature in 2003 amended Section 440.34 in a way that “eliminated any consideration of reasonableness and removed any discretion from the JCC, or the judiciary on review, to alter the fee award in cases where the sliding scale based on benefits obtained results in either a clearly inadequate or a clearly excessive fee.” As such, Pariente said it created a statute with “a conclusive irrebuttable presumption that the formula will produce an adequate fee in every case.”

Pariente said the “inability of any injured worker to challenge the reasonableness of the fee award in his or her individual case is a facial constitutional due process issue.”

Although Pariente acknowledged that the legislative purpose behind the amendment of Section 440.34 was “to standardize fees” — and having the conclusive presumption “certainly does that” — she said it does so “in a manner that lacks any relationship to the amount of time and effort actually expended by the attorney.”

She said the Legislature was supposedly concerned with excessive fees being awarded, too, but “excessive fees can still result under the fee schedule, just as inadequate ones can,” so “this is not a reasonable basis for the unyielding formulaic fee schedule.”

Pariente further opined that it was perfectly feasible for JCCs to make individual assessments of what constitutes a reasonable fee in a given case, and so there was no need for “the inherent imprecision of the conclusive presumption.”

The remedy, she said, would be reinstatement of the statute’s immediate predecessor, which was construed by the Florida Supreme Court as providing for a “reasonable” award of attorney’s fees when the statutory formula results in an unreasonable fee.

Chief Justice Jorge Labarga joined Pariente’s opinion, along with Justices Peggy Quince, James Perry and R. Fred Lewis.

Lewis also wrote separately to say he thought Section 440.34 not only failed to comport with due process, it also violated the constitutional guarantee of access to the courts.

“Florida workers’ compensation system has become increasingly complex and difficult to navigate without the assistance of one having specialized training,” he said.

Justices Ricky Polston and Charles Canady dissented.

Canady contended that Section 440.34 “embodies a policy determination by the Legislature that there should be a reasonable relationship between the value of the benefits obtained in litigating a workers’ compensation claim and the amount of attorney’s fees the employer or carrier is required to pay to the claimant.”

While he conceded “this legislative policy may be subject to criticism,” he said there is no constitutional requirement that statutory fee awards fully compensate a party for the effective litigation of all claims.

As Section 440.34 “unquestionably has a rational basis,” Canady said, the court should not have declared it unconstitutional.

Polston argued that the statute cannot be facially unconstitutional if there is “a set of circumstances under which the attorney’s fees provision could be constitutionally applied,” and so he said he thought the statute was only vulnerable to an “as-applied” challenge in this case.

Richard Anthony Sicking, Mark Andrew Touby and Richard Eric Chait of Touby, Chait & Sicking represented Castellanos before the Supreme Court, along with Tampa attorney Mike Winer.

Given the complexity of the comp system, Touby said, a worker without the assistance of competent counsel is “helpless as a turtle on its back.” He said he thought the court’s ruling clearly acknowledged “it’s critical” that workers get representation.

He said he believed the court has not gotten rid of the fee schedule entirely — it has just said that “should be the starting point” for determining a reasonable fee award, and that a deviation is appropriate only if the scheduled award was unreasonable.

This “was how it was before” the 2003 amendments, and Touby opined that “it always worked.”

He also said he didn’t expect Thursday’s decision to drive up costs within the system.

“We’re in a $4 billion industry,” and only a small portion of that is attorney fees, he said.

According to the Annual Report of the Office of the Judges of Compensation Claims, only $418,775,099 was paid in fees in 2012-2013.

Touby further said that he doubted the ruling will spark an uptick in litigated claims. He said his experience was that the level of litigation “remained pretty much the same” both before and after the 2003 amendment to Section 440.34, and this is because litigation only happens “when benefits that should be awarded are denied.”

Touby said he also believed that “there are a lot of benefits that have been eliminated or diminished” over the years, and “there certainly still needs to be some restoration of those benefits,” even with the court’s ruling in Castellanos.

There’s one more case still pending at the Supreme Court that may provide an avenue for that.

Westphal v. St. Petersburg involves a challenge to the state’s 104-week cap on temporary disability and whether it is unconstitutional as applied to an injured firefighter who exhausted his benefits nine months before he became medically stationary.

That case has been pending at the Supreme Court even longer than the Castellanos case. Oral argument in Stahl took place in March 2014.

Winer said he believed that the Castellanos decision “somewhat ameliorates the problem from Stahl” because now “the courthouse doors are open for claimants to access all the benefits that are available.”

He said he thought benefits “still aren’t what they could be or should be, but at least the barrier to finding an attorney to access them has been removed.”

But the amici for Next Door and defense attorneys who have been following the Castellanos case said they are concerned that the court’s ruling is going to trigger rising costs for the comp system.

Tamela Perdue, general counsel for the Associated Industries of Florida and a newly appointed member of the state’s Workers’ Compensation Panel, said she was certain that employers are going to be seeing their insurance rates rise. Such an increase will be an “unexpected and un-budgeted expense” for employers, she said.

Perdue said she wouldn’t be surprised if Florida goes back to where it was in 2002, with the highest workers’ compensation rates in the country. She said she also had concern that claims are going to start taking longer to resolve because attorneys will have “an incentive to keep them going” if they can get paid for more work.

Her group will be “calling on our elected leaders to consider the impact of this on Florida businesses, as well as state’s economic outlook, and to respond,” Perdue said. “This is something we have to have these officials take seriously and work with us to come up with a viable solution.”

The Associated Industries of Florida had been a defense amicus in the Castellanos case, represented by attorney Rayford Taylor of Casey Gilson.

Taylor said Thursday that the 2003 amendments to Florida’s comp laws had been designed to address “all the major cost-drivers in the system.”

Attorney fees were one of them, he said, because “cases were being litigated when they probably shouldn’t have been, and more than they probably should have been,” which resulted in “small-value cases producing some huge fees” based on the number of hours the attorney put into them.

Now that the court has said that an attorney deserves a “reasonable” fee considering the amount of work performed, Taylor opined “there is no reason to think this situation will not be replicated in the future.”

Taylor said the high costs of litigation had driven insurance rates up at around the turn of the millennium, and this “caused a lot of employers to leave Florida or to go bare,” while carriers also “left the state or stopped covering certain risks.”

In light of Thursday’s ruling, Taylor said “there’s a good chance that will happen again.”

At the very least, Taylor said, it will “have an upward effect on rates, there’s no ifs, ands or buts about that.”

Chris Bailey, the National Council on Compensation Insurance state relations executive for Florida, said his group was evaluating the Castellanos decision as of Thursday afternoon.

“The impact on Florida’s workers’ compensation system costs is expected to be significant,” he said in an emailed statement.

Bailey advised that NCCI is planning to submit an off-cycle rate filing next month with a proposed effective date this summer for review and consideration by the Florida Office of Insurance Regulation.

Florida Insurance Commissioner Kevin M. McCarty issued a statement Thursday afternoon saying he believed a legislative remedy will be required to prevent significant increases in rates. “We look forward to working with all parties affected to bring about a sensible solution,” he said.

In terms of legal precedent, William Large, president of the Florida Justice Reform Institute, on Thursday said he thought the Castellanos ruling was “an extraordinary case in terms of procedural due process jurisprudence.”

The Institute had been a defense amicus in the case, which has “greatly expanded the potential grounds to bring a procedural due process violation in Florida,” Large said.

He said he thought the ramifications of it could even carry outside of the comp arena, as the Castellanos ruling “has the potential to create unlimited challenges to the Legislature’s authority to create policy if a claimant alleges there isn’t an avenue to challenge the sufficiency of the regulation in question.”

But H. George Kagan, a defense attorney for Miller, Kagan, Rodriguez & Silver who has been tracking the Castellanos litigation, said he believed that the Legislature may have “overreached” in 2003 when it made the fee schedule mandatory.

Still, he said he doubted the Legislature presumed these fees would be reasonable for every single case. Kagan said the fee statute “cut both ways,” providing fees that were very large for cases where an attorney did very little work, and sometimes providing fees that were very small when an attorney did a lot of work.

Kagan said he thought that’s what the Legislature had expected the statute to do, and while that would sometimes be an “unfair” outcome, the idea of comp is not to provide “perfect justice.”

He said he suspected the court “thinks the door has been opened a modest amount” only, because attorneys can’t get a fee that deviates from the fee schedule unless the scheduled amount is not reasonable, but he said he thought “the danger here” is that “in every case, that will be pleaded as inadequate.”

But David Langham, the deputy chief judge of the Florida Office of the Judges of Workers’ Compensation Claims, said he thought his office is prepared to deal with fee claims, if they start coming in.

The state’s JCCS issued awards in “dozens and dozens and dozens” of cases under a “reasonable” standard before Section 440.34’s schedule became mandatory, so there’s “lots of authority” on how those determinations will be made, Langham said.

To read the court’s decision, click here

https://www.workcompcentral.com/news/story/id/eaefcebab2f29735121b3c46573b0a485c8386d3

Justices Strike Down Workers Comp Fee Law

April 28, 2016/in Gainesville Sun

JUSTICES STRIKE DOWN WORKERS COMP FEE LAW

By JIM SAUNDERS
THE NEWS SERVICE OF FLORIDA

THE CAPITAL, TALLAHASSEE, April 28, 2016………. In a major ruling, the Florida Supreme Court on Thursday said that a state law limiting attorney’s fees in workers-compensation insurance cases is unconstitutional.

The 5-2 ruling in the closely watched case was a victory for attorneys who represent injured workers — and a blow to business groups that have long argued legal fees drive up the costs of workers-compensation insurance. The fee issue will bounce back to the Legislature, where it could spark a fierce debate.

Justice Barbara Pariente, writing for the court’s majority, said the 2009 law is a violation of due-process rights under the Florida Constitution and the U.S. Constitution because it prevents challenges to the “reasonableness” of attorney’s fees awarded in workers-compensation cases. The ruling stemmed from a case in which an attorney was awarded the equivalent of $1.53 an hour in successfully pursuing a claim for benefits for a worker injured in Miami.

Pariente wrote that the goal of the workers-compensation system is to quickly provide benefits to get injured people back on the job at a reasonable cost to employers.

“This case, and many others like it, demonstrate that despite the stated goal, oftentimes the worker experiences delay and resistance either by the employer or the (insurance) carrier,” wrote Pariente, who was joined in the majority by Chief Justice Jorge Labarga and justices R. Fred Lewis, Peggy Quince and James E.C. Perry. “Without the likelihood of an adequate attorney’s fee award, there is little disincentive for a carrier to deny benefits or to raise multiple defenses, as was done here.”

But Justice Charles Canady wrote a dissent that said the law involves a “policy determination” by the Legislature that there should be a relationship between the amount of benefits obtained in workers-compensation cases and the amount of attorney’s fees awarded. The law includes a formula that links benefits and attorney’s fees.

“In reaching the conclusion that the statute violates due process, the majority fails to directly address the actual policy of the statute,” wrote Canady, who was joined in dissent by Justice Ricky Polston. “Instead, the majority assumes — without any reasoned explanation — that due process requires a particular definition of ‘reasonableness’ in the award of statutory attorney’s fees. The definition assumed by the majority categorically precludes the legislative policy requiring a reasonable relationship between the amount of a fee award and the amount of the recovery obtained by the efforts of the attorney. Certainly, this legislative policy may be subject to criticism. But there is no basis in our precedents or federal law for declaring it unconstitutional.”

The case, known as Marvin Castellanos v. Next Door Company, was one of three major challenges to the workers-compensation system that have been pending at the Supreme Court. The other cases have focused on a workers-compensation overhaul that lawmakers and then-Gov. Jeb Bush approved in 2003 to reduce insurance rates for employers.

Business groups received a partial victory Thursday when the Supreme Court said it will not rule in one of the other cases, brought on behalf of former Hialeah Hospital nurse Daniel Stahl who was injured on the job. Justices heard arguments in that case April 6, but it was clear they had questions about the procedural history of the case and a lack of a factual record.

Attorney’s fees have long been one of the most-contentious issues in the workers-compensation system, which handles disputes through a legal process outside of more-typical civil courts. Under the formula included in the 2009 law, for example, attorneys who successfully represent workers can receive fees equal to 20 percent of the first $5,000 in benefits obtained and 15 percent of the next $5,000 in benefits.

The attorney’s fee ruling Thursday stemmed from a case that started in 2009 when Marvin Castellanos was injured while at work at Next Door Company, a manufacturer of metal doors and door frames, Pariente wrote in the majority opinion. But a dispute about the injuries ultimately led to a case going before a judge of compensation claims.

Pariente wrote that the dispute resulted in Castellanos securing benefits with a value of $822.70. His attorney spent 107.2 hours on the case and was entitled to fees of $164.54 — or $1.53 an hour — under the formula. In the dissent, Canady wrote that the amount of attorney’s fees sought in the case were $36,817.50.

In a concurring opinion, Lewis described the attorney’s fees part of the workers-compensation system as “emasculated” and pointed to the example of the $1.53 an hour in fees in the Castellanos case, which he wrote is “clearly unreasonable and insufficient to afford workers the ability to secure competent counsel.”

In striking down the fee law, the majority directed the state to return to a previous law “until the Legislature acts to cure the constitutional infirmity.” Under that previous law, workers will be able to present evidence about how using the fee schedule would lead to “unreasonable” attorney’s fees.

“We emphasize, however, that the fee schedule remains the starting point, and that the revival of the predecessor statute does not mean that claimants’ attorneys will receive a windfall,” Pariente wrote. “Only where the claimant can demonstrate … that the fee schedule results in an unreasonable fee — such as in a case like this — will the claimant’s attorney be entitled to a fee that deviates from the fee schedule.”

The ruling drew quick rebukes from the Florida Chamber of Commerce, Associated Industries of Florida and the business-backed Florida Justice Reform Institute, all of which raised the specter of increased insurance rates. The Florida Chamber, anticipating the possibility of the ruling, had earlier formed a task force to make recommendations to the Legislature about how to respond.

Chamber President and CEO Mark Wilson said in a prepared statement the “potential impact of the high court’s ruling could threaten Florida’s improving business climate. The Florida Chamber remains laser focused on ensuring workers’ comp rates are fair, and we will lead the effort before lawmakers and in the halls of justice to ensure the voices of job creators are heard.”

–END–
4/28/2016

https://www.gainesville.com/news/20160428/justices-strike-down-floridas-workers-comp-fee-law/1

Florida Supreme Court Strikes Down Workers Comp Fee Law

April 28, 2016/in Brandenton Herald

Florida Supreme Court strikes down workers comp fee law

BY BRENDAN FARRINGTON – Associated Press
APRIL 28, 2016 5:43 PM

TALLAHASSEE — The Florida Supreme Court struck down a law limiting lawyer fees in workers’ compensation cases on Thursday, saying the $1.53 hourly rate a lawyer was paid to help an injured worker was “absurdly low.”

The decision is a victory for injured workers who have struggled to get lawyers to help them because the fee system created by then-Gov. Jeb Bush in 2003 makes their cases not worth representing. The case involved a man who successfully sued a Miami door manufacturer over an on-the-job injury. His lawyer was paid $164.54 for more than 100 hours of work.

The Supreme Court said the fee limits are unconstitutional because they resulted in a system where people can’t find lawyers to represent them at unreasonably low rates. The law based lawyer fees on a percentage of the amount of money won in a claim, so if an injured worker had a $5,000 claim, lawyers knew that they could receive no more than $1,000.

So while the $5,000 could be important to someone earning $10 an hour and trying to pay bills, lawyers don’t want to take cases where their fee is driving down to the equivalent of $10 an hour or less, said Michael Winer, who chairs the Workers Compensation Section of The Florida Bar.

“People who were injured on the job and stuck in the workers’ comp system lost the ability to pay lawyers,” he said. “I have had very difficult discussions with a lot of injured workers who had valid claims, and said, `Look, the juice here, unfortunately, just isn’t worth the squeeze. I might have to spend 50 to 70 hours on your case.”‘

It also led to insurance companies denying legitimate claims knowing that injured workers wouldn’t be able to fight the decision, Winer said.

“They deny the claim, and if the claimant can’t get a lawyer, he goes away and he makes it somebody else’s problem. That problem might be Medicaid’s problem, that problem might be a county hospital that never gets reimbursed,” Winer said. “It’s the grand passing of the buck.”

Business groups immediately criticized the decision, saying it’s going to drive up employers’ costs.

“Most people have probably forgotten how runaway workers’ compensation costs nearly caused Florida’s economy to seize up and stop before the 2003 reforms. Well, now we’re about to remember,” said William Large, president of the Florida Justice Reform Institute, a group created by the Florida Chamber of Commerce.

The law was a high priority for Bush, who made it part of a special legislative session. He said at the time that the rising cost of workers’ compensation insurance was making it unaffordable and in some cases unavailable.

The decision could lead to higher workers compensation rates, Florida Insurance Commissioner Kevin McCarty said in an emailed statement.

“Limiting attorney’s fees has been an important factor in reducing workers’ compensation rates. A legislative remedy will be required to prevent significant increases in rates and we look forward to working with all parties affected to bring about a sensible solution,” McCarty said.

Gov. Rick Scott’s office said it is reviewing the decision.

Court Calls $1.53 an Hour Lawyer Fee Unconstitutional, ‘Absurd’

April 28, 2016/in Orlando Sentinel

By Brendan Farrington
Associated Press – April 28, 2016

TALLAHASSEE — The Florida Supreme Court struck down a law limiting lawyer fees in workers’ compensation cases on Thursday, saying the $1.53 hourly rate a lawyer was paid to help an injured worker was “absurdly low.”

The 5-2 decision is expected to help injured workers who have struggled to get lawyers to help them because the fee system created by then-Gov. Jeb Bush in 2003 makes their cases not worth representing. The case involved a man who successfully sued a Miami door manufacturer over an on-the-job injury. His lawyer was paid $164.54 for more than 100 hours of work.

But the ruling is a blow to business groups that have long argued legal fees drive up the costs of workers-compensation insurance. The fee issue will bounce back to the Legislature, where it could spark a fierce debate.

In its ruling, the court said the fee limits are unconstitutional because they resulted in a system where people can’t find lawyers to represent them at unreasonably low rates. The law based lawyer fees on a percentage of the amount of money won in a claim, so if an injured worker had a $5,000 claim, lawyers knew that they could receive no more than $1,000.

So while the $5,000 could be important to someone earning $10 an hour and trying to pay bills, lawyers don’t want to take cases where their fee is driving down to the equivalent of $10 an hour or less, said Michael Winer, who chairs the Workers Compensation Section of The Florida Bar.

“People who were injured on the job and stuck in the workers’ comp system lost the ability to pay lawyers,” he said. “I have had very difficult discussions with a lot of injured workers who had valid claims, and said, `Look, the juice here, unfortunately, just isn’t worth the squeeze. I might have to spend 50 to 70 hours on your case.”‘

It also led to insurance companies denying legitimate claims knowing that injured workers wouldn’t be able to fight the decision, Winer said.

“They deny the claim, and if the claimant can’t get a lawyer, he goes away and he makes it somebody else’s problem. That problem might be Medicaid’s problem, that problem might be a county hospital that never gets reimbursed,” Winer said. “It’s the grand passing of the buck.”

But the ruling drew quick rebukes from the Florida Chamber of Commerce, Associated Industries of Florida and the business-backed Florida Justice Reform Institute, all of which raised the specter of increased insurance rates.

“Most people have probably forgotten how runaway workers’ compensation costs nearly caused Florida’s economy to seize up and stop before the 2003 reforms. Well, now we’re about to remember,” said William Large, president of the Florida Justice Reform Institute, a group created by the Florida Chamber of Commerce.

The law was a high priority for Bush, who made it part of a special legislative session. He said at the time that the rising cost of workers’ compensation insurance was making it unaffordable and in some cases unavailable.

The decision could lead to higher workers compensation rates, Florida Insurance Commissioner Kevin McCarty said in an emailed statement.

“Limiting attorney’s fees has been an important factor in reducing workers’ compensation rates. A legislative remedy will be required to prevent significant increases in rates and we look forward to working with all parties affected to bring about a sensible solution,” McCarty said.

Gov. Rick Scott’s office said it is reviewing the decision.

Justice Barbara Pariente, writing for the court’s majority, said the 2009 law is a violation of due-process rights under the Florida Constitution and the U.S. Constitution because it prevents challenges to the “reasonableness” of attorney’s fees awarded in workers-compensation cases.

“This case, and many others like it, demonstrate that despite the stated goal, oftentimes the worker experiences delay and resistance either by the employer or the [insurance] carrier,” wrote Pariente. “Without the likelihood of an adequate attorney’s fee award, there is little disincentive for a carrier to deny benefits or to raise multiple defenses, as was done here.”

News Service of Florida contributed to this report.
Copyright © 2016, Orlando Sentinel

See Full Article

Justices Strike Down Workers Comp Fee Law

April 28, 2016/in News Service of Florida

JUSTICES STRIKE DOWN WORKERS COMP FEE LAW
Jim Saunders

THE CAPITAL, TALLAHASSEE, April 28, 2016………. In a major ruling, the Florida Supreme Court on Thursday said that a state law limiting attorney’s fees in workers-compensation insurance cases is unconstitutional.
The 5-2 ruling in the closely watched case was a victory for attorneys who represent injured workers — and a blow to business groups that have long argued legal fees drive up the costs of workers-compensation insurance. The fee issue will bounce back to the Legislature, where it could spark a fierce debate.

Justice Barbara Pariente, writing for the court’s majority, said the 2009 law is a violation of due-process rights under the Florida Constitution and the U.S. Constitution because it prevents challenges to the “reasonableness” of attorney’s fees awarded in workers-compensation cases. The ruling stemmed from a case in which an attorney was awarded the equivalent of $1.53 an hour in successfully pursuing a claim for benefits for a worker injured in Miami.
Pariente wrote that the goal of the workers-compensation system is to quickly provide benefits to get injured people back on the job at a reasonable cost to employers.

“This case, and many others like it, demonstrate that despite the stated goal, oftentimes the worker experiences delay and resistance either by the employer or the (insurance) carrier,” wrote Pariente, who was joined in the majority by Chief Justice Jorge Labarga and justices R. Fred Lewis, Peggy Quince and James E.C. Perry. “Without the likelihood of an adequate attorney’s fee award, there is little disincentive for a carrier to deny benefits or to raise multiple defenses, as was done here.”

But Justice Charles Canady wrote a dissent that said the law involves a “policy determination” by the Legislature that there should be a relationship between the amount of benefits obtained in workers-compensation cases and the amount of attorney’s fees awarded. The law includes a formula that links benefits and attorney’s fees.

“In reaching the conclusion that the statute violates due process, the majority fails to directly address the actual policy of the statute,” wrote Canady, who was joined in dissent by Justice Ricky Polston. “Instead, the majority assumes — without any reasoned explanation — that due process requires a particular definition of ‘reasonableness’ in the award of statutory attorney’s fees. The definition assumed by the majority categorically precludes the legislative policy requiring a reasonable relationship between the amount of a fee award and the amount of the recovery obtained by the efforts of the attorney. Certainly, this legislative policy may be subject to criticism. But there is no basis in our precedents or federal law for declaring it unconstitutional.”

The case, known as Marvin Castellanos v. Next Door Company, was one of three major challenges to the workers-compensation system that have been pending at the Supreme Court. The other cases have focused on a workers-compensation overhaul that lawmakers and then-Gov. Jeb Bush approved in 2003 to reduce insurance rates for employers.

Business groups received a partial victory Thursday when the Supreme Court said it will not rule in one of the other cases, brought on behalf of former Hialeah Hospital nurse Daniel Stahl who was injured on the job. Justices heard arguments in that case April 6, but it was clear they had questions about the procedural history of the case and a lack of a factual record.

Attorney’s fees have long been one of the most-contentious issues in the workers-compensation system, which handles disputes through a legal process outside of more-typical civil courts. Under the formula included in the 2009 law, for example, attorneys who successfully represent workers can receive fees equal to 20 percent of the first $5,000 in benefits obtained and 15 percent of the next $5,000 in benefits.

The attorney’s fee ruling Thursday stemmed from a case that started in 2009 when Marvin Castellanos was injured while at work at Next Door Company, a manufacturer of metal doors and door frames, Pariente wrote in the majority opinion. But a dispute about the injuries ultimately led to a case going before a judge of compensation claims.

Pariente wrote that the dispute resulted in Castellanos securing benefits with a value of $822.70. His attorney spent 107.2 hours on the case and was entitled to fees of $164.54 — or $1.53 an hour — under the formula. In the dissent, Canady wrote that the amount of attorney’s fees sought in the case were $36,817.50.

In a concurring opinion, Lewis described the attorney’s fees part of the workers-compensation system as “emasculated” and pointed to the example of the $1.53 an hour in fees in the Castellanos case, which he wrote is “clearly unreasonable and insufficient to afford workers the ability to secure competent counsel.”

In striking down the fee law, the majority directed the state to return to a previous law “until the Legislature acts to cure the constitutional infirmity.” Under that previous law, workers will be able to present evidence about how using the fee schedule would lead to “unreasonable” attorney’s fees.

“We emphasize, however, that the fee schedule remains the starting point, and that the revival of the predecessor statute does not mean that claimants’ attorneys will receive a windfall,” Pariente wrote. “Only where the claimant can demonstrate … that the fee schedule results in an unreasonable fee — such as in a case like this — will the claimant’s attorney be entitled to a fee that deviates from the fee schedule.”

The ruling drew quick rebukes from the Florida Chamber of Commerce, Associated Industries of Florida and the business-backed Florida Justice Reform Institute, all of which raised the specter of increased insurance rates. The Florida Chamber, anticipating the possibility of the ruling, had earlier formed a task force to make recommendations to the Legislature about how to respond.

Chamber President and CEO Mark Wilson said in a prepared statement the “potential impact of the high court’s ruling could threaten Florida’s improving business climate. The Florida Chamber remains laser focused on ensuring workers’ comp rates are fair, and we will lead the effort before lawmakers and in the halls of justice to ensure the voices of job creators are heard.”

–END–
4/28/2016

$1.53 an Hour for Lawyer Fees? Not in Florida, Court Says

April 28, 2016/in Townhall.com

$1.53 an hour for lawyer fees? Not in Florida, court says

AP News |Posted: Apr 28, 2016 4:10 PM

TALLAHASSEE, Fla. (AP) — The Florida Supreme Court struck down a law limiting lawyer fees in workers’ compensation cases on Thursday, saying the $1.53 hourly rate a lawyer was paid to help an injured worker was “absurdly low.”

The decision is a victory for injured workers who have struggled to get lawyers to help them because the fee system created by then-Gov. Jeb Bush in 2003 makes their cases not worth representing. The case involved a man who successfully sued a Miami door manufacturer over an on-the-job injury. His lawyer was paid $164.54 for more than 100 hours of work.

The Supreme Court said the fee limits are unconstitutional because they resulted in a system where people can’t find lawyers to represent them at unreasonably low rates. The law based lawyer fees on a percentage of the amount of money won in a claim, so if an injured worker had a $5,000 claim, lawyers knew that they could receive no more than $1,000.

“People who were injured on the job and stuck in the workers’ comp system lost the ability to pay lawyers,” he said. “I have had very difficult discussions with a lot of injured workers who had valid claims, and said, ‘Look, the juice here, unfortunately, just isn’t worth the squeeze. I might have to spend 50 to 70 hours on your case.'”

It also led to insurance companies denying legitimate claims knowing that injured workers wouldn’t be able to fight the decision, Winer said.

“They deny the claim, and if the claimant can’t get a lawyer, he goes away and he makes it somebody else’s problem. That problem might be Medicaid’s problem, that problem might be a county hospital that never gets reimbursed,” Winer said. “It’s the grand passing of the buck.”

Business groups immediately criticized the decision, saying it’s going to drive up employers’ costs.

“Most people have probably forgotten how runaway workers’ compensation costs nearly caused Florida’s economy to seize up and stop before the 2003 reforms. Well, now we’re about to remember,” said William Large, president of the Florida Justice Reform Institute, a group created by the Florida Chamber of Commerce.

The law was a high priority for Bush, who made it part of a special legislative session. He said at the time that the rising cost of workers’ compensation insurance was making it unaffordable and in some cases unavailable.

The decision could lead to higher workers compensation rates, Florida Insurance Commissioner Kevin McCarty said in an emailed statement.

“Limiting attorney’s fees has been an important factor in reducing workers’ compensation rates. A legislative remedy will be required to prevent significant increases in rates and we look forward to working with all parties affected to bring about a sensible solution,” McCarty said.

Gov. Rick Scott’s office said it is reviewing the decision.

So while the $5,000 could be important to someone earning $10 an hour and trying to pay bills, lawyers don’t want to take cases where their fee is driving down to the equivalent of $10 an hour or less, said Michael Winer, who chairs the Workers Compensation Section of The Florida Bar.

http://townhall.com/news/politics-elections/2016/04/28/153-an-hour-for-lawyer-fees–not-in-florida-court-says-n2155086

Daubert vs. Frye: Florida Supreme Court Sets Oral Arguments Over Expert Testimony Standard

April 13, 2016/in Florida Record

Daubert vs. Frye: Florida Supreme Court sets oral arguments over expert testimony standard

W.J. Kennedy Apr. 13, 2016, 11:43am

TALLAHASSEE – Oral arguments have been set for Sept. 1 to decide the standard Florida courts will use to approve expert testimony in civil and criminal cases.

The Florida Supreme Court, however, is a little late to the party. The standard was actually settled three years ago – or at least should have been – when the legislature approved the modern Daubert Standard, one established in the federal courts in 1993, and then later adopted by a majority of states.

But the trial bar intervened in the process, and now has the Supreme Court, through a recommendation from the Florida Bar Board of Governors, considering overruling the legislature. The trial bar prefers the 1923 Frye Standard, which can greatly expand the scope of what can be considered expert testimony.

Attorney Timothy M. Moore of Shook Hardy & Bacon in Miami explained the difference between the two: Daubert asks whether the data is sufficient, if it’s based on reliable principles and if those principles are reliably applied. Frye asks if the science the testimony is based on is generally accepted by the scientific community.

“There is no question that Daubert is the superior standard,” Moore said. “Besides being more stringent, it puts a judge in more of a gatekeeper role. Frye, and another standard used in some instances that relied on pure opinion (Marsh v. Valyou, 977 So. 2d 543 (Fla. 2007), could result in bringing in someone who claims to be an expert by just hanging a shingle.”

While the legislature apparently believed that Daubert was superior as well, the bill’s sponsor in the Senate, Garrett Richter (R-Naples), said lawmakers still had to “fight off the trial bar for years” to get the bill through.

The Supreme Court’s involvement comes via a provision in the Florida Constitution that gives the courts full jurisdiction over procedure, while the legislature has say over substance.

Complicating the matter is that the proposed change includes both procedure and substance. In order to avoid turf battles between the branches, the Supreme Court years ago adopted a legislatively approved “Evidence Code.” The few disputes that have occurred over legislative changes to the Evidence Code have been constitutional questions, or ones that the Court simply didn’t see the need for the change, not turf considerations.

Initially, the Florida Bar appeared as though it would recommend adoption of Daubert.

In two straw votes in 2013, the Bar’s Code and Rules of Evidence Committee (CREC) overwhelmingly favored Daubert. But halfway through 2014, one-third of the members of CREC were replaced with their terms expiring. Daubert then lost out. The Bar’s Board of Governors, following a final CREC vote, recommended that the Court not adopt the Daubert standard.

Richter said he has no doubt that the trial bar “co-opted” the committee when its complexion changed.

Hundreds of comments have since poured into the Court.

William W. Large, president of the Florida Justice Reform Institute, was among those to comment.

“The Committee (CREC) serves an important purpose but it is neither a democratic institution nor a constitutionally established, coordinate branch of government,” he stated. “Its members are not elected and have no constituency. Where the committee’s recommendation conflicts with the considered judgment of the legislative branch, the committee’s recommendation is entitled to no precedence over the legislative will.”

David A. Jones of Holland & Knight in Orlando spent hundreds of hours reviewing the issue.

He said it’s unclear how the court would rule but it could go so far as to declare Daubert unconstitutional. Then the state would revert to Frye.

“At that point, the Legislature either licks its wounds or we get into an ugly turf war,” Jones said.

For his part, sponsor of the Daubert legislation in the House, Larry Metz (R-Yalaha), said that in his comments to the Supreme Court he asked that the ruling be based on which standard is the better policy not who has the final say.

“We shouldn’t get hung up on who decides what,” Metz said.

http://flarecord.com/stories/510714673-florida-supreme-court-sets-oral-arguments-over-expert-testimony-standard

Supreme Court Says 1936 Road Deal Requires State to Pay

April 11, 2016/in Daily Business Review

Supreme Court Says 1936 Road Deal Requires State to Pay

Jim Saunders, News Service of Florida, Daily Business Review

April 11, 2016

Photo: Radisa Zivkovic/iStockphoto.com

As it sought to build a road in then-rural Pasco County, the state in 1936 reached an agreement with Seaboard Air Line Railway Co.

In exchange for being able to build a road that crossed Seaboard’s railroad tracks, the state agreed to compensate the company for any losses or damages stemming from the road.

Now, 80 years later, the agreement will cost the state Department of Transportation more than $500,000.

The Florida Supreme Court on April 7 ruled that the state is required to pay $502,462 to CSX Transportation Inc., Seaboard’s successor company, because of a legal settlement and expenses related to a fatal traffic accident on the road in 2002.

The justices, in a unanimous decision, rejected the transportation department’s arguments that the agreement, known as an “indemnity clause,” was invalid. In finding that the state was bound by the 1936 deal, the Supreme Court upheld a ruling by the Second District Court of Appeal.

“In this case, the crossing agreement necessitated the expenditure of funds for the DOT to construct and maintain the road it was licensed to build,” said the 14-page decision, written by Justice Peggy Quince. “The indemnity provision was merely an additional performance obligation that required the DOT to expend funds. The authorization to fulfill one’s performance under a contract does not disappear merely because the performance obligation happens to implicate tort law. Accordingly, we find that the DOT is bound by the crossing agreement—including the indemnity clause.”

The dispute began after an October 2002 fatal accident on State Road 52, now a heavily traveled highway cutting across Pasco County. Robert and Dorthy Schwefringhaus were in a car traveling eastbound on the road, when a westbound truck went over tracks owned by CSX. A trailer behind the truck disconnected, and a load of lumber hit the couple’s car, killing Robert and injuring Dorthy, the ruling said.

Dorthy Schwefringhaus in 2004 filed a lawsuit against CSX, which later agreed to a $125,000 settlement. CSX then sought to recover from the state the $125,000 and $377,462 in expenses related to the case.

While the Second District Court of Appeal sided with CSX, it also asked the Supreme Court to take up the issue. In the 2013 appeals court opinion, then-Judge Chris Altenbernd wrote that the state in 1936 wanted to build a road on abandoned right-of-way of an old logging railway that had served the community of Fivay, which Altenbernd described as “little more than a ghost town by the mid-1930s.” To build the road, however, the state had to cross an active Seaboard railroad line.

“The State Road Department built this rural road, State Road 210 [its name at the time], and the crossing agreement undoubtedly was filed away in the filing cabinets of one or both parties,” Altenbernd wrote. “One imagines that on a daily basis a few cars and a few horse-drawn vehicles crossed the railroad tracks in 1939 when the population of Pasco County was less than 14,000.”

The case drew attention at the Supreme Court, with the Florida Association of County Attorneys filing a friend-of-the-court brief on behalf of the transportation department, and the Florida Chamber of Commerce, Associated Industries of Florida, the Florida Justice Reform Institute and the Association of American Railroads weighing in with briefs for CSX.

William Large, president of the business-backed Florida Justice Reform Institute, pointed to a need for predictability in contract law.

“To allow FDOT to walk away from its clear and unambiguous duties under the crossing agreement would raise serious doubts concerning the fairness of our judicial system,” Large argued. “It could even call into question other contracts with governmental entities.”

Workers Comp Fight in State Supreme Court Could have High Stakes

April 5, 2016/in The Palm Beach Post

Workers Comp Fight in State Supreme Court Could have High Stakes

Workers Comp Fight Could Have High Stakes

April 4, 2016/in News Service of Florida

WORKERS COMP FIGHT COULD HAVE HIGH STAKES

By JIM SAUNDERS
THE NEWS SERVICE OF FLORIDA

THE CAPITAL, TALLAHASSEE, April 4, 2016………. Nearly 13 years after lawmakers overhauled the state’s workers-compensation insurance system, the Florida Supreme Court is poised to hear a legal challenge that could have major implications for businesses, insurers and injured workers.

Justices will hear arguments Wednesday in a constitutional challenge to a key part of the workers-compensation system — and have long mulled two other cases that take issue with workers-compensation laws.

In each case, plaintiffs essentially argue that lawmakers have gone too far in taking away rights and benefits from people who get injured on the job. But business groups and their allies say, in part, that legislative changes made in 2003 were crucial for addressing a “crisis” in spiraling workers-compensation insurance rates and that the lawsuits threaten to drive up costs again.

“A reversion to pre-2003 law would only cause the ‘crisis’ to arise again, thereby increasing the costs of insurance, directly impacting the affordability of coverage for Florida employers, and reducing the guaranteed protection of workers for work-related injuries,” said a brief filed by attorneys for Hialeah Hospital and Sedgwick Claims Management Services, the defendants in the case going before the Supreme Court on Wednesday.

But an attorney for former Hialeah Hospital nurse Daniel Stahl, whose on-the-job back injury prompted the case, argued in a brief that premiums went down far more than predicted when the 2003 law was passed and that lost benefits were not subsequently restored for injured workers.

“This (Supreme) court has indicated it has little patience for the crises mentality, especially where the crisis, if there ever was one, has gone away,” said the brief, filed in November by Stahl’s attorney, Mark Zientz said.

As an indication of the interest in Wednesday’s arguments, two-dozen groups have signed on to friend-of-the-court briefs. Supporting the challenge are groups such as the Florida Justice Association, the Police Benevolent Association, the Fraternal Order of Police and the Florida Professional Firefighters. Opposing it are groups such Associated Industries of Florida, the Florida Chamber of Commerce, the National Federation of Independent Business and the Florida League of Cities.

The workers-compensation system is highly complex and is supposed to provide benefits that will help get injured workers back on the job while avoiding civil lawsuits.

The Stahl challenge argues, in part, that the system is unconstitutional because the 2003 law “decimated and eviscerated” benefits, while injured workers still could not pursue civil lawsuits. It contends that the system violates rights to due-process rights and the right to access to courts. Stahl could not return to work as a nurse after injuring his back, but the 2003 law eliminated a type of benefit related to permanent partial disability, the challenge says.

But Hialeah Hospital and Sedgwick, represented in part by former Supreme Court Justice Kenneth Bell, contend that the court should not decide the constitutional issues. They point to a lengthy history of the case and say Stahl does not have legal “standing” to bring the challenge.

Justices will take up the Stahl case more than a year after hearing arguments in the two other pending workers-compensation challenges. The court, as is customary, has not indicated when it will in rule in those two cases.

One of the cases, which stems from injuries suffered in 2009 by a South Florida man, Marvin Castellanos, during an altercation with another worker at their employer, challenges the constitutionality of limits on attorneys’ fees in workers-compensation disputes.

The other case involves injuries suffered in 2009 by St. Petersburg firefighter Bradley Westphal and focuses on a two-year limit on what are known as “temporary total disability” benefits. Westphal received those benefits but then had a gap of several months before he could get permanent benefits.

In a brief filed in the Stahl case, the Florida Justice Association trial-lawyers group argued that the workers-compensation system has undergone a “death of constitutionality by a thousand legislative cuts.” It argued that the Supreme Court should reject the 2003 changes and return the system to a 1990 law that was found constitutional.

“The sacrifice of reasonable benefits for injured workers in exchange for lower rates has created a ‘race to the bottom’ to see which state can win. Florida leads the pack,” the association’s friend-of-the-court brief said. “In the process, the (workers- compensation) act has become bastardized from its intended purpose and injured workers are the scapegoats sacrificed at the altar.”

But in another brief, the Florida Chamber of Commerce and the business-backed Florida Justice Reform Institute warned that a ruling in favor of Stahl could “implode” the workers-compensation system.

“For decades, workers’ compensation has been providing much needed benefits to injured Florida workers in a timely, efficient, and economically sound manner,” the brief said. “Florida’s employers depend on the program because, in exchange for providing workers’ compensation benefits to their employees, they receive immunity from costly and prolonged tort litigation. If the immunity provision is held optional or invalid, the entire system will collapse.”

–END–
4/4/2016

Supreme Court Says Attorney Fee Statute Is Unconstitutional

JUSTICES STRIKE DOWN WORKERS COMP FEE LAW

Florida Supreme Court strikes down workers comp fee law

Supreme Court Says 1936 Road Deal Requires State to Pay

Florida Justice Reform Institute

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