Attorney Fee Cap Passes First House Hurdle

By J. Todd Foster

The Florida House Commerce Committee on Tuesday passed a bill that would cap claimants’ attorney fees at $150 an hour.

The 18-8 vote was largely along party lines — with Republicans in favor and Democrats opposed — for Proposed Committee Bill 18-01. The measure will receive a regular bill number before it advances to other committees.

One Democratic lawmaker on the Commerce Committee said that even if the proposed legislation is passed into law, the state Supreme Court will strike it down as unconstitutional because it conflicts with the high court’s Castellanos decision.

Justices ruled in April 2016 in Marvin Castellanos v. Next Door Co. that Florida’s statutory fee schedule was unconstitutional because it did not allow for “reasonable” fees in unique circumstances, such as in complex, labor-intensive cases.

“I think the bottom line is we’re going to see this bill, even if it passes, get struck down because it seems to conflict with the Supreme Court ruling because it has attorney fee caps. Some things in the bill are probably worth doing, but I still think it’s premature,” said Rep. Joseph Geller, D-Aventura.

He added that the cost impacts of the Castellanos decision will not be known until at least a year.

“But the way we passed it today, we might as well have done nothing,” Geller said.

The bill mostly mirrors House Bill 7085 from last session. It would allow judges of compensation claims to award claimants’ attorneys an hourly fee of up to $150 if they qualify for payment outside the statutory fee schedule.

The current formula is for claimants’ attorneys to receive 20% of the first $5,000 in benefits secured, 15% of the next $5,000, 10% of the remaining amount of benefits secured during the first 10 years after a claim is filed, and 5% of the benefits secured after 10 years.

To qualify for a so-called “departure fee” outside the schedule, the statutory fee would have to come out to less than 40%, or greater than 125%, of the customary amount a defense attorney would have earned in the same locality, based on an analysis of local defense attorneys’ hourly rates.

Florida Workers’ Advocates issued a statement saying the proposed bill “would turn the workers’ compensation grand bargain to protect injured workers into a grand illusion.”

The organization argues that any workers’ compensation reforms should include converting Florida into a loss-cost system instead of an administered pricing system that requires all carriers to charge the same rates.

FWA President Mark Touby, a Miami claimants’ attorney who represented Castellanos, said his group "will continue to work to ensure that increased competition, more transparency and other essential components of meaningful workers’ compensation reform are included in any legislation that ultimately passes.”

The National Council on Compensation Insurance recommends full rates to regulators in Florida and three other states — Arizona, Idaho and Iowa. Massachusetts and Wisconsin also have administered pricing for workers' compensation, but each state has its own rating bureau.

The Castellanos ruling triggered the vast majority of a law-only 14.5% rate hike effective Dec. 1, 2016, based on NCCI projections. But NCCI followed that rate increase with a 9.8% rate decrease that was approved by the Office of Insurance Regulation last week based on favorable carrier experiences for policy years 2014 and 2015, before the Castellanos ruling.

The National Federation of Independent Business said the bill that passed Tuesday was essentially the same bill it supported fewer than six months ago as legislators wound down their 2017 session.

But NFIB/Florida Executive Director Bill Herrle said in an emailed statement Tuesday that the recent rate decreases — 9.5% for the statewide overall rate level and 9.8% for the overall premium level — were unexpected and could dull the business community’s call for a cap on claimants’ attorney fees.

Herrle said that if the bill that passed the Commerce Committee on Tuesday is the final bill, his group would support it, however.

“If it represents just an opening bargaining position, then we’ll probably end up with a bill we cannot support,” he said.

William W. Large, president of the Florida Justice Reform Institute, which champions tort reform, said the Commerce Committee bill doesn’t go far enough and that lawmakers need to wait for post-Castellanos experience data one to two years from now.

“After the Castellanos data comes in, I think the Legislature will find that an approach that makes the employee/claimant have some skin in the game by paying a portion of the fees will be the most prudent approach,” Large said. “But, right now, everyone needs to slow down and take a deep breath and wait until the post-Castellanos actuarial data rolls in.”

In addition to capping claimants’ attorney fees at $150 an hour, the Commerce Committee bill would require attorneys to file at least five days before the pretrial and final hearings statements verifying their hours on the case and specifically allocating the hours worked on each benefit claimed.

The proposed 41-page bill contains many other revisions to Florida’s workers’ compensation system by:

• Increasing the duration of temporary total disability benefits to 260 weeks from the 104-week cap that the Supreme Court in June 2016 declared unconstitutional in Westphal v. City of St. Petersburg.
• Authorizing within five business days after receipt of a request a one-time second opinion by a physician of the employee’s choice who is not professionally affiliated with the previously authorized physician. After the second opinion, the employee would be required to write the carrier naming the physician he or she has selected.
• Making the injured worker responsible for remaining attorney fees if required by a retainer agreement.
• Allowing carriers to reduce premiums by up to 5% if they disagree with the filings made on their behalf by NCCI.
• Eliminating charge-based reimbursement of outpatient medical care in favor of reimbursement at 200% of the Medicare rate for unscheduled care and 160% of the Medicare rate for scheduled surgery.
• Allowing carriers to wait 45 days to pay claimants’ attorneys instead of the current 30.
• A House staff analysis cites a preliminary estimate by NCCI of the impact of many provisions of the Commerce Committee bill, including that it would trigger “moderate to significant” decreases in overall workers’ compensation costs.

NCCI defines a moderate decrease as between 1% and 3% of system costs, and a significant decrease as 5% and greater.

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Reprinted courtesy of WorkCompCentral.