1st DCA Rejects Challenge to Use of ‘Daubert Standard’ in Comp Cases

January 19, 2017/in WorkCompCentral

Thursday, January 19, 2017

By Sherri Okamoto

Florida’s 1st District Court of Appeal this week summarily denied a challenge to the use of the “Daubert” evidentiary standard in workers’ compensation cases.

This standard derives from a 1993 U.S. Supreme Court case called Daubert v. Merrell Dow Pharmaceuticals. It requires trial judges to assess the scientific validity of an expert’s opinion before the opinion will be admissible.

While the U.S. Supreme Court’s decision in Daubert technically applies only to evidentiary rulings in the federal court system, many states have rules of evidence that mirror the Federal Rules of Evidence. The vast majority of jurisdictions have embraced the Daubert standard.

Florida’s legislature amended Evidence Code Sections 90.702 and 90.704 in 2013 to incorporate the Daubert standard – but the Florida Supreme Court has not yet adopted them.

The court usually makes changes to its Rules of Evidence to conform to legislative amendments to the Evidence Code, so the rules and the code basically parallel each other.

But that doesn’t always happen. The Florida Supreme Court has previously refused to implement legislative changes to the Evidence Code that were procedural in nature because the Florida constitution provides the Florida Supreme Court has sole authority to establish court procedures.

The Florida Bar has taken the position that the 2013 amendments to Sections 90.702 and 90.704 are also procedural in nature – and the Florida Supreme Court heard oral argument on the matter in September.

Krys Godwin, director of legal publications for the the Florida Bar, said they are still “waiting for an opinion by the Florida Supreme Court on whether this standard will be adopted, to the extent that it is procedural.”

Until the Florida Supreme Court rules, claimants’ attorney Michael Winer said Wednesday, the use of the Daubert standard is “far from settled-law.”

Accordingly, Winer had objected to a decision by Judge of Compensation Claims Mark A. Massey to use the standard to exclude a medical expert’s opinion evidence in his client’s comp case.

Unfortunately for him, the 1st DCA on Monday issued a per curiam decision that affirmed Massey’s decision without a written opinion. In an unusual move, Judge Kent Wetherell II wrote a concurrence to the decision, berating Winer’s argument as “frivolous.”

Wetherell said the 1st DCA’s 2014 decision in Giaimo v. Florida Autosport established that the Daubert standard applies in workers’ compensation cases.

Wetherell said the Giaimo decision had been based on the Florida Supreme Court’s 2002 decision in U.S. Sugar Corp. v. G.J. Henson, which decreed that “the Florida Evidence Code applies in workers’ compensation proceedings,” and the fact that the Daubert standard is now a part of the Evidence Code.

The JCC was therefore bound to follow Giaimo—and the plain language of Section 90.702, Wetherell opined.

Wetherell further posited that even if the Florida Supreme Court declines to adopt the Daubert standard into the Rules of Evidence, that wouldn’t stop the Daubert standard from applying to Winer’s case since “it is well established that the Court does not have the authority to establish procedural rules for executive branch quasi-judicial proceedings.”

But Winer on Wednesday said the Florida Supreme Court “has always set forth the evidentiary standards to be applied in workers’ compensation proceedings.” Indeed, he said, that’s exactly what the court did in the U.S. Sugar Corp. case.

Winer said he doubted he’d be able to get the Florida Supreme Court to review the 1st DCA’s decision though, since per curiam affirmances are not precedential.

George Kagan, a defense attorney with Miller, Kagan, Rodriguez & Silver, served as amicus counsel in the U.S. Sugar case.

His argument to the court had been that the Evidence Code should apply to comp cases – but that had been the predecessor-standard to Daubert.

Kagan said he had never been a huge fan of the Daubert standard, and trying to apply it to comp cases is akin to fitting “a square peg into a round hole.”

The problem, he said, is that there are many things that comp attorneys rely on doctors to establish for which there is no accepted medical standard, such as the proper way to determine the major contributing cause of a condition.

Fellow defense attorney Rogers Turner of Hurley, Rogner, Miller, Cox & Waranch said he considered the Daubert standard a bit of a double-edged sword.

While he can use it to challenge the opinion of a claimants’ expert, he said, he has to be sure his own expert’s opinion can satisfy the requirements of Sections 90.702 and 90.704.

The statutes require that a judge screen an expert’s proffered opinion to ensure it is based upon sufficient facts or data and that it is the product of reliable principles and methods that have been reliably applied to the facts of a given case.

Thus, Turner said it is “valuable to prevent a jury from relying on opinions that don’t have a sufficient scientific basis,” but it “doesn’t make a lot of sense at a bench trial.”

David Langham, the deputy chief judge of the Florida Office of Judges of Compensation Claims, said the point of the Daubert standard is to “control the evidence heard by the finder-of-fact,” and have a judge decide what evidence a jury will hear.

“But the thing about comp is, we have no juries,” he said.

That means the judges of compensation claims have to hear whatever expert opinion that a party wants to exclude from evidence when there is a Daubert challenge – even though the judge is also going to be the ultimate finder-of-fact on the case, Langham explained.

At the end of the day though, Langham said, the judges of compensation claims have to follow the Evidence Code.

If the Supreme Court winds up excluding the Daubert standard from the Rules of Evidence, Langham said that would mean the standard wouldn’t apply in the judicial system – but the judges of compensation claims will still have to use it as long as it remains in the Evidence Code.

“So we’ll have it where we need it the least,” Langham opined.

William Large, the president of the Florida Justice Reform Institute, said his organization had backed the effort to have the Daubert standard adopted.

Large said the change “was meant to address the admissibility of pure opinion testimony and the limited opportunity to challenge the validity of scientific and technical evidence” under the pre-existing process being used by the courts. Monday’s ruling from the 1st DCA “stands for the proposition that Daubert applies to workers’ compensation cases,” he said.

To read the court’s decision, click here

https://www.workcompcentral.com/news/story/id/cdb324a9ae35bf069ec2a306105b290b0b1c9914

Reprinted courtesy of WorkCompCentral.

U.S. Supreme Court Won’t Review Constitutionality of Comp System

November 1, 2016/in WorkCompCentral

U.S. Supreme Court Won’t Review Constitutionality of Comp System

By Sheri Okamoto – November 1, 2016

The U.S. Supreme Court on Monday denied a review of a challenge to the constitutionality of the Florida workers’ compensation.

Although the Florida Supreme Court earlier this year declared portions of the state’s comp scheme invalid, it ducked the opportunity to weigh in whether workers’ compensation still provides an adequate substitute remedy to the civil justice system, in Stahl v. Hialeah Hospital.

The Florida Supreme Court granted review of the matter and heard oral argument, but then it revoked its writ without explanation in April.

Mark Zientz, the attorney Daniel Stahl, petitioned the U.S. Supreme Court for review in June.

While the operation of a workers’ compensation system is normally an issue reserved for state oversight, Zientz’s writ petition noted that it was U.S. Supreme Court decision in 1917 that established the parameters of the “Grand Bargain” that underlies the constitutional validity of the comp scheme of every state.

Zientz argued that the Florida comp system does not provide injured workers with a fair substitute for a civil remedy because it doesn’t provide a replacement for wages they may lose from an industrial injury, and it requires that workers pay for part of their medical care.

Hialeah Hospital countered that there has never been any case in any court that has invalidated a provision of a state workers’ compensation law as inadequate under the U.S. Constitution.

It also argued that the U.S. Supreme Court lacked jurisdiction over the Stahl case because the federal constitutional issues had not been preserved for review during the state court proceedings.

The U.S. Supreme Court gave no indication on Monday whether it found these arguments persuasive. The court generally does not provide its reasons for denying review of cases. The Stahl case was not exception.

Zientz on Monday expressed disappointment with the court’s decision, given the rest findings of the U.S. Department of Labor on the inadequacy of the benefits provided by the comp systems in almost every state.

Zientz said he provided the court with a copy of the Labor Department report earlier this month, “so they knew there was a problem.” But when it comes to getting review, “you either get their attention or you don’t.”

Zientz said he hopes Florida state lawmakers realize “this one came really close” to getting a declaration of unconstitutionality, so they’ll think twice about whether “they want to be cutting benefits any further.”

Richard Johnson, a Tallahassee attorney who filed an amicus brief on behalf of the Florida Chapter of National Employment Lawyers Association in support of Stahl, on Monday said he had known the mathematical odds of getting the U.S. Supreme Court to review the case were slim.

He said the court gets more than 10,000 petitions each year and hears about 70 cases, so “you don’t typically expect one to be accepted.”

Still, Johnson said, he had hoped the Stahl case may make the cut since the adequacy of a Florida comp remedy, “is an important issue.” He contended that a remedy under the Florida workers’ compensation system is “not really a remedy at all,” and the system itself is “almost useless.”

For a comp system to be constitutional, Johnson said, it needs to be a fair substitute for a proceeding through the tort system, but Florida has taken away the ability of a worker to sue in tort, and “gives us nothing” in return. Johnson said he felt it was a “deprivation of property without due process.”

Even though the U.S. Supreme Court passed on a chance to issue such a finding in Stahl, Johnson said there are more cases, “in the pipeline” that will present additional opportunities for the constitutionality of the Florida comp system to be addressed.

The Stahl case will help those along, since now “the issues have been defined,” and “everything has been framed” in terms of legal arguments, Johnson said.

“We’ve got that little foodhold,” he said, while we didn’t get to the top of the mountain, we started a dialogue.”

Now that there is talk with lawmakers, the media and the public about “what’s wrong and what needs to be done,” Johnson said, there the potential for change.

Alan Pierce, the immediate past president of the national Workers Injury Law & Advocacy Group, said the group – which had been an amici backing Stahl – was disappointed with the U.S. Supreme Court’s decision to deny review, but everyone had known “it’s really hard to get the U.S. Supreme Court involved in anything.”

Pierce said he was heartened by the two Florida Supreme Court decisions in Castellanos v. Next Door Co. and Westphal v. City of St. Petersburg earlier this year though.

In Castellanos, the Florida Supreme Court declared the state attorney fee statue unconstitutional, and in Westphal, the court struck down a statutory cap on temporary disability benefits.

Pierce said he thought the Florida Supreme Court decisions in those cases “made it clear” that the way the Florida comp statutes have been amended and changed over the past 20 years have breached “the Grand Bargain.”

He said “the Grand Bargain is still alive,” it’s just “not getting as much nourishment as it should.”

Ramon Malca, a claimants’ attorney with Malca & Jacobs who represent WILGs interests in Florida, said that the problems workers in the state face are by no means unique.

“Stahl attempted to bring light to the shortcomings of the our law in Florida,” Malca said but “we are seeing a nationwide pattern of state governments protecting the interests of business above the interests of working people and their families.”

He said he believed there will be a day when the federal government will have to step in and set “appropriate standards” for the comp systems, and that it would be in the best interests of businesses to support “proper reform” to avoid the potential for tort liability if a comp remedy is declared inadequate.

George Kagan, a defense attorney with Miller, Kegan, Rodriguez & Silver who also has been keeping and eye on the Stahl matter, on Monday reflected that the case was “momentous for what it tried to accomplish.”

He said it’s “very rare that we can say any given state comp case has a prospect of making it to the U.S. Supreme Court,” and thought the chance for the Stahl case to get reviewed, given the rulings in Castellanos and Westphal.

But William Large, the president of Florida Justice Reform Institute, said he was not surprised to see that the U.S. Supreme Court denied review of the Stahl case. He said that since workers’ compensation is traditionally a state concern, he thought the chances of the U.S. Supreme Court grating review were “remote.”

Mark Touby, the president of Florida Workers’ Advocates, on Tuesday said that even though the U.S. Supreme Court decided not to review the issues raised in Stahl, “those issues certainly are not going away.”

He said that the provision of full medical care and wage-loss benefits “are critical to having a constitutional workers’ compensation law,” and the Stahl case shows “the Grand Bargain is not being completely fulfilled anymore.”

Touby said he couldn’t predict when or how that situation will be remedied, but he said “it needs to be addressed.”

https://www.workcompcentral.com/news/story/id/471d292211c84afa83315ea2d236de8bf81419fb

Reprinted courtesy of WorkCompCentral.

NCCI Rate Hike Could Be Far Worse, Actuaries Say

August 17, 2016/in WorkCompCentral

NCCI Rate Hike Could Be Far Worse, Actuaries Say

Wednesday August 17, 2016

By Todd Foster –

A consulting actuary and an economist testified Tuesday that a proposed 19.6% workers’ compensation rate increase in Florida might be half of what is needed in response to a pair of state Supreme Court rulings that favored claimants’ attorneys and injured workers.

Mike Helvacian, an economist retained by the Florida Justice Reform Institute to analyze the recent court decisions, predicted first-year costs would rise by 35.4%, well above the increase proposed by the National Council of Compensation Insurance.

NCCI-hired actuary Steve Lattanzio testified that his projected range of cost increase from Castellanos v. Next Door Co. alone would range from 18% to 38%.

Both were among 20 stakeholders who testified for and against NCCI’s proposed rate hike for a four-hour public hearing in Tallahassee before the Florida Office of Insurance Regulation. NCCI is Florida’s sole licensed rating organization and is authorized to make rate filings on behalf of the state’s 260 workers’ comp carriers.

Claimants’ attorneys, a labor leader and an actuary hired by Florida Workers’ Advocates testified that NCCI’s actuarial findings were deceptive and misleading, and urged regulators to force the rate-maker to release all of its worksheets and data, and to comply with other tenets of the open meetings and records laws.

Lattanzio, president and consulting actuary of Bohemia, N.Y.-based Actuarial & Technical Solutions, said the Supreme Court’s April 28 ruling in Castellanos will set Florida back to before 2003, when massive reforms were enacted after the Sunshine State climbed to first and second for the nation’s highest workers’ comp rates in the early 2000s.

Florida has a long way to go. According to a rate benchmarking study by the Oregon Department of Consumer and Business Services, the state’s average premium cost of $1.82 was 28th in the nation in 2014. Even if 20% had been added to that, Florida would have still fallen well below the top 10.

The Supreme Court ruled in Castellanos that capping attorney fees based on a schedule was unconstitutional because it barred reasonable fees in some instances. NCCI says that Castellanos ruling alone requires a 15% rate increase and will cost employers $544 million in higher premiums in the first year.

“Fifteen is a reasonable number,” said Lattanzio, a former vice president at NCCI. “If, however, the true value ends up being more akin to plus 38 at the top end, then obviously the plus 15% looks very inadequate.”

NCCI says another Supreme Court ruling, Westphal v. City of St. Petersburg, in which the cap of 104 weeks on temporary disability benefits was raised back to 260 weeks, required an additional 2.2% rate increase, or $80 million in higher premiums. In addition, the rate-maker said updates to the state’s health care reimbursement manuals would require a 1.8% rate increase.

That kind of impact goes directly against the mission of the Justice Reform Institute, which pledges to fight “wasteful civil litigation” and “wealthy personal injury trial lawyers.” The Institute’s consulting economist, Helvacian, said the court decisions would reverse the effects of Senate Bill 50A, which passed in 2003 with reforms that included capping attorney fees based on a percentage of benefits.

The legislation also provided greater compliance and enforcement authority to combat fraud, and lowered indemnity benefits for some injured workers.

Helvacian said tying attorney fees to the benefits they secured for injured workers has reduced costs in Florida by 28.6%, or nearly half of the 60% in decreases experienced in the past 13 years.

“This will fundamentally alter the way workers’ compensation dispute resolution is handled and will raise costs 35.4%. This will have very serious repercussions for doing business in Florida,” Helvacian said.

Helvacian worked for NCCI between 1993 and 2000 as chief economist and director of research, according to the Goodman Insitute of Public Policy Research, where Helvancian is listed as an “expert.”

He predicted Florida employers would pay $1.3 billion more in premiums per year because of the Supreme Court rulings. “That will translate to a loss of 106,000 jobs per year,” Helvacian said.

Steve Alexander of Tallahassee-based Alexander Actuarial Consulting said NCCI looked just at the attorney-fee provisions of SB 50A and ignored the other myriad changes to the workers’ compensation law that were enacted in 2003.

Given regional and national trends of decreasing costs, Florida’s rates would have dropped 35% over the past 13 years without any reforms, said Alexander, speaking on behalf of Florida Workers’ Advocates. Instead a 19.6% rate increase, he said a 5.7% hike would be more adequate.

“These 2003 reforms were so closely intertwined that there’s no an actuarially sound way to separate the attorney fee schedule from all the other reforms,” he said. “It’s misleading and deceptive.”

“OIR should encourage insurers to file deviations from NCCI’s rates,” Alexander said. “You should require individual insurers for the first time in many years to compete on price. There is no need for NCCI to determine this rate for the whole state.”

NCCI’s proposed rate increase does not include an estimated $1 billion in unfunded liabilities due to the retroactive nature of the court decisions. American International Group recognized that impact even before NCCI recommended the rate hike and boosted workers’ comp reserves by $109 million because of the Castellanos decision.

Alexander and Miami claimants’ attorney Mark Touby, who represented Marvin Castellanos, said the 60% decrease in rates over the past 13 years allowed insurers to pocket $1.8 billion in excess profits through reduced claims.

“Back in 2003, we heard the same type of crisis cry,” Touby said. “The sky is not falling. It will not fall. Insurers made $1.8 billion in excess profits. Unfunded liabilities are already funded. It was a profit that should have been appropriately provided as benefits.”

Touby is the lawyer who challenged the state’s attorny fee schedule before the Florida Supreme Court after he gained $822.70 of medical benefits for a Next Door Co, employee who was assaulted by a co-worker. Under the state’s fee schedule, Touby was awarded $164.54 – the equivalent of $1.53 an hour.

The Supreme Court raised his fee to nearly $38,000 for working the Castellanos case.

“Judges are the safeguard against excessive and unreasonable fees,” Touby said. “The Castellanos case will provide stability. The problem here is the big ask for a rate increase. Employers did nothing wrong. Carriers wrongfully denied benefits. They (Next Door’s insurer Amerisure) spent over $10,000 of their own attorney fees to deny Mr. Castellanos $800 in benefits. Bad decisions should not be put back into the rates.”

The Florida Chamber of Commerce, Walmart’s vice president of global risk management, the Greater Pensacola Chamber of Commerce, the Florida Roofing and Sheet Metal Association, the Marine Industries Association of South Florida, the National Federation of Independent Businesses and Manufacturers Association of Florida all urged the Office of Insurance Regulation to be circumspect before approving any rate increase.

Claimants’ attorneys Richardo Morales, Christopher Smith and Richard Chait all testified that NCCI had grossly exaggerated the impacts of the high court rulings.

Rich Remplin, Florida AFL-CIO legislative and political director, said NCCI’s rate filing is a “political strategy” designed to set up the Legislature’s biggest battle over next year – further workers’ comp reforms.

“This is a political ploy. Rates have to be raised so that when the Legislature comes back, the insurance lobby can go to well-meaning legislators, stick a gun to their heads and say we have a premium crisis, companies are going to leave the state,” Templin said. “Don’t get sucked into that process.”

Former Florida Lt. Gov. Jeff Kottkamp, representing the Boys & Girls Clubs, urged regulators to temper any rate increase “realizing almost certainly that the Legislature will address this.” He said fewer children, many of whom live in poverty, will served by his nonprofit if rates are raised nearly 20%.

“This is designed to be a system of shared sacrifice,” Kottkamp said. “What has been the history of profits for carriers? That has to be looked at in the overall scheme of things.”

Public comments will be accepted until the close of business Tuesday, Aug. 23, and should be emailed to [email protected] with “NCCI” in the subject line.

https://www.workcompcentral.com/news/story/id/481693f1f5708fcda6c344e77ca78f01fd31dc56

Reprinted courtesy of WorkCompCentral.

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

3rd DCA Reverses Summary Judgment in FWA Constitutional Challenge to Exclusive Remedy

June 25, 2015/in WorkCompCentral

WorkComp Central

Thursday, June 25, 2015

3rd DCA Reverses Summary Judgment in FWA Constitutional Challenge to Exclusive Remedy

by Sherri Okamoto (Legal Editor)

The Florida 3rd District Court of Appeal dismissed a district court judge’s ruling that the state workers’ compensation system is unconstitutional, for procedural reasons, failing to address the core arguments of the case.

The 3rd DCA determined that the constitutional issue in State of Florida v. Florida Workers’ Advocates as rendered moot once Velda Farms abandoned its exclusive remedy defense to Julio Cortes’ comp claim. And it said FWA couldn’t pick up the argument and carry it over into a separate case.

Since the argument wasn’t properly presented to Miami Dade Circuit Judge Jorge Cueto last year, the 3rd DCA said he shouldn’t have ruled on the merits. The court ordered the case remanded for Cueto to dismiss FWA’s complaint.

FWA President Michael Winer said that Wednesday’s decision was “just a set-back on procedural grounds,” and he emphasized that it “does not make the problem go away.”

The “burning question on everyone’s mind” is still whether the benefits available to injured workers have been so eroded that they shouldn’t be held their trade-off in the “grand bargain” that is comp.

“It would have been nice,” if the 3rd DCA had decided this issue, Winer said, since “everyone needs to know,” so the question now is whether to push for resolution in this case, or try again.

He said FWA has yet to make a decision about whether to appeal to the Supreme Court or start over again with a new plaintiff leading a fresh case.

At the very least, Winer noted, “the blueprint for the challenge has been laid” and “all the work has been done.”

“It is going to take a little time to get back to the same pace, but I suspect and hope the result would be he same if another court is confronted with the same evidence in a different procedural posture.”

The procedural history for the FWA lawsuit was indeed unconventional, as it evolved to involve a “completely different set of claims and parties” than it originally had, the 3rd DCA noted.

It started out as a dispute between Julio Cortes and his employer, Velda Farms, over liability for his 2010 work injury. Cortes had filed a workers’ compensation claim. When Velda denied coverage, he filed a tort claim.

Velda sought dismissal of his lawsuit, asserting Cortes’ only remedy lay in the comp system. Cortes countered that the sections of the Florida Workers’ Compensation Law which afford employers immunity rom civil liability for industrial injuries were unconstitutional.

Cortes provided notice of his constitutional challenge to the Attorney General’s Office – as required by the Florida Rules of Civil Procedure – but he never joined the state or the AG as defendants.

In May 2012, FWA and the Workers’ Injury Law and Advocacy Group joined the case as additional plaintiffs for the constitutional claim. Velda then voluntarily dismissed its immunity defense, and it sought dismissal of the constitutional issues as being moot.

In response, WILG and FWA asked Judge Cueto to sever the constitutional claim from the case and allow them to pursue it in a separate action.

Cueto allowed the organizations to maintain the constitutional argument as a separate action for declaratory judgment, and he identified the state as the appropriate defendant for that action.

The judge later gave permission for Elsa Padgett, an injured Miami-Dade county employee, to become an additional plaintiff in the declaratory judgment action.

FWA and WILG then moved for summary judgment, and last summer, Cueto issued an order for Attorney General Pam Bondi to show cause why he shouldn’t do so.

Bondi’s office responded that neither it nor the state had ever been made parties to the declaratory relief action, and that they wouldn’t be the appropriate defendants for that claim anyway. Thus, it took the position that Cueto couldn’t grant summary judgment because there was no defendant to enter the judgment against.

Nevertheless, Cueto in August entered summary judgment for FWA, WILG and Padgett without discussing the arguments made by Bondi’s office.

Bondi appealed his ruling to the 3rd DCA, and FWA then asked the court to pass the case straight up tohe Florida Supreme Court so that workers, employers and carriers would know whether comp will remainhe exclusive remedy for industrial injuries or not.

Historically, Florida’s intermediate appellate courts generally decline to exercise their authority to “passhrough” cases to the state Supreme Court, and the FWA dispute proved to be no exception. The 3rd DCannounced that it would hear the FWA case in October and began collecting amicus briefs from interestedparties. The court heard oral argument in March.

On Wednesday, a 3rd DCA panel comprised of Chief Judge Frank Sheperd, Judge Barbara Lagoa andudge Vance Salter said two “threshold legal issuesmootness and lack of standingeach precludePadgett, FWA and WILG from pursuing the constitutional claims. The court reasoned that there was no longer any live controversy over the constitutionality of the exclusive remedy statutes once Velda was no longer asserting it as a defense.

The court then went on to say that Padgett, FWA and WILG lacked standing to pursue the constitutional claim, even if it weren’t moot.

“Standing” represents a party’s legal right to prosecute or defend a claim, because their interests will be affected by the outcome of the claim.

But a party that intervenes in a claim that is part of someone else’s lawsuit has standing to pursue that claim only as long as the lawsuit continues, the court explained. “The case law does not support some sort of ‘piggy-back’ standing by an intervenor based exclusively on a predecessor plaintiffs subsequently dismissed claim,” the decision states.

WILG’s immediate-past president, Louisiana attorney Charles Davoli of Davoli Krumholt & Price, said that he 3rd DCA’s decision “wasn’t unexpected,” even though it wasn’t what the group had been hoping for.

“We suspected that the intermediate appellate court didn’t want this issue to get to the Supreme Court, and we figured they were going to try to knock it out on some sort of procedural ground,” he said.

While this delays the resolution of the constitutionality question, Davoli said appellate courts often try toavoid ruling on constitutional challenges “the way people avoid going to the dentist,” because “you know it’s going to hurt.”

But Davoli said the continued erosion of workers’ compensation benefits for claimants across the countryeventuallycometohead.

Trey Gillespie, the senior workers’ compensation director for the Property Casualty Insurers Association ofmerica, on Wednesday said the 3rd DCA’s ruling “leaves in place the central tenants of the state’s workers’ compensation system that balance the interests of injured employees and employers that seekpredictability in costs.”

William Large of the Florida Justice Reform Institute, which filed an amicus brief in support of the attorney general’s position, said Wednesday’s ruling “recognized this case was flawed from the start,” as “there was no proper claimant, there was no proper defendant, and there was no proper controversy in front of the trial court.”

He said it seemed the constitutional cause of action “was manufactured out of thin air to cause chaos“within the workers compensation system,” when “the workers compensation system works and has worked in Florida because it is pro employee and adequately compensates injured workers.”

Tamela Perdue, the general counsel for the Associated Industries of Floridaanother supporter of theattorney generalsaid she thought it was “telling” that the 3rd DCA didn’t have to go through a constitutional analysis to find that the summary judgment was unwarranted.

“The path that this judge took to be able to reach that conclusion just flies in the face of every goodcannon of justice,” Perdue opined. “They got to this ruling of unconstitutionality in a forum that wasn’t open or accessible to the opposing side at all,” she said, “and that’s just not how we do things.”

David Langham, the deputy chief judge of the Office of the Judges of Compensation Claims, on Wednesday remarked that “due process is the bedrock of our legal system,” and since the 3rd DCA found it was lacking in the FWA case, he said it was “absolutely appropriate” for the court to stop its analysis at that point.

While he said he was sure attorneys and judges in Florida would have liked to have had the substantive issues of the case addressed, Langham warned it is a “slippery slope” for courts to start ruling on things if due process is lacking.

As this was “just a procedural reversal,” Langham said, he didn’t anticipate any impact on pending claims or the OJCC’s caseload, but he said “the doubt will still be out there” as to whether the exclusive remedy statutes are constitutional, and since “nobody likes doubt,” he said he was sure another challenge will arise.

Sam Miller, the executive director of the Florida Insurance Council, on Wednesday observed that “the ole workers’ compensation system in Florida has been under an unprecedented legal attack” in recent years.

As “the exclusive remedy is the absolute heart of the workers’ compensation system,” Miller said he was “happy” the 3rd DCA didn’t see fit to find it unconstitutional, but he said “we’re still looking over the horizon” for what else might be coming.

There are two cases currently pending at the Florida Supreme Court which challenge aspects of the workers’ compensation law, he said, and those also have the potential to shake things up.

The dispute in Westphal v. City of St. Petersburg is about the statutory limits on the payment of temporary total disability benefits, and Castellanos v. Next Door Co. involves a challenge to the cap on claimant attorney fees.

“So far we’ve dodged a bullet,” Miller said, but if either Supreme Court case results in parts of the comp system being invalidated, he said employers and carriers are likely going to have to contend with increased costs and groups like his are going to have to put pressure on lawmakers for a legislative fix.

Full Article

Business and Insurance Groups Defend Exclusive Remedy in FWA Lawsuit

January 15, 2015/in WorkCompCentral

Business and Insurance Groups Defend Exclusive Remedy in FWA Lawsuit

by Sherri Okamoto (Legal Reporter) – January 15, 2015

Groups representing Florida businesses and insurers are stepping up to defend the state workers’ compensation system as the exclusive remedy for injured workers, filing amicus briefs Monday in the case now known as The State of Florida v. Florida Workers’ Advocates.

Miami-Dade Circuit Judge Jorge Cueto stunned system participants last August when he ruled that the benefits available to workers under the comp system had become so decimated that a workers’ comp claim was no longer an adequate substitute for a tort cause of action, as a matter of law.

Florida Attorney General Pam Bondi is appealing this ruling to the state’s 3rd District Court of Appeal, even though she is arguing that she was never properly made a defendant in the proceedings.

The Florida Chamber of Commerce, Florida Justice Reform Institute, Associated Industries of Florida, Associated Builders and Contractors of Florida, Florida Insurance Council, Property Casualty Insurers Association of America, Florida Retail Federation, American Insurance Association, National Federation of Independent Business, Florida United Businesses Association, Sedgwick Claims Management Services, Florida Association of Insurance Agents and various other trade associations are all backing her position.

Carolyn Johnson – the director of business economic development and innovation policy for the Florida Chamber of Commerce – said her group got involved because “throwing out the exclusive remedy would mean Florida employers could be subject to more litigation and may be subjected to additional costs when workers get hurt.”

The Florida comp system “has been in place for 80 years and has been working just fine,” she opined, and while the benefits afforded under it have changed over the years, Johnson said “there’s still plenty of remedy in the workers’ compensation system for an injured worker to receive the treatment they should receive.”

William Large of the Florida Justice Reform Institute said Wednesday that his group decided to join in the litigation because it believes “the Florida business community needs to defend the reliable and available system for compensating workers for workplace injuries.”

He insisted that “the workers’ compensation system works,” and if Cueto’s ruling stands, this “will have an adverse impact on the rights and the benefits afforded to workers in the state of Florida” since they lose the no-fault aspect of comp if they move into the civil arena.

The case arose out of a 2011 negligence suit that Julio Cortes filed against his employer, Velda Farms, for an alleged workplace injury.

After Velda Farms raised workers’ compensation exclusivity as a defense, Cortes sought a declaratory judgment that Florida Statutes Section 440.11 – which immunizes employers from civil liability if they provide workers’ compensation insurance to their employees – was unconstitutional.

In May 2012, Florida Workers’ Advocates and the Workers’ Injury Law and Advocacy Group joined the case as additional plaintiffs to Cortes’ declaratory judgment cause of action.

After this, Velda voluntarily dismissed its immunity defense. It then asked to have the declaratory relief claim dismissed as moot.

But FWA and WILG asked the trial judge to sever the declaratory judgment claim instead and allow FWA to litigate the constitutionality of Section 440.11 in a separate proceeding.

The judge granted their request and directed that Bondi’s office be named as the defendant in the declaratory relief action, since Velda Farms was no longer involved in litigating the severed claim.

FWA and WILG then made two unsuccessful motions for summary judgment and added Elsa Padgett as an additional plaintiff in the declaratory relief action.

Padgett asserted she had been injured in the course of her employment with Miami-Dade County and she had an interest in the dispute because she wanted to know if she had the option of suing her employer in tort.

However, up until this point, there had been no participation in the litigation from Bondi’s office.

Last July, Cueto issued an order for Bondi to show cause why he shouldn’t issue summary judgment in favor of FWA and WILG. Bondi’s office responded that Cueto couldn’t grant summary judgment because there was no defendant to enter the judgment against.

Bondi’s office contended that neither it nor the state had ever been made parties to the declaratory relief action, and that they wouldn’t be the appropriate defendants for that claim anyway.

Cueto in August entered summary judgment for FWA, WILG and Padgett without discussing the arguments made by Bondi’s office.

After Cueto denied rehearing, Bondi’s office petitioned the 3rd DCA for review.

Chief Deputy Solicitor General Adam S. Tanenbaum filed the opening brief on the merits for the state on Jan. 2.

He accuses FWA and WILG of engaging in a “series of improper and unnecessary steps” to make the case into a “procedural morass” and get “a final judgment with no legal effect.”

Tanenbaum says the FWA and WILG “commandeered a routine, existing tort case to litigate a constitutional issue that presented no live controversy” and then purported to present claims against the state “without ever attempting to present a pleading stating so or, at a minimum, serving process.”

And then, they “sought and obtained a final judgment listing the state as a respondent, despite never properly joining any party,” which “creates the potential for substantial confusion and uncertainty throughout the state,” Tanenbaum contends.

He’s asking the court to simply vacate Cueto’s ruling as “a nullity,” although he is also arguing that the decision could be overturned on its merits as well.

“Florida’s workers’ compensation law is constitutional,” Tanenbaum insists, and a facial challenge had to fail because FWA and WILG “failed to establish beyond doubt that there is no set of circumstances under which the law – which Florida courts repeatedly have upheld as constitutional – can constitutionally be applied.”

He says that the comp system “ensures prompt and certain payments for workers’ injuries on the job in return for immunity for employers who provide coverage for those payments,” which is what it was designed to do, and so FWA and WILG could not “demonstrate constitutional invalidity ‘beyond reasonable doubt.’”

The Florida Chamber of Commerce and Florida Justice Reform Institute echoed Tanenbaum’s argument that the case is procedurally flawed in their joint amicus brief, authored by Katherine E. Giddings, Gerald Cope and Large.

According to their brief, Cueto took an “unprecedented” approach to declaring the existing workers’ compensation system unconstitutional “without a fair adversary proceeding.”

They contend that “Florida has long been committed to the proposition that, to hold a statute unconstitutional, there must be a fair process conducted by litigants who have a real controversy in which both sides of the constitutional question are fully and fairly presented.” But Cueto “wholly ignored this basic, fundamental proposition,” the brief says.

If his ruling is allowed to stand, the Chamber and Reform Institute warn, this “will create substantial uncertainty statewide, resulting in confusion in the area of workers’ compensation as well as an avalanche of litigation.” Thus, they insist, it should be reversed.

Kenneth B. Bell, a former Florida Supreme Court justice now with the Gunster law firm, filed the brief for the other state amici.

Bell contends that Tanenbaum’s jurisdictional arguments are dispositive and correct, but if the 3rd DCA wants to reach the merits of the dispute, that Section 440.11 is constitutional.

He says Cueto “fundamentally erred by declaring the statute facially unconstitutional without making the necessary finding that there is no set of circumstances under which the statute would be valid.”

Bell also suggests that the concerns Cueto voiced about the erosion of benefits available to injured workers was “based on unwarranted, misleading factual findings.”

And finally, as a practical matter, Bell notes that “hundreds of thousands of employees and employers daily depend on Florida’s workers’ compensation system,” and it was up to the Legislature to create and maintain it.

The system depends on “a delicate balance among a myriad of competing interests,” and the balancing “should be largely left in the hands of the Legislature,” Bell says.

But the position of FWA and WILG is not without its supporters. Their answer to the state’s petition will be due later this month, and their amici can then file briefs supporting them.

The Fraternal Order of Police, Police Benevolent Association and International Union of Police Associations’ and FWA President Michael Winer have also obtained permission from the 3rd DCA to file amicus briefs in support of FWA and WILG.

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Defense Attorneys Say Morales Maintains Viability of Comp as Exclusive Remedy

December 8, 2014/in WorkCompCentral

by Sherri Okamoto (Legal Reporter) – Monday, December 8, 2014

State: Florida Topic: Top Defense attorneys in and around the state are celebrating last week’s decision from the Florida Supreme Court that they say establishes the continuing viability of the state comp system as the exclusive remedy for an industrial injury.

The high court ruled unanimously that the family of a landscaper who was killed by a falling tree could not collect a tort recovery in addition to the workers’ compensation benefits they had already received from the Zenith Insurance Co.

Tallahassee attorney William Wells Large said he viewed Thursday’s decision in Morales v. Zenith as a sign that “the exclusive remedy doctrine is alive and well in Florida, and that the workers’ compensation system remains the only redress available for injured employees in the workplace.”

Large filed an amicus brief in the proceedings on behalf of the Florida Justice Reform Institute, supporting Zenith.

“I believe the Morales case is a strong decision that will be cited by other appellate courts in the near future regarding the exclusive remedy doctrine,” he said Friday. He also said the decision was an indication that “attempts by the claimants bar to get around the workers’ compensation system are not going to be well-taken.”

Claimant attorneys have been mounting increasing attacks on the Florida comp system in recent years, arguing that its limited remedies are inadequate.

Earlier this year, a Miami trial court judge agreed that the remedies for workers under the comp system have been so curtailed by the Legislature that it is a constitutionally inadequate substitute for the tort remedy it was designed to replace. That case has become State of Florida v. Florida Workers’ Advocates and its currently pending before the state’s 3rd District Court of Appeal.

Two other cases involving narrower constitutional challenges directed at the statutory limits on temporary total disability benefits and attorney fees are also pending at the Florida Supreme Court level.

Chief Judge of Compensation Claims David Langham said Friday that all of the cases “have the potential to be monumental,” but whether they will be remains to be seen.

He noted that participants in the comp system have been waiting, with bated breath, to see what the Supreme Court will do with each of these matters. From what he’s been seeing and hearing

though, Langham said he got the impression that most people thought the Morales decision had the potential to, but ultimately “didn’t really change anything.”

Rayford H. Taylor of Stiles Taylor & Grace – who represented the Associated Industries of Florida as an amicus for Zenith – said Friday that “what we were really talking about in Morales was whether there was another exception to tort immunity under this scenario.”

Normally, a worker is limited to only receiving workers’ compensation benefits for an industrial accident – but the family of Santana Morales Jr. had been able to obtain a default judgment against his former employer, Lawns Nursery and Irrigation Designs, which they insisted Zenith was obligated to pay.

Zenith had provided an insurance policy to Lawns, to cover both its workers’ compensation and employer liability obligations.

According to “Part I” of the policy it issued to Lawns, Zenith would cover any benefits the landscape company might be required to pay under Florida workers’ compensation law. “Part II” of the policy provided coverage of up to $100,000 for bodily injury sustained by an employee, although it stated that it was not applicable to “any obligation imposed by a workers’ compensation, occupational disease, unemployment compensation, or disability benefits law, or any similar law.”

Zenith paid workers’ compensation benefits to Morales’ family pursuant to “Part I” of the policy.

Morales’ family later filed a wrongful death action against Lawns in Florida circuit court, alleging that Lawns’ negligence in failing to secure the palm tree that fell on Morales was what had caused his fatal accident.

Zenith agreed to defend Lawns in accordance with “Part II” of the policy, but the company failed to cooperate in the litigation. Eventually, the attorney Zenith hired withdrew as counsel for Lawns.

After Lawns failed to respond to the family’s discovery requests, the trial judge struck Lawns’ pleadings as a sanction and entered a default judgment in favor of the family for $9.525 million in damages.

Meanwhile, Zenith continued to pay workers’ compensation benefits to the Morales family. Then, in August 2003, Zenith agreed to settle the family’s comp claim for a lump-sum payment of $20,000.

The settlement provided that the family waived any right to additional benefits under the Florida Workers’ Compensation Act and that the execution of the settlement agreement would constitute an election of remedies by the family.

After a judge of compensation claims approved the settlement agreement, the Morales family sued Zenith seeking payment of the $9.525 million tort judgment against Lawns. The family argued that the carrier had to pay the judgment under Part II of the Lawns policy.

Zenith removed the dispute to the federal trial court for the Middle District of Florida. A district court judge then granted summary judgment in favor of Zenith.

Since Florida law provides workers’ compensation benefits as the exclusive remedy for an employee injury caused by an employer’s negligence, the district court judge reasoned that the verdict in the family’s negligence suit against Lawns was an “obligation imposed by” Florida’s Workers’ Compensation Act that fell within the policy exclusion in “Part II.”

The Morales family appealed to the 11th Circuit, which then turned to the Florida Supreme Court for guidance on three issues, since the 11th Circuit had to apply Florida law to the dispute.

As an initial matter, the 11th Circuit asked whether the family even had standing to bring a breach-of-contract claim against Zenith based on a policy it has issued to Lawns. If so, then the 11th Circuit asked whether the coverage exclusion in Part II applied to the family’s claim against Zenith for payment of a judgment from a tort action.

The 11th Circuit also asked whether the release the Morales family had signed in connection with the settlement of its comp claim prohibited them from collecting on the default judgment.

A unanimous Florida Supreme Court on Thursday answered all three questions affirmatively.

Under Florida law, the court said, a judgment creditor has standing to bring suit against a liability insurer that may owe coverage for the judgment, so the Morales family could sue Zenith. Under the plain language of Zenith’s policy to Lawns, however, the court said, the estate couldn’t actually recover from the carrier.

The court reasoned that if Lawns’ negligence caused Morales’ death, as the family alleged, then the family’s exclusive remedy lay in the comp system. Thus, the court said, the estate didn’t have a right to bring the tort action and secure the default judgment.

Additionally, the court said, the release the family executed in the settlement of their comp claim precluded it from collecting the tort judgment from Zenith.

Taylor said Friday that he thought the court reached the right conclusion on each of these issues, as its decision was “consistent with prior cases and consistent with what most courts in other states have held.”

He said that most of the insurance policies he’s seen for both comp and employer liability are worded the same way as the Zurich policy in this case, and to his knowledge, “no court has said you can get benefits under Part I and then sue under Part II.”

If the family could do so, Taylor said it “wouldn’t have caused ripples that would have caused waves.” Every injured worker “would be entitled to get comp with the left hand and then sue the employer or carrier with the right,” even after the employer or carrier paid the worker all the comp benefits he was entitled to receive, and the worker agreed to limit himself to the comp remedy, Taylor said.

Bill Rogner of Hurley, Rogner, Miller, Cox, Waranch & Westcott represented the Florida Association of Insurance Agents in supporting Zenith’s position in the case.

He said Thursday that he was “very pleased with the ruling, as it properly recognized that Part I and Part II of the standard Florida workers’ compensation policy are alternate coverages.”

Since Part I covered “the unfortunate death of Mr. Morales,” Rogner said he thought, “Part II of the policy should never have been implicated.” He said he also believed that the settlement agreement between the Morales family and Zenith “clearly elected workers’ compensation coverage (Part I) as the sole remedy,” so the Supreme Court’s opinion “affirms what we believed all along.”

Katherine Eastmoore Giddings of Akerman LLP – who represented the Florida Justice Reform Institute and the Florida Chamber of Commerce as Zenith amici – said she too was “very pleased” with Thursday’s ruling.

“The court’s decision confirms that releases contained in workers’ compensation settlement agreements are valid – which brings needed certainty to both employers and employees alike,” she opined. “Given that workers’ compensation benefits were already paid in this case, the court’s prohibiting the estate’s attempted collection of the $9.5 million tort judgment against the employer’s insurance company was the right decision.”

Defense attorney George Kagan of Miller Kagan Rodriguez & Silver said that based upon his reading of Thursday’s decision, it set a helpful precedent for employers and carriers in Florida.

“It reaffirms the strength of a release when one is entered into and validates the principle of the exclusive remedy,” he remarked.

What he said he liked about it was that the court basically “turned a deaf ear” to the family’s argument that the comp claim release was not binding on the estate since Morales’ widow had signed the release in her capacity as a surviving spouse and guardian of Morales’ four minor children, not her capacity as the representative of the estate.

Kagan said he frequently sees claimants make similar arguments to keep an employer’s lien from attaching to a third-party recovery, so he was glad the court rejected it in this case.

Tracy Raffles Gunn and Lee D. Gunn IV of Gunn Appeals and the Gunn Law Group represented the Morales family before the Florida Supreme Court. They could not be reached for comment Friday.

William Spivey, Courtney M. Keller, Elliott Scherker, Julissa Rodriguez and Jay A. Yagoda of Greenberg Traurig represented Zurich.

Spivey said Friday that the defense would not be making immediate comment on the decision, which is available here.

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U.S. Supreme Court Won’t Review Constitutionality of Comp System

By Sheri Okamoto – November 1, 2016

The U.S. Supreme Court on Monday denied a review of a challenge to the constitutionality of the Florida workers’ compensation.

Although the Florida Supreme Court earlier this year declared portions of the state’s comp scheme invalid, it ducked the opportunity to weigh in whether workers’ compensation still provides an adequate substitute remedy to the civil justice system, in Stahl v. Hialeah Hospital.

The Florida Supreme Court granted review of the matter and heard oral argument, but then it revoked its writ without explanation in April.

Mark Zientz, the attorney Daniel Stahl, petitioned the U.S. Supreme Court for review in June.

Zientz argued that the Florida comp system does not provide injured workers with a fair substitute for a civil remedy because it doesn’t provide a replacement for wages they may lose from an industrial injury, and it requires that workers pay for part of their medical care.

Hialeah Hospital countered that there has never been any case in any court that has invalidated a provision of a state workers’ compensation law as inadequate under the U.S. Constitution.

It also argued that the U.S. Supreme Court lacked jurisdiction over the Stahl case because the federal constitutional issues had not been preserved for review during the state court proceedings.

The U.S. Supreme Court gave no indication on Monday whether it found these arguments persuasive. The court generally does not provide its reasons for denying review of cases. The Stahl case was not exception.

Zientz on Monday expressed disappointment with the court’s decision, given the rest findings of the U.S. Department of Labor on the inadequacy of the benefits provided by the comp systems in almost every state.

Zientz said he provided the court with a copy of the Labor Department report earlier this month, “so they knew there was a problem.” But when it comes to getting review, “you either get their attention or you don’t.”

Zientz said he hopes Florida state lawmakers realize “this one came really close” to getting a declaration of unconstitutionality, so they’ll think twice about whether “they want to be cutting benefits any further.”

Richard Johnson, a Tallahassee attorney who filed an amicus brief on behalf of the Florida Chapter of National Employment Lawyers Association in support of Stahl, on Monday said he had known the mathematical odds of getting the U.S. Supreme Court to review the case were slim.

He said the court gets more than 10,000 petitions each year and hears about 70 cases, so “you don’t typically expect one to be accepted.”

Still, Johnson said, he had hoped the Stahl case may make the cut since the adequacy of a Florida comp remedy, “is an important issue.” He contended that a remedy under the Florida workers’ compensation system is “not really a remedy at all,” and the system itself is “almost useless.”

Even though the U.S. Supreme Court passed on a chance to issue such a finding in Stahl, Johnson said there are more cases, “in the pipeline” that will present additional opportunities for the constitutionality of the Florida comp system to be addressed.

The Stahl case will help those along, since now “the issues have been defined,” and “everything has been framed” in terms of legal arguments, Johnson said.

“We’ve got that little foodhold,” he said, while we didn’t get to the top of the mountain, we started a dialogue.”

Now that there is talk with lawmakers, the media and the public about “what’s wrong and what needs to be done,” Johnson said, there the potential for change.

Pierce said he was heartened by the two Florida Supreme Court decisions in Castellanos v. Next Door Co. and Westphal v. City of St. Petersburg earlier this year though.

In Castellanos, the Florida Supreme Court declared the state attorney fee statue unconstitutional, and in Westphal, the court struck down a statutory cap on temporary disability benefits.

Pierce said he thought the Florida Supreme Court decisions in those cases “made it clear” that the way the Florida comp statutes have been amended and changed over the past 20 years have breached “the Grand Bargain.”

He said “the Grand Bargain is still alive,” it’s just “not getting as much nourishment as it should.”

Ramon Malca, a claimants’ attorney with Malca & Jacobs who represent WILGs interests in Florida, said that the problems workers in the state face are by no means unique.

“Stahl attempted to bring light to the shortcomings of the our law in Florida,” Malca said but “we are seeing a nationwide pattern of state governments protecting the interests of business above the interests of working people and their families.”

George Kagan, a defense attorney with Miller, Kegan, Rodriguez & Silver who also has been keeping and eye on the Stahl matter, on Monday reflected that the case was “momentous for what it tried to accomplish.”

He said it’s “very rare that we can say any given state comp case has a prospect of making it to the U.S. Supreme Court,” and thought the chance for the Stahl case to get reviewed, given the rulings in Castellanos and Westphal.

Mark Touby, the president of Florida Workers’ Advocates, on Tuesday said that even though the U.S. Supreme Court decided not to review the issues raised in Stahl, “those issues certainly are not going away.”

He said that the provision of full medical care and wage-loss benefits “are critical to having a constitutional workers’ compensation law,” and the Stahl case shows “the Grand Bargain is not being completely fulfilled anymore.”

Touby said he couldn’t predict when or how that situation will be remedied, but he said “it needs to be addressed.”

Supreme Court Says Attorney Fee Statute Is Unconstitutional

3rd DCA Reverses Summary Judgment in FWA Constitutional Challenge to Exclusive Remedy

Business and Insurance Groups Defend Exclusive Remedy in FWA Lawsuit

Florida Justice Reform Institute

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