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Over the last two years we have reported the continuing saga of the siege against the legislative reforms put in place between 2003 and 2009. We report this year that the siege continues in various ways but the big cases we have discussed in years past are largely resolved and not to the benefit of Employers/Carriers. We respectfully report on theCastellanos, Westphal, Miles, andStahl cases.
THE CASTELLANOS ATTORNEY’S FEE
CASE RESOLVED BY FLORIDA SUPREME COURT -
THE RESULT: THE FEE STATUTE RULED UNCONSTITUTIONAL
Castellanos v. Next Door Company, 124 So. 3d 392 (Fla.2016)
You may recall from our prior presentations that Florida Statute §440.34 governs the payment of attorney’s fees to claimant attorneys. From at least 1998 through the present §440.34 has set forth a sliding fee scale that promotes awarding fees via paying claimant attorney’s 20% of the first $5,000 in benefits the attorney secured, 15% of the next $5,000 in benefits secured, 10% of the benefits of the remaining benefits secured during the first 10 years, and 5% of the benefits secured after 10 years. Through 2002 §440.34 contained an alternative allowing the Judge of Compensation Claims (JCC) to “increase or decrease the attorney’s fee if, in her or his judgment, the circumstances of the particular case warrant such action” which was effectively leave to award a fee to claimant’s counsel utilizing the factors set out in Lee Engineering & Const. Co. v. Fellows, 209 So. 2d 454 (Fla. 1968). In 2003 the specific reference to theLee Engineering factors was removed but still allowed the JCC to award a reasonable fee. Legislative changes in 2009 removed the references for leave to award a “reasonable fee” thereby ensuring that the 20/15/10/5 fee scale was the only payment claimant’s counsel would receive.
The uproar and backlash from the claimant’s bar was quick and spawned considerable litigation includingMarvin Castellanos v. Next Door Company. The first Petition for Benefits was filed October 29, 2009. The final compensation order was issued on September 8, 2010. Thereafter various skirmishes occurred between the parties and ultimately a verified petition for attorney’s fees was filed by claimant’s counsel on May 11, 2011 and ultimately heard on July 3, 2012. The JCC awarded the fees that claimant’s counsel sought. An appeal was first taken to Florida’s intermediate First District Court of Appeal on July 30, 2012 and on October 23, 2013 the First District affirmed the ruling of the judge of compensation claims that there was no infirmity in the award of attorney’s fees to claimant’s attorney but certified the issue to the Florida Supreme Court.
Various filings commenced in The Florida Supreme Court on October 31, 2013 and jurisdiction was accepted on March 14, 2014. Amicus folks showed up in droves and finally on April 28, 2016 the Florida Supreme Court finally ruled on the Castellanos case. The ultimate outcome, distilled to its essence by the opinion’s initial paragraph, is this: “This case asks us to evaluate the constitutionality of the mandatory fee schedule in section 440.34, Florida Statutes (2009), which eliminates the requirement of a reasonable attorney’s fee to the successful claimant. Considering that the right of a claimant to obtain a reasonable attorney’s fee has been a critical feature of the workers’ compensation law, we conclude that the mandatory fee schedule in section 440.34, which creates an irrebuttable presumption that precludes any consideration of whether the fee award is reasonable to compensate the attorney, is unconstitutional under both the Florida and United States Constitutions as a violation of due process. See art. I, § 9, Fla. Const.; U.S. Const. amend. XIV, § 1.” The Court pointed out that in light of the benefits obtained for claimant, his attorney’s fee “amounted to only $1.53 per hour for 107.2 hours of work determined by the...JCC to be reasonable and necessary” in litigating this complex case.
For the time being this decision has returned the Florida workers’ compensation litigation atmosphere to what it was eight years ago. Whether or not the Florida legislature chooses to address this decision remains to be seen. In the interim, one of the interesting though problematic collateral issues now is the impact on employers that is likely to occur as a result of the unexpected reserve shortages suffered by the carriers. Now that fees for claimant counsel are back to the kinds of awards seen before the 2009 legislative changes carriers are potentially left with insufficient reserves to cover what we would expect to be higher financial exposure.
THE FLORIDA SUPREME COURT
FASHIONS A SOLUTION TO THE WESTPHAL PROBLEM
Westphal v. City of St. Petersburg, 194 So. 3d 311 (Fla.2016).
The Westphal case involved an issue involving temporary total disability benefits which, pursuant to Florida law (Florida Statute §440.15), cease to be available once the claimant has exhausted 104 weeks of benefits. In last year’s update we discussed that the Florida intermediate First District Court of Appeal en banc found, though in a less than unanimous decision, that a worker who remains totally disabled at the end of eligibility for temporary total disability benefits is deemed to be at maximum medical improvement as a matter of law and may immediately assert a claim for permanent total disability benefits.
The First District’s decision made its way to the Florida Supreme Court which, by majority, found that the 104 week limitation was “unconstitutional under article I, section 21, of the Florida Constitution, as a denial of right to access to courts, because it deprives an injured worker of disability benefits under these circumstances for an indefinite amount of time --- thereby creating a system of redress that no longer functions as a reasonable alternative to tort litigation.” The Court thus fashioned a different solution via a declaration that §440.15 in its then-present state was unconstitutional but could be saved, according to the majority opinion, by declaring the 104 week disability benefit cap to be unconstitutional and reviving the pre-1994 statute that provided for a limitation of 260 weeks of temporary total disability benefits. This solution effectively provided claimants who remained
temporarily totally disabled an additional two and a half years of such benefits in which to rehabilitate and recover from their injury and, hopefully, return to gainful employment.Westphal v. City of St. Petersburg, 194 So. 3d 311 (Fla.2016).
THE CASE OF MILES V. CITY OF EDGEWATER POLICE DEPARTMENT:
THE FLORIDA FIRST DISTRICT COURT OF APPEAL ADDRESSES
THE RIGHT OF A CLAIMANT TO CONTRACTUAL RELATIONSHIP WITH COUNSEL
190 So. 3d 171 (Fla. 1st DCA 2016)
Ms. Miles suffered four accidents, only one or perhaps two of which is/are pertinent to this presentation. After petitions for benefits were filed by claimant and subsequently denied by the employer/carrier, claimant’s attorney withdrew and dismissed the petitions. Thereafter, two retainer agreements were executed:
1. One between claimant’s attorney and claimant’s union for payment by the union to claimant’s counsel of a flat fee of $1,500 to represent claimant, and
2. One between claimant and her attorney for payment of any fees beyond the $1,500 retainer provided by claimant’s union, in which case she would pay him an hourly fee for all work done after the union’s flat fee was consumed. She further noted in this agreement that she was made aware of the fact that Florida workers’ compensation law prohibits the fee agreement she entered into, specifically waived those statutory prohibitions, and stated that she entered into the agreement with understanding that she might not prevail.
Thereafter litigation ensued with claimant maintaining she had suffered exposure accidents in the course and scope of employment and the employer/carrier saying otherwise. At that point claimant’s attorney filed a motion seeking approval of both retainer agreements which alleged that “it would not be economically feasible for [her] to continue on a purely contingent basis with fee restrictions as contained in Florida Statute §440.34.” She concluded by certifying that if the JCC denied the retainer fee then his firm would possibly have no choice but to withdraw. An evidentiary hearing was convened at which, distilled to its essence, claimant’s counsel stated that “it is unreasonable to ask an attorney to basically work for free.” The Judge of Compensation Claims denied both retainer agreements as contrary to the governing law under Chapter 440, Florida Statutes. With claimant’s attorney asserting a conflict of interest due to the retainer issues she withdrew and claimant proceeding to hearing without counsel. The JCC denied and dismissed both petitions for benefits.
Florida’s First District Court of Appeal noted that (1) Florida Statute §440.105(3)(c) renders it is first degree misdemeanor for a Florida attorney to accept a fee that is not approved by the JCC pursuant to §440.34(1) and (2) fees to a claimant’s attorney are statutorily required to be tied only to benefits the attorney secures for his/her client. The appellate court here noted that this situation involved an as-applied challenge regarding the constitutionality of the Florida fee statute. After working its way through analysis of freedom of speech and freedom to contract principles the appellate court stated as follows (in pertinent part): “...the restrictions in sections 440.105 and 44.34, when applied to claimant’s
ability to retain counsel under a contract that calls for the payment of a reasonable fee by a claimant (or someone on his or her behalf), are unconstitutional violations of a claimant’s right to free speech, free association, and petition....as well as to form contracts...[t]hus we hold that the criminal penalties of section 440.105(3)(c)...are unenforceable against an attorney representing a workers’ compensation client seeking to obtain benefits under Chapter 440..”
NOT TO SAY IT IS THE FIRST TIME THIS HAS
EVER HAPPENED BUT IT VERY WELL MIGHT BE:
CLAIMANT COUNSEL APPEALS STATE WORKERS’
COMPENSATION CASE TO THE UNITED STATES SUPREME COURT
Daniel Stahl v. Hialeah Hospital and Sedgwick Claims Management
Petition for Writ of Certiorari / United States Supreme Court / Case No. 16-98
Mr. Stahl suffered a workplace accident on December 8, 2003. Workers’ compensation litigation commenced July 12, 2004 and persisted until Florida’s First District Court of Appeal issued its written opinion on March 25, 2015 and its mandate on April 30, 2015. During that period the case had made its way to the First District Court of Appeal several times without there ultimately having been a resolution acceptable to claimant. The court, having seen a number of appellate filings in this claim over the years, issued an opinion March 25, 2015. The court set out the issues as follows: did (1) the 1994 addition of a $10 copay for medical visits and (2) the 2003 elimination of permanent partial disability benefits render Florida’s workers’ compensation law an inadequate exclusive replacement remedy for a tort action. The appellate court found that it did not, stating that “[w]e disagree, because both amendments withstand rational basis review, in that the copay provision furthers the legitimate stated purpose of ensuring reasonable medical costs after the injured worker has reached a maximum state of medical improvement, and PPD benefits were supplanted by impairment income benefits. Thus the appellate court affirmed the decision of the Judge of Compensation Claims.
Stahl’s Petition for Certiorari to the United States Supreme Court posits three issues: (1) whether the U.S. Supreme Court should exercise its jurisdiction to review Stahl’s case based on the proposition that the “Grand Bargain” is no longer a bargain; (2) whether Florida’s workers’ compensation law deny injured workers due process by establishing an arbitrary system that provides inadequate benefits; and (3) does the Florida workers’ compensation system provide an insignificant level of benefits so as to violate the United States Constitution’s Fourteenth Amendment’s substantive due process requirement. The Petition for Certiorari itself covers 35 pages with an appendix that covers the Stahl and Westphal cases discussed above. Whether, what and when the U.S. Supreme Court will take its next action remains to be seen. As of the drafting of this discussion, claimant’s petition for writ of certiorari, three amicus curiae briefs, and an order extending time for a response to the petition to September 21, 2016.