The Florida Supreme Court ruled late last week in the high profile Castellanos v. Next Door Co. case, saying that the state’s mandatory attorney’s fee schedule for workers’ compensation cases is unconstitutional under both the Florida Constitution and the U.S. Constitution as a violation of due process. Two justices dissented.
The 55-page decision, written by Justice Pariente (pictured at left) for the majority, reads in part: “Through the 2009 enactment of a mandatory fee schedule, the Legislature has created an irrebuttable presumption that every fee calculated in accordance with the fee schedule will be reasonable to compensate the attorney for his or her services. The $1.53 hourly rate in this case clearly demonstrates that not to be true […] in reality the system has become increasingly complex to the detriment of the claimant, who depends on the assistance of a competent attorney to navigate the thicket.”
The necessity of hiring counsel to “navigate the thicket” is a considerable point of contention in any reform effort, and here in Louisiana, the mounds of paperwork required to process a claim are often bemoaned. However, in reaction to this case, Louisiana attorneys saw this decision as indicative of larger issues in a national conversation about the adequacy of workers’ comp benefits – rather than an indictment of low attorney compensation per se.
Davoli: Castellanos sends a message
Charles Davoli, mediator and claimant attorney with Davoli Krumholt & Price and an activist for injured worker rights for decades, explained, “Louisiana attorney fees are consistent with the national average of ‘up to’ 20 percent of the gross recovery in workers’ comp disputes and settlements. Our state, unlike most others, also has the added attorney incentive of penalties and attorney’s fees. The Castellanos decision is consistent with the recent Oklahoma Supreme Court decision […] Castellanos sends a message [regarding the Court’s] sentiments about cuts in the Florida system.”
Justice Pariente identifies “one-sided” payments to defense
Justice Pariente references such potential bias in the system in terms of the attorney fees question. Accompanied by a chart dating back to Fiscal Year 2002, Pariente writes in Castellanos: “The effect of the limitation on the fee amounts paid to claimants’ attorneys is revealed in the mandatory annual reporting of all attorney’s fees to the Office of the Judges of Compensation Claims, as required by section 440.345, Florida Statutes. The report demonstrates the one-sided nature of the fees paid, with claimants’ attorneys consistently receiving a lower percentage of the total fees than defense attorneys and the gap only increasing over the past decade.”
Here in Louisiana, the Workers’ Compensation Research Institute (WCRI) noted a similar problem in its latest CompScope benchmarks report for our state. Though it did not measure disparities between plaintiff and defense attorney’s fees, the organization cited ever-rising defense costs as a significant cost driver for our system.
Truitt: Decision could drive states toward considering opt-out
On a larger scale, Bobby Truitt, who represents both claimants and insurers/employers in his practice, The Truitt Law Firm, saw a warning in the ruling about claimants who are stuck in the middle – unable to “navigate the thicket” on their own, and unable to find an attorney to represent them – which he sees as a Louisiana problem as well.
“I think [Louisiana comp attorney’s fees] are reasonably fair at 20 percent of recovery,” Truitt said. “However, I also think that the changes in the delivery of care, pursuant to the Medical Treatment Guidelines, has made it difficult for some claimants to obtain counsel.”
Situations like Castellanos, he opined, could push more and more states to consider opt-out legislation as a potential solution, as many of these constitutional suits across the country react to comp laws that have “failed to keep pace with economic realities.”
Monson: This is part of an ongoing war
However, for his part, Matthew Monson, defense attorney with his own Mandeville-based The Monson Firm, saw the Florida Supreme Court’s ruling in an entirely different light, noting that Florida’s position in non-comp areas of the law allows for the attorney fee schedule.
In reference to that state’s fee shifting statutes, Monson explained, “In Florida, in cases not involving workers’ compensation, there is a statute providing for attorney’s fees in favor of a party who obtains a judgment against an insurance company. There is also a statute providing for attorney’s fees to be awarded arising out of a ‘Proposal for Settlement,’ which is similar to Louisiana’s Offer of Judgment. Accordingly, Florida as a whole has numerous significant departures from the ‘American Rule’ [in which parties bear their own legal costs] and it is within this background that Castellanos was decided.”
Calling the ruling part of an “ongoing war” to overhaul the workers’ comp framework as it stands, Monson sees Castellanos as primarily financially motivated. “What is crystal clear from Castellanos is that the plaintiff’s bar is seeking to fill their own pockets,” he said. “There was nothing about the underlying facts of the case in which the needs of the injured party were at issue.”
Monson pointed to Justice Canady’s dissent to make his point, which stated: “the value of the claim was $822.70, and the claimant sought attorney’s fees in the amount of $36,817.50 – a fee of nearly 45 times the amount of the recovery.”
According to Monson, the majority in this case “ignored” recent changes to the statute made by the Florida Legislature removing the term “reasonable” and found that the statute was unconstitutional because the attorney’s fees in this case were not reasonable. “This is clear judicial activism at its finest,” he said.
Image Credit: Miami-Herald