Florida Supreme Court Decision Sends Shockwaves Throughout Workers’ Compensation World

The Florida Supreme Court on April 28, 2016, ruled for an injured worker in a case that will dramatically change how attorneys for injured workers are paid in worker’s compensation disputes. 

The case, Castellanos v. Next Door Company, 124 So. 3d 392, 41 Fla. L. Weekly S197b (Fla. 2016), stems from a 2009 dispute over an injured worker’s claim for wage loss benefits under Florida’s Workers’ Compensation Law. The claimant’s attorney spent over 100 hours proving his case and rebutting multiple defenses asserted by the employer and its insurance company. After a final hearing, the claimant was awarded a sum total of $822.70. For his efforts, the attorney was due a fee under the mandatory attorney fee formula prescribed by law. Unfortunately, this formula calculated a fee award of only $1.53/hour. Under the law, the Judge of Compensation Claims had no discretion to award a fee in excess of that formula. The claimant challenged this fee as so unreasonable as to violate the his due process rights. 

The case worked its way through the legal system and finally made it to the Florida Supreme Court. In a 55 page opinion, the Court voted 5-2 vote that the attorney fee structure adopted by the Florida Legislature was unconstitutional as violation of the due process rights of workers. The Court found that the right of a successful claimant to a reasonable attorney’s fee has been a “critical feature of the worker’s compensation law since 1941.” The Court noted that the increasingly complex worker’s compensation system now requires a competent attorney to “navigate the thicket.” Because of this, the Court found that a “reasonable” attorney fee is necessary to ensure that the worker’s compensation system assures the “quick and efficient delivery of disability and medical benefits to an injured worker.” 

The end result allows attorneys to argue (and judges to decide) whether awarding a successful claimant the statutory fee would result in an unreasonable fee. The Court laid out multiple factors to determine this issue based on its decision in Lee Eng’g & Constr. Co v. Fellows, 209 So. 2d 454 (Fla. 1968). Thus, the starting point remains the statutory formula but judges are empowered to stray from that formula if the result would be unreasonable. Because many worker’s compensation claims can involve complex litigation over comparatively minimal benefits it is likely many attorneys will now argue entitlement to a reasonable fee beyond the statutory formula. 

The practice of law will always be affected by how attorneys can be paid, on both sides. Proponents argue that this will allow attorneys to take fewer cases and focus only on the most meritorious claims. However, employers and insurance carriers must now be weary of fighting battles that may risk exposure to fee awards between $200 and $400 per hour. Luckily, Employers are still given 30 days to decide whether a claim is worth the risks involved.

Many questions remain about the full effect of the Castellano decision. Many believe worker’s compensation insurance rates are likely to increase. The Legislature may call a special session to address the Court’s ruling as they did with a similar case in 2008, Murray v. Mariner Health, 994 So. 2d 1051 (Fla. 2008). Regardless, worker’s compensation litigation will remain an ever-changing landscape which requires skilled practitioners on both sides to be aware of the latest changes. 

If you have any questions on this subject or related topic, please contact the author, Attorney Cole Davis at cdavis@hsmclaw.com.