In a major victory for injured workers and stinging defeat for businesses, the Florida Supreme Court on Thursday struck down a law limiting attorney’s fees in workers’ compensation cases.
The 5-2 ruling is a setback for business groups who say legal fees drive up the cost of workers’ compensation insurance and threaten Florida’s economy and they must seek help from a reliably pro-business Legislature.
The long-awaited decision puts pressure on lawmakers to call a special session in an election year to referee a high-stakes battle between Republican-aligned businesses and Democrat-leaning law firms, two deep-pocketed rivals that are among the biggest contributors to legislators’ political campaigns.
The case before the high court involves a Miami man, Marvin Castellanos, who suffered head, neck and shoulder injuries while working for Next Door Company, a maker of doors and door frames in Miami.
The company waged an aggressive defense, but Castellanos won and received benefits of $822.70.
His lawyer, who worked on the case for 107 hours, sought a fee of $36,817.50.
He received a fee of $164.54, the equivalent of $1.53 per hour under a fee system the Legislature approved in 2009.
Under that law, attorneys who successfully represent injured workers are paid 20 percent of the first $5,000 in benefits obtained and 15 percent of the next $5,000 in benefits.
Writing for the majority, Justice Barbara Pariente said the law violates workers’ due process rights under the state and U.S. Constitution because it prevents challenges to the “reasonableness” of legal fees in workers-compensation cases.
Without the likelihood of an adequate attorney’s fee award, there is little disincentive for a carrier to deny benefits or to raise multiple defenses, as was done here.
Justice Barbara Pariente
“Without the likelihood of an adequate attorney’s fee award, there is little disincentive for a carrier to deny benefits or to raise multiple defenses, as was done here,” Pariente wrote. “Virtually since its inception, the right of a claimant to obtain a reasonable prevailing party attorney’s fee has been central to the workers’ compensation law.”
By replacing the former “reasonable” standard with a sliding scale of legal fees, Pariente said, “the Legislature has thus eliminated any consideration of reasonableness.”
The ruling reflected the court’s ideological split.
Pariente was appointed to the state’s high court by Lawton Chiles, Florida’s last Democratic governor, who died in 1998. She was supported by Chief Justice Jorge Labarga and justices Fred Lewis, James Perry and Peggy Quince.
The dissenters were the court’s two conservative members, Ricky Polston and Charles Canady. Both were appointed by former Republican Gov. Charlie Crist, who also appointed Perry and Labarga.
Canady said the law involves a “policy determination” by the Legislature that there should be a relationship between the amount of benefits obtained in workers’ compensation cases and the amount of attorney’s fees awarded. The law has a formula that links benefits and attorney’s fees.
“The definition assumed by the majority categorically precludes the legislative policy requiring a reasonable relationship between the amount of a fee award and the amount of the recovery obtained by the efforts of the attorney,” Canady wrote. “Certainly, this legislative policy may be subject to criticism. But there is no basis in our precedents or federal law for declaring it unconstitutional.”
Workers’ compensation rates in Florida are regulated by the Office of Insurance Regulation, run by Kevin McCarty, who has resigned effective May 2 but who has offered to stay on with no permanent successor in place. Gov. Rick Scott said he wants to appoint McCarty’s successor on Friday.
McCarty said that until the Legislature acts, the state will base attorney’s fees on the “reasonable” standard defined in a 2008 case, Murray vs. Mariner Health.
“Limiting attorney’s fees has been an important factor in reducing workers’ compensation rates,” McCarty said. “A legislative remedy will be required to prevent significant increases in rates, and we look forward to working with all parties affected to bring about a sensible solution.”
Rep. David Simmons, R-Altamonte Springs, said the ruling is not a crisis.
“The sky is not falling,” he said.
Simmons said legislators must find a compromise between outrageous attorney’s fees and the “absurd” $1.53 an hour in Thursday’s decision.
“It can be fixed,” Simmons said.
The effect on rates businesses pay for workers’ comp insurance will be clearer in about a month when the National Council on Compensation Insurance, a federal clearinghouse, is expected to submit a proposed rate filing with McCarty’s office.
McCarty said that after NCCI makes its rate filing, OIR will hold a hearing and work with the stakeholders to “help develop a legislative solution.”
The impact on Florida’s workers compensation system costs is expected to be significant,” said Chris Bailey, a spokesman for NCCI.
Trial lawyers praised the decision.
Debra Henley, executive director of the Florida Justice Association, said she hoped companies “will change their claims handling practices and start promptly paying meritorious claims from injured workers so they can get the care they need, get back to work and support their families.”
The Florida Chamber of Commerce chose its words carefully in responding to the ruling.
“The potential impact of the high court’s ruling could threaten Florida’s improving business climate,” Chamber CEO Mark Wilson said in a statement.
Business groups won a partial victory Thursday when the court declined to rule in another workers’ compensation case brought by a former Hialeah Hospital nurse, Daniel Stahl.
Times/Herald Tallahassee Bureau reporters Mary Ellen Klas and Jeremy Wallace contributed to this report and information from The News Service of Florida was used.