Workers’ Compensation Attorney’s Fee Schedule Unconstitutional

By Ted Babbitt
July / August 2016

In Castellanos v Next Door Company, 41 Fla. L. Weekly S197 (April 28, 2016), the Florida Supreme Court found Fla. Stat. 440.34 (2009) to be unconstitutional.  Section 440.34 Fla. Stat. (2009) mandates a conclusive fee schedule for awarding attorney’s fees to the claimant in a workers’ compensation case.  The statute provides that an attorney representing a claimant in a workers’ compensation case can only receive a fee based upon a percentage of the benefits obtained for the client.  The statute provides that the attorney’s fee would amount to 20% of the first $5,000.00 of benefits secured, 15% of the next $5,000.00 benefits, 10% of the remaining benefits during the first ten years after the claim was filed and 5% of any benefits after that 10 year period.  The statute specifically provides that the Judge of Industrial Claims cannot award an attorney’s fee in excess of that amount nor can that Judge approve a settlement where the claimant has agreed to pay his or her attorney an amount in excess of that schedule.

In Castellanos, the employer raised a dozen defenses which had to be rebutted by the attorney for the claimant.  It was undisputed that the claimant’s attorney expended over 107 hours of reasonably required work in order to obtain an award just under $900.00.  Using the statutory scale, the attorney was thus awarded a fee equal to $1.53 per hour for over 100 hours of work.  The statute precluded the Judge of Industrial Claims and any Court reviewing the Judge’s order from questioning the amount provided for in the schedule and provided an irrebuttable statutory presumption that the fee was appropriate.  The testimony from both sides concluded that the claimant’s attorney’s work was necessary, the claimant never could have been successful without a skilled attorney, the hours of the attorney were reasonable and that the award was ridiculous.  Nevertheless, the Judge of Industrial Claims, as well as the First District Court of Appeals, concluded that they were precluded from questioning the adequacy of the attorney’s fee.

The Supreme Court reviewed the case de novo and concluded that the statute was unconstitutional under both the state and federal constitutions.  The Supreme Court noted that the workers’ compensation law was designed to assure “the quick and efficient delivery of disability and medical benefits to an injured worker.”  A long line of Florida cases holds that a claimant is entitled to be represented by an attorney and that the attorney’s fee should be borne by the employer so as to assure that the claimant receives an appropriate net recovery.  The Court held that the provision regarding attorney’s fees was adopted to discourage an employer or its carrier from unnecessarily resisting claims in order to force a worker into an inadequate settlement.

The issue before the Supreme Court was viewed by the Court as a question of whether the conclusive statutory presumption, rather than the amount of the attorney’s fees, was an inherent constitutional flaw in the statute.  The Court cites several cases questioning the validity of the conclusive statutory presumption and reiterated the constitutional test for such a statute.

This Court has set forth the following three-part

test for determining the constitutionality of a

                       
conclusive statutory presumption, such as the
fee schedule provided in section 440.34:  (1)
whether the concern of the Legislature was
“reasonably aroused by the possibility of an
abuse which it legitimately desired to avoid”:
(2) whether there was a “reasonable basis for a
conclusion that the statute would protect
against its occurrence”; and (3) whether “the
expense and other difficulties of individual
determinations justify the inherent imprecision
of a conclusive presumption.”  Recci Am. Inc. v
Hall, 692 So. 2d 153, 154 (Fla.1997) (citing
Markham v. Fogg, 458 So. 2d 1122, 1125 (Fla.
1984).

 

The Supreme Court found that the elimination of the authority of the  judiciary to review or alter a fee award completely frustrated the purpose of the workers’ compensations scheme.

Based upon the irrebuttable nature of the fee award under § 440.34, the Court concludes that the statute is unconstitutional.

But the conclusive fee schedule prevents all

injured workers –whether they have small-value

                       
or high-value claims – from presenting evidence
to prove that the fee is inadequate in any given
case.  Without the ability of the attorney to
present, and the JCC to determine, the
reasonableness of the fee award and to deviate
where necessary, the risk is too great that the
fee award will be entirely arbitrary, unjust,
and grossly inadequate.  We therefore
conclude that the statute violates the state and
federal constitutional guarantees of due
process.

 

While the Court declares the statute unconstitutional, it indicates that the statutory schedule still provides a starting point for the award of a reasonable attorney’s fee.  The Court concludes that because § 440.34 has been held unconstitutional, the prior statute providing for a reasonable fee was revived.  However, the claimant must show that utilizing only the statutory scheme would result in an unreasonable fee in order to obtain a fee in excess of that schedule.