Florida Supreme Court Rules Attorney Fee Schedule in Workers’ Compensation Cases Unconstitutional

On April 28, 2016, in a 5-2 decision, the Florida Supreme Court struck down the mandatory fee schedule for attorneys’ fees in workers’ compensation cases outlined in Florida Statute § 440.34 (2009) as unconstitutional at both the state and federal levels. The ruling came after the court addressed the issue presented in the case of Marvin Castellanos v. Next Door Company, et al., SC13-2082, where an injured employee sued his employer and the employer’s insurance carrier. Ultimately, the injured employee retained counsel of his own who prevailed in recovering benefits owed to his injured client. As a result, the attorney sought fees in the amount of $350.00 per hour for a total of 107.1 hours. However, under the statute’s mandatory fee schedule, the attorney’s fees calculated for the claimant’s attorney amounted to $1.53 per hour.

Florida Statute § 440.34 prescribes a sliding scale fee schedule, which the Judge of Compensation Claims (JCC) is required to follow in calculating and awarding attorneys’ fees in worker’s compensation cases. In 2009, the Florida legislature amended Florida Statute § 440.34, removing the JCC’s ability to consider whether the calculated fee is “reasonable” and providing no way for the JCC or the judiciary, on review, to change the calculated fee, even if that fee is unreasonable, inadequate or excessive. The statute, as currently drafted, creates an irrefutable presumption as to the reasonableness of the attorneys’ fees awarded.

In striking down the mandatory fee schedule, the Florida Supreme Court reasoned that the inability of attorneys to recover reasonable fees in the representation of workers compensation claims would discourage attorneys from agreeing to handle such cases. This chilling effect would further harm injured employees, putting them at a disadvantage against their “recalcitrant” employers, which is exactly what the workers’ compensation statute was designed to avoid. Because the statute denies the injured employee’s ability to challenge the attorneys’ fees awarded to his counsel, the statute effectively limits the employee’s ability to retain competent counsel to litigate his or her claims. Based on this result, the court ruled the statute unconstitutional as a violation of the claimant’s right to due process.

New Method of Calculating Attorneys’ Fees

Until such time as the Florida legislature “cures the constitutional infirmity,” the court provided a remedy for determining reasonable attorneys’ fees. In doing so, the court cited Florida law requiring that “when the legislature approves unconstitutional statutory language and simultaneously repeals its predecessor, then the judicial act of striking the new statutory language automatically revives the predecessor, unless, it too would be unconstitutional.” B.H. v. State, 645 So.2d 987, 995 (Fla. 1994). The predecessor to Florida Statute 440.34 is the standard set forth by the court in Murray v. Mariner Health and ACE USA, 994 So.2d 1051 (Fla. 2008), which states that reasonable attorneys’ fees will be calculated using the factors listed under Florida Statutes, Rules Governing the Florida Bar, Rule 4-1.5(b)(1), “Factors to be Considered in Determining Reasonable Fees and Costs.” Those factors include:

(A) the time and labor required, the novelty, complexity, and difficulty of the questions involved, and the skill requisite to perform the legal service properly;

(B) the likelihood that the acceptance of the particular employment will preclude other employment by the lawyer;

(C) the fee, or rate of fee, customarily charged in the locality for legal services of a comparable or similar nature;

(D) the significance of, or amount involved in, the subject matter of the representation, the responsibility involved in the representation, and the results obtained;

(E) the time limitations imposed by the client or by the circumstances and, as between attorney and client, any additional or special time demands or requests of the attorney by the client;

(F) the nature and length of the professional relationship with the client;

(G) the experience, reputation, diligence, and ability of the lawyer or lawyers performing the service and the skill, expertise, or efficiency of effort reflected in the actual providing of such services; and

(H) whether the fee is fixed or contingent, and, if fixed as to amount or rate, then whether the client’s ability to pay rested to any significant degree on the outcome of the representation.

The court emphasized that the fee schedule will remain the starting point and that the JCC is to use the ruling in Murray as guide. The court stated the claimant must be allowed to present evidence to show that applying the statutory fee schedule will result in an unreasonable fee. The claimant’s attorney will be entitled to a fee that deviates from the fee schedule only where the claimant can demonstrate that the fee schedule will result in an unreasonable fee.