TALLAHASSEE - Florida’s business and insurance leaders are predicting workers' compensation rates will jump at least 20 percent in light of a Supreme Court decision striking limits on attorney fees.
They will almost certainly repeat calls for a special session of the Legislature to address the court’s ruling when the National Council on Compensation Insurance (NCCI), a rating bureau, publishes its estimate of the impact of the ruling, expected by the end of May.
In a statement, Associated Industries of Florida, said of the April 28 ruling in Castellanos v. Next Door Company that it “will certainly trigger a substantial and hefty rate increase for which employers have not prepared or budgeted. We also know from history that this will spark an avalanche of increased and unbridled litigation that will continue to be a leading cost driver to the system in the future…”
The statement added: “We call on our elected leaders to immediately act and respond to this ruling in a way that protects our economy and continues to ensure Florida businesses.”
Legislative leaders and Governor Rick Scott will weigh other factors besides workers' compensation costs in calling for a special session, political observers say. Number one among them is the fact that it’s an election year.
“The pressure on both sides of the issue will be just as great,” said one political observer who asked not to be identified. “You’ll have some lawmakers with business backing demanding it. Others with trial lawyer backing will say the special session is unnecessary.”
What’s more, the scheduling of a special session will hinge on finding a clear legislative response to the ruling.
“We are studying all policy options now,” said Kathy Mears, chief of staff to House Speaker Steve Crisafull. “What we might be able to accomplish without a special session and what we would consider if we hold a session.”
The lawyer in the Castellanos case requested a fee of $350 on a $850 award in benefits. A judge of compensation claims (JCC) said the fee was justified but under the fee schedule had to limit the award to what amounted to $1.53 per hour. In the majority opinion, Justice Barbara J. Pariente, wrote: “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.”
Claimants’ lawyers say the ruling is being misinterpreted and its impact exaggerated.
“The fee schedule still remains the starting point,” said Michael J. Winer, Chair of the Workers’ Compensation Section of the Florida Bar. “It will be up to the judge (JCC) to determine what is a reasonable fee beyond that. This could work in favor of the employer/carrier if a judge determines the fee is too high.”
Richard E Chait of Richard, with Touby, Chait & Sicking, P.L, called the predictions of skyrocketing rates “hogwash.”
The reasonable fee standard, he said, only kicks in when benefits are “unfairly denied.”
What constitutes a reasonable rate was set down in the 1968 Lee Engineering & Const. Co. v. Fellows decision, which listed the factors to be considered in determining fees.
But faced with run-away costs in the WC system, the Florida Legislature in 2003 approved sweeping changes to the law, the fee schedule among them. In general, the caps amount to about 10 percent of the award.
Then in Murray v. Mariner in 2008, the Supreme Court ruled that the caps did not permit a “reasonable” recovery for attorneys; they could receive awards above the caps. So in 2009, the Legislature struck the word “reasonable” in relation to attorneys fees, again limiting attorneys to only those amounts allowed under the caps.
Any special session, legislative sources say, would likely be held concurrent with the November organization session, when lawmakers will return to Tallahassee after the general elections.
If not, the issue will have to wait until the start of regular session next March.