TAMPA -- Confusion reigns among Florida businesses
and employers following the Florida Supreme Court's April decision in the Marvin
Castellanos v. Next Door Company.
The case centered on the legality of set scheduled lawyer fees in cases
involving workers compensation. According to Lykes Insurance, a premier Florida-based commercial insurance firm,
many employers are left trying to figure out what the ruling means for them.
A 2009 Florida law revamping aspects of worker
compensation cases resulted in employer insurance rates dropping 60 percent.
Part of this reduction derived from the imposed scheduling of lawyer fees, which
produced a large reduction in what lawyers collected from such cases. The court, however, has invalidated this, saying that by imposing an “irrebuttable”
method of determining these fees, a claimant, and by implication his/her
attorney, had been denied due process.
An explanation was offered to the Florida Record by Mark Webb, senior vice president of Lykes Insurance.
“The court held that an ‘unreasonable fee’ would limit or possibly eliminate
the ability of a claimant to have adequate legal representation, which they
consider to be essential to receiving fair treatment under the law," he said. "This is very clearly expressed in the
majority opinion that stated ‘it is undeniable that without the right to
an attorney with a reasonable fee, the workers’ compensation law can no longer
assure the quick and efficient delivery of disability and medical benefits to
an injured worker.’''
The court’s decision could give a booster shot to the
filing of claims and encourage the drawing out of cases in order to rack up
Webb told the Florida
Record, “Using the Castellanos case as an example, under the statutory
attorney fee schedule, to secure $822 in benefits for the claimant, the
attorney spent more than 107 hours for a fee of $164.54 which equals $1.53 per hour
in compensation to the attorney. This was
obviously considered to be ‘unreasonable’ and the fee was amended to more than $37,000 based on an hourly fee in the range of $350 to $400 per hour. With that type of potential increase in
compensation, a plaintiff attorney is going to be much more incentivized to
take on workers’ compensation claims.”
To make the situation even more trying for businesses, Webb said, the court’s ruling, "can also be applied retroactively to claims
that were thought to be closed.”
That means carriers who covered case fees
based on the low rates of $1.53 an hour, must now fork over an
estimated $1 billion to make good on the much higher rates, rates they did not
collect premiums for. The retroactive period stretches back to Oct. 1, 2003.
With this decision, companies are faced with the
challenge of understanding and responding to what will be increased claims
processing. The first step for companies dealing with the court’s decision is to
decide who will handle the issue: internal claims managers or outsourced claims
More specific steps for employers include, making sure they provide wage information on the state mandated DWC1(a)
form as quickly as possible, clearly documenting all interactions with
employees in relation to their duties and ensuring employees know that light
work duty is available if they are injured.