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 bigger fees.
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 advocates?
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.