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Florida Court Empowers Fee Agreements in Claims Bill Fee Disputes

June 30, 2017 | Posted in : Contingency Fees / POF, Fee Agreements, Fee Dispute, Fee Issues on Appeal, Legislation

A recent Daily Business Review story by Noreen Marcus, “Court Empowers Lawyers in Claims Bill Fee Disputesdiscusses Florida’s legislation on a victim’s claims bill and fee agreements.  The story reads:

Which comes first, the promise of a sizable contingency fee or the Florida Legislature's passage of a claims bill?  The answer is the fee agreement between, typically, one or more prominent personal injury law firms and a victim suing someone who enjoys the protection of sovereign immunity and damage caps.  The example from this past session is $3.75 million in private relief to Victor Barahona, the victim of hideous child abuse that his twin sister, Nubia, did not survive.

But would a claims bill ever get past go without the guarantee of a significant fee and costs to cover lobbyists and everything else it takes to succeed in the Legislature?  As a practical matter, probably not.  This reality irritates people who want to maximize payouts to victims as opposed to their lawyers.  That's the dilemma when claims bills turn into legislatively recognized damage awards and the money must be split between victims and attorneys.

To this point, Fourth District Court of Appeal Chief Judge Cory Ciklin penned a June 21 opinion in Grossman Roth v. Mellen that must seem to him like good karma.  In 2015, the influential jurist wrote a dissent that the Florida Supreme Court later adopted — the very precedent that dictated his ruling.

In the precedent-setting case of Searcy Denney Scarola Barnhart & Shipley v. State, a claims bill awarded $15 million to the victim in a medical malpractice case and capped all fees and costs at $100,000.  A Fourth District panel majority approved the formula; Ciklin's dissent called it "draconian."

Ultimately, the Supreme Court agreed with Ciklin that the Legislature cannot constitutionally impair fee contracts through a private relief act.  Access to courts might otherwise be chilled, the court reasoned in an unsigned opinion.

The claims bill could be saved by severing the fees and costs provision, the justices concluded.  Searcy Denney and other firms would get their contracted $2.5 million for fees and costs.  The guardianship trust for Aaron Edwards, a child who suffered a catastrophic brain injury due to hospital negligence, would get $12.5 million.

The decision drew two dissents from Justices Charles Canady and Ricky Polston, the latter joined by Chief Justice Jorge Labarga.  "Although this is a favorable result for the plaintiff and his attorneys, it is not what the law requires," Polston wrote.  "The Legislature was very clear that it was awarding only $100,000 for anyone other than Aaron Edwards."  But he noted the result was to take $2.5 million from the guardianship of Aaron Edwards for attorney fees, "a result that was explicitly rejected by the Legislature with its enactment of the claims bill."

Florida TaxWatch, a nonprofit government watchdog that keeps track of how taxpayer dollars are spent, sees a need to reform the claims bill system.  "The current process is a little too arbitrary," said Kurt Wenner, head of research for TaxWatch.  "It's more a factor of lobbying than the justification for the claim, so it's political, and lobbying plays too big of a role."

Not that TaxWatch would oppose passage of a claims bill in an obviously worthy case like Victor Barahona's. "Our whole thing is, make sure that people have access and are allowed to file just claims and get their compensation in a timely manner, but don't pay unnecessary costs where taxpayers have to foot the bill," Wenner said.

TaxWatch produced a 2013 briefing paper for a legislative committee reviewing claims bill procedures.  The committee accepted the group's suggestions, held hearings and drafted legislation that went nowhere.  TaxWatch's ideas are all about trying to avoid the court system and the Legislature in the kinds of tort cases that tend to result in claims bills.  It's hard to imagine PI lawyers and lobbyists would support this kind of change.

For instance, Wenner talked about raising the sovereign immunity cap from the current $200,000 to a figure that would be tougher to resist and therefore encourage settlements.  His research turned up four states with caps of $1 million per person.  Florida's current political climate suggests a $1 million cap would be a hard sell.

As for attorney fees and lobbying costs, Wenner praised the Legislature for combining the two into one number in claims acts.  He said TaxWatch recommended adding that concept to the law.  It didn't happen and, in fact, Ciklin was talking about a $100,000 total for fees and costs when he used the word "draconian" in his Searcy Denney dissent.

The recently decided Grossman Roth case is similar to the Searcy Denney case.  The Grossman Roth matter began in 2008 when Kristi Mellen and her husband Michael Mellen went to a public hospital because he showed symptoms of a heart attack.  In the waiting room he suffered a massive heart attack and died.

His widow sued the North Broward Hospital District for medical malpractice.  She signed a contingency fee contract with Grossman Roth that promised the firm what amounted to 25 percent of her total recovery.  After huddling with Mellen's lawyers, the hospital district agreed to a $3 million settlement and to support a claims bill.

The claims bill passed and apportioned $290,000 of the award to attorney fees and $2.8 million to Mellen.  The trial court approved the split — but this was before the Supreme Court handed down its Searcy Denney decision, Ciklin noted.  Grossman Roth will get its $750,000 fee.