A recent Law 360 story, “Fla. High Court Nixes Workers’ Comp Law Atty Fee Formula,” reports that the Florida Supreme Court on Thursday struck down the prevailing-party attorneys' fees provision of the state's workers' compensation law, ruling that the mandatory fee structure is an unconstitutional violation of a worker's due process rights.

In a long-awaited opinion, the state's highest court sided with worker Marvin Castellanos, who challenged the statutory formula that led to a $164 award for his attorney for 107 hours of legal work on his case, and said the provision unconstitutionally limits a worker's access to the courts.

The court, which split 5-2 in the decision, said the main problem with the “unyielding formulaic fee schedule” was a claimant's inability to challenge an unreasonable award.  In Castellanos' case, both the judge of compensation claims and the First District Court of Appeal were precluded by law from assessing whether the fee award was reasonable.

“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,” the Supreme Court said.  “We therefore conclude that the statute violates the state and federal constitutional guarantees of due process.”

The court emphasized that it was not doing away with the fee schedule, which limits the percentage an attorney can seek of the benefits secured in a workers' comp case, but instead merely allowing claimants to challenge a fee award.  “We emphasize that the fee schedule remains the starting point, and that the revival of the predecessor statute does not mean that claimants' attorneys will receive a windfall,” the court said.

That is exactly what Castellanos' attorney Mark Touby of Touby Chait & Sicking PL was hoping the Supreme Court would do.  “We were making the argument that the fee schedule should be the starting point, and in those situations where that will result in an unreasonable fee, there needs to be due process to determine what a reasonable fee would be,” Touby said.

Castellanos, who was injured on the job in October 2009, was handed the meager fee award that came out to $1.53 per hour in his dispute with Next Door Co. and Amerisure Insurance Co.

In addition to limiting the percentage of benefits secured that an attorney can seek, the law also states that a judge of compensation claims is not required to approve any retainer agreement between the claimant and his or her counsel and makes it a misdemeanor for a lawyer to take payment without approval by a JCC.

In October 2013, the First District Court of Appeal affirmed the award but also certified the question to the Florida Supreme Court of whether the award is adequate and consistent with provisions of the state's constitution that protect access to the courts and due process.

Allison Hartnett of Walton Lantaff Schroeder & Carson LLP, who represents employers and insurance companies in workers comp cases, said the employer carrier industry is disappointed in the ruling.  But her clients are hopeful that judges facing requests from claimants' attorneys for additional fees will come up with reasonable awards and “not something where a claimant's attorney receives a windfall,” she said.  She added that some clients have already begun to look into possibly settling some pending cases that they fear may end up incurring costly fees.

Kimberly Fernandes of Kelley Kronenberg, who also works on the defense side in workers comp cases, said the Castellanos decision takes the statute back to 2008, when the high court opened up an hourly fee option for attorneys' fees in Murray v. Mariner Health.  The Legislature then amended the law to require a statutory calculation based only on the benefits obtained.

“Time will tell if the Legislature desires to repeat history by amending the statute again,” Fernandes said.  “Regardless, we are sure to see a revival of attorney fee litigation right now, as claimants' attorneys dust off their old but viable claims and start seeking hourly fees instead of the statutorily calculated fees on benefits that were obtained for their clients ages ago.”