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Supreme Court Ruling on Attorney Fees in Worker’s Compensation: Castellanos

Castellanos v. Next Door Company, et al.

The Florida Supreme Court recently ruled on the much anticipated Castellanos case that challenged the limitation of attorney fees in worker’s compensation cases. The court has ruled that the mandatory fee schedule is unconstitutional as a violation of due process under both the Florida and United States Constitutions.

Summary of Castellanos

In the Castellanos case, the insurer denied six visits of physical therapy for an injured worker. The plaintiff’s attorney spent 107 hours of work on the case and eventually got the therapy awarded entitling him to $164.54, or roughly $1.53 an hour. He then claimed that the statutory fee schedule is unconstitutional because it hinders an injured worker’s right to due process and limits access to courts since attorneys would not devote time to smaller claims.

How this affects you and the work comp system:

The decision will likely increase litigation, which will increase claims costs, which will drive up premiums. Below are some of the anticipated effects:

This affects all open claims and claims where the statute of limitations has not run.

What can employers do to mitigate litigation:

Given that plaintiff counsel will be more aggressive in litigating even small issues, it is important that employers provide timely and accurate information. It is recommended that you keep in contact with injured workers to ensure that their claim is resolving without issues. If your injured worker has questions regarding their claim and not receiving answers from their adjuster, please contact BKS’ claims department.

What now:

The Florida Legislature is currently in session and it is anticipated that they will respond with some sort of a compromise. The National Council on Compensation Insurance (NCCI) is expected to submit a proposal to the Office of Insurance Regulation that will give a clearer picture on how the ruling will effect rates businesses pay for worker’s compensation premiums.

We still await a decision from another high profile case, Westphal v. City of St. Petersburg, which challenges the 104 week indemnity payment cap. Stay tuned for its outcome.

More about the decision:

The Court starts with the premise that the WC system has become increasingly complex, and a claimant often needs an attorney to “navigate the thicket”.  The essential reason the Court found the statute in violation of both the Florida and the U.S. Constitution was that the statute created an irrebuttable presumption, neither an injured worker nor an employer could challenge the reasonableness of a fee that was too high or too low.

The Court then ties those both together; a claimant needs an attorney, a claimant cannot hire an attorney unless the fees are reasonable, and without an attorney the statute does not accomplish the legislative intent of providing benefits:

“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,” as is the stated legislative intent in section 440.015, Florida Statutes (2009), nor can it provide workers with “full medical care and wage-loss payments for total or partial disability regardless of fault and without the delay and uncertainty of tort litigation.”

For more information about this decision, click here.