On April 20, 2016, the Florida First District Court of Appeal rendered a decision in Miles v. City of Edgewater Police Dept.,190 So.3d 171 (Fla. 1st DCA 2016). Eight days later, the Florida Supreme Court rendered Castellanos v. Next Door Company, 192 So.3d 431 (2016). Each found elements of the Florida workers' compensation statute regarding claimant attorney fees unconstitutional.
Each year, the Florida Office of Judges of Compensation Claims issues an annual report, pursuant to statutory mandate, Section 440.45. That report is in the drafting stages this month, and figures remain subject to audit and revision. However, the statistics indicate that litigation volume increased in 2016-17, as did claimant attorney fees.
Claimant attorney fees in Florida can be paid by the injured worker (on settlements and ex parte stipulated fees) or
by the employer/carrier (ordered or stipulated), pursuant to Section 440.34(1) or (7). There are three general fee order types:
settlement, stipulated, awarded.
Litigation volumes are measured in Florida with two metrics, the overall petition for benefits filing rate and the "new case" filing rate. A "new case" may be created by filing a petition on case for the first time. A "new case" can also be created with a Request for Assignment of Case Number or "RACN," in cases that do not, at that time, require a petition. This might be to facilitate the filing of a motion regarding discovery, or the filing of a settlement, or a variety of other reasons. In either instance, any volume of "subsequent petitions" could be filed in any case. Therefore, petition volume includes litigation on cases filed in previous years, and instances of multiple petitions filed in a single case; petition volume will always be higher than new case volume.
In 2015-16, the Petition filing volume increased 12.1%, a significant change. That trend, increase, continued in 2016-17, but at a somewhat slower rate of 5%. The total petition filing in 2016-17 was 70,363. Of note, the increasing filing rates are beginning to affect availability and convenience of state mediation in Florida. The recent landfall of Hurricane Irma and the extended office closures and appointment cancellations associated with it will exacerbate that affect in the near term, potentially affecting availability throughout most of 2017-18.
New Case volume has historically changed similarly to changes in petition filing. However, the New Case rates of change have tended to demonstrate less elasticity, to have generally changed more subtly. That is evidenced in 2016-17 with New Cases increasing, but very slightly to 31,304. The increase is .4%.
In 2016-17, the number of cases in which settlement attorney fees were approved decreased slightly (1%), and the total dollar value of those settlements also decreased slightly, about $3 million. The attorney fees paid by injured workers regarding those settlements increased by about $4.5 million. Attorney fees on settlements may be impacted by the District Court's analysis in Miles.
Attorneys fees outside of the "settlement" setting, litigation attorney fees, can be either "statutory" or hourly. The availability of hourly fees expanded in scope and depth following the Court's decision in Castellanos. Litigation claimant attorney fees increased about $44 million in 2016-17.
At a recent seminar, I was asked if some portion of that may be non-recurring. That seems probable. The Castellanos opinion decided an additional volume of pending appellate challenges (called the "companion cases"). Therefore, some volume of cases had fee issues resolved after Castellanos, and had been in the system awaiting decision or stipulation. It is therefore a corollary that the fee amounts reported in 2015-16 (and perhaps before) were suppressed by the withholding of fee agreements pending the Court's decision.
That is, there was certainly a volume of fees not awarded or paid in 2015-16 as those cases were being challenged ("companion cases"). And, it is likely that some attorneys who were entitled to fees based on litigation undertaken were not seeking determination of fee amounts in 2015-16 (and perhaps before), in anticipation of the Court changing the paradigm. That withholding would have constrained 2015-16 fees approved, and the following resolution of those fees would have increased 2016-17 fees approves.
In 2016-17 the volume of "statutory fees," those calculated with the formula set forth in Section 440.34(1) decreased about $5 million ($5,028,656, or by about 31%. Hourly attorney fees increased by about $49 million ($49,487,622, or about 191%. The aggregate of decreasing statutory fees and increasing hourly fees results in the overall increase of about $44 million, above. An immediate question I hear is "how were there any hourly fees prior to Castellanos.
It is noteworthy that there was a limited exception in place throughout this history. Since 2003 there was a limited opportunity for hourly attorney fees. Section 440.34(7). This allowed an hourly fee one time during any case. But, the fee was limited to a maximum of ten hours, at a maximum rate of $150 per hour, and was available solely for claims that involved only medical issues.
But, there were other hourly fees since 2003 as well. In 2003, the Legislature eliminated hourly fees. However, thereafter hourly fees were nonetheless awarded (trial) and approved (stipulation) regarding litigation on cases with a date of accident before that July 1, 2003 statute change. For several years, there were both statutory fees (post 2003 cases) and hourly fees (pre 2003 cases). In 2008, the Florida Supreme Court insinuated "reasonable" into the statute, and concluded the 2003 statute allowed hourly fees. This was referred to as the Murray decision. Thereafter, hourly fees were available on all workers' compensation cases, with no relevance afforded the July 1, 2003 date.
In 2009, the Legislature amended Section 440.34 and eliminated hourly attorney fees. As with most statutory enactments, that change did not affect cases prior to the amendment. Therefore, a new distinction was drawn between cases with accident dates prior to July 1, 2009 and those with accident dates after. Cases with accident dates before July 1, 2009 could include hourly attorney fees following Murray, while those after could not. Following that change, various challenges were litigated, culminating in the Castellanos decision that again insinuated "reasonable" and hourly attorney fees into Florida workers' compensation. Thus, since April 2016 hourly fees have been appropriate in all cases, without the constraints in 440.34(7), regardless of the date of accident.
With the change to a broader hourly fee paradigm (440.34(1)) in 2016, the hourly rate has also demonstrated upward change. In 2015-16, the overall effective hourly rate was about $185.87. In 2016-17, the overall effective hourly rate was $259.05. Those figures were calculated by dividing the overall total of reported hourly attorney fees each year by the overall total of reported attorney hours. This is an "average" calculation, which ignores the methodologies of "median" or "mode" upon which some place certain statistical importance.
What is known and what is not bears reiterating. What is known is that claimant attorney fees in Florida increased in 2016-17. The average hourly rate awarded or approved also increased. What is not known is what portion of that increase can be attributed to "pent up" cases that were awaiting the Supreme Court's decision, and whether the increase therefore represents a significant trend or merely documents the result of the Castellanos decision. Further answers on what is not known may become more clear as future data is collected and analyzed.
