Recently, in 2018 Fees and Settlements (August 2018), this blog provided a brief history of Florida workers' compensation attorney fee evolution, 2018 aggregate claimant attorney fees, and an overview of the reasonably consistent recent history of both settlement order volume and settlement aggregate dollar value. This post continues the examination of 2018 claimant fees, with an analysis of the contributions of various fee categories or groups to the overall total.
Over the four fiscal years 2015 through 2018, attorney fees related to the settlement of Florida workers' compensation cases averaged about 62% of the aggregate total of claimant fees. The non-settlement fees contributed 38%, which was comprised of 9% non-hourly and 28% hourly fees.
The data reported for each of those years individually, however, demonstrates changes in the contributions each element makes to the aggregate. In 2015 and 2016, attorney fees on settlements accounted for a larger majority of claimant attorney fees. Those two years documented similar figures in all categories: settlement $96,073,314 to $94,422,599 - settlement fees decreased in 2016; non-settlement, non-hourly fees $17,882,330 to $16,285,382 - the non-hourly fees decreased in 2016; non-settlement, hourly fees $22,281,761 to $25,866,295 - hourly fees increase in 2016. However, the overall total claimant fees for the two years were remarkably similar: $136,237,414 (2015) to $136,574,237 (2016).
The aggregate, or total claimant attorney fees increased notably in 2017, from $136,574,237 (2016) to $185,676,766, an increase of almost 36% in one year. There is the suggestion that some portion of that increase should be related to the pent-up supply of fee agreements. Anecdotally, some attorneys voiced an intention to hold fee entitlements in fiscal 2016 in anticipation of a decision in the then-pending Supreme Court review of Castellanos v. Next Door Company, 192 So.3d 431 (Fla. 2016). And, the composition of parts contributing to that aggregate also changed.
Settlement fees remained the predominant category in 2017 and increased slightly from $94,422,599 to $99,066,123 (+5%). Non-settlement fees contributed more significantly to the increase, although the non-settlement, non-hourly fees decreased notably (though as a percentage, perhaps "significantly" is more apt) from 16,285,382 to $11,256,726 (-31%). The increase in non-settlement fees was in the hourly category, which increased from $25,866,295 to $75,353,918 (+191%).
In 2018, the overall aggregate total of claimant attorney fees increased by almost 7%, from $185,676,766 to $198,653,393. Fees in two categories decreased in 2018. The volume of non-settlement, hourly fees receded from $75,353,918 to $70,013,393 (-7%). The contribution of non-settlement, non-hourly fees decreased in a reasonably consistent fashion, from $11,256,726 to $10,570,867 (-6%). The increase in 2018 is attributable to settlement fees, which increased from $99,066,123 to $118,069,209 (+19%).
The various contributions of these categories are perhaps easier to visualize when expressed as percentages of each year's respective whole.
This diagram illustrates that the 2018 composition of claimant attorney fees is somewhat divergent from the four-year averages illustrated in the first graph: settlement 62%, non-settlement hourly 29%, and non-settlement, non-hourly 9%. In 2017: settlement 53%, non-settlement hourly 41%, and non-settlement, non-hourly 6%. In 2018: settlement 59%, non-settlement hourly 35%, and non-settlement, non-hourly 5%. Considering that neither the volume of settlements nor the aggregate dollar value of settlements is demonstrating significant changes in either 2017 or 2018, claimant fees on settlements appear to be accounting for a greater amount of the settlement funds.
That conclusion may be supported by an examination of the distribution of the fee percentage in settlements (above). Virtually all settlement fees are calculated as a percentage of the settlement amount. in both 2015 and 2016, almost 99% of Florida workers' compensation settlement fees ranged between 1% and 20% of the settlement amount. That is consistent with the statutory requirement for application of the 20%/15%/10% formula in Section 440.34, F.S.
However, in 2017, that 1%-20% fee range decreased to just over 90% of the settlements; in 2018, it decreased more significantly to about 66%. Notably, every settlement fee in a workers' compensation case (remembering the caution of the Estupinan potential discussed in 2018 Fees and Settlements, August 2018) must be approved by a Judge of Compensation Claims. As the data supports a significant (over 33%) volume of approved fees inconsistent with the statutory formula, it appears that some populations are ignoring that formula.
The non-settlement attorney fees can be further subdivided into categories. The Florida OJCC has five categories for such fees: Order Approving Stipulated Appellate Attorney Fee (OASAAF), Order Approving Interim Attorney Fee (OAIAF), Order Awarding Contested Attorney Fee (OACAF), Order Awarding Contested Appellate Attorney Fee (OACAAF), and Order Approving Side Stipulation with Settlement (6). However, two of these account for just over 94% of the non-settlement fees: OAIAF and 6. I have always wondered what led the programmers to abbreviate that one "6." But, if it isn't broken, don't fix it?
Of course, any of those five might be either "hourly" or "non-hourly." Analysis of the hourly fees in these categories is perhaps worthy of understanding. The hourly rates in these categories can be calculated and compared from one year to the next. This demonstrates regarding OAIAF that in both 2015 and 2016, there were distinctions between the three methods of calculating "average": (1) mean (add all and divide by volume), (2) median (the number value that is in the middle of a range examined), and (3) mode (the number value most often represented in a data set). In 2017 and 2018, these three calculation methods have yielded significantly consistent results.
The analysis of Order Approving Side Stipulation with Settlement (6) does not illustrate the distinctions among various methods of quantifying "average." Some will note that the average hourly rate in both categories demonstrated an increase from 2016 to 2017, and the averages are all reasonably consistent comparing 2017 to 2018 in both of these predominant fee order types.
Claimant attorney fees in Florida continued to rise in 2018. Hourly fees' contribution to the overall total decreased some, while settlement fees increased significantly. This is despite the overall volume of settlements and the aggregate settlement value remaining remarkably stable. There is significant indicia that some population of Judges of Compensation Claims either interpret the District Court's decision in Miles as a determination that Section 440.34 F.S. is facially unconstitutional or otherwise find legal justification for disregarding the provisions of that statute related to settlement attorney fees.