I recently published regarding the authority of a Florida Judge of Compensation Claims to order appellate attorney fees in Statutory, Inherent, or Delegated Authority (July 2018). I received some interesting comments on that post, some in passing, delivered in quiet whispers, and others more detailed.
Authority was in the news about a month later, with the rendition of Howes v. Apollo Oil, ___ SW3d _____, NO. 2017-CA-001116-WC Kentucky Court of Appeals, 2018). It is worth reminding that in Kentucky workers' compensation trials are decided by Administrative Law Judges (ALJ). Those decisions are subject to appellate review by the Workers Compensation Board (Board), whose decisions may then be reviewed in turn by the Court of Appeals. The administrative appellate review Board model is somewhat unique in workers' compensation.
The decision in this instance focused on the costs related to obtaining benefits through the litigation process. An injured worker named Roscoe Lohr hired an attorney, Mr. Howes, to represent him in a workers' compensation case. Mr. Lohr was seeking benefits from the employer, Apollo Oil. When Mr. Howes was hired, he and Mr. Lohr "executed a legal services agreement." In that contract, Mr. "Howes agreed to represent Lohr," and Mr. "Lohr was to pay Howes twenty percent of any award or settlement he received."
In addition, the agreement said that Mr. Howes would "advance" costs of litigation (items such as "postage, transportation, deposition costs, witness fees"). The agreement was that those costs were to be reimbursed by Mr. Lohr "in the event of and only to the extent of a settlement or award in" Mr. Lohr's favor. The case was later settled, and Mr. Howes filed a motion for his fees and those litigation costs.
The "ALJ entered an order approving the $3,500 attorney fee but denying the request for litigation costs." The judge concluded that she/he lacked authority, or "jurisdiction," to "award costs." The ALJ noted that there was "no statutory provisions permitting an ALJ to award costs." Mr. Howes' appeal to the Board did not change the ALJ decision, and thus he sought review of the Court of Appeals.
In addition to the foundation cited by the ALJ, the lack of statutory authority to award costs, the Board concluded that "requiring litigation cost to be reimbursed" from the funds "paid pursuant to a valid child support lien" would not be appropriate under a Kentucky statute that exempts workers' compensation benefits from "the claims of creditors." See KRS1 342.180. That statute is not identical to, but arguably has similarities with Section 440.22, Florida Statutes.
The Court interpreted and explained KRS 342.180, noting that "any compensation awarded," except "child support, is exempt from the claims of creditors." The Court also interpreted KRS 342.320 which delineates the calculation and approval of attorney fees in workers' compensation claims. The Court noted that this statute "contains no provision permitting the ALJ to award reimbursement of litigation costs." Notably, the "only section of the workers’ compensation statutes which addresses costs" is a provision regarding the imposition of "costs as a sanction."
The Court of Appeals concluded that the sanctions statute would be "unnecessary if the ALJ had authority to award costs in an ordinary claim." Thus, to infer into the statute a broad authority to award costs, the Court explained, would be to render the sanction statute effectively "meaningless or ineffectual.” The Court also reminded that "[w]orkers’ compensation is a creature of statute, and the remedies and procedures described therein are exclusive.” (Citations omitted).
The Court noted that Mr. Howes’s basis for payment of costs "stems from a provision in his legal services agreement," a contract. That agreement "is not an issue that has any effect on the obligations that exist between Apollo Oil and Lohr." The claim for costs is therefore "merely a post-judgment contractual dispute between an attorney and his client." Thus, it is seemingly subject to enforcement like any other contract, in a court of competent jurisdiction.
The Court also addressed Mr. Howes' contention that equity dictates the ALJ should both interpret and enforce his legal services agreement. This argument is essentially that attorneys will be disincentivized to "represent a client in . . . workers’ compensation" if the attorney is not "guaranteed to be reimbursed litigation costs advanced."
The Court concluded that in most cases, "costs can be reimbursed from the proceeds of an award or settlement." In this instance, the attorney was not postured to make those deductions because the settlement funds were paid to a child support agency pursuant to statutory requirements. Therefore the settlement funds never came into the attorney's possession for him to deduct his due prior to disbursement. Thus, the situation presented was an exception to that in many workers' compensation cases.
The Court noted that a different result in this instance, which involved child support arrearage, "would act to the detriment of the children to whom the child support is intended to benefit." Thus, even assuming that equity might override the statutory provisions, the Court concluded that equity had not been shown in this instance to dictate the attorney recovering to the detriment of the children, who are protected by the statute. This is a notable statement, equity is essentially about "fairness," and as a result may be difficult to predict and perhaps more difficult to replicate in various factual situations.
The subject of costs has been the subject of litigation in Florida. Demedrano v. Labor Finders of Treasure Coast, 8 So.3d 498 (Fla. 1st DCA 2009) addressed the jurisdiction of a Judge of Compensation Claims regarding the reimbursement of costs from settlement proceeds. Another decision of potential interest regarding costs is Eshlibi v. Consolidated Box Mfg., 962 So.2d 377, Fla 1st DCA 2007). Some court watchers may note that the panels for both of these decisions included judges Benton and Kahn.
Demedrano reminds us that Judges of Compensation Claims (JCC) "lack inherent judicial power," and are limited to the authority provided by statute. It also refers favorably to the broad language of Section 440.33(1), Florida Statutes. That provision empowers the JCC to "do all things conformable to law which may be necessary to enable the judge effectively to discharge the duties of his or her office.” Though that broad conveyance of authority was relied upon in Demedrano, it has been discounted in other appellate decisions. see e.g. Karell v. Miami Airport Hilton, 668 So.2d 227 (Fla. 1st DCA 1996); Millinger v. Broward County Mental Health, 672 So.2d 24 (Fla. 1st DCA 1996).
A fair reading of Demedrano, Karell, Millinger, and other analyses of Section 440.33(1) likely leads to the conclusion that whether a Florida judge has authority over costs or not is simply "maybe." And, if that answer is not acceptable, then perhaps a more definite "it depends" is of more comfort? Unfortunately, the law often comes down to an answer of "it depends," because the outcome is dependent upon various facts and circumstances, and those differ from case to case.
In the end, "it depends" is perhaps the essential lesson of Howes v. Apollo Oil in Kentucky also. Jurisdiction there did not exist, but that only mattered because the attorney did not possess the proceeds from which to pay himself before the client received funds. The circumstances of the settlement proceeds going directly to the child support this worker owed created facts and circumstances that caused the case to be heard. The statutory construct that protects workers, and yet favors child support, led to the outcome in that set of facts.
Howes is thus an educational foray and reminder of the statutory nature of what we do, the limited authority of workers' compensation judges, and the fact that our systems are all products of state law.
