SUPREME COURT DECIDES CASTELLANOS FEE  STATUTE UNCONSTITUTIONAL
 
The Supreme Court of Florida issued an opinion in the case of Marvin Castellanos v. Next Door Company, et al, NO. SC 13-2082 (Fla. April 28, 2016), and held that F.S. §440.34 as amended in 2009 is facially unconstitutional and creates an irrebuttable presumption in violation of due process of law. 

As many of you know, the Supreme Court of Florida accepted jurisdiction to evaluate and determine the constitutionality of the mandatory fee schedule which eliminated the requirement of a “reasonable” attorney’s fee.  The Supreme Court of Florida issued a 55-page opinion setting forth the history of attorney’s fees in Florida Workers’ Compensation Law, factual circumstances surrounding many relevant cases, and an in-depth analysis of constitutional law as applied to F.S. §440.34. 

The Supreme Court made several important determinations, including that the Legislature created an irrebuttable presumption in 2009 when they removed any consideration of reasonableness from the statute and removed any discretion from the JCC, or judiciary on review, to alter the statutory fee amount.  The Supreme Court described this as a complete elimination of any ability of either the JCC or the reviewing Court to deviate from the statutory formula.  The Court held that the conclusive fee schedule prevents all injured workers, whether they have small-value or high-value claims, from presenting evidence to prove that the fee is inadequate in any given case and, therefore, is in violation of the state and federal constitutional guarantees of due process. 

The Supreme Court identified a three-part test for determining the constitutionality of a conclusive statutory presumption and held the rebuttable presumption of the statutory guidelines under F.S. §440.34 failed the three-prong test.  First, the Supreme Court determined that the Legislature’s concern about the excessiveness of the attorney’s fee award is not a reasonable basis for the unyielding fee schedule.  Next, the Supreme Court determined that there is no reasonable basis to assume the conclusive fee schedule actually serves the function of the statute to eliminate excessive fees and noted that excessive fees can still result under the fee schedule particularly if the time required to obtain significant benefits was relatively minor.  Third, the Supreme Court determined that the elimination of any requirement that the fee be “reasonable” in 2009 completely eviscerated the purpose of the attorney’s fee provision and failed to provide any penalty to the Employer/Carrier for wrongfully denying or delaying benefits in contravention to the stated purpose of the statutory guideline scheme. 

Following the conclusion that the Statute is unconstitutional, the Supreme Court explained the prior version of F.S. §440.34, the statute’s immediate predecessor to the 2009 amendment, is revived.  The Court noted this is the statute that was addressed by the Supreme Court decision of Murray v. Mariner Health, 994 So. 2d 1051 (Fla. 2008). 

The Supreme Court emphasized that the fee schedule remains the starting point for a determination of workers’ compensation attorney’s fees, and that the revival of the predecessor statute does not mean the claimant’s attorneys will receive a windfall.  Only when the claimant can demonstrate, based on the standards articulated by the Florida Supreme Court in the 1968 decision of Lee Engineering and Construction Company v. Fellows, 209 So. 2d 454 (Fla. 1968), that the fee schedule results in an unreasonable fee, such as in the Castellanos case, will the claimant’s attorney be entitled to a fee that deviates from the fee schedule.

Throughout the opinion, the Supreme Court emphasized the right to a reasonable prevailing party attorney’s fee has been a key feature of the state’s workers’ compensation law since 1941.  The Court specifically found that the 2009 enactment of a mandatory fee schedule created an irrebuttable presumption that every fee calculated in accordance with the fee schedule will be reasonable to compensate the attorney for his or her services and that this is clearly not true. 

PRACTICE TIPS:
Don’t panic.  According to the Supreme Court, we are back where we were with the statute in 2003.  We were able to resolve many cases, issues, and fee disputes back then and we can do it again. 

If there are open fee reservations, those are the cases we need to look at and resolve.  Please remember, if there is no agreement to entitlement to an attorney’s fee, the clock will continue to run.  

The recent case of Miles v. City of Edgewater Police Department, No. 1D15-0165 (Fla. 1^st DCA April 20, 2016) allows above-guideline fees in claimant-paid fee situations and may encourage claimant’s attorneys to washout their cases. 

Although there will be an increased number of Petitions, Verified Petitions for Attorney’s Fees, and a push to schedule discovery events and court events in an effort to increase time spent on files, excess attorney’s fees can be avoided by timely payment of benefits that are due.