There has been a recent resurrection of the near decade-long debate within the Florida legal community surrounding the interpretation of Section 440.34 subsections 1 and 3 of the Florida Statute, which addresses claimant attorney’s fees in workers’ compensation cases. To understand how and why this argument has resurfaced it is important to revisit the subject from the beginning.
This entire issue dates back to 1968 when the Florida Supreme Court ruled on Lee Engineering v. Fellows. In their brief, the justices commented on the fairness of claimant attorney’s fees stating that “it is obvious that fees should not be so low that capable attorneys will not be attracted, nor so high as to impair the compensation program.” As a result the justices introduced six criteria for determining the reasonableness of claimant attorney’s fees, which can be read by clicking the Lee Engineering v. Fellows link below.
Fast forward to 2003. Florida had been happily plugging along with “reasonable fee” settlements for over 30 years since the Lee Engineering decision. However, in 2003, Florida was one of the nation’s leaders in workers’ compensation rates which caused industries to avoid Florida, or leave Florida altogether. Many have argued that contributing factors included a housing boom, increased workers, and an increased attorney presence in the marketplace, etc. Lawmakers felt that claimant attorneys fees needed to decrease so the Florida Statute was amended to include a subsection that outlined a specific schedule that judges were to follow when determining the reasonableness of claimant attorney fees based on a percentage of the settlement (440.34 (1)). This resulted in lower claimant attorney fees and remained the standard until 2009 when the Emma Murray v. Mariner Health case was decided.
In the Emma Murray case, the Florida Supreme Court was faced with an interesting conflict. Florida Statute 440.34(1) spells out the fee schedule, where 440.34(3) simply called for a “reasonable” fee for any employer/carrier paid attorney’s fee. The judges were faced with a question of what should occur when the subsection 1 fee schedule is so unreasonable that it violates the reasonable fee language in subsection 3. The judges ruled that the reasonable fee language in subsection 3 was more specific in nature because it directly dealt with the issue of employer/carrier paid attorney’s fees, whereas the fee schedule language in subsection 1 discussed attorney’s fees but was silent as to its interpretation of employer/carrier paid fees. So they ruled that the specific language controlled the general language and as a result reasonable hourly attorney fees for Claimant attorneys once again ruled. So, fees went up again…but not for long.
In July of 2009, on the heals of the Emma Murray decision, lawmakers again descended on Tallahassee in an effort to reverse the effects of the Emmy Murray decision and reduce plaintiff legal fees. As a result, legislators removed the term “reasonable” from subsection 3 which paved the way for the fee schedule laid out in subsection 1 to guide judges in their decision on attorney’s fees…until recently.
Often referred to as Emma Murray 2, Kauffman v. Community Inclusions once again has shown the pitfalls judges were facing when utilizing the guidance offered in subsection 1 of the statutes (440.34(1)). In the Kauffman case, a carrier denied compensability for damages Jennifer Kauffman sustained while attempting to transfer a patient into a recliner. At trial the injury was found to be compensable, and the carrier was ordered to pay $3,417.03 to Ms. Kauffman. Neither party disputed the amount owed to Ms. Kauffman, however the Judge of Compensation Claims (JCC) stated that he was bound by the statutory fee schedule regarding claimant attorney’s fee that was spelled out in subsection 1 of the Florida Statutes. As a result, the prevailing claimant attorney was entitled to $684.41, or about $6.84 per billable hour. In his Order, Judge E. David Spangler, Jr. commented that, “While the undersigned is constrained to follow the legislatively mandated scheme, I cannot help but question whether this scheme is consistent with the otherwise stated legislative intent…”. He also stated in a footnote that, “Based on the testimony presented by the claimant the undersigned would find a reasonable fee in this matter to be a factor of the stated hours 100.3 hours and an appropriate billable rate for this particular matter of $250 per hour, totaling $25,075.”
Many would argue that the Kauffman case encompassed everything that was wrong with the current state of affairs surrounding claimant attorney’s fees and workers’ compensation cases in Florida. One could even make a very compelling argument that claimant attorney’s had been on the look out for a case like this ever since lawmakers removed the term “reasonable” from the statue back in the summer of 2009. The judges in the Emma Murray case failed to address the constitutionality issue they were faced with, instead choosing to focus their attention on the conflicting language in 440.34 (1) and (3). Kauffman has now forced the courts to revisit the constitutionality issue, which they did during oral arguments in the 1st District Court of Appeals on January 13, 2011. It can be safely assumed that the anticipated ruling from the 1st DCA is sure to be a game changer.
To read Lee Engineering v. Fellows, please click here
To read Emma Murray v. Mariner Health, please click here
To read Kauffman v. Community Inclusions, please click here
To watch the video of the Kauffman v. Community Inclusions oral arguments heard by the 1st DCA, please click here.