Florida's Cap on Attorney's Fees in Workers' Compensation Cases Ruled Facially Unconstitutional

In Marvin Castellanos v. Next Door Company, et al., the Florida Supreme Court ruled 5-2 that the mandatory fee schedule in section 440.34, Florida Statutes (2009), which eliminates the requirement of a “reasonable” attorney’s fee to the successful claimant, is facially unconstitutional.  The Court held that the mandatory fee schedule in section 440.34, which creates an irrebutable presumption that precludes any consideration of whether the fee award is reasonable to compensate the attorney, is unconstitutional under both the Florida and United States Constitutions as a violation of due process.

Section 440.34(1) states, in pertinent part:
A fee, gratuity, or other consideration may not be paid for a claimant in connection with any proceedings arising under this chapter, unless approved by the judge of compensation claims or court having jurisdiction over such proceedings.  Any attorney’s fee approved by a judge of compensation claims for benefits secured on behalf of a claimant must equal to 20 percent of the first $5,000 of the amount of benefits secured, 15 percent of the next $5,000 of the amount of the benefits secured, 10 percent of the remaining amount of the benefits secured to be provided during the first 10 years after the date the claim is filed, and 5 percent of the benefits secured after 10 years.  The judge of compensation claims shall not approve … any … agreement related to benefits under this chapter which provides for an attorney’s fee in excess of the amount permitted by this section. (emphasis added)

         In Castellanos, the claimant prevailed in his workers’ compensation claim.  However, because section 440.34 limits a claimant’s ability to recover attorney’s fees to the above sliding scale based on the amount of benefits obtained, the fee awarded to Mr. Castellanos’ attorney amounted to only $1.53 per hour for 107.2 hours of work determined by the Judge of Compensation Claims to be “reasonable and necessary” in litigating the case.  Castellanos had no ability to challenge the reasonableness of the $1.53 hourly rate, and both the JCC and First District were precluded by section 440.34 from assessing whether the fee award was reasonable.

In ruling that the mandatory cap is unconstitutional, the Florida Supreme Court has potentially opened the door to higher claims cost and additional litigation.  Claims handlers should be wary of exponential increases in attorney’s fees going forward on Workers’ Compensation cases, and adjust reserves accordingly.