Abraham Lincoln said that a lawyer's time and advice are hisstock and trade. Abraham Lincoln was not wrong. Time is animportant factor.” So said workers' compensation claimant attorneyRichard Sicking standing before the Florida Supreme Court in whatmay be a seminal moment for the future of the workers' compensationsystem.

Since the passage of the 2003 reforms, employers' rates havebeen cut by more than half, including a statewide average 18.4percent decrease that took effect in January. But even as employerssavored the largest rate decrease in the state's history, whichtranslates into a collective savings of $700 million,employers/carriers have been awaiting the most serious challengeposed to the reforms. Such is the case as the $4 billion industryfaces a potentially dynamic change that could turn upside down theentire scope of its business practices after the Florida SupremeCourt showed strong signs that it might declare all or part of thestatutory attorneys' fees provision unconstitutional.

No issue addressed in 2003 received more attention than thepayment of claimant attorneys' fees, which had been calculated on ahourly basis after a 1990 court ruling that found that the state'sstatutory reimbursement schedule did not adequately compensateattorneys. Critics had long argued that the court's decisionrepresented a case of judicial activism. They accused the court ofignoring the statutory intent of the law, which contained noreference to hourly fees. As a result of the hourly fees, criticssaid claimant attorneys had a strong incentive to prolong cases,even to the detriment of injured workers who needed benefits.

The legislature agreed with the employers/carriers byeliminating all hourly fees with one exception: a $150 hourly feeup to a maximum of $1,500 for one medical claim per accident.Lawmakers also said the legislative intent of the fee provision wasto follow the current statutory fee schedule, which calls forclaimant attorneys to receive 20 percent of the first $5,000 inbenefits, 15 percent of the following $5,000, and 10 percent of theremaining benefits awarded in the 10-year period following the dateof the accident. As a means to further ensure that the feeprovisions were followed, lawmakers specifically stated that judgesof compensation claims (JCCs) could not approve fees higher thanwhat was spelled out in the law.

Emma Murray v. Mariner Health/ACE USA

When the Florida Supreme Court donned their robes to hear oralarguments in Emma Murray v. Mariner Health/ACE USA (SC07-244), allof those law changes were up for review. The case in question isrelatively straightforward. The JCC found that an on-the-jobaccident resulted in Murray needing surgery to repair her collapseduterus. In addition, they determined that she qualified for wageloss benefits. Those medical and indemnity benefits were determinedto be in the amount of $3,224.21. Brian O. Sutter, who representedMurray, indicated that he spent 84.4 hours on the case, which underthe current fee schedule equals a total fee of $648.84 — or $8.11per hour. By comparison, Cora Malloy, who represented theemployer/carrier, acknowledged that she spent 135 hours on the caseand was paid $16,050, which equals $125 per hour.

From the beginning, some justices made clear their attitudestoward the case and the workers' compensation system in general.Justice Barbara Pariente set the tone for much of the hearing.“Everyone here would agree that the facts look crazy,” she said.“You have an employer who is paying its attorney $16,000, but anexperienced workers' compensation attorney who has done 80 hours ofwork gets $600.”

When Is Reasonable, Reasonable?

Sicking's case rested on several constitutional arguments thatclaimant attorneys have been making ever since the fee language wasfirst circulated through the workgroups and legislative committeesthat led up to the 2003 reforms. Simply stated, he maintained thatthe legislature unconstitutionally interfered with the rights ofinjured workers to due process in the legal system because itunfairly restricted claimant attorneys' fees to the point wherethey might not take certain small benefit cases. This is becausethe fees would not reflect the time and effort spent on thecase.

As a starting point, Sicking pointed to Chapter 440.34(1),Florida Statutes, which governs attorneys' fees. The statute reads,“A fee, gratuity, or other consideration may not be paid for aclaimant in connection with any proceedings arising under thischapter, unless approved as reasonable by the JCC or the courthaving jurisdiction over such proceedings.” The same language issomewhat echoed in Chapter 440.34(3), which states that “if anyparty should prevail in any proceedings before a JCC or court,there shall be taxed against the non-prevailing party thereasonable costs of such proceedings, not to include attorneys'fees.”

As constructed, the two provisions were designed to eliminatehourly fees by specifically limiting the ability of JCCs to awardcontingency fees without consideration of the time and expensesassociated with an attorney pursuing benefits on behalf of aninjured worker. Secondly, it eliminated employer/carrier fees paidto claimant attorneys even if they prevailed in a case, whichclaimant attorneys say further restricts the abilities of claimantattorneys to be adequately compensated.

Enter Abraham Lincoln.

“Abraham Lincoln was not wrong,” said Sicking. “Time is animportant factor, and what the legislature has said is that you canhave a hearing, but you can't tell the judge how much time wasspent on the case because that now is legally irrelevant.”

In one of those black-letter law disputes, the argument turns onthe definition of the word “reasonable.” From Sicking's point ofview, reasonable should be the jumping-off point to decide fees, aswas generally the case prior to the 2003 reforms. Before thereforms, even though the statutory fee schedule was in place,judges were free to award fees based upon their own determinationsof what was reasonable. That led to wide-ranging attorneys' feesthat were based on the views of judges and the related differencesin cost as determined by geographic area. As Sicking said, thepercentages were a starting point for calculating fees, as opposedto being the end point set by the 2003 reforms.

As a means to end the practice of having a legal systempredicated on claimant attorneys' hourly fees, employers/carriersconvinced lawmakers to shift the underlying premise for awardingbenefits so that they were paid on “benefits secured,” as opposedto “services rendered.” The employers/carriers stated that thiswould ensure that injured workers received more benefits instead ofthe money flowing into claimant attorneys' pockets. In response,Sicking maintained that this exacerbated an already unfair playingfield since the resources of an employer/carrier substantiallyoutweighed any that could be marshaled by injured workers or theirattorneys.

“It is an unequal contest because the employer has a sword forwhich an employee has no shield,” he said. “They can spend whateverthey want in defense of the case, but the worker is faced withbeing able to pay an unlimited amount to his attorney to representhim.”

It was an argument that resonated with many justices. “If thepurpose of this is to maximize the award for the claimant, howcould arbitrarily limiting the fees paid by the employer/carrier,who has wrongly denied benefits, [accomplish that]? It affects notthe claimant with the big claim, but the poor woman or man who hasthe small claim,” said Pariente. “They haven't leveled the playingfield; they have eviscerated the playing field by creating asituation that allows a carrier to spend unlimited amounts ofmoney.”

Speaking on behalf of Mariner Health/ACE USA, John Darin notedthat since defense attorneys were defending clients as opposed toinjured workers seeking benefits, defense firms were necessarilycompensated based on the time and expense associated with defendinga claim. He also pointed out that while due process in regards toan injured worker's ability to gain access to the courts is aconstitutional issue, there is ample evidence to suggest that theyare being represented appropriately.

“There are lots of workers' compensation claimants who getexcellent representation from their attorneys,” he said. “Younotice that there is a gallery of people here interested becausethey want to take these cases.”

Attorneys' Fees

In an amicus brief, the Associated Industries of Florida andFlorida Insurance Council argued that the 2003 changes had notradically altered the dynamics of the litigation system. The Officeof Judges of Compensation Claims (OJCC) earlier this year publishedan annual report detailing the legal activity throughout thesystem.

In fiscal year 2006-2007, some $478.5 million was spent onclaimant attorney and defense attorney expenses. Of that money,$191 million was reimbursed to claimant attorneys and $287 millionto defense lawyers. Those figures, however, reflect fees from casesin different years and multiple petitions for benefits. Forexample, $500 in claimant attorneys' fees are applicable to a casethat was opened in 1957. According to the report, claimantattorneys were paid just over $7 million in cases dating from 1987to 1954, which represents four percent of the total amount paid.The majority of the claimant attorneys' monies — some 77.14 percent— reflected payments on cases in which a worker suffered an injurybetween January 1, 2000 and December 31, 2006.

It wasn't until 2002 that the OJCC started tracking the amountof money paid to defense attorneys. One of the arguments used byclaimant attorneys in any field of insurance is that there isalways an unfair playing field where litigation is concerned.Whereas claimants typically have limited resources and must dependon attorneys to take their cases on a contingency-fee basis,insurers have seemingly unlimited resources to dispute claims.Since there is no credible data on defense attorneys' fees datingback before the reforms, it is impossible to measure the legalspending habits of insurers as compared to claimant attorneys'reimbursements.

One thing is clear, however: Defense attorneys' fees have risensignificantly in the post-reform era. In fiscal year 2002-2003,defense firms earned a total of $220 million, a number thatincreased to $300 million by fiscal year 2005-2006.