Florida Supreme Court Decision Removing Attorney Fee Limitation Projected to Increase Workers’ Comp Rates by at Least 15%

The impact of the Florida Supreme Court decision in the Castellanos case http://www.floridasupremecourt.org/decisions/2016/sc13-2082.pdf  finding the statutory limitation on attorney fees to be unconstitutional prompted the NCCI rate fling with an increase of 15% associated with the decision. Most of the overall rate filing increase of 19.6% that would be effective for new and renewal business October 1, 2016 is attributable to this case. Jay Rosen, Director and Senior Actuary for NCCI, provided detail in support of the NCCI rate filing as part of the hearing conducted by the Florida Office of Insurance Regulation on August 16th. See http://www.floir.com/siteDocuments/NCCIPresentationJayRosen08162016.pdf

On April 28, 2016, the Florida Supreme Court issued a decision in Marvin Castellanos v. Next Door Company, et al., (Castellanos), No. SC13-2082. The Supreme Court concluded,

“…that the mandatory attorney fee schedule in section 440.34 of Florida Statutes, which creates an irrebuttable 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.”

The result of the Supreme Court’s decision is to eliminate the statutory caps on claimant attorney fees and return Florida to the law as it was prior to July 1, 2009 when claimant attorney

fees awarded under the fee schedule were required to be “reasonable.”

NCCI estimates that the prospective first-year impact of the Castellanos decision will be +15.0% on overall Florida workers compensation system costs.

A review of the hearing with testimony is provided at http://www.floir.com/Sections/PandC/NCCIHearing.aspx

As we reported earlier, the Castellanos decision provides some persuasive authority that may be cited in other states with limitations on attorney fees.

We continue to follow the developments in Florida and other states as they arise.