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Thursday, April 21, 2016

Florida Appeallate Court Rules Attorney Fee Statute Unconstitutional

The Florida First District Court of Appeals has held counsel fee provisions in the Workers' Compensation Act to be unconstitutional, ,"We hold that the challenged provisions violate Claimant’s First Amendment guarantees of free speech, freedom of association, and right to petition for redress." Miles v City of Edgewater, Decided April 20, 2016, setting the stage for review by the Florida Supreme Court.

Today's guest post is authored by the Hon. David Langham, Deputy Chief Judge of Compensation Claims for the Florida Office of Judges of Compensation Claims and Division of Administrative Hearings and is shared from

For over two years, the people of Florida workers' compensation have been watching The Florida
David Langham is the Deputy Chief 
Judge of Compensation Claims for the Florida Office
 of Judges of Compensation Claims
 and Division of Administrative Hearings
Supreme Court
 waiting for a decision in Castellanos v. Next Door Company. Then, the Florida First District Court of Appeal issued a panel decision on April 20, 2016. Judge Bradford Thomas authored the 26 page opinion in Miles v. City of Edgewater Police, joined by Chief Judge Roberts and Judge Wolf. The court has declared Fla. Stat. 440.34 and  Fla. Stat. 440.105(3)(c) unconstitutional. 

The facts include a police officer, Martha Miles, who sought to prosecute an occupational exposure case in Tampa. She first appeared with the assistance of counsel and asked the Judge "to approve two attorney’s fee retainer agreements." One agreement sought approval of "a $1,500 retainer by Claimant’s union," and the other "provided that Claimant would pay her attorney an hourly fee once the $1,500 is exhausted." These were both denied; counsel then withdrew.

Claimant proceeded to trial pro-se (representing herself) and failed to prove her entitlement to benefits under the workers' compensation act. That is, that she suffered a "compensable" accident or injury. The term "compensable" "is a concept used to convey that the Florida Workers' Compensation Law applies." See Esad Babahmetovic v. Scan Design Florida Inc., discussed recently on this blog.

Claimant alleged that she was pro se at the time of trial because no attorney would represent her. She offered multiple affidavits from attorneys attesting that they could (or would) not take on trial of a case like this under the constraints of the statutory fee parameters of Fla. Stat. 440.34. In withdrawing from the case, her original attorney, for whose fee retainer she had been denied approval stated “it would not be economically feasible for the undersigned to continue on a purely contingent basis with fee restrictions as contained in Florida Statute § 440.34.” Counsel asserted that the requirements of the statute would "ask an attorney to basically work for free.” 

The trial judge concluded "I find that the law as it currently exists does not allow for non-contingent, claimant-paid hourly fees for prosecution of a claim on the merits." The court concluded that the restrictions of FlaStat. 440.34 violate the injured workers' rights under the First and Fourteenth Amendments to the United States Constitution. The First provides protections for freedom of speech and freedom of association. The Fourteenth provides due process and equal protection.  
Claimant alleged two occupational exposures. She "testified regarding what occurred on the two dates." She further "testified that she became ill after each incident and lost time from work, but was eventually released to return to work." Claimant was "diagnosed with Chronic Obstructive Pulmonary Disease" before she had these work exposures, and she may have been a smoker. Her argument in favor of causation was that "losing a significant amount of work and requiring medical treatment for a short time after each event 'would lead anyone to believe that there was something that occurred that was out of the ordinary from the individual normal health responses.'” The trial judge denied the claims concluding there was no "evidence as to what the specific substance or substances were to which she was exposed," nor of "the levels to which she was exposed," nor the causation of the "disease she complains of." (sic).

The court's analysis takes the reader through several points. First, the court reminds us that Judges of Compensation Claims are not a court and cannot decide issues of constitutionality, unlike the admininstrative officials in Oklahoma. Therefore, the constitutional challenges can be raised by Claimant in the appellate court without necessarily preserving that error in proceedings before the JCC. 

The First Amendment protects freedom of speech and association. With little explanation, the Court describes Claimant's "speech" in seeking benefits (through an attorney) as "content-based speech," and states that the standard of review is "strict scrutiny;" this means the statute fails "unless the government can show that the regulation promotes a compelling government interest and that it chooses the least restrictive means to further the articulated interest.” The court cites to its previous decision regarding an injured worker being allowed to pay an attorney outside the statute when defending a claim for costs. Jacobson v. Southeast Personnel Leasing, Inc., 113 So.3d 1042, 1048 (Fla. 1st DCA 2013). Though not stated specifically, some will argue that the court found Jacobson to be controlling authority in this analysis.

The court concluded that the Constitution protects "the right to hire attorneys on a salary basis to assist . . . in the assertion of their legal rights.” Claimant argued Fla. Stat. 440.34 violates her right to free speech, because the evidence established that no attorney would take her case if counsel’s compensation was limited to a 'guideline' fee." This remains true, according to the court, despite the fact that there is no evidence of what that fee might be if a claim were deemed "compensable." Despite not knowing what the statutory fee might be, the court concluded that the record in this case supported that "no reasonable attorney would accept the risk of investing their labor into representing Claimant where the likelihood of receiving any compensation was uncertain." 

As an aside, the court does not explain the multitude of civil cases filed every day in Florida in which the fee is wholly contingent upon success, and in some population of which no recovery or fee ever occurs. That is a point that has been raised often in the past. There may be argument that the court might have prevented future litigation with such an explanation. 

The Court concluded that "because section 440.105(3)(c), Florida Statutes, makes it a crime for an attorney to accept a fee that is not approved by a JCC, and section 440.34, Florida Statutes, prohibits a JCC from approving a fee that is not tied to the amount of benefits secured, the two statutes operated as an unconstitutional infringement on the claimant’s right to hire an attorney." The court also concluded that the state failed to prove that asserted governmental interests were sufficient to uphold the statute. 

The Court held that “[laypersons] cannot be expected to know how to protect their rights when dealing with practiced and carefully counseled adversaries.” Thus, it appears that in any case in which the employer/carrier employs an attorney, the claimant will have the right to do the same. Some may argue that the court has essentially held that injured workers cannot prevail against attorneys. 

The court also concluded that Fla. Stat. 440.34 "violated the claimant’s right to contract for legal services." It noted that “the right to make contracts of any kind, so long as no fraud or deception is practiced and the contracts are legal in all respects, is an element of civil liberty possessed by all persons." Further, this is both a "liberty and property right" protected by the Fifth and Fourteenth Amendments. Some will argue that the Fifth is not involved, but the Fourteenth Amendment has been deemed to "incorporate" other protections, including those in the Fifth. As a point of clarity, each is therefore arguably involved in any due process analysis. 

The court reminded that that Fla. Stat. 440.34 “does not offend the right to freely contract," regarding fees paid by the Employer/Carrier. Lundy v. Four Seasons OceanGrand Palm Beach, 932 So.2d 506 (Fla. 1st DCA 2006). But where someone other than the Employer/Carrier (the worker or her union) is to pay the fee, the issue is "whether sections 440.105 and 440.34 are constitutionally permissible restrictions on claimant-paid fees based on the State’s police power." The court concluded they are not. 

Furthermore, the court held that the "application of the statutes to this scenario is arbitrary and capricious, because only the attorney’s fees paid to claimants’ attorneys are regulated, and E/Cs are free to contract for legal services without limitation."

The court conceded that "the Legislature could intend to prevent the public harm caused when injured workers might quixotically seek benefits the worker is highly unlikely to obtain. In addition, the Legislature could rationally seek to disincentivize meritless litigation which disrupts the workplace and causes unnecessary hostility between employers and employees." However, these interests are secondary, according to the court, to the right in "a free society" for individuals "the intellectual prerogative to personally weigh the benefits and risk of exercising their statutory right to obtain redress for their injury." Essentially, the decision about whether to enter into some agreement with counsel is up to the injured worker. 

In a nutshell, "the public harm to be prevented – undue depletion of workers’ financial resources and undue disruption of the workplace – does not prevail against the individual’s right to contract for legal representation." The legislature and the state have no interest, essentially, in attempting to protect someone from entering into a contract of her or his own choosing. 
Finally, the court held that "Florida case law has long recognized that an individual can waive his or her personal constitutional rights." Therefore, "if a person can waive constitutional rights, a person can also waive statutory rights such as those in section 440.34." The court found "no reason why a workers’ compensation claimant should not be able to waive a limitation on claimant attorney’s fees and agree to pay her attorney with her own (or someone else’s) funds."

The court reminded that "any fee agreement 'must nonetheless, like all fees for Florida attorneys, comport with the factors set forth in Lee Engineering & Construction Co. v. Fellows, 209 So.2d 454, 458 (Fla. 1968), and codified in the Rules Regulating the Florida Bar at rule 4– 1.5(b)."

The court held that such a Claimant-paid fee is somehow "subject to a JCC’s finding that the fee is reasonable," but cited no authority for the conclusion that a JCC has such authority. The Legislature specifically removed the word "reasonable" from Fla. Stat. 440.34 in 2009 following the Florida Supreme Court's decision in Murray v. Mariner. There are already those who question what authority exists for the exercise of JCC review or the constraint of "reasonable."

So, the "restrictions in sections 440.105 and 440.34, when applied to a claimant’s ability to retain counsel under a contract that calls for the payment of a reasonable fee by a claimant (or someone on his or her behalf), are unconstitutional violations of a claimant’s rights to free speech, free association, and petition . . . and also represent unconstitutional violations of a claimant’s right to form contracts." Thus, the "criminal penalties of section 440.105(3)(c) are unenforceable against an attorney representing a workers’ compensation client seeking to obtain benefits under chapter 440, as limited by other provisions discussed above." 

The court also says that the "proper remedy (to the constitutional infirmity) is to allow an injured worker and an attorney to enter into a fee agreement approved by the JCC." But again, the court cites no authority which affords the JCC authority for prospective approval of fee agreements.
All this time spent watching The Florida Supreme Court for a ruling on the constitutionality of restrictions on employer/carrier paid fees, and on an otherwise quiet Wednesday in April the First District renders this decision which provides ample food for thought. 

It is important to remember, as previously discussed on this blog, that if a District Court, such as the First District "declares invalid a state statute," then the case "shall" be reviewed "by appeal" by the Florida Supreme Court, pursuant to Florida Rule of Appellate Procedure 9.030(1)(a). So, so a rehearing is possible, as is a rehearing en banc (the whole court), and it will be reviewed by the Supreme Court as the case now stands.