Editor’s comment: We were surprised to hear former Chairman Dennis Ruth made a comment at a state-wide presentation about wanting open disclosure of defense counsel fees. His point was claimant attorneys had to disclose their fees to the Arbitrators so why shouldn’t defense attorneys? In response to Chairman Ruth’s unprecedented suggestion, one pundit suggested all WC attorneys across the state should have to post their tax returns on the web so we can see who makes the real money in workers’ comp and who doesn’t.
The Florida claim we mention began with a claimant who was a certified nursing assistant for a health care provider in Florida. While helping to lift a patient, she allegedly suffered a uterine prolapse, which required a hysterectomy. She filed for workers compensation benefits, but her claim was denied because the carrier felt the condition was not work-related. We assure all of you we agree with denial.
Based upon a favorable independent medical exam, claimant prevailed on appeal and was awarded $3,244.21. The award was not the issue—the claimant attorney filed an appeal of the award of attorney fees to the Florida Supreme Court.
Under the most recent reforms to the Florida comp statute, attorneys are supposed to be paid according to a very simple schedule. Based upon the award of $3,244.41, her attorney would collect $649 under the schedule. Most defense observers would suggest the attorney think carefully before taking such a tenuous claim. The attorney then claimed 80 hours of legal work went into the file and counsel complained it would be an hourly rate of $8.11.
The Florida Supreme Court then went to a long-time Florida WC tradition. They found “ambiguity in the statute.” Having looked for and found “ambiguity” in what seems to be a very clear fee schedule, the Supreme Court then began to try to find some way to increase claimant counsel’s fees. In rooting around for a strategy, the court noted defense attorneys billed $16,000—we don’t agree such fees should be disclosed as public record and broadcast on the web. The court then reasoned if you multiply the claimed 80 hours of work performed by claimant’s attorney with the court’s view of a “usual and customary fee of $200 per hour,” the resulting fee would be about $16,000.
So what did they do? The court ordered the insurance carrier to not only pay their own defense attorney’s fees; they also ordered the carrier to pay claimant’s attorney $16,000 in fees for securing a $3,244 settlement! So the resolution of this quizzical and disputed claim results in the carrier paying $3,244.41 to claimant and $32,000 in attorney’s fees!! The Florida insurance community is naturally buzzing with outrages at such an outcome.
There are so many things unwise about such a ruling and the legislation that fostered it, it boggles the mind. First and foremost, we point out the vast majority of claimant attorneys make lots more money that defense attorneys so the courts don’t need to “even the playing field” by trying to award equal fees to claimant attorneys when they take on marginal workers’ compensation claims. There is an adage in workers’ compensation that you make $500 per hour on the average as a claimant attorney and $100 per hour as a defense attorney. Those economics make some of our defense competitors “cross-over” to quietly do both defense and claimant work and causes problems with their loyalty to the defense side of the force in complex legal battles.
How do claimant attorneys make bigger bucks? Well, please understand many litigated claims don’t have defense attorneys. The cases are settled by claimant counsels directly with the insurance adjusters. The claimant attorneys and adjusters love this setting because there is no “interference” from defense attorneys who sometimes worry about the law and rules. The claimant attorneys make millions in such settings and clearly don’t expend thousands of hours in doing so.
Even when the matter is in litigation, claimant attorneys may also settle major claims in many states and get very substantial fees with very, very little time expended. We know of one case where a claimant attorney got a single phone call from a claimant, signed him up via mail, made one call to an adjuster and settled a wage loss claim and got a fee of $25,000 in about a week. When that happens, in contrast to the silly claim about making $8.11 per hour above, the attorney isn’t going to the courts or anywhere else to complain his fees are too high.
Next, in Illinois and most states, something has to be done about claimant attorneys taking what we call a “Seven Dwarfs” claim—workers compensation claims that are dopey, goofy, sleepy and silly. As we have pointed out many times, it doesn’t cost anything to file even the most bogus and unfounded workers’ compensation claim. Right now, KC&A has at least five pending hotly disputed WC death claims that range from questionable to completely unfounded. By that we mean, we are sure claimant is dead but we have no idea, none, why claimant’s counsel feels the death might be in any way related to work. What is happening with all five of these claims is the “status call dance” that infuriates our defense clients.
The “status call dance” begins with defense counsel writing letters to claimant counsels for several years asking for medical and/or accident documentation. The cases roll and roll on the Illinois status calls until the Arbitrators start to get firm about continuances and demand claimant counsel take some definitive action, such as disclosing experts. Please also understand disputed death claims where no benefits are paid are arguably “emergency” hearings at every status call because there is a widow(er) and possibly children not receiving benefits. We point out to our readers; competent claimant attorneys should not even file a death claim until they have expert medical opinions in place. As defense attorneys have to travel to and attend hearings across the state, we have to bill our clients and ask them to be patient while the claims age badly.
When and if our opponents get solid to slippery documentation, we can then try to close the files via settlement or hearing. Please note we sometimes settle disputed death claims for $3,200 like the uterine prolapse claim above. But if we have billed $5-10,000 to track the file for the years claimant’s counsel fools around doing nothing and we then have to get defense experts and depose them, we assure our readers our defense clients aren’t happy with us and they are furious with opposing counsel. We assure you they would be even more furious to have to pay attorneys on both sides to simply appear in court repeatedly when nothing but nothing is happening other than claimant’s counsel is not prepared and shouldn’t have brought the claim until it was ready.
So we ask the question, is the Florida Supreme Court ruling bad for workers comp? Some observers note claimant attorneys might reject some small cases and this may be felt to be bad for claimants. We point out this is a critical aspect of keeping workers’ compensation costs down—we don’t need dopey, goofy and silly claims clogging the dockets so injured workers with bona fide claims have to wait. The more dumb claims we receive the more we want to ask our legislators to institute a filing fee so claimant attorneys have to have some rational basis to file and manage litigated claims. But whatever happens, it is a bad, bad idea to double-penalize insurance carriers for disputing questionable claims.
If you have questions or comments, please send a reply.
