Jeffrey P. Gale, P.A. // Miles Fee Is Customary And Presumptively Correct In Florida Workers’ Compensation Cases

applicationUntil six years ago, it was a crime in Florida for an attorney to accept a fee from a claimant in a workers’ compensation case that was not approved by a Judge of Compensation Claims (JCC) in accordance with the fee formula contained in section 440.34(1), Florida Statutes. Section 440.105(3)(c), Florida Statutes. The crime was punishable by up to one year in prison (s. 775.082) and a fine (s. 775.082). Moreover, any lawyer violating 440.105(3)(c) could expect to be suspended or disbarred from the practice of law.

In Miles v. City of Edgewater Police Dept/Preferred Governmental Claims Solutions, 190 So. 3d 171 (Fla. 1st DCA 2016), the JCC rejected an attorney/client contract wherein the client, an injured worker, and her union agreed to pay a workers’ compensation lawyer a fee in excess of the amount allowed under 440.34. Because it would be a financial hardship for the lawyer to handle the case under the formula set forth in 440.34, she withdrew from the case. Unable to find a lawyer to take her case, the injured worker proceeded Pro Se. Her claims were denied by the JCC.

On appeal, Claimant challenged sections 440.105 and 440.34, Florida Statutes, arguing they violated the First Amendment of the Constitution of the United States and the fundamental right to contract. The First District Court of Appeal agreed.

At its heart, Miles is about freedom of speech and the right of individuals to freely contract for legal services. The Court found that 440.105 and 440.34 violated these rights:

In conclusion, 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 are not permissible time, place, or manner restrictions on those rights. Likewise, those provisions also represent unconstitutional violations of a claimant’s right to form contracts — and are not permissible police power restrictions on those rights. Miles at 184.

Less than a year later, the Florida Supreme Court expressed similar sentiments regarding the inviolability of attorney/client contracts. Searcy, Denney, Scarola, Barnhart & Shipley vs. State of Florida, 209 So.3d 1181 (Fla. 2017) involved a challenge to a law limiting the contractual fee in a medical malpractice case. Relying on the same principles applied in Miles, the Florida Supreme Court rejected the law, declaring as follows:

The right to contract for legal services in order to petition for redress is a right that is related to the First Amendment, and any impairment of that right not only adversely affects the right of the lawyer to receive his fee but the right of the party to obtain, by contract, competent legal representation to ensure meaningful access to courts to petition for redress. The United States Supreme Court has stated, “We hold that the freedom of speech, assembly, and petition guaranteed by the First and Fourteenth Amendments gives petitioner the right to hire attorneys on a salary basis to assist its members in the assertion of their legal rights.” United Mine Workers of America, Dist. 12 v. Illinois State Bar Ass’n, 389 U.S. 217, 221-22, 88 S.Ct. 353, 19 L.Ed.2d 426 (1967) (vacating judgment enjoining union from hiring salaried attorney to assist members in assertion of legal rights with respect to workers’ compensation claims). This same constitutional right extends to a party’s right and practical ability to retain an attorney by contingency fee contract in order to have meaningful access to courts. Id. at 1193.

Before Miles changed the workers’ compensation Claimant-paid fee landscape, the statutory fee was considered the presumptively correct fee. Alderman v. Florida Plastering, 805 So.2d 1097 (Fla. 1st DCA 2002). In Alderman the JCC rejected a statutory fee which calculated to an hourly rate of $847.00 because the customary hourly rate was $150 to $300. Finding that the JCC placed undue reliance on the customary hourly rate, the First DCA reversed. It explained that the fee customarily charged in the locality for similar legal work is unlikely to “provide the sole basis for a departure [from the presumptive fee], particularly if the customary fee is based on an hourly rate. A decision to displace the statutory calculation with a fee based on hourly rate would effectively defeat the contingent fee arrangement implemented by the statute. Id.” at 1100.

The Court also said

it is possible that the award in a given case might be higher than the amount that would be obtained by applying an hourly rate. That is the essential feature of a contingent fee arrangement, and it is inherent in the design of the statute. Id. at 1100.

To protect the essential feature of the contingent fee, the Court established the following rule:

Although the judge of compensation claims may increase or reduce the presumptive fee by applying the statutory factors, an increase or reduction is appropriate only in exceptional circumstances. DeLoach, 603 So.2d at 705; Tri-State Motor Transit, 566 So.2d at 539. As we said in Marsh v. Benedetto, 566 So.2d 324, 326 (Fla. 1st DCA 1990), a departure is proper only if the presumptive amount produced by the statutory formula is “manifestly unfair.” Id. at 1100.

As a result of Miles and the legal standards enunciated in cases like Searcy, Denney, contingency contracts in Florida workers’ compensation cases providing for the recovery of attorney’s fees exceeding the 440.34 formula are allowed.

Contingency fees in Florida cases are subject to the guidelines established in Lee Engineering & Construction Co. v. Fellows, 209 So.2d 454, 458 (Fla.1968), now codified in the Rules Regulating the Florida Bar at rule 4-1.5(b).

Neither before nor since Miles was decided has any authority declared or even suggested that Florida Bar rule 4-1.5(b) does not apply or should be applied differently in workers’ compensation cases than in other types of contingency fee cases.

One of the main inquiries in the rule is to “the fee, or rate of fee, customarily charged in the locality for legal services of a comparable or similar nature.” Rules Regulating the Florida Bar at rule 4-1.5(b)(1)(C).

In pre-Miles workers’ compensation cases, the so-called “statutory fee” outlined in 440.34 was the correct answer to the inquiry. See Alderman v. Florida Plastering, 805 So.2d 1097 (Fla. 1st DCA 2002). With these words, Miles changed the answer:

In conclusion, 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 are not permissible time, place, or manner restrictions on those rights. Likewise, those provisions also represent unconstitutional violations of a claimant’s right to form contracts — and are not permissible police power restrictions on those rights.

The correct answer now is that the Miles contract rate has supplanted the statutory fee as “the fee, or rate of fee, customarily charged in the locality for legal services of a comparable or similar nature.”

For decades, the contingent fee customarily charged in Florida personal injury cases has been 33-1/3% to 40%. While no legal authority — rule, statute, or case law — since Miles was decided has forbidden charging the same rate in workers’ compensation cases, over the ensuing six years the standard Miles contract contingency rate has settled in at 25% to 33-1/3%. At the very least, then, this rate should be considered “the fee, or rate of fee, customarily charged in the locality for legal services of a comparable or similar nature.” Moreover, unless exceptional circumstances dictate otherwise, the contract fee must be considered presumptively correct and approved. See Alderman v. Florida Plastering, 805 So.2d 1097, 1100 (Fla. 1st DCA 2002)

Indoctrinated by 85 years of statutorily imposed fees, some workers’ compensation judges grapple with this new reality. They continue to believe that the statutory fee remains, if not the ceiling it once was, a measure to some degree of what constitutes a customary fee. This thinking is leading to the rejection of some “Miles Fees.” While the thinking is understandable, it is not the law.

One argument being floated for the continued deference to 440.34(1), is that the unconstitutional language remains on the books. Despite being found unconstitutional in 2016, the Florida Legislature has not gotten around to wiping the offensive language of 440.34 or 440.105 off the books. This is a mere housekeeping oversight, rather than anything of legal consequence. Quite simply, the Florida Legislature has more important things to do than spend time sweeping away dead statutory provisions.

It is not unusual for dead statutes to remain on the books long after their judicially declared demise. Only Legislative action can scrub a dead statute from the books. Hence, the Legislature’s failure to perform this action does not somehow mean a rejected statute remains a factor. The First DCA, which entertains all workers’ compensation appeals and is thus often the final word in this arena, has rejected 440.105(3)(c) and 440.34(1). Until the Florida Supreme Court disagrees with the First DCA or the First reverses itself in another case, the statutes are nothing but relics of the past.

Interestingly, just one week after the Miles decision was rendered, the Florida Supreme Court issued a decision on another aspect of 440.34. What has happened in the aftermath of this decision substantiates the proposition that statutes declared unconstitutional are rendered irrelevant despite remaining on the books.

While Miles concerned claimant-paid attorney’s fees, Castellanos v. Next Door Company, 192 So.3d 431 (Fla. 2016), dealt with carrier-paid attorney’s fees. The Supreme Court framed the certified question as follows:

WHETHER SECTION 440.34, FLORIDA STATUTES (2009), WHICH MANDATES A CONCLUSIVE FEE SCHEDULE FOR AWARDING ATTORNEY’S FEES TO THE CLAIMANT IN A WORKERS’ COMPENSATION CASE, IS UNCONSTITUTIONAL AS A DENIAL OF DUE PROCESS UNDER THE FLORIDA AND UNITED STATES CONSTITUTIONS.

Under the portion of the statute addressed by the Court, insurance carriers were responsible for paying fees to Claimant’s attorneys for successfully prosecuting claims against them. The rub is that the statute limited the fee to the statutory percentage contained in 440.34(1).

Castellanos involved a challenge to the limitation. The facts of the case, as expressed by the Court, demonstrate the statute’s crippling application:

The Petitioner, Marvin Castellanos, was injured during the course of his employment with the Respondent, Next Door Company. Through the assistance of an attorney, Castellanos prevailed in his workers’ compensation claim, after the attorney successfully refuted numerous defenses raised by the employer and its insurance carrier. However, because section 440.34 limits a claimant’s ability to recover attorney’s fees to a sliding scale based on the amount of workers’ compensation benefits obtained, the fee awarded to Castellanos’ attorney amounted to only $1.53 per hour for 107.2 hours of work determined by the Judge of Compensation Claims (JCC) to be “reasonable and necessary” in litigating this complex case.

The Court decided the certified question as follows:

This case asks us to evaluate the constitutionality of 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. Considering that the right of a claimant to obtain a reasonable attorney’s fee has been a critical feature of the workers’ compensation law, we conclude that the mandatory fee schedule in section 440.34, 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. See art. I, § 9, Fla. Const.; U.S. Const. amend. XIV, § 1.

My point in injecting Castellanos into this blog is to further debunk the argument that a statute on the books somehow remains vital despite being declared unconstitutional. While the statutory language declared unconstitutional in Castellanos remains the same, Claimant’s lawyers have continued without challenge to be awarded reasonable attorney’s fees based on hourly rates for successfully prosecuting claims against carriers. Not a single JCC or insurance carrier has so much as hinted that because the rejected statutory language remains on the books, reasonable hourly rate fees cannot be awarded. The argument is not being made because it is patently absurd.

Another case instructive on this point is Westphal v. City of St. Petersburg, 194 So.3d 311 (Fla. 2016). This is the Westphal case in a nutshell:

In this case, we consider the constitutionality of section 440.15(2)(a), Florida Statutes (2009) — part of the state’s workers’ compensation law — which cuts off disability benefits after 104 weeks to a worker who is totally disabled and incapable of working but who has not yet reached maximum medical improvement. We conclude that this portion of the worker’s compensation statute is unconstitutional under article I, section 21, of the Florida Constitution, as a denial of the right of access to courts, because it deprives an injured worker of disability benefits under these circumstances for an indefinite amount of time — thereby creating a system of redress that no longer functions as a reasonable alternative to tort litigation.

In its decision, the Supreme Court increased the number of weeks of entitlement from 104 to 260. Even still, the offensive statutory language, pasted below, remains the same. Nevertheless, everyone involved in the system knows that the law is 260 weeks. Here is the pertinent 2022 version of the statute:

(2) TEMPORARY TOTAL DISABILITY.

(a) Subject to subsection (7), in case of disability total in character but temporary in quality, 662/3 or 66.67 percent of the average weekly wages shall be paid to the employee during the continuance thereof, not to exceed 104 weeks except as provided in this subsection, s. 440.12(1), and s. 440.14(3). Once the employee reaches the maximum number of weeks allowed, or the employee reaches the date of maximum medical improvement, whichever occurs earlier, temporary disability benefits shall cease and the injured worker’s permanent impairment shall be determined.

The parting words in Miles help drive home the point of this blog:

In conclusion, 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 are not permissible time, place, or manner restrictions on those rights. Likewise, those provisions also represent unconstitutional violations of a claimant’s right to form contracts — and are not permissible police power restrictions on those rights. Thus, we hold that the criminal penalties of section 440.105(3)(c), Florida Statutes, are unenforceable against an attorney representing a workers’ compensation client seeking to obtain benefits under chapter 440, as limited by other provisions discussed above.

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Jeffrey P. Gale, P.A. is a South Florida based law firm committed to the judicial system and to representing and obtaining justice for individuals – the poor, the injured, the forgotten, the voiceless, the defenseless and the damned, and to protecting the rights of such people from corporate and government oppression. We do not represent government, corporations or large business interests.

While prompt resolution of your legal matter is our goal, our approach is fundamentally different. Our clients are “people” and not “cases” or “files.” We take the time to build a relationship with our clients, realizing that only through meaningful interaction can we best serve their needs. In this manner, we have been able to best help those requiring legal representation.

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