Legislators Will Not Fix Workers’ Compensation This Year

Legislators Will Not Fix Workers’ Compensation This Year

A $70 difference in an attorney’s maximum hourly rate torpedoed a comprehensive workers’ compensation reform measure making its way through the legislature, as House and Senate lawmakers were unable to compromise further.

Both versions extended the benefits period from 104 to 260 weeks, to conform with a Florida Supreme Court decision that declared the current system unconstitutional. In an earlier case, the justices declared that the attorneys’ fee provision, which capped these costs at a percentage of the recovery, was also unconstitutional. House lawmakers proposed a $150 per hour maximum. Some Senators believed that this amount was too low for some complex cases, and the body endorsed a $250 per hour maximum. The House moved up to $180 but no further, and the Senate did not move at all. Business groups wholeheartedly supported the House workers’ compensation reform measure, but it failed to gain much traction with Democrats.

Lawmakers may pick up the issue again in 2018, but first they must draft new legislation from scratch.

Why an Attorney Matters

Since workers’ compensation is no-fault insurance, meaning that injured workers do not have to prove that their employers were to blame for the accident that hurt them, most cases should speed through the system with little or no delay, so injured workers can get back on the job. A hundred years ago, when state workers’ compensation plans first appeared, that may have been the case.

Today, however, insurance company lawyers often bitterly contest even the smallest sums, to reduce employer costs. That was the situation in Castellanos v. Next Door Company, the case which invalidated that current fee structure. In this case, the victim’s attorney worked over 100 hours to procure a modest settlement, and because fees are tied to the amount of recovery, the lawyer received the equivalent of $1.53 an hour.

Since no one with any bills to pay can afford to work for that amount of money, the fee structure effectively denied victims counsel in complex cases. That outcome places them at an overwhelming disadvantage because, as the court observed, “the once quick and efficient delivery of necessary medical treatment and wages [has become a] maze of reduced benefits and a contentious process for the recovery of those benefits.”

In civil cases, such as contract disputes, attorneys routinely give testimony about the reasonableness of their fees. Until the Legislature says otherwise, administrative law judges will probably use this procedure in workers’ compensation cases, and they will require the insurance company to pay what the ALJ considers a reasonable fee.

Workers win with this arrangement because they get aggressive attorneys and the insurance companies pay the bills.

Lost Wages

Since injured workers have no income, workers’ compensation pays two-thirds of their average weekly wage for the duration of their disabilities. This calculation often involves more than basic multiplication and division.

Take NFL players, for example. The average paycheck is about $900 a week during training camp and about $9,000 per week once the regular season begins. So, if a player is hurt during training camp, he is entitled to about $600 a week in workers’ compensation lost wages benefits. But once the regular season starts, if he is still unable to play, he should receive about $6,000 a week. That is a significant difference that may occur in other lines of work, as well. Moreover, a victim who is not working has no opportunity for promotion.

Furthermore, the AWW calculation should include non-cash compensation and irregular compensation, such as housing allowance, tuition reimbursement, and performance bonuses. These items, and others like them, may not be reflected in a W-2 or 1040.

How Long Do Benefits Last?

In 2009, lawmakers slashed the rehabilitation period from 260 to 104 weeks. In other words, injured victims stopped receiving lost wages two years after their injuries, without any ifs, ands, or buts. Many of them had not reached their maximum medical improvement (MMI) after such a short period of physical therapy, and since they were not completely disabled under the law, they were ineligible for any further cash benefits.

These workers faced a harsh choice between paying for their recoveries out of their own pockets or trying to go back to work before they had fully healed. As a result, the system was no longer “a reasonable alternative to tort litigation” and therefore unconstitutional.

Since the Supreme Court overturned the 104 week limit, workers are now entitled to benefits for five years (260 weeks).

To learn more about the workers’ compensation process, contact Barnett, Lerner, Karsen & Frankel.