For the second time in six weeks, the Florida Supreme Court has declared part of Florida’s workers’ compensation law to be unconstitutional. Although the court’s recent decisions are limited to specific portions of the statutory workers’ compensation system, its opinions also have alluded to broader concerns with the growing restrictions and limitations in Florida’s workers’ compensation laws. The court’s recent holdings with respect to specific provisions of the law, together with the resulting impact on workers’ compensation insurance rates and potentially broader statutory concerns, assures that workers’ compensation will be at the forefront of Florida’s public policy debate in the coming months.
Invalidation of Temporary Total Disability Benefit Limit
In an opinion dated June 9, 2016, the Florida Supreme Court considered the constitutionality of section 440.15(2)(a), Florida Statutes. This provision limits disability benefits to 104 weeks for a worker who is totally disabled and incapable of working but who has not yet reached maximum medical improvement. The court found that the 104-week limitation is unconstitutional under article I, section 21, of the Florida Constitution, which provides citizens with access to courts. [1]
The Westphal case involved a firefighter who injured his back while moving heavy furniture in the course of fighting a fire. Soon after his injury, the firefighter began receiving workers’ compensation benefits. According to section 440.15(2)(a), Florida Statutes, he would receive benefits until the earlier of the date of maximum medical improvement or until 104 weeks. Unfortunately, the firefighter did not reach maximum medical improvement prior to the expiration of the 104-week limit. [2] He therefore fell into a so-called “gap.” He remained totally disabled at the point his temporary total disability benefits ended, but he did not qualify for permanent total disability benefits because he could not prove that he would still be totally disabled when he reached maximum medical improvement.
Article I, section 21, of the Florida Constitution, guarantees every person access to the courts and ensures the administration of justice without denial or delay. [3] As noted by the Westphal court, this constitutional right has been construed liberally to “guarantee broad accessibility to the courts for resolving disputes.” [4] This provision further has been held to prohibit the legislature from abolishing a common law right without providing a reasonable alternative to protect the rights of citizens to redress for injuries, unless the legislature can show an overpowering public necessity for abolishing the right and there is no alternative method for meeting the public necessity. [5]
The court observed that in 1968 when the access to courts provision was added to the Florida Constitution, the state had already abolished the common law tort remedy for injured workers and had enacted the workers’ compensation law to provide a simple, expeditious and inexpensive method of resolving workplace injuries. The Florida Supreme Court, in Kluger v. White, [6] held that the alternative remedy set forth in the workers’ compensation law provided adequate, sufficient, and even preferable safeguards for injured employees, thus satisfying one of the exceptions to the rule against abolishing rights to redress for injuries. [7] As respects benefits for temporary total disability, the workers’ compensation law provided 350 weeks of benefits until amended in 1990. In 1990, the legislature amended the law to provide temporary total disability benefits for 260 weeks. Still, the Florida Supreme Court, in Martinez v. Scanlan , [8]concluded that the 1990 workers’ compensation law remained a reasonable alternative to tort litigation. [9] The court reached this decision based upon its finding that the workers’ compensation system as a whole continued to provide injured workers with full medical care and wage-loss benefits regardless of fault and without the delay and uncertainty of tort litigation.
The central question in Westphal therefore became whether the further reduction in temporary total disability benefits from 260 weeks to 104 weeks altered the earlier analysis -- that is, whether the workers’ compensation law remained a reasonable alternative to tort litigation with a 104-week limit on temporary total disability benefits. The court stated that, at some point, reductions in statutory benefits reach a “tipping point” at which the limitations become so significant as to effectively constitute a denial of benefits and therefore a constitutional violation. [10] In Westphal, the 104-week cap on benefits operated to completely cut off the injured worker’s ability to continue receiving benefits even when he remained severely injured and under the active treatment of doctors selected by his employer. The court therefore found that the 104-week limit was not a sufficient period for severely injured workers to show maximum medical improvement. As a result, the court then held that the 104-week limit did not provide a reasonable alternative to tort litigation for these injured workers. [11]
Under Florida law, the judicial act of striking a statutory provision automatically revives the predecessor version of the same statute unless it too would be constitutional. The Westphal court noted that the prior version of section 440.15(2)(a), Florida Statutes, had been determined to be constitutional when it allowed for 260 weeks of temporary total disability benefits. [12] Westphal therefore results in a revival of 260 weeks of benefits in these instances. As of this writing, the estimate rate impact of the decision is not yet known.
Striking of Attorneys’ Fee Schedule and Resulting Rate Impact
Just six weeks before Westphal, the Florida Supreme Court assessed the constitutionality of the mandatory attorney’s fee schedule in section 440.34, Florida Statutes. The statutory schedule limited the fees of a claimant’s attorney to a percentage of the recovery. In Castellanos, the injured worker’s attorney spent more than 100 hours pursuing a claim that resulted in a recovery of $822.70. [13] The attorney asserted that an hourly rate of $350 would have been reasonable in light of the complexity of the claim and the numerous defenses raised by the employer/injury. Nonetheless, due to the statutory attorney’s fee schedule, the amount of fee award was limited to $164.54, or only $1.53 per hour.
The Castellanos court considered whether the mandatory fee schedule of section 440.34, Florida Statutes, which precluded any consideration of whether the fee award was reasonable, was unconstitutional as a violation of due process under the Florida and United States Constitutions. [14] The court found that the fee schedule created an irrefutable presumption that every fee calculated under the schedule was reasonable. The statute precluded injured workers from presenting evidence to provide that the fee calculated under the schedule was inadequate in a given case. Accordingly, the court found that the risk was too great that the schedule would result in a fee award that was “entirely arbitrary, unjust, and grossly inadequate.” The court therefore held that the statutory fee schedule, when coupled with an inability to show that the resulting award was not appropriate in particular cases, violated the state and federal constitutional guarantees of due process. [15]
As noted in the discussion of Westphal above, Florida law provides that the judicial act of declaring a statute unconstitutional serves to revive the predecessor version of the same statute unless the predecessor version likewise would be unconstitutional. [16]Regarding the statute at issue in Castellanos, prior court decisions had interpreted an earlier version of the fee schedule to include a reasonableness standard on fee awards. Therefore, by reviving this statute, the Florida Supreme Court specified that a Judge of Compensation Claims must allow a claimant to present evidence to show that the application of the statutory fee schedule will result in an unreasonable fee. The court emphasized, however, that the statutory fee schedule remains the starting point. [17]
In the weeks following Castellanos, the National Council on Compensation Insurance (NCCI) calculated the rate impact of the decision. The Florida Office of Insurance Regulation (OIR) announced on May 27, 2016, that NCCI had submitted a rate filing proposing a 17.1% increase in workers’ compensation insurance rates, most of which (15%) was attributable to Castellanos. [18] The OIR has announced it will hold a public hearing in July to receive testimony and public input regarding the filing.
Potential Broader Concerns with the Workers’ Compensation Law
The decisions in Westphal and Castellanos are limited to striking specific provisions of the workers’ compensation law that the Florida Supreme Court found to be unconstitutional. However, in reaching these decisions, the court created concerns as to how it might view other parts of the workers’ compensation law in which benefits have been reduced over the years. Notwithstanding that the decision in Westphal was limited to the 104-week cap on temporary total disability benefits, the court added that the gap in coverage for the injured worker “cannot be viewed in isolation from the remainder of the statutory scheme.” [19] The court pointed to potential concerns with several other reductions in benefits adopted by the legislature over the years, including giving employers and insurers the “virtually unfettered right to select treating physicians,” repealing the right of employees and employers to opt-out of the workers’ compensation system, adopting a standard that the compensable injury be the “major contributing cause” of a worker’s disability, and a requirement that an injured worker pay a medical copayment after reaching maximum medical improvement. [20]
Although these aspects of the workers’ compensation law were not implicated by Westphal, the court’s decision to discuss them in the opinion may reveal broader concerns with the workers’ compensation law that were at issue in Westphal or Castellanos. Justice Lewis concurred in the Westphal result, but separately wrote that he would have gone further. He wrote in his concurring opinion that the only appropriate remedy is to require the Florida Legislature to provide a comprehensive, constitutional rewrite of the workers’ compensation law. [21]
Conclusion
The Florida Supreme Court has invalidated two provisions of Florida’s workers’ compensation insurance law. The Castellanos decision prompted a proposed 15% increase in workers’ compensation insurance rates, which ultimately will affect businesses throughout Florida. Any further rate impact resulting from Westphal is not yet known. However, beyond the immediate and targeted impact of these two cases, the Florida Supreme Court has signaled broader potential concerns with Florida’s workers’ compensation system. The court’s statements assuredly will result in additional challenges to the workers’ compensation law working their way through the court system. In addition, these decisions necessitate discussions about potential 2017 legislation not only addressing Westphal and Castellanos but perhaps more broadly addressing the system as a whole. These discussions, of course, require consideration of both the scope of benefits provided by the workers’ compensation law and the economic impact of changes that would increase workers’ compensation insurance rates.