Friday, July 15, 2016

Florida Worker’s Comp Costs Going through the Roof Next Month!

                                 Florida Worker’s Comp. Costs                             Going through the Roof Next Month!

     In April of 2016, the Florida Supreme Court issued two opinions which will, by themselves, cause the cost of worker’s compensation insurance to go through the roof starting this fall.   In Castellanos v. Next Door Company the Supreme Court ruled that a law passed in 2009 creating a mandatory attorneys fee schedule for workers compensation cases was unconstitutional under both the Florida and United States Constitution. 

     Prior to the Castellanos decision, attorneys’ fees had to be commensurate with the damages received by the plaintiff in a workers’ compensation case. In this case, Mr. Castellanos was seeking benefits in the amount of $822.70.  His attorney billed 107 hours and sought a fee of $36,817.50.  However under the 2009 fee system, Castellanos’ attorney was awarded attorney's fees of only $164.54.

     Writing for the majority, Justice Barbara Pariente said the law creating the fee schedule violated Castellanos' due process rights under the state and U.S. Constitution because it prevents challenges to the “reasonableness” of legal fees in workers-compensation cases.   “Without the likelihood of an adequate attorney’s fee award, there is little disincentive for a carrier to deny benefits or to raise multiple defenses, as was done here,” Pariente wrote.“Virtually since its inception, the right of a claimant to obtain a reasonable prevailing party attorney’s fee has been central to the workers’ compensation law.”  By replacing the former “reasonable” standard with a sliding scale of legal fees, Pariente said, “the Legislature has thus eliminated any consideration of reasonableness.”
     In the second ruling, Westphal v. City of St. Petersburg  the Florida Supreme Court struck down the two year cap on workers’ compensation temporary benefits, re-establishing the cap at five years.
     Mr. Westphal was a firefighter who was seriously injured on the job, needing multiple spine surgeries. Under Florida’s workers’ compensation system, Mr. Westphal was barred from bringing a legal action for his injuries against his employer, and instead was required by statute, to apply for workers’ compensation benefits. Under the workers compensation system, Mr. Westphal was required to agree to his employer’s choice of physicians and to abide by those physicians’ advice.  After 104 weeks (2 years) of treatment by the employers physicians, Mr. Westphal’s temporary disability benefits ran out.  Despite the fact Westphal was still unable to work the employers physicians opined Westphal’s condition was still improving, and as such, he did not qualify for permanent disability benefits.   Thus, Mr. Westphal was completely cut off from the ability to receive any workers comp benefits until such time as he qualified for permanent disability.
     Based on the fact Westphal fell through the statutory cracks and was ineligible for continuing benefits, the Supreme Court held the eligibility time limit in the workers' comp law unconstitutional “as a denial of the right of access to courts.”   Then, rather than invalidating the entire statute, the Court employed the judicially created remedy of “statutory revival” replacing the 104 week temporary benefit cap with a 260 week benefit cap which existed in a prior version of the statute.  The Court further stated 260 weeks of temporary benefits “passes constitutional muster”.
     As a direct result of these two rulings, insurance industry analysts are predicting a 20% increase in workers’ compensation insurance premiums beginning this fall.  The increase being mainly to cover increased attorney’s fee awards resulting from the Castellanos decision, and to cover three additional years of benefits now allowed by the Westphal decision.

     With an increase of 20% in worker’s comp insurance, it goes without saying Florida consumers and homeowners alike can expect to pay a lot more for goods and services starting this fall as many companies, predominantly in the construction sector, go out of business.  

     For instance, companies such as roofers will see their premiums escalate so much that homeowners simply won’t be able to afford to have the work done and work will dry up.  With homeowners being unwilling to afford to pay licensed and insured roofers, you can then expect unlicensed and uninsured roofers to come in and fill the void at substantially lower prices.  Why is this a problem for homeowners?  Well, aside from the fact the quality of work will suffer with unlicensed and uninsured companies, if a homeowner hires an unlicensed and uninsured contractor there could be serious financial repercussions if a worker is hurt on their property.

         These two opinions also expose the inherent problems with the current workers compensation system.  For instance, the Supreme Court correctly recognized in Castellanos the current system encourages abuse by insurers since, without the fear of large attorney’s fee awards, there is no incentive for insurers to do the right thing on an $822 claim and just pay it.  However, on the flip side, I can think of no other court or administrative proceeding where anything approaching $36,000 would ever be found to be a reasonable amount of attorney’s fees on an $822 damage claim.  Thus, this ruling will only serve to encourage unscrupulous billing practices and file churning by plaintiff's attorneys.

         The same sort of conundrum is also apparent in Westphal.  Clearly, if a man is legitimately unable to work due to a work injury, but has yet to qualify for permanent disability his benefits should not be terminated.  However there is also no doubt that raising the time cap from 2 to 5 years will be another avenue of abuse of the system by workers, as there will be no incentive for them to settle their claims and return to work.

That all being said, perhaps the most disturbing part of both of these opinions to me are the legal red flags which are exposed.  In each of these decisions, the Supreme Court has yet again taken a judicial activist role, ignoring the separation of powers which is key to the workings of our government. 

Under the separation of powers, the legislature is empowered to make policy determinations and enact the laws of the state.  The judiciary is empowered to interpret the constitution and laws of the state, not pass judgment upon the wisdom of legislature's policy decisions.

In both Castellanos and Westphal, the Supreme Court has strayed from simply interpreting the law but rather, has taken it upon itself to encroach in to the legislature’s realm of deciding what constitutes good policy for the state.  In fact, in Castellanos and Westphal Justices Canady and Polston politely take their colleagues to task for ignoring separation of powers and invading the legislature’s authority to make policy determinations. 

In the Castellanos dissent, Justice Canady recognized that it was a policy determination, and the Legislature was fully within its authority to establish a relationship between the amount of benefits obtained in workers’ compensation cases and the amount of attorney’s fees awarded.  He went on to chastise the majority for declaring the law unconstitutional simply because they disagreed with the wisdom of the Legislature's policy determination.

Canady and Polston also penned a similarly themed dissent in Westphal because essentially the majority of Justices arbitrarily decided 260 weeks of benefits was constitutional, yet the 104 weeks of benefits authorized by the Legislature was not.

 We know almost for certain that since this an election year, there will be no special session called to deal with the workers comp insurance.  Thus, it seems likely the Legislature will deal with amending the workers comp statute as soon as the 2017 legislative session begins.

We can only hope this time, when the Legislature comes up with its fix, the Supreme Court will respect the principle of separation of powers regardless of whether they concur with the wisdom of the Legislature or not.  

Tuesday, July 5, 2016



As we roll in to July, it has not been widely publicized but a new set of amendments to the Martin County Comprehensive Plan are set to go in to effect later this month.  These amendments are numerous, and will eventually prove shocking and troublesome to many residents of Martin County.  
For those having the patience to sit, read through and understand all these amendments it becomes clear these latest changes are not part of a coherent “plan” for Martin County.  A “plan” would clearly lay out the big picture with regard to how residents want Martin County to evolve.  The bulk of these amendments do not address big picture items.  Rather, they are specific new local governmental regulations which are being improperly injected in to a “planning” document..  What is the difference you ask?  It’s simple, local ordinances and/or regulations are the method by which the “plan” is implemented.  Logically this makes sense since we want the process of changing the “plan” to take longer so we don’t change the  “plan” on a regular basis.  To the contrary, we DO want the ability to change regulations and ordinances in a timely manner because we may, from time to time, stumble upon better or more appropriate ways to implement our “plan”.
That having been said, there is only one motivation for placing specific  regulations in the “plan” where they don’t belong.  That motivation is………….wait for it………………to make it as difficult as possible to undo the continuing and unabashed assault upon the private property rights of the citizens of Martin County. 
For instance, one of the more objectionable provisions in the amendments is laid out in Policy 8.1C.1(1), providing for the creation of a new seventy five foot (75’) shoreline protection zone (SPZ).   This new 75 foot SPZ is, or will now be, required for “all new development”.  Thus, as of the effective date in July, “no construction” will be permitted in Martin County within 75 feet of the waterline on any waterfront property within the County.   In other words, in Martin County no waterfront real estate owner will be permitted to make any use of a 75 foot wide strip of land which abuts the water.  There is no scientific justification cited in the "plan" for this regulation, rather, the 75 foot SPZ is premised upon a generalization and presumption "that of course a 75 foot buffer will help water quality". 
This type of regulation, which denies a limited group of property owners the right to use their property is not new by any means in Martin County.  It is simply a perpetuation of the problematic mindset which all to often goes unchallenged because citizens believe a burdensome regulation will only affect someone else.  After all, why would any voter object when there is a governmentally identified "public purpose" that is being advanced solely by burdening a small minority of property owners?     
            Looking at it  purely from a fairness perspective I think we would all agree if there is some truly legitimate “public purpose” to the community, the cost or burden of achieving that"public purpose' should be borne by the entire community, not just by a small minority of property owners. So for instance, (leaving aside the issue of 75 foot SPZ being improperly injected in a planning document) if there truly is a “public purpose” to the community to be achieved in enacting a 75 foot SPZ, then Martin County should pay all waterfront property owners for taking their 75 foot strip of land.  To be fair, Martin County should then turn around  and assess all County residents their fair share of the cost of buying the land needed to achieve this "public purpose".  
This type of governmental regulation which takes property without providing just compensation violates the United States Constitution’s Fifth Amendment’s Takings Clause which states: “nor shall private property be taken for public use without just compensation.”
Uncompensated regulatory takings of private property have become an immense problem not just in Martin County but all across the nation.  This, notwithstanding the fact the US Supreme Court has recognized it is inappropriate for governmental regulation to act as a substitute for the power of eminent domain, calling it an“out and out plan of extortion” 
With any luck however, the tide many be turning on uncompensated regulatory takings.  There is currently pending before the US Supreme Court the case of Common Sense Alliance v. San Juan County which is a case from San Juan County in Washington State.  The most interesting factor in Common Sense Alliance  is that the unlawful regulation which precipitated this case is eerily similar to the 75 foot SPZ in Martin County.    
As is the case in Martin County, San Juan County’s “growth management approach" to regulating land-uses adjacent to environmentally sensitive lands relies almost exclusively on presumptions and generalizations. 
In 2012, San Juan County enacted a regulation stating that as condition of obtaining local government approval, a waterfront property owner must dedicate a portion of their property as an on-site conservation area.  So, just as with Martin County’s 75 foot SPZ, San Juan County shoreline property owners are required to set aside “water quality buffers” as a condition of development.   Again similar to the 75 foot SPZ in Martin County, San Juan’s “water quality buffers” are not based on any harm the proposed land use itself might cause, but based on the county’s general efforts to reduce pollutants and improve water quality.   
            The San Juan regulation was challenged as a taking without just compensation by a local property owners’ association called the Common Sense Alliance. Unfortunately, at each level the Washington state courts ignored the Fifth Amendment and sided with San Juan County finding the ordinance was permissible because it was a generally applicable ordinance instead of a case specific  regulation.  Because the Washington State courts ignored well established federal precedent with regard to the federal Takings Clause, the case has been appealed to the United States Supreme Court.
The Washington State courts logic flies in the face of several U.S Supreme Court decisions, such as Nollan v. California Coastal Commission and Dolan v. City of Tigard, which  hold the government may only demand property from a permit applicant when necessary to mitigate a harm that the proposed project would cause.  Put another way, permit conditions are legal only when they mitigate identifiable development impacts caused by that permit applicant. Permit conditions cannot be imposed to cure problems not created by the permit applicant, or be disproportionate to the impact.
In 2013, following along the rationale of Nollan and Dolan, the Supreme Court said in Koontz v. St. Johns River Water Management District that government is forbidden from pressuring citizens into forfeiting their constitutional rights by coercively withholding benefits (i.e., giving up property to obtain a permit).
            With any luck the Supreme Court will grant review to Common Sense Alliance v. San Juan County, and there is hope the case could be heard by the Court before the end of 2016, so perhaps by 2017 private property rights in Martin County and across the country can begin to be restored as the Constitution intended..