March 2022

14 Florida Pool Prosm • March 2022 INSURANCE UPDATE fees to 20% of the first $5,000 of benefits secured and 15% of the next $5,000. On benefits that accrue after 10 years, the fee was limited to 5%. Part of the legislative reasoning behind the fee limits, besides tamping down workers’ comp costs for businesses, was that in many cases, the fee would come out of the claimant’s indemnity award, potentially depriving injured workers of some indemnity compensation. And unlike personal injury cases, in which lawyers often charge 30% to 40% of the award, comp cases can’t include punitive damages paid directly by the defendant corporation or insurer. But the statutory fee limits were disincentivizing attorneys from taking workers’ comp cases and were making it difficult for injured workers to find representation, claimants’ lawyers argued. Since the Castellanos decision, claimants’ attorneys are not limited by the fee schedule. But insurance attorneys said that most claimants’ lawyers continue to use the schedule as a guide or they follow a simple rule of thumb: 10% of the settlement or award, plus $750. If the parties and the judge in the Ambrocio case had followed that rule, the claimant’s attorneys’ fees would have totaled $395,750. But many have said that the Ambrocio case marks a dangerous precedent. Insurers and employers have fretted that claimants’ legal fees have been creeping upwards since the Castellanos decision, adding to carriers’ loss adjustment expenses and threatening to affect comp insurance rates and premiums. Claimants’ lawyers have countered that workers’ comp premiums for most employers in Florida have dropped significantly in recent years, suggesting that plaintiffs’ legal fees aren’t hurting anyone. After regulators approved a 14.5% average rate increase for 2017, due to the anticipated effects of the Castellanos court ruling, rates since then have fallen by more than 40%. The Florida Office of Insurance Regulation approved another average decrease in comp rates, of 4.9% for 2022. The database, covering more than 258,000 claims since 2013, shows that since the Castellanos decision, claimants’ attorney fees have risen steadily. The total amount of claimants’ attorney fees per year have climbed from $128 million in 2014 to $230 million in 2021. The average amount of fees, after remaining steady at about $4,000 in 2014 and 2015, also has risen each year, topping $7,830 in 2021. That’s a 94% increase, about five times the rate of inflation.

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