Monday, October 15, 2012

FL Taxing Costs - Irrational at Best, Unjust at Worst

Florida has an interesting provision in its workers' compensation laws that I don't think any other state has - the taxation of "costs" to the losing party in litigated cases.

Florida Statutes Section 440.34(3) provides:

"If any party should prevail in any proceedings before a judge of compensation claims or court, there shall be taxed against the nonprevailing party the reasonable costs of such proceedings, not to include attorney's fees. A claimant shall be responsible for the payment of her or his own attorney's fees, except that a claimant shall be entitled to recover a reasonable attorney's fee from a carrier or employer..."

In just two weeks the Florida 1st District Court of Appeals, where all workers' compensation cases are appealed to, has issued opinions defining the liability of losing claimants.

On Friday an opinion in Marton v. Florida Hospital Ormond Beach/Adventist Health Systems, No. 1D11-6593, was released wherein the court ordered a registered nurse, formerly employed by Florida Hospital Ormond Beach, to pay $17,894.66 in costs after pursuing her claim for benefits based on multiple injuries occurring in July 2007.

Last week the court ruled in Frederick v. Monroe County School Board, No. 1D12-0251 that an injured elementary school teacher pay her employer $11,834.35 in costs it incurred defending its denial of her petition for permanent total disability from a 2007 injury.

Though the statute does not permit the taxing of attorney's fees as costs, nevertheless, expenses for medical-legal services and other professional fees can add up quickly.

I can't help but think that this statute promotes cost shifting away from the workers' compensation system into other systems such as general health and private disability.

In particular I'm struck by the inequity of pitting individuals of limited means against much larger litigants with much greater resources - something that workers' compensation laws were originally intended to rectify.

The law about taxing the prevailing party has been the law in Florida for some time. In 2003 the statute was amended as part of the state's big reform act, SB 50a, but that affected hourly attorney fees that used to be the norm in Florida. Taxing costs existed prior to that amendment.

So it is curious to me why the 1st DCA has brought so much attention to this provision in the last couple of weeks - perhaps it is just serendipity that the issue has gone up on appeal in such a short time frame, or perhaps employers are getting more aggressive in pursuing the issue.

Workers' compensation was intended to allay the fears of workers who might get injured, or claim an injury, from seeking appropriate redress - the cost of doing so is a part of doing business in the grand scheme of employer/employee relations.

I'm sure the employer community would argue that this provision does not dissuade claimants from pursuing legitimate claims and that the statute keeps bogus matters under control.

The opposite argument could also be made though - that legitimate claims are pursued via alternative means (e.g. general health) because the claimant does not want to risk losing everything should an issue be decided against him or her and then face reimbursement of professional fees and other costs that, to most people in this country, would be financially ruinous.

I don't know the history of this provision, or if any other state has similar provisions. Perhaps someone out there can educate us all.

In the meantime, there was a study released a few months ago ( "The Lack of Correspondence Between Work-Related Disability and Receipt of Workers' Compensation Benefits," American Journal of Industrial Medicine, January 2012) by perennial workers' compensation guru/critic, former Rutgers University professor John Burton (and co-author Emily Spieler), which commented on the oversized cost shifting from workers' compensation to other systems.

That study drew some industry acknowledgment from those on the ground level.

Chief Judge of Compensation Claims, David Langham, told WorkCompCentral when the Burton study was released, that in states like Florida, it doesn't take an injured worker long to "do the math" and realize reporting an injury could result in financial losses for them.

Florida's culture would certainly seem to support this notion, and support the conclusions of Burton and Spieler:

"Injured workers are facing complex systems that are not providing benefits for all work-related conditions. The current system is irrational, at best, and unjust at worst."


  1. I'm sure the employer community would argue that this provision does not dissuade claimants from pursuing legitimate claims and that the statute keeps bogus matters under control.

    1. Of course that's their argument mithun12, and that is always the argument, until that person is on the receiving end of an incident and wants "justice."