Blake J. Hood

The First District Court of Appeal issued an opinion that clarifies the extent of a Judge of Compensation Claim’s (JCC’s) discretion, and even jurisdiction, to review attorney fees and costs paid by employers/carriers. In Fox v. Sarasota County School Board, the district court held that a JCC’s role in approving employer/carrier-paid attorney fees for benefits secured under Florida Statutes Section 440.34(1) extends to only reviewing the amount of rather than entitlement to attorney fees. The court stated that JCCs have no jurisdiction whatsoever over employer/carrier-paid costs. The opinion may have sweeping implications for settlement negotiations and the role of JCCs in approving “side stipulations” to employer/carrier-paid attorney fees and costs.

In practice, settlement negotiations frequently commence with astronomical demands followed by similarly unrealistic opening offers. Over time, these coalesce to some middle ground figure to which both sides agree. The actual dollar amount for settlement is ostensibly based upon the parties’ calculations of the economic exposure of the claim remaining open and the consequential future medical and disability benefit payments. However, parties to a settlement must also account for intangible factors, rather than simple arithmetic. Economic evaluations of a case often center on, for example, questions of witness credibility and subtle differences in medical expert opinions. The result is that claimants and employers/carriers may arrive at a dollar amount for settlement that each side can live with based on various factors; each side may arrive at the same destination while on different journeys. 

As in the Fox case, employers/carriers may agree to a bottom-line settlement figure and not care “how it’s divided up” between the settlement of the underlying claim and attorney fees and costs, if there is a claim for employer/carrier-paid fees under Florida Statutes Section 440.34(1).

However, as noted by the JCC in the Fox case, attorneys are not free sign pleadings without a basis in fact or law. Florida Statutes provide:

Every pleading, motion, and other paper of a party represented by an attorney shall be signed by at least one attorney of record in the attorney’s individual name, whose address shall be stated. The signature of an attorney constitutes a certificate by the signer that the signer has read the pleading, motion, or other paper; that to the best of the signer’s knowledge, information, and belief formed after reasonable inquiry it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law, and that it is not interposed for any improper purpose…

Section 440.32(3), FLA. STAT. (2024).

The appeal in Fox followed a scathing 70-page JCC order detailing at great length the JCC’s finding that attorney fees stipulated to by the parties should not have been approved. The JCC went so far as to find the stipulated attorney fee petition to be a “sham” and entered a show cause order requiring both the claimant’s attorney and the employer’s/carrier’s attorney to explain why each should not be sanctioned. 

At the trial level, the attorney for the employer/carrier explained that the parties reached a settlement in the amount of $200,000. He then received a “breakdown” from the claimant’s attorney, which allocated a large portion for employer/carrier-paid attorneys fees and costs with the remainder going to the claimant. The final allocation as between the settlement of the underlying claim (“washout settlement”) versus the employer/carrier-paid attorney fees (“side stipulation”) was as follows:

Washout:
•    $114,900 (out of which the claimant’s attorney would receive $12,240 in attorney fees but not costs)

Side Stipulation:
•    $60,308.72 for employer/carrier paid attorney fees;
•    $24,691.28 for employer/carrier paid costs. 
(Presumably $100 was allocated for a separate General Release)

Counsel for the employer/carrier filed the washout paperwork first, and the JCC approved the same. Later that day, the side stipulation for the employer/carrier-paid fees was filed, which the JCC refused to approve. Instead, he entered a Notice of Deficiency. The JCC held two contentious hearings at which the attorneys for the claimant and employer/carrier testified. 

In his order denying the side stipulation for fees and costs, the JCC took both attorneys to task and asked them to explain on what colorable basis there was for entitlement to employer/carrier-paid attorney's fees under Florida Statutes. The JCC found that the fees claimed often related to events that did not occur or to benefits that, in the JCC’s opinion, were timely provided so as to avoid attorney fee entitlement. The JCC ultimately determined that there was no entitlement to employer/carrier-paid attorney fees or costs.

The First District Court of Appeal in a per curiam opinion set aside the JCC’s order. The district court held that the JCC was obligated to follow the parties’ stipulation to fee entitlement in the absence of fraud, overreaching, misrepresentation or some other basis that would void the agreement. The district court said that, while the JCC found no factual or legal basis supporting attorney fee entitlement or entitlement to taxable costs, such a finding was insufficient under prior case law. The court also clarified that “JCCs have no jurisdiction at all” over employer/carrier-paid costs.

While JCCs have recently been scrutinizing such side stipulations when filed in conjunction with washout settlements, the Fox case limits their role in reviewing questions of attorney fee entitlement. JCCs retain the authority and obligation, however, to review the amount of fees being claimed. 

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