For years, the Utah Labor Commission has limited the amount of money that attorneys representing injured workers could charge; yet the Commission has never regulated what insurance companies can pay their attorneys. Yesterday, that changed, with the Utah Supreme Court finding that the Labor Commission's practice of regulating and limiting attorneys fees is unconstitutional.
The rationale for the limitation was to help injured workers retain more of their benefits. The consequence may certainly have been true in some cases, but economists and workers’ compensation attorneys would argue, it had the opposite effect.
The argument was that because attorney fees were capped at just below $20,000, and because injured workers’ attorneys were fighting insurance attorneys (who are paid many times more and have unlimited resources) they could, therefore, wear down the injured worker’s attorney in a war of attrition. So, economically and emotionally, the injured worker’s attorney either consciously or subconsciously found that the better part of valor was to terminate a case in a settlement, rather than fight for benefits that generated no additional attorney fees. (Be aware that many workers’ compensation claims can generate anywhere from $500 to $1 million – and if you add medical expenses into that, several million dollars. Also, be aware that attorney fees in these cases were traditionally not paid on medical expenses, except in cases in which there was a dispute over just medical expenses, or the other types of damages fell below $4000.)
Some additional arguments were that the Labor Commission, injured workers, unions, and other advocacy groups for laborers have been complacent and have not agitated for higher wages, an increase in benefits, nor sought to rein in overly conservative and “agendized” medical panel members, because that price was being paid by their attorneys due to their limited fees. Additional arguments cite many cases in which the injured worker’s attorneys could simply not afford to defend the worker, because it was economically prohibited.
Also, at times, the Labor Commission has overstepped its bounds by irrationally, and in petty ways, restricting attorney fees. They had done this by not allowing fees when mediation had not been attempted, denying interest on the attorney fees when the insurance company failed to pay in a timely fashion, applying the cap to several applications, dragging their feet in raising fees that were stagnate after many years, lagging behind the costs of appeals, and at times, just arbitrarily denying fees.
Finally, the Labor Commission's suppression of attorney fees has limited the number of attorneys who have entered this area of practice and have thereby reduced the competition among workers’ compensation attorneys. It is thought that this has equated to less competent advocacy on behalf of injured workers (in other words, if more money can be made, more attorneys will practice in this area of law, thereby increasing competition).
Anecdotally, my own experience has been that I have often felt at a severe economic disadvantage when representing injured workers. In the long run, I suspect that the change will be a positive one for injured workers. Moreover, if the Labor Commission is really serious about wanting to ensure that more benefits are provided to the injured workers, it should revamp the benefit regime to provide better support for injured workers, as it has not been significantly modified in decades and lags behind inflation. It should also grant their ALJ’s discretion to require insurance companies to pay attorney fees when a denial of benefits is deemed to have been without substantial merit. They can also create a more speedy and equitable manner of having injured workers evaluated for impairment ratings and causation findings.
I am an interested party.
I’m curious if anyone out there has opinion they would like to serve up. Not that it has been an impediment to opinions being shared on my page in the past. Please don’t worry about my sensibilities. Fire away.
Loren M. Lambert, May 19, 2016 ©
The rationale for the limitation was to help injured workers retain more of their benefits. The consequence may certainly have been true in some cases, but economists and workers’ compensation attorneys would argue, it had the opposite effect.
The argument was that because attorney fees were capped at just below $20,000, and because injured workers’ attorneys were fighting insurance attorneys (who are paid many times more and have unlimited resources) they could, therefore, wear down the injured worker’s attorney in a war of attrition. So, economically and emotionally, the injured worker’s attorney either consciously or subconsciously found that the better part of valor was to terminate a case in a settlement, rather than fight for benefits that generated no additional attorney fees. (Be aware that many workers’ compensation claims can generate anywhere from $500 to $1 million – and if you add medical expenses into that, several million dollars. Also, be aware that attorney fees in these cases were traditionally not paid on medical expenses, except in cases in which there was a dispute over just medical expenses, or the other types of damages fell below $4000.)
Some additional arguments were that the Labor Commission, injured workers, unions, and other advocacy groups for laborers have been complacent and have not agitated for higher wages, an increase in benefits, nor sought to rein in overly conservative and “agendized” medical panel members, because that price was being paid by their attorneys due to their limited fees. Additional arguments cite many cases in which the injured worker’s attorneys could simply not afford to defend the worker, because it was economically prohibited.
Also, at times, the Labor Commission has overstepped its bounds by irrationally, and in petty ways, restricting attorney fees. They had done this by not allowing fees when mediation had not been attempted, denying interest on the attorney fees when the insurance company failed to pay in a timely fashion, applying the cap to several applications, dragging their feet in raising fees that were stagnate after many years, lagging behind the costs of appeals, and at times, just arbitrarily denying fees.
Finally, the Labor Commission's suppression of attorney fees has limited the number of attorneys who have entered this area of practice and have thereby reduced the competition among workers’ compensation attorneys. It is thought that this has equated to less competent advocacy on behalf of injured workers (in other words, if more money can be made, more attorneys will practice in this area of law, thereby increasing competition).
Anecdotally, my own experience has been that I have often felt at a severe economic disadvantage when representing injured workers. In the long run, I suspect that the change will be a positive one for injured workers. Moreover, if the Labor Commission is really serious about wanting to ensure that more benefits are provided to the injured workers, it should revamp the benefit regime to provide better support for injured workers, as it has not been significantly modified in decades and lags behind inflation. It should also grant their ALJ’s discretion to require insurance companies to pay attorney fees when a denial of benefits is deemed to have been without substantial merit. They can also create a more speedy and equitable manner of having injured workers evaluated for impairment ratings and causation findings.
I am an interested party.
I’m curious if anyone out there has opinion they would like to serve up. Not that it has been an impediment to opinions being shared on my page in the past. Please don’t worry about my sensibilities. Fire away.
Loren M. Lambert, May 19, 2016 ©
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