Volusia Memorial Park v. White

• Decision Date: 05 October 1989
• Docket Number: Nos. BR-325,BR-386,s. BR-325
• Citation: 549 So.2d 1114
• Parties: VOLUSIA MEMORIAL PARK and Nationwide Insurance Company, Appellants, v. Freddie WHITE, Appellee. VOLUSIA MEMORIAL PARK and Royal Insurance Company of America, Appellants, v. Freddie WHITE, Appellee.
• Court: Florida District Court of Appeals

Page 1114

549 So.2d 1114

VOLUSIA MEMORIAL PARK and Nationwide Insurance Company, Appellants, v. Freddie WHITE, Appellee.

VOLUSIA MEMORIAL PARK and Royal Insurance Company of America, Appellants, v. Freddie WHITE, Appellee.

Nos. BR-325, BR-386.

District Court of Appeal of Florida First District.

Oct. 5, 1989.

John A. Leklem of Sparks, Cooper & Leklem, P.A., Orlando, for appellant, Nationwide Ins. Co.

Daniel C. Shaughnessy and John J. Schickel of Coker, Myers & Schickel, P.A., Jacksonville, for appellants, Volusia Memorial Park and Royal Ins. Co.

Bill McCabe of Shepherd, McCabe & Cooley, Orlando, for appellee.

ZEHMER, Judge.

Freddie White, an employee of Volusia Memorial Park, suffered a compensable injury to his neck and low back on February 9, 1981. Nationwide Insurance Company was the workers' compensation carrier for the employer from the date of the accident to February 1984, at which time Royal Insurance Company of America succeeded Nationwide as the carrier. Pursuant to section 440.34(3)(b), Florida Statutes (1985), the deputy commissioner ordered "the employer/carrier" to pay a $35,000 fee to White's attorney. Nationwide and Royal have filed separate appeals from the order finding both carriers guilty of bad faith in handling the claim. Claimant cross-appeals, contending that the deputy commissioner erred in departing from the statutory formula guideline fee. For the reasons discussed hereafter, we reverse.

Nationwide paid temporary total disability (TTD) benefits to claimant from the date of the accident until November 11, 1982, when it independently determined that claimant had reached maximum medical improvement (MMI) with a 30 percent permanent impairment and stopped the TTD benefits. It was not, however, until March 8, 1983, that Nationwide notified claimant, through a BCL-4 form, that it had removed claimant from temporary disability status and had reclassified claimant to permanent partial disability and wage loss status. Because he had not been receiving any benefits, claimant employed attorney Edward H. Hurt, Sr., to represent him in connection with his claim. On March 23, 1983, Mr. Hurt filed a claim for TTD benefits from November 11, 1982, to date and demanded costs, interest, penalties, and attorney's fees. On April 18, 1983, a notice of hearing issued scheduling a hearing for June 23, 1983. On April 21, 1983, Nationwide agreed to reinstate TTD benefits because, "per Dr. Harr's report of 11-11-82," claimant had not reached MMI with respect to his back injury. Nationwide issued claimant a check for $903, representing the total overdue payments, and the scheduled hearing was canceled because claimant's attorney withdrew his application for hearing.

On September 8, 1983, claimant's attorney again filed a claim for benefits, this time seeking permanent total disability (PTD) benefits, costs, interest, penalties, and attorney's fees. On October 20, 1983, claimant's attorney withdrew his application for hearing on this claim.

On February 8, 1984, Royal became the workers' compensation carrier for employer and assumed responsibility for White's claim. In April, claimant's attorney obtained a $9.00 per week increase in claimant's compensation rate from Royal in settlement, without a hearing, of a dispute over claimant's average weekly wage.

On January 31, 1985, claimant's attorney filed another application for hearing on the September 8 claim for PTD benefits. A hearing was set for March 6, 1985, and on February 26 the parties entered into a pretrial stipulation agreeing (1) that claimant was seeking PTD benefits, costs, interest, penalties, and attorney's fees; (2) that Nationwide was seeking reimbursement from Royal; (3) that Royal had paid all benefits due; (4) that claimant was not yet at MMI, and (5) that Royal was unable to investigate and handle the claim for permanent benefits. The scheduled hearing was subsequently canceled at the request of claimant's attorney.

Royal continued paying TTD benefits until October 10, 1985, when it inadvertently caused claimant's case to be taken off its diary and as a result ceased paying such benefits. The benefits were reinstated on November 21, however, and all overdue benefits were paid. Thereafter, Royal continued paying TTD benefits through July 30, 1986, at which time it voluntarily accepted claimant as permanently totally disabled. Royal has paid claimant PTD benefits since that date.

A hearing was held on December 5, 1986, on the entitlement to and amount of attorney's fees for claimant's attorney. Both Royal and Nationwide were parties to the hearing. Nationwide stipulated with claimant that on November 11, 1982, Nationwide determined that claimant had reached MMI with a 30 percent permanent impairment and had changed claimant's benefit status from TTD to permanent disability wage loss, and that this erroneous determination and conversion of benefits constituted bad faith under the attorney's fee statute. Royal stipulated with claimant that it had inadvertently suspended claimant's benefits from October 10, 1985, to November 21, 1985. Claimant's attorney, Mr. Hurt, testified to these facts and submitted an affidavit scheduling the time expended in representing the claimant. He expended 41.2 hours on the claim. Hurt further explained that the expected future benefits amount to $362,667, and that the statutory fee calculated under the formula in section 440.34(1) equals $55,150. Affidavits of three other attorneys submitted by the parties opined a reasonable fee would be $55,000, $55,156, and $14,190, respectively.

In the order under review, the deputy commissioner found that Mr. Hurt expended 41.2 hours as claimed, although this was "an extremely conservative estimate of his time." She further found that (1) Nationwide acted in bad faith, as stipulated, causing claimant to suffer economic loss from November 11, 1982, to April 22, 1983; (2) Royal acted in bad faith and without good cause in allowing claimant's benefits to terminate from October 10, 1985, to November 21, 1985, causing claimant to suffer economic loss; (3) past and future benefits to claimant amount to $362,707; (4) but for the intervention of claimant's attorney, claimant would not have recovered any of these benefits, "and, therefore, claimant's attorney is entitled to have his fee, based on the amount of benefits set out in Finding # 3 above"; and (5) the statutory fee calculated under the formula in section 440.34(1) is $55,149. The order then recited that the deputy commissioner had considered the attorney fee affidavits, the time involved, the attorney's skill, the nature of the legal questions presented, the fact that the attorney's acceptance of this case precluded him from representing insurance companies generally, the amount of benefits involved, the attorney's reputation and experience, and that the case was taken on a contingent fee basis. After applying these factors pursuant to section 440.34(1) and Lee Engineering Construction Co. v. Fellows, 209 So.2d 454 (Fla.1968), the deputy commissioner determined a reasonable fee to be $35,000, and ordered "employer/carrier" to pay it. The order made no apportionment of this amount between the two carriers.

Each carrier appealed from this order. Both take issue with the deputy commissioner's finding that claimant would not have recovered past and future benefits amounting to $362,707 absent the intervention of claimant's attorney, and her use of that figure as the basis of the fee award. Both carriers argue that the order is not supported by adequate findings of fact, leaving it insufficient as a matter of law. Royal also contends that the deputy commissioner's finding that Royal had acted in bad faith was erroneous because not supported by competent, substantial evidence, and no factual basis for such finding was set forth in the order as required by section 440.34(3)(b), Florida Statutes (1985). The claimant has cross-appealed, contending that the deputy erred in departing from the statutory formula guideline fee.

We observe at the outset that the deputy commissioner erred in ordering both carriers to pay the award without apportioning the amount of the award attributable to each carrier's bad faith conduct. The record contains no evidence that either carrier was acting as an agent on behalf of the other in handling the claim, and there is no evidence that either carrier assumed the obligation to pay an award of attorney's fees based on the other carrier's bad faith. There is no showing that the acts of bad faith of both carriers were in concert. Without a finding of such agency relationship, assumption of liability, or concerted action, neither carrier can be held...