Sokoloff & Weinstein Personal Injury-Automobile Collision Crossover with Worker’s Comp and the Comp Lien that lingers
First off, typically, when someone is physically hurt on the job, Florida Statute 440 usually dictates that going through worker’s compensation should be the first line of recovery. However, employees worried about losing their job should they file a worker’s compensation claim, sometimes look for other avenues to recover when a 3rd party is involved.
We had a client involved in an automobile collision while on the job and in the company vehicle, who had spoken to a colleague who handles only comp matters here in Florida. He is an ethical guy and unlike some other practitioners, explained to our client that by filing a comp case, he may also be risking his job with his employer since many of these matters are settled with that either being a condition of settlement, or because Florida remains an employment at will state. It is just something that happens. When that came up, our client told him that he was not interested in pursuing a plaintiff’s worker’s comp claim and would like to explore a 3rd party claim only if possible.
The problem with that is that if the client wanted to use his own no-fault/PIP benefits, one of the disqualifying questions asked on the application for no-fault benefits or during a recorded statement would be whether he was on the job at the time of the crash…which he was. Thus PIP would have grounds not to pay any of his bills.
Likewise, a health insurer can ask similar questions and point to the available worker’s compensation coverage as primary for any medical care and even lost wages. So, as in this case, the client chose to treat under his employer’s worker’s compensation coverage.
While the client can continue treating under worker’s compensation, and not pursue a legal case against the carrier and the employer, under Florida Statute, worker’s compensation would then have essentially have a ‘super-lien’ against any monies that he recovers from the 3rd party and if still treating, worker’s comp would continue to have a right of reimbursement so long as his comp matter would remain open.
While the information below is provided for exemplary purposes concerning the worker’s compensation lien that exists with a qualified Florida employer, being serviced by their 3rdparty agent, or directly by the insurance carrier, the Client should always be advised of his/her ability/option to hire separate Florida Worker’s Compensation counsel to resolve a work related injury matter. Whether the comp case is pursued or not, there is always the ability to pursue the 3rd party claim.
Here is what we learned:
An employer in Florida is entitled to get paid back from the settlement with a third-party tortfeasor, for compensation benefits paid. So, it is understood that the Employee/Client, must pay Worker’s Compensation Insurer from a 3rd Party Settlement proceeds both past workers’ compensation benefits paid and those to be paid in the future. (Oil Co. v. Reynolds, 565, So.2d 737, 737 (Fla. 2nd DCA 1990)).
If the amount that the employee receives from the 3rd party (usually via the insurer) is not full value (for example, given that the lien exceeds third party coverage), we could make an equitable distribution argument. Florida Statute 440.39(3)(a) creates an equitable distribution formula that can be applied in these circumstances. The formula is the net settlement (gross settlement minus attorney’s fees and costs) divided by the total value of the employee’s claim. Payless Oil Co. v. Reynolds, 565 So.2d 737, 737 (Fla. 2nd DCA 1990).
The language of section 440.39(3)(a) creates an equitable distribution formula to be applied when an employee has not received the full value of his damages because of comparative negligence or the limits of insurance coverage and collectability. The formula for the equitable distribution rate is net settlement (gross settlement — attorney’s fees and costs) divided by the total value of the employee’s claim. Reynolds, 565 So.2d 737, 738. The result of this computation is the equitable distribution rate which is then multiplied by the workers’ compensation benefits to determine the amount of the workers’ compensation carrier’s equitable distribution lien.
Section 440.39(3)(a) provides that the workers’ compensation carrier shall recover from the judgment “[i]n all claims or actions at law against a third-party tortfeasor.” Thus, the equitable distribution rate is as follows: judgment against third-party tortfeasor / full value of damages. The uninsured motorist carrier is not a third-party tortfeasor. Therefore, because the uninsured motorist carrier is not a third-party tortfeasor, proceeds from any uninsured motorist coverage is not included in the equitable distribution formula (Eric maintained $50k in UIM coverage). In summary, the uninsured/underinsured motorist benefits cannot be included in the formula to determine the equitable distribution rate and to compute the amount of employee’s equitable distribution lien. VOLK v. GALLOPO, District Court of Appeal of Florida, Fourth District. 585 So.2d 1163 (Fla. Dist. Ct. App. 1991).
Our understanding is that the Worker’s Comp insurer does not have a lien on the UIM settlement since it is a first party claim. Florida Statute 627.727(1). Also, Volk v. Gallopo.
So, to simplify the equitable distribution formula:
Pay Back Rate = (Gross Settlement – Attorney’s Fees and costs)/Full Value of the Case.
So, we would argue that our client’s case is worth in excess of a certain dollar amount thus minimizing the lien…but that is the battle involving a WC issue and if it gets that far, sometimes will require retaining separate counsel to resolve the lien.
Recently, we have used that same formula to get a worker’s compensation lien holder to reduce a nearly $13,000.00 lien to close to $1,400.00 saving our client the difference in pocket.
Albeit, if a reduction is accepted, the worker’s comp carrier does get an offset on future benefits to be paid. The carrier can set off the recovery obtained by an injured employee from a third party tortfeasor (the guy that hit you) against compensation benefits due the injured employee. FS 440.39(1). Such limits the amount of the compensation carrier’s set-off to its pro rata share of the compensation and medical benefits paid or to be paid, less its pro-rata share, court, costs, and reasonable attorney fees expended by the claimant in the claim against the third party. The carrier can subtract its future payments by a ratio of net recovery to the full value of the third-party claim…(sometimes referred to as the Manfredo formula.)
So, in that same example, while our client had completed his treatment entirely, making any future care for the same injuries from the same collision a non-issue, should there have been additional treatment or benefits, the carrier would have been able to pay only a percentage of it rather than whole amount (i.e.-80% instead of 100%).