Miami Heat: Florida Feeling the Impact of Decision Affecting Future of Workers Comp

florida workers comp

I just returned from the Workers’ Compensation Institute Conference in Florida.  The Conference had over 200 presentations and 8,000 attendees this year, but a single topic dominated the buzz: the impact of a recent Circuit Court decision from Judge Jorge E. Cueto of the 11th Circuit Court in Miami.

Specifically, in Padgett v. State of Florida Judge Cueto stated:

“The purpose of a workers’ compensation act is not for it to be used as weapon in an economic civil war.  Its purpose is to provide adequate compensation for on the job injuries in place of the tort remedy so as to relieve society from the costs of industrial injuries”

A Compromise Between Employers and Employees

Judge Cueto issued a 22-page opinion where he gave a dissertation on the evolution of the Florida Workers Compensation Act going back to when the Act was passed in 1935 as a reasonable alternative to tort actions in civil courts.  Judge Cueto wrote,

“[t]he trade off was the Act was designed to provide fast, sure and adequate payment in exchange for the tort remedy that was cumbersome, slow, costly and which it had been legally difficult for injured workers to prevail.”

I remember my training class instructor on my first day in Workers’ Compensation insurance training  telling us, “The injured worker gave up their right to file suit in civil court in exchange for medical and indemnity benefits.”

Still, Florida lagged the nation with exclusive remedy in Workers’ Comp, as injured workers were still allowed to “opt out” of Workers’ Comp up until 1970.  In 1970, the Florida legislators passed a bill that made Workers’ Comp the exclusive remedy in Florida .

Judge Cueto, in his opinion, used the phrase “trade off” to describe the compromise between employers and employees exchanging WC statutory benefits in lieu of civil litigation.

Law Changed in 1973

In 1973, The Florida Supreme Court, as stated in Judge Cueto’s opinion, started to move away from the “trade off” when they transitioned from a pure contributory negligence doctrine where a plaintiff could be denied compensation if found negligent to comparative negligence allowing the plaintiff to only recover according to the defendant’s degree of fault (Hoffman v. Jones).  Because this essentially changed the law, writes Cueto, the “trade off” should have been increased;  instead, the Workers’ Comp Act in Florida had essentially been modified several times and therefore has created an unfair “trade off” going up until the most recent Florida Workers’ Comp reform/legislation passed on October 1, 2003.

Exclusive Remedy Provision Invalid

Cueto finally concludes in his opinion that, because the benefits presently defined in the Florida Workers’ Comp Act are no longer significant, the Florida exclusive remedy violates the 14th amendment to the U.S. Constitution Due Process Clause, citing specifically to the elimination of permanent partial disability benefits on October 1, 2003 without providing reasonable replacements to these and other benefits leaving the injured worker without a reasonable alternate remedy to the tort remedy.  Therefore, in Judge Cueto’s view, he renders the FL 440.11 exclusive remedy provision constitutionally infirm and invalid.

Much Still to Be Determined

Wow! Does this mean that Workers’ Compensation in Florida is no more?   Do we continue to pay Workers’ Comp to employees in Florida?  Can employees sue their employers now?  Does this affect the entire state?

I am not an attorney, but I had the pleasure of speaking with several leading Workers Comp defense attorneys in Florida, most notably Steve Rissman, the chairman of the WCI Conference.  Many consider Steve to be one of the foremost experts on Workers’ Compensation in Florida.

Steve noted that this is a Circuit Court decision, not an Appellate Court decision. As such, it is not precedent for the entire state of Florida, and may be not precedent in Miami-Dade County either.  There are two other major cases right now disputing similar limitations on benefits and attorney’s fees (Westphal and Castellano).  The legal community expects there will be an appeal of this case, however it is an active decision in the 11th Circuit Court until the parties exhaust the anticipated state appellate process.  The case will likely be appealed to the Florida 3rd District Court of Appeals who could pass this issue directly to the Florida Supreme Court (especially in light of the Court’s knowledge of the Westphal and Castellano cases).

There are challenges expected from other jurisdictions following Cueto’s opinion.  Of significant importance, Florida’s attorney general has 30 days to file an appeal.  I heard from a few major corporations during the WCI Conference that they have engaged their government affairs departments and are preparing to encourage the attorney general to intervene.

The interesting issue about an appeal is that Paggett was decided by Judge Cueto with only the plaintiff submitting an argument.  As such, an appeal may only strengthen the Paggett decision statewide as there was never a counter argument submitted by the defense.  The ultimate outcome of Paggett may not be realized until the very first liability claim stemming from Paggett is defended.   The defense would have to successfully argue exclusive remedy and take this up through the adjudication process, possibly and ultimately, the Supreme Court of Florida.

I also had time to hear David North, CEO of Sedgwick speak on a panel.  David said that no matter where the Paggett case goes, we have a very difficult issue in America.  To paraphrase David, “You can have the same type of injury, the same type of treatment, the same type of lost time, but in different jurisdictions, there is a great disparity in the value of these cases on a state-by-state basis.”   I agree 100%.

Is Paggett the indication that we need more standardization in the United States Workers’ Compensation process?   Every few years we see a push for a nationalized Workers’ Comp process, are we seeing the next wave of thoughts that will build into momentum for such a major change to Workers’ Comp?

Steve Rissman, told me that no matter what the outcome of Paggett is, there will likely be some type of legislation/continued decisions to correct the “trade off” that clearly Judge Cueto and other Judges feel is needed.

What to do?

So, what is a company to do at this time?  I’ll give you some simple steps to consider:

  1. Don’t wait for the final decisions. Get involved in any way your company can.
  2. Read Paggett, Westphal, Castellano
  3. Accept that long term there will likely be some change in the future for Florida Workers’ Comp that will likely increase costs for employers
  4. If you have employees in Florida, expect a volume of liability claims for what would normally be Workers’ Comp claims.
  5. Strategize now with your broker/third-party administrator/legal teams on how you will change your claim and investigation process.
  6. Employers, if defending liability claims, should use all available defenses, cross claims, etc.   Employers need to show the plaintiffs that exclusive remedy does work in FL and that without exclusive remedy, there will be lengthy delays in getting benefits for workers, extensive legal proceedings, and exorbitant legal costs.

Some unanswerable questions to leave you with something to ponder, are:

  1. Should I stop paying Workers’ Comp benefits in Miami-Dade right now?
  2. Can an employee file both Workers’ Comp and liability claims against my company now?  Would I get an offset for the Workers’ Comp benefits paid to date?
  3. What if I’m paying benefits to an injured worker in the Miami-Dade area and they file a liability claim against me?  If the law is found by the appellate courts to be Constitutional, do I get an offset for any monies I’ve paid under the liability claim?

Paggett is not to be ignored. It represents a fundamental shift in ideology in the entire Workers’ Comp system that will be felt nationwide. The nation will be watching closely over the next year or more.   There will likely be similar challenges in other states to ensure benefit adequacy and you will hear more about “nationalizing Workers’ Comp.”

 

 


Note:  Special thanks to Steve Rissman of Rissman Barrett Hurt, Donahue & McLain, P.A. and Dave North, CEO of Sedgwick, for their assistance in allowing me to use their comments/thoughts on this topic.

About Joe Picone

Joe Picone is Claim Consulting Practice Leader in Willis' Risk Control and Claim Advocacy Practice, with more than …
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