Florida Workers' Compensation Lawyer & Attorney : David A. McCranie : Serving Jacksonville, Miami, Tampa, St Petersburg

Consider these facts:

• Medicare beneficiary is injured in a fall from a ladder.  Medicare expends $22,549.67 in payment of beneficiary's resulting medical bills.  Beneficiary hires an attorney who files suit against the ladder retailer.  Suit settles for $25,000, and attorney notifies Medicare of settlement.  Medicare calculates that it is owed $10,253.39 from the settlement, but attorney fails to forward this amount to Medicare. 

These were the facts pleaded in Medicare's suit against the attorney to recover these expenses pursuant to 42 U.S.C. §1395y(b)(2)(B)(iii) in U.S. v. Harris, and they were sufficient to survive the attorney's motion to dismiss the suit under Fed. R. Civ. P. 12(b)(6).  You can read the 11/13/2008 order from the Federal District Court for the Northern District of West Virginia here. 

 

The lesson?  Be sure to protect Medicare's interest when settling your workers' compensation claim.  Tip of the hat to the the Medicare Set-Aside Blog for alerting us to this case.

 

 

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In Sanders v. City of Orlando, decided on 9/25/2008, a case I discussed here, the Florida Supreme Court has held 5-2 that the judges of compensation claims do have jurisdiction to vacate or set aside lump-sum settlement agreements which had previously been entered into pursuant to the terms of §440.20(11)(c), Fla. Stat., reversing the decision of the First DCA which had held to the contrary.  [The case was originally styled Flamily v. City of Orlando, but Mr. Flamily died during the litigation, and therefore the personal representative of his estate was substituted].

 

To summarize the facts briefly, Mr. Flamily was employed by the City of Orlando as a firefighter.  He developed heart problems which, by virtue of §112.18(1), Fla. Stat. (the "Heart-Lung" Bill), were presumptively caused by his employment.  Those problems eventually resulted in his permanent total disability, and in December 1996 Flamily agreed to settle his right to future compensation benefits from the City for a lump sum.  The settlement documents signed by the parties at the time contained language stating that Flamily "waived any future workers' compensation claims that were either known or unknown" at the time of the settlement.

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Bonagura v. Home Depot, decided on 7/21/2008, illustrates what can happen when the terms and conditions of a settlement agreement aren't clearly spelled out by both parties during settlement negotiations.  The parties in Bonagura had gone to a mediation conference where they agreed to settle the employee's workers' compensation claim for $50,000 plus an attorney's fee.  When the defense lawyer later drew up the formal settlement documents, however, he included provisions which released the employer not only from liability for the workers' compensation claim, but from all liability of any sort. 

 

The claimant refused to sign these documents, contending that they did not accurately reflect the terms of the agreement, and that they in fact constituted a counter-offer by the employer.  He therefore rescinded his earlier agreement on the compensation claim and filed new petitions for benefits, while the employer sought enforcement of what they believed was the settlement agreement.  The JCC sided with the employer and ordered the claimant to sign the releases which the employer's lawyer had prepared.

 

On appeal, the First DCA reversed.  Said the court: "It is clear from both attorneys' testimony that the paperwork sent to Claimant after the negotiations includes matters that were not discussed and agreed upon during the oral settlement talks.  It is undisputed that the attorneys did not orally discuss a release agreement."

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Speaking of settlements, I've been watching the case of Manzini & Associates, P.A. v. Broward Sheriff''s Office, which I discussed here.  That's the case where the claimant, Wimberly, was simultaneously pursuing a workers' compensation claim and a discrimination claim against her employer, the Broward Sheriff's Office ("BSO"), but with a different attorney for each claim.  When she settled her workers' compensation claim, she signed an agreement which released BSO not just from liability for her workers' compensation claim, but from all liability.  That's when things got interesting.

 

Manzini (her discrimination lawyer) was shocked when he learned about the settlement and filed a motion in the pending discrimination action requesting that he be allowed to continue to pursue the claim so that he could recover his attorney's fees against BSO.  The trial court denied the motion and the Fourth DCA affirmed.  Manzini has sought review of the decision in the Supreme Court of Florida and has now filed his jurisdictional brief, which you can read here. 

 

According to Manzini's Statement of the Case and Facts, Wimberly testified below that she didn't realize she was settling her discrimination claim when she signed the release.  Her workers' compensation lawyer testified that he didn't know Wimberly even had a discrimination claim (although Wimberly insisted that she had told him about it).  BSO's position was that its representatives involved with the settlement of the workers' compensation claim were unaware of the existence of the discrimination claim.  Manzini also alleges that while the case was pending on appeal before the Fourth DCA, the trial judge recused himself from further involvement in the case because "BSO's human resources director and the chief decisionmaker" in the discrimination suit was the judge's brother.

 

Interesting stuff.  I'll keep watching.

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Munroe v. U.S. Food Service, decided on 6/27/2008, illustrates the risks inherent in "settling" a case at mediation when one party's attorney doesn't have authority to do so.  The parties in Munroe went to a mediation conference where they conditionally agreed to settle for $30,000.00.  The problem was that the E/C’s attorney didn't actually have $30,000.00 in authority at the time.  Nevertheless, he promised to obtain the necessary authority within 20 days which, in fact, he did.  But by that time the claimant had changed his mind and decided not to settle for the agreed upon amount.  The E/C then filed a motion to enforce the agreement because their attorney had timely obtained the authority within the allotted time, and the JCC granted the motion.

 

But on appeal the First District Court of Appeal reversed, holding that because the agreement was contingent upon the happening of some future event, no contract had been formed before the claimant elected to back out.  The court also pointed out the rule which says that “failure. . .to appear at the mediation conference with full authority to resolve the issues may subject the party or attorney to sanctions.”

 

Note also that the First DCA doesn't defer to the ruling of the JCC in these types of cases.  Whether there is an enforceable settlement agreement is a question that is reviewed de novo.

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Mortality tables genereally break down life expectancies by race and sex.  In this 5/20/2008 memo, however, the Center for Medicare Services announces that for Medicare Set-Aside Arrangements it will accept only estimates from Table 1 of the Center for Disease Control's mortality tables, that is, for the population as a whole without regard to race and sex.  You can access the CDC's tables here.

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When settling a workers' compensation claim with an employee, most Florida employers - particularly if they're self-insured -  want the employee to settle not only his rights under the Florida Workers' Compensation Law, but any other kind of employment-related claim which the employee may have as well.  As Manzini & Associates, P.A. v. Broward Sheriff's Office indicates, however, all parties should take care in entering into such agreements.

 

The plaintiff/claimant in the case was pursuing both a civil rights claim and a workers’ compensation claim against her employer, Broward Sheriff’s Office, using two different lawyers. She eventually fired her civil rights lawyer (Manzini), however, and subsequently entered into an agreement to settle all of her claims against Broward, using her workers’ compensation lawyer. (We don’t have the general release, but you can see the motion for approval of attorney’s fees in the workers’ compensation case and the JCC’s order approving the motion here). 

 

 

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Is a workers' compensation settlement agreement which purports to release the employer along with "its subsidiaries, affiliates, [and] parent companies" broad enough to release not only the employer from further liability under the Florida Workers' Compensation Law, but also the employer's sister corporation from the claimant's tort claim against the sister corporation?  Yes,said the First District Court of Appeal in Churchville, et ux v. GACS, Inc., a 2-1 decision issued on 1/23/2008.

 

Both judges in the majority agree that the term "affiliate" was unambiguous and that therefore the Churchvilles' tort claim against GACS, his employer's sister corporation, was barred by the release which he had executed in favor of his employer, Allied Systems, Ltd.  The two judges in the majority don't agree on the precise reasoning in that regard, however.  Judge Wolf uses a rule of statutory construction known as noscitur a sociis - meaning that "a word is known by the company it keeps."  Judge Wolf reasons that because the word "affiliate" appears in the release along with the terms "subsidiaries" and "parent companies," an "affiliate" is an entity which is neither a "subsidiary" nor a "parent company."  Judge Wolf also concludes that "[w]hile the Release does not specifically mention the pending tort claim, the language of the Release belies the assertion that the tort claim was not to be covered by the Release."

 

Judge Van Nortwick, on the other hand, concludes that because the term "affiliate" is unambiguous it is therefore unneccessary to resort to rules of statutory construction like noscitur a sociis.

 

Dissenting, Judge Browning reasons that the term "affiliate" was ambiguous and that it was therefore improper to grant summary judgment on the Churvilles' tort claim against GACS. 

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As I wrote here, when an injured worker agrees to a "washout" of his rights to past and future benefits for an on-the-job accident pursuant to§440.20(11), Fla. Stat., employers and carriers in Florida also routinely require the execution of a "general release" in which the injured worker waives his right to any other employment-related claims as well.  Are such "general releases" really effective to waive all such claims?  In Taylor v Progress Energy Inc., the Fourth Circuit Court of Appeals held that a release in which the employee purported to waive his FMLA rights as part of a severance agreement was ineffective because it was obtained without either court approval or the approval of the Department of Labor.

 

Progress Energy has now filed this petition for writ of certiorari in the Supreme Court of the United States seeking review of the Fourth Circuit's decision.  The petition alleges that the Fourth Circuit's decision is in conflict with the Fifth Circuit Court of Appeals' decision in Faris v. Williams WPC-I, Inc.  For more on the petition and this issue, see this post at SCOTUSblog.

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The Medicare Secondary Payer Act [42 U.S.C. §1395y(b)(2)] prohibits Medicare from paying a Medicare beneficiary's medical expenses when payment "has been made or can reasonably be expected to be made under a workmen's compensation plan. . . ."  So when an injured worker settles his right to receive future medical care from the employer/carrier under the Florida Workers' Compensation Act, Medicare requires that its interests be considered in the settlement.  See 42 C.F.R. §§411.46 and 411.47.  In other words, Medicare will look with disfavor upon any attempt to shift responsibility for the claimant's future work-related medical expenses from the employer/carrier to Medicare.  Consideration of Medicare's interests is accomplished through the use of a "Medicare Set-Aside Arrangement" whereby a portion of the settlement proceeds are allocated ("set aside") to cover the claimant/beneficiary's future work-related medical expenses.  Once the money set aside for that purpose has been exhausted, Medicare becomes responsible for paying for all Medicare-covered expenses, even if they are work-related.

 

Unfortunately, obtaining Medicare's approval of any proposed set-aside arrangement often involves significant delay.  And Medicare currently requires a set-aside arrangement if the claimant (a) is currently a Medicare beneficiary and the proposed settlement is greater than $25,000 or (b) has a "reasonable expectation" of becoming a Medicare beneficiary within 30 months from the date of settlement and the amount of the settlement is expected to be greater than $250,000.

 

 

A bill introduced in the House of Representatives on 5/24/2007, the "Medicare Secondary Payer and Workers' Compensation Settlement Agreements Act of 2007" (H.R. 2545), is intended to offer some relief in that regard.  Under this proposed legislation, workers' compensation settlements of less than $250,000 (payable either in a lump sum or through an annuity whose present value is less than $250,000) would not require Medicare approval.  For an excellent summary of this bill, see this post at the Traumatic Brain Injury Law Blog.

 

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Jorge Diaz, an injured worker, was accused by the employer/carrier of committing workers' compensation fraud by submitting false mileage reimbursement requests.  The Judge of Compensation Claims agreed to "bifurcate" the issues, that is, to conduct a hearing where the issues would be limited solely to whether Diaz was guilty of committing fraud and therefore whether any further workers' compensation benefits would be barred pursuant to §440.09(4), Fla. Stat.  In this order, the JCC concluded that Diaz in fact was not guilty of fraud, and the employer/carrier sought review of that decision by way of a petition for writ of certiorari to the First District Court of Appeal.

 

In this decision rendered on 8/8/2006, the First DCA denied the petition, but "without prejudice to appellants seeking review after the Judge of Compensation Claims issues a final order on the merits of the claims pending below."  Later, rather than proceeding to a hearing on the merits, the parties settled the pending petition for benefits, as reflected in this stipulation and order from the JCC dated 2/13/2007.  The employer/carrier then sought to raise the denial of its fraud defense on appeal for the second time.

 

But in Isol Auto Supply v. Diaz, decided on 9/12/2007, the First DCA once again refused to consider the employer/carrier's fraud defense on its merits.  In the stipulation, the parties agreed, among other things, that "all issues are resolved except as to the amount of attorney's fees and costs."  This agreement, said the court, rendered the fraud defense moot.

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Section 440.20(7), Fla. Stat., provides for a 20% penalty on compensation benefits payable pursuant to an "award" when the compensation is not paid within 7 days after it becomes due.  When an unrepresented claimant enters into a "washout" settlement agreement with the employer/carrier, he is entitled to the 20% penalty in the event of late payment of the settlement proceeds.  But a claimant who has an attorney is not entitled to penalties for a similar late payment.  See s.440.20(11)(c), Fla. Stat.

 

Does this unequal treatment of represented versus unrepresented claimants violate the Equal Protection clause of the Constitution?  No, said the First District Court of Appeal in Lucas v. Englewood Community Hospital, decided on 8/23/2007.  The statute bears "a rational relationship to a legitimate state interest."  The Court reasoned that the legisislature could rationally have presumed that a represented claimant is in a better position to negotiate the terms of settlement - including when the settlement proceeds are due and what penalty might attach in the event of a late payment.  The Court therefore affirmed the order of the JCC which had refused to award a penalty on the late payment of the claimant's $225,000 settlement.

 

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In 2001, the legislature amended s.440.20(11), Fla. Stat., to repeal the JCC's former duty to review a proposed lump-sum settlement of an injured worker's right to future benefits to ensure that it was in the best interests of the worker.  See Ch. 2001-91, s.17, Laws of Fla.  Under the revised statute, in cases where the injured worker is represented by counsel, the JCC has jurisdiction only to review the amount of attorney's fees paid by the claimant to his attorney for obtaining the settlement and to ensure that any child support arrearages owed by the worker are paid from the proceeds of the settlement. 

 

But what happens if the JCC approves the amount of attorney's fees but does not approve of the amount of costs being charged to the worker by his attorney?  Can the JCC refuse to approve both the attorney's fees and the costs?  That's what the JCC did in this order.

 

But the First District Court of Appeal has now said no.  In Eshlibi v. Consolidated Box Manufacturing, decided on 7/31/2001, the Court said that "a JCC lacks statutory authority to deny the attorney's fees based upon costs charged to the claimant" in lump-sum settlement cases.

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When settling a claimant's right to future benefits arising under the Florida Workers' Compensation Act, it has become standard practice for the employer/carrier also to require the claimant to execute a "general release" of any other employment-related claims which he might have as well.  The effectiveness of this practice has been called into question, however, in a recent case from the Fourth Circuit Court of Appeals.

 

The Family and Medical Leave Act of 1993 (FMLA) allows an employee to take up to 12 weeks of unpaid leave during any 12-month period for, among other things, a "serious health condition."  As the FMLA Blog points out in this post, a federal regulation, 29 C.F.R. s.825.220(d), provdes that "[e]mployees cannot waive, nor may employers induce employees to waive, their rights under FMLA."  In Taylor v. Progress Energy, Inc., decided on 7/3/2007, the Fourth Circuit Court of Appeals held that this regulation means exactly what it says - it prohibits an employee from waiving his FMLA rights without approval by a court or by the Department of Labor.

 

The Eleventh Circuit Court of Appeals (which covers Florida) has not addressed this question.  But if the Fourth Circuit's reasoning is adopted, then post-accident agreements which purport to release an employee's rights under the FMLA without prior approval will be ineffective.

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Very few workers' compensation cases make it all the way to the Florida Supreme Court, but this one has.  It’s a complicated tale.

 

Mr. Flamily, the claimant here, was a firefighter for the City of Orlando who contracted Hepatitis C. (By way of background, since 1995, firefighters and other “first responders” have benefited from a special statute which says that, when a firefighter contracts that disease, it’s presumed that he contracted it as a result of his employment). Mr. Flamily actually retired in 1996 due to disability resulting from heart problems. He settled his workers’ compensation claim arising out of those heart problems later that year for a lump-sum payment of $110,750.00. (There’s another special statute that makes heart problems of firefighters and other law enforcement personnel compensable under the Florida Workers’ Compensation Act without having to comply with the “Victor Wine” rule).

 

Anyway, although Flamily’s Hepatitis C wasn’t diagnosed until 2000, he was convinced that he had contracted it during his employment with the City (Understandable, really, given the nature of firefighters’ work and the long incubation period usually necessary before symptoms of the disease appear). Trouble was, by the time he was diagnosed, he was no longer an employee of the City. And then there was that pesky 1996 settlement agreement where he had settled all potential work-related claims against the City.

 

 

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