Articles Posted in Workers’ Compensation

We are frequently asked if workers’ compensation benefits are exempt from the claims of creditors? The answer is Yes and No.

The No first. WC benefits are not exempt from claims based on an award of child support or alimony. While it is up to the creditor to initiate the collection process, WC money can be garnished to satisfy these obligations. The amount garnishable is determined by a formula contained in the garnishment laws (Chapter 77).

In addition, portions of lump sum settlements will be applied against child support amounts in arrears. The rule of thumb is that up to 1/2 of the Claimant’s share of the lump sum settlement proceeds will be applied against the arrears.

On July 11, 2012, a former client walked into our office and described a February, 2008 work related accident. After being pushed to the ground while trying to break up a hallway fight in a South Florida High School, he was sent by his employer to a workers’ compensation clinic for medical care. His injuries consisted of neck and right shoulder pain.

After a month of treatment, he became disenchanted with the level of care and seeming indifference to his complaints. He spoke to the insurance adjuster, but was told to take it up with the doctor. He stopped going to the clinic.

Although the pain got progressively worse, he continued to work. He began seeing doctors through his health insurance. His primary care physician sent him to a neurologist and a pain management specialist. He was diagnosed with a serious cervical spine condition to explain the neck pain. He did not receive a diagnosis for the shoulder pain.

It became more and more difficult to work. Knowing that his disability was from the 2008 accident, he reached out to the workers’ compensation adjuster to authorize better medical care. This was more than two years after the accident. The adjuster told him that he had waited too long to pursue additional benefits, that the workers’ compensation statute of limitation had expired. See Florida Statute 440.19.

Shortly thereafter, he walked into our office.

After yelling at him for waiting so long to come to us, I decided to take a shot at reviving the case. Our one shot was that the employer/servicing agent had not advised him of his rights in accordance with FS 440.185. We filed a Petition for Benefits seeking authorization of medical care and lost wage benefits. At the same time, we filed a formal request with the employer/servicing agent to produce its entire claim file absent privileged documents.

Either the 440.185 statutory notice was there or it wasn’t.

After waiting an anxious 35 days for a response to our Request to Produce, we received the answer we had been hoping for: The 440.185 notice, if it ever existed, was nowhere to be found.

So much for E/SA’s SOL defense.
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This past week our firm settled a workers’ compensation case for $892,000. Included in the settlement package was a Medicare Set Aside. Importantly, while the workers’ compensation carrier had not obtained CMS approval prior to the settlement, the carrier guaranteed that it would cover any CMS required payments above those proposed. (The carrier also agreed that if CMS required less than the proposed amount, the Claimant would keep the difference.)

Without this guarantee, the case would not have settled. While the settlement was abundantly fair, the Claimant could not chance having to pay out-of-pocket to CMS more than was proposed. Moreover, he wanted the peace of mind of finality that only the guarantee could buy. The proposal was not a complete shot in the dark for the carrier, so the guarantee was not a big risk. The MSA proposal was generated by the carrier’s own experts, with backgrounds in medicine and billing, and extensive experience with CMS. Having been-there and done-that, the carrier’s team did not expect any big surprises. Nevertheless, the guarantee was a big deal for the Claimant. (Also helpful is that the carrier agreed to pay a private company — Medivest — to manage the Medicare Set-Aside. This is the way to go. Managing a Set-Aside is beyond the capabilities of most individuals and if done wrong, money will be wasted and Medicare benefits jeopardized.)

In cases where the Claimant has substantial future medical needs, it is important for Claimant’s attorneys to remember that the amount CMS is willing to approve for the MSA Set-Aside is often a small fraction of the actual cost of future medical expenses. For example, in the settlement mentioned above, the carrier’s exposure for future medical expenses was 15-20 times greater than the amount CMS will approve. Congress allowed this flexibility by understanding the importance to private business of being able to settle cases. (See, 42 C.F.R. §411.46, 42 C.F.R. §411.47 and §3407.7, or 42 C.F.R. §411.54, et seq., of the Medicare Intermediary Manual.) If MSAs had to equal full exposure, cases would be too costly to settle. Without being able to settle cases, the insurance industry would come to a grinding halt. This would harm the economy. The alternative was to make taxpayers shoulder some of the exposure. This is what happens when Set-Asides are approved for less than full exposure.
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Florida once treated its injured workers with dignity and respect. This is no longer the case. Current workers’ compensation laws treat injured workers as expendable commodities. Little regard is given to their health and well-being.

Rather than being a non-adversarial system for the provision of needed and deserved benefits, as it was originally designed to be when adopted in Florida nearly 80 years ago, Florida’s workers’ compensation system has become a gauntlet of detours and obstructions with little reward at the end for those few who somehow manage to find their way through.

Complicating matters greatly for injured workers is that their lawyers are prohibited from being compensated fairly for their services. This was a clever scheme formulated by former Governor Jeb Bush and his Republican colleagues in 2002 to keep injured workers from being represented adequately. Here’s proof in the pudding: In Jennifer Kaufman v. Community Inclusions, Inc./Guarantee Insurance Company, the claimant’s attorney successfully prosecuted claims against the employer/insurance carrier. For his services, which consumed 100.3 hours, he received a whopping court awarded a fee of $648.41, or $6.48 per hour. (The fee was awarded by Judge E. Douglas Spangler, Jr. To Judge Spangler’s credit, he wrote in his Final Compensation Order that the attorney deserved a fee in excess of $25,000, but that his hands were tied by the workers’ compensation attorney’s fee statute, 440.34. Judge Spangler also expressed dismay that the employer/carrier were allowed to pay their own defense attorney $14,720.) The First District Court of Appeal upheld the small award.

Here’s a sampling of other ways in which Florida’s workers’ compensation system has moved away from being for the people:

In 1990, amendments to Chapter 440, Florida’s body of workers’ compensation laws, reduced the duration of temporary monetary benefits from 350 weeks to 260 weeks. Temporary benefits are payable to injured workers during the recovery process prior to maximum medical improvement — (440.02(10). (In 1993, the legislature further reduced temporary benefits to a maximum of 104 weeks. However, in a recent 1st DCA decision, Westphal v. City of St. Petersburg/Risk Management & State of Florida, the 104 week limit was struck down and replaced by the 260 week limit.)

The 1990 amendments also cut dramatically the benefits available under the wage loss system. Consider the case of a person left with a 6% permanent impairment — this is the current rating for a single level spinal disc herniation. Pre-1990, the injured worker was eligible for 520 weeks of benefits. This person would have to perform weekly good faith job searches and prove a connection between his injury and wage loss to receive benefits. The 1990 changes reduced eligibility for a 6% impairment to 78 weeks. If this reduction were not drastic enough, in 2003 the wage loss system was eliminated altogether, replaced by one in which an injured worker left with a 6% permanent impairment would receive 12 weeks of impairment benefits. Period. So, in little more than 21 years, wage loss benefits have been reduced by 98%.

Before 1993, Chapter 440 contained explicit language calling for workers’ compensation laws to be liberally construed in favor of injured workers. When in doubt, rule in favor of the worker. This worker friendly mentality was adopted in 1935, when the Florida Legislature first enacted the “Workman’s Compensation Act.” The 1993 Legislature had no use for this attitude and cut it out of the statute.
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I discuss settlement with our workers’ compensation clients every day of the week. Even people we don’t represent call on a regular basis to pick my brain about settlement. Each case has its own unique set of variables. No blueprint is available to provide answers.

Some basic principles do apply in every Florida workers’ compensation case. It is important for them to be understood.

1. Neither the employer/carrier (e/c) nor the injured worker/claimant can be forced to settle a Florida workers’ compensation case. If there is going to be a settlement, it must come by agreement of the parties.
2. No judge or jury can order the e/c to pay a lump sum amount for future benefits. While workers’ compensation judges can order the e/c to provide some future benefits, the payout only comes as the benefit accrues. For example, the judge can make an e/c responsible for attendant care, but the e/c only pays as the service is provided. Lump sum verdicts are the remedy in civil cases, not in workers’ compensation cases.
3. There are no juries in workers’ compensation cases, only workers’ compensation judges appointed by the Governor of the state. Juries render verdicts in civil cases.
4. Injured workers never receive compensation for pain and suffering in Florida workers’ compensation cases. Compensation for pain and suffering is exclusive to civil liability cases. While an employer can sometimes be sued for civil damages, it is a rare exception. It is not uncommon, however, for a third party to be sued in civil court for causing the employee’s job-related accident. For example, our office is currently prosecuting a civil action for a woman who slipped in wet paint as she was leaving work. The case is against her employer’s landlord. We settled the workers’ compensation case against her employer (and its insurance company) six months ago.

Settlement value is based on exposure. How much a case is worth at any given moment in time depends on how much the case can reasonably be expected to cost e/c in the future if it does not settle. Since the e/c is not in the business of giving gifts to injured workers, it will never settle a case for more than what it projects as its long term exposure. In fact, the e/c won’t even settle for an amount equal to its projected exposure. If a deal is to be made, it will have to be for a fraction of e/c’s worst case scenario analysis. The main reason for this is because the e/c earns money on its money. Rather than pay the full amount today, the e/c is better off investing the money and paying it off over time. Another reason why less than full exposure is paid today is because workers’ compensation claims die with the claimant. The e/c’s obligation to pay benefits ends when the claimant dies. Whatever money e/c has in reserve to meet is future obligations becomes its money with the passing of the claimant.
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Because Florida workers’ compensation permanent total disability (PTD) benefits are paid at the rate of 66-2/3% of an injured worker’s average weekly wage (AWW), an employee qualifying for both PTD and Social Security Disability (SSD) benefits may be in line to receive combined payments in excess of his or her AWW. Is this allowed under Florida law? The answer is, it depends.

Florida Statute 440.15(9)(a) and 42 U.S.C. s. 424(a) address the issue. The federal law allows the combined payments to equal 80% of a person’s average current earnings (ACE). ACE is a calculation, based on one of three formulas, used by the United States Social Security Administration to determine monthly SSD payments. Payments in excess of the 80% are subject to an offset.

Who gets the offset, the federal government, against SSD, or the workers’ compensation insurance companies? Unless a state has laws allowing workers’ compensation carriers to take the offset, the offset belongs to the Social Security Administration. The SSA will reduce SSD payments to bring the combined benefits down to the 80% mark.
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