Florida Statute 440.39(2) provides that “the employer or, in the event the employer is insured against liability hereunder, the insurer shall be subrogated to the rights of the employee or his or her dependents against such third-party tortfeasor.” This means that the employer and its workers’ compensation insurance carrier are entitled to recover a portion of their expenditures from money the injured employee receives from the at-fault third party.

Typically, it is not a dollar-for-dollar recovery. The formula for the recovery is contained in section 440.39(3)(a).

The formula’s interpretation has been challenged. Manfredo v. Employer’s Casualty Insurance Company, 560 So.2d 1162 (Fla 1990) put much of the uncertainty to rest. Manfredo explained that the percentage of the employer/carrier’s recovery is determined as follows:

Step 1. Establish the “full value” of the liability case.

Step 2. Reduce the actual recovery by attorney’s fees and costs to reach a net recovery.

Step 3. Divide the net recovery by the full value.

Step 4. The result in Step 3 is the percentage of the subrogation lien the employer/carrier is allowed to recover.

Let’s say the employer/carrier’s subrogation lien totals $100,000, and the net recovery divided by the full value is 20%, the employer/carrier’s recovery is $20,000.

Determining full value is an evidentiary matter. Experts, usually seasoned personal injury lawyers, give their opinions based on the facts of the particular case and their experience. The judge decides what evidence to accept.

Florida is a comparative fault state. See Florida Statute 768.81. This means that a tortfeasor only pays for damages in proportion to his or her percentage of fault. For example, if damages are $1,000,000, but the tortfeasor is only 60% at fault for causing the accident which has resulted in the damages, the at-fault party’s share is limited to $600,000.

Interestingly, comparative fault cannot be argued to reduce full value. See City of Hollywood v. Lombardi, 770 So. 2d 1196 (Fla. 2000) and Luscomb v Liberty Mut. Ins. Co., 967 So. 2d 379 (Fla. 3rd DCA 2007).

Another common factor preventing full recoveries is limited insurance coverage. Very few individuals maintain large bodily injury and uninsured/underinsured motorist insurance policy limits — I consider $1 million and above to be large. Damages usually exceed coverage limits.

While the cases cited in the section above discussing comparative fault do not explicitly say that limited coverage can be argued to reduce the full value assessment, it is my opinion that it cannot. There is nothing in the statute or the cases interpreting the statute saying it can. The language of the statute suggests that it cannot. Section 440.39(3)(a) contains the following language:

“[T]he employer or carrier shall recover from the judgment or settlement, after costs and attorney’s fees incurred by the employee or dependent in that suit have been deducted, 100 percent of what it has paid and future benefits to be paid, except, if the employee or dependent can demonstrate to the court that he or she did not recover the full value of damages sustained, the employer or carrier shall recover from the judgment or settlement, after costs and attorney’s fees incurred by the employee or dependent in that suit have been deducted, a percentage of what it has paid and future benefits to be paid equal to the percentage that the employee’s net recovery is of the full value of the employee’s damages.”

Moreover, the Lombardi case involved a compromised policy limits settlement of $100,000 in which the trial court calculated full value at $250,000. The insurance company did not argue that full value should be limited to the $100,000 settlement.

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Jeffrey P. Gale, P.A. is a South Florida based law firm committed to the judicial system and to representing and obtaining justice for individuals – the poor, the injured, the forgotten, the voiceless, the defenseless and the damned, and to protecting the rights of such people from corporate and government oppression. We do not represent government, corporations or large business interests.

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