manfredo formula - Jeffrey P. Gale, P.A.

Jeffrey P. Gale, P.A. // Understanding Workers’ Compensation Liens and Uninsured Motorist Claims Under Florida Law

Jeffrey P. Gale, P.A. — Sun, 08 Jun 2025 19:36:52 GMT

It is not uncommon for employees to be injured in motor vehicle accidents while acting within the course and scope of their employment. Such incidents frequently implicate multiple layers of insurance coverage.

Regardless of fault, injured employees may be eligible for benefits including workers’ compensation, Personal Injury Protection (PIP), and health insurance (including Medicare). Workers’ compensation and PIP are considered primary over Medicare, meaning they must pay first. If Medicare does make a payment, it typically expects to be reimbursed from any subsequent workers’ compensation or personal injury recovery.

When an injured employee is not at fault, they may seek damages through a third-party civil action against the negligent driver and, if different, the vehicle’s owner. Recovery in these cases typically comes from the tortfeasor’s and owner’s bodily injury (BI) liability insurance or, if applicable, personal assets.

In many cases, however, the at-fault party either lacks BI coverage altogether or carries insufficient limits. Florida law addresses this risk through uninsured/underinsured motorist (UM/UIM) coverage, governed by § 627.727, Florida Statutes. This optional coverage is designed to fill the gap left by the inadequacy—or absence—of BI insurance.

Per § 627.727(1), the purpose of UM/UIM coverage is:

“…for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness, or disease, including death, resulting therefrom.”

The Workers’ Compensation Lien Under § 440.39

Section 440.39, Florida Statutes, grants workers’ compensation (WC) carriers an equitable lien on any judgment or settlement obtained by the injured worker from a third-party tortfeasor. This lien allows the carrier to recover benefits previously paid out, including indemnity and medical expenses.

However, critically, the WC lien does not attach to UM/UIM proceeds. Florida courts have addressed this distinction:

Volk v. Gallopo, 585 So. 2d 1163 (Fla. 4th DCA 1991): Held that a WC carrier cannot benefit from a UM recovery due to the plain language of § 440.39(3)(a), which excludes UM recoveries from lien applicability.
§ 627.727(1), Fla. Stat.: Explicitly states that UM coverage “shall not inure directly or indirectly to the benefit of any workers’ compensation … carrier.”

When BI and UIM Coverage Coexist: Procedural Mechanics

In claims involving both BI and UIM, procedural requirements under § 627.727(6)(a)-(b) govern how settlements must be handled:

(a) Notification Requirement

If the injured party agrees to settle with the liability insurer but the settlement won’t fully satisfy their claim (thereby triggering a UIM claim), they must notify all UIM carriers by certified or registered mail. The UIM carrier then has 30 days to either:

Authorize the settlement, or
Preserve subrogation rights under paragraph (b).

(b) Preservation of Subrogation Rights

If the UIM carrier elects to preserve subrogation, it must:

Pay the BI settlement amount to the injured party within 30 days.
Thereafter, the UIM carrier may pursue subrogation against the at-fault party and their liability carrier.

This mechanism ensures the UIM carrier can protect its reimbursement rights by preventing the injured party from releasing the tortfeasor from further liability.

When UM is BI

In Metrix South v. Rose, 758 So. 2d 1259 (Fla. 4th DCA 2000), the UIM carrier refused to authorize settlement of a $100,000 BI offer and instead paid that amount directly to the claimant to preserve subrogation rights. The workers’ compensation carrier claimed a lien on the payment.

The trial court ruled that the payment constituted UM benefits, thereby exempt from the lien under § 440.39. However, the Fourth DCA reversed, holding that the payment was the equivalent of a third-party recovery, making it subject to the WC lien:

“… the trial court erred in characterizing the $100,000 payment to appellees as UM benefits and not a judgment or settlement recovered by the employee.”

This decision illustrates the complexity that arises when UM and UIM coverage functions as a stand-in for third-party BI liability, particularly in lien determinations.

Conclusion

Understanding the relationship between workers’ compensation lien rights and UM/UIM insurance is essential in motor vehicle accident cases involving injured workers. While Florida law generally prohibits WC carriers from recovering UM/UIM proceeds, exceptions exist—especially where UIM payments substitute for BI coverage through statutory subrogation mechanisms.

Practitioners must closely evaluate the structure and source of all settlements to determine lien exposure under § 440.39, and comply with § 627.727’s procedural requirements when both BI and UIM are in play.

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Contact us at 305-758-4900 or by email (kgale@jeffgalelaw.com and jgale@jeffgalelaw.com) to learn your legal rights.

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.

While prompt resolution of your legal matter is our goal, our approach is fundamentally different. Our clients are “people” and not “cases” or “files.” We take the time to build a relationship with our clients, realizing that only through meaningful interaction can we best serve their needs. In this manner, we have been able to best help those requiring legal representation.

DISCLAIMER: This information provided by Jeffrey P. Gale, P.A. is for informational purposes only and is intended to be used as a non-legal guide prior to consultation with an attorney familiar with your specific legal situation. It should not be considered legal advice or counseling. No such legal advice or counseling is either expressly or impliedly intended. This information is not a substitute for the advice or counsel of an attorney. If you require legal advice, you should seek the services of an attorney.

Jeffrey P. Gale, P.A. /// Scrutinize Workers’ Compensation Carrier’s Paylog to Reduce WC Lien Amount

Jeffrey P. Gale, P.A. — Thu, 09 Jan 2025 22:21:14 GMT

It is not uncommon for an individual hurt in a work-related accident, for which workers’ compensation benefits are due, to also have a liability case against a negligent third party. Where compensation is recovered in both cases, the injured party may have to give some of the third-party recovery to the workers’ compensation insurance carrier to satisfy its workers’ compensation lien. See section 440.39(2), Florida Statutes.

There is a formula, commonly referred to as the Manfredo Formula, used for establishing the amount of the lien recovery. However, before getting to the formula, it is necessary to determine the amount of recoverable expenditures to plug into the formula.

440.39(3)(a) identifies recoverable expenditures:

Upon suit being filed, the employer or the insurance carrier, as the case may be, may file in the suit a notice of payment of compensation and medical benefits to the employee or his or her dependents, which notice shall constitute a lien upon any judgment or settlement recovered to the extent that the court may determine to be their pro rata share for compensation and medical benefits paid or to be paid under the provisions of this law….

“Compensation” benefits, indemnity or wage loss benefits, are paid in accordance with section 440.15. “Medical benefits” are covered by section 440.13.

In Associated Home Health Agency, Inc. v. Lore, 484 So.2d 1389 (Fla. 4th DCA 1986), the appellate court upheld the trial court’s refusal to include in the amount recoverable under section 440.39, the amount paid by the carrier for rehabilitative services authorized by section 440.49(1)(a) [now, 440.491]. The Court explained:

The vocational rehabilitation of an injured employee, while mutually beneficial to both the employee and the employer, is intended primarily to enhance the wage earning capacity of the injured employee, thereby reducing (if not eliminating) the employee’s wage loss. Thus, rehabilitative services, at least to the extent that such services accomplish this intended purpose, provide a direct monetary benefit to the employer/carrier. Additionally, section 440.39(3)(a) is explicit in granting to the employer/carrier a pro rata recovery (against a judgment or settlement received by the employee against the third party tort-feasor) “for compensation and medical benefits paid or to be paid… .” The expense incurred by the employer in providing to the employee vocational rehabilitation is neither compensation nor medical benefits, each of which is clearly defined in the statute.

Additional benefits falling into this category of excluded expenditures include investigative costs, nurse case management expenses, and vocational rehabilitation expenses.

Other excluded expenses are carrier-paid attorney’s fees and costs. When carriers are forced to pay wrongly denied benefits, they must pay the claimant’s attorney’s fees and costs. See section 440.34(3). These fees and costs are not compensation or medical benefits and to allow the carrier to recoup some of the money would be against public policy. In contrast, carriers can recover under 440.39 for fees and costs claimants pay to their attorneys. The fees and costs are typically paid in conjunction with the settlement of the workers’ compensation case and are based on private attorney/client compensation agreements. Washout settlements of this nature are essentially considered the payment, in the form of a lump sum, of compensation and medical benefits, hence, the reason why the claimant-paid fee can be applied to the carrier’s lien.

This blog illustrates why it is important to carefully study the carrier’s paylog to filter out inapplicable payments. Carriers will not do the job for claimants’ attorneys and will laugh all the way to the bank if they make a windfall recovery.

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Contact us at 305-758-4900 or by email to learn your legal rights.

Jeffrey P. Gale, P.A. // Comparative Fault Not Part of Manfredo Formula Equation

Jeffrey P. Gale, P.A. — Sun, 21 Jul 2024 23:18:24 GMT

Not infrequently, both a workers’ compensation case and a personal injury liability case will arise from the same accident. For example, a construction site supervisor involved in a motor vehicle crash while traveling to Home Depot for supplies can pursue workers’ compensation benefits from the employer and civil liability damages from the at-fault party.

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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Contact us at 305-758-4900 or by email to learn your legal rights.