Florida Statute 440.39 gives the employer or its workers’ compensation insurance carrier, as the case may be, lien rights in the proceeds of any recovery made in the personal injury liability case. In consideration of this right, the employer and carrier have a “duty to cooperate” with the employee in prosecuting claims and potential claims against third-party tortfeasors. See sec. 440.39(7).

The court in Shaw v. Cambridge Integrated Servs. Group, Inc., 888 So.2d 58, 64 (Fla. 4th DCA 2004), declared that the duty to cooperate found in section 440.39(7) is “[o]ne of the most important rules and conditions stated in the Workers Compensation statute.” For example, an employer/carrier’s failure to cooperate can have adverse consequences on their lien rights. 440.39(3)(a) provides that

the failure by the employer or carrier to comply with the duty to cooperate imposed by subsection (7) may be taken into account by the trial court in determining the amount of the employer’s or carrier’s recovery, and such recovery may be reduced, as the court deems equitable and appropriate under the circumstances, including as a mitigating factor whether a claim or potential claim against a third party is likely to impose liability upon the party whose cooperation is sought, if it finds such a failure has occurred.

A violation of 440.39 can also subject the employer/carrier to a spoliation claim for failing to preserve evidence. This cause of action is not barred by the employer’s workers’ compensation immunity outlined in section 440.11, Florida Statutes. See General Cinema Beverages of Miami v. Mortimer, 689 So.2d 276, 278 (Fla. 3d DCA 1995).Discovery

The statute can be useful for discovering helpful information from the employer/carrier regarding the third-party case. While interrogatories are not permitted in workers’ compensation cases, requests for production and depositions are.

In Southeast Recycling Corporation v. McClure, 658 So.2d 670 (Fla. 1st DCA 1995), the Claimant was injured while cleaning a densifier machine when its operating system moved unexpectedly. The employer/carrier was ordered by the Judge of Compensation Claims to produce the densifier machine for inspection, testing, and videotaping as well as certain specified documents related to the machine’s manufacture and maintenance. The Order was upheld on appeal.

The duty to cooperate in providing discovery is not boundless. In Suburban Propane v. Estate of Pitcher, 564 So.2d 1118 (Fla. 1st DCA 1990), the employer/carrier were not required to furnish certain information to the claimant’s estate concerning the installation, maintenance and repair, and/or records kept in connection with the customer location where the deceased died because “petitioner had expressly admitted that it was on a fishing expedition to establish employer liability. Therefore, it could not be said that the depositions sought to be compelled involved an investigation or prosecution of a claim or a potential claim against a third-party tortfeasor.” The court pointed out that its decision should not be read to suspend a party’s duty to cooperate prior to filing a lawsuit.

Spoliation

In General Cinema Beverages of Miami v. Mortimer, 689 So.2d 276, 279 (Fla. 3d DCA 1995) the court explained that the duty to cooperate “must necessarily include a duty to preserve evidence.” Accord Shaw v. Cambridge Integrated Servs., 888 So.2d 58, 61-62 (Fla. 4th DCA 2004) (recognizing that section 440.39(7), Florida Statutes, creates an independent cause of action for spoliation of evidence).

Citing these authorities, the appellate court in Gayer v Fine Line Construction & Electric, Inc. 970 So.2d 424 (Fla. 4th DCA 2007), concluded that an employer had a duty to preserve evidence for the injured laborer’s claim against a third-party tortfeasor. Gayer sustained severe injuries when he fell from a ladder furnished to him by Fine Line, his statutory employer. He considered suing the ladder manufacturer, but the ladder could not be located. Claiming this impaired his ability to prove the lawsuit against the manufacturer, Gayer sued the Fine Line for spoliation.

Generally, to establish a claim for spoliation, the plaintiff must prove six elements: “(1) existence of a potential civil action, (2) a legal or contractual duty to preserve evidence which is relevant to the potential civil action, (3) destruction of that evidence, (4) significant impairment and the ability to prove the lawsuit, (5) a causal relationship between the evidence destruction and the inability to prove the lawsuit, and (6) damages.” Flagstar Cos. v. Cole-Ehlinger, 909 So.2d 320, 322-23 (Fla. 4th DCA 2005) (internal quotations omitted).

The issue on appeal in Gayer was whether element two, duty to preserve, existed. Gayer argued that 440.39(7) imposed the duty on Fine Line to preserve evidence. The Fourth DCA agreed, noting that the purpose of section 440.39(7) is to preserve evidence and aid in pursuing causes of action against third-party tortfeasors and to impose a duty of cooperation to that end. General Cinema, 689 So.2d at 279.

Having possession of the evidence also matters. Gayer got his job with Fine Line through a help supply services company, Labor Finders of Broward, Inc. (Labor Finders), which leased workers to construction companies, paid the workers an hourly wage, and provided workers’ compensation benefits. Both Fine Line and Labor Finders were considered Gayer’s employer under the workers’ compensation system. However, because Labor Finders never obtained possession of the ladder, the appellate court held that it had no duty under section 440.39(7) to acquire and preserve evidence that was never in its possession. The same result was reached in Barbosa v. Liberty Mut. Ins. Co., 617 So.2d 1129, 1129-30 (Fla. 3d DCA 1993), a case cited by the court in Gayer.

Note of caution: While not imperative, it is almost always advisable to inform the employer in writing to preserve the evidence and the purpose of the request. As stated by the court in Perez v. La Dove, Inc., 964 So.2d 777, 779 (Fla. 3rd DCA 2007), “the purpose of a spoliation claim generally is not served by permitting suit where no notice is given.” An exception to this rule was made in Builder’s Square v. Shaw, 755 So.2d 721, 724 (Fla. 4th DCA 1999), where the Fourth District Court of Appeal allowed a spoliation claim to proceed in a case in which a request for preservation has not been made, but “when the circumstances are such that [the employer] should have known that certain evidence could conceivably be critical to an employee’s claim.” “The Fourth District Court of Appeal apparently imputed to the employer a commonly perceived truth of the times that litigation arising out of the accident was ‘”foreseeable,”‘ if not inevitable, and hence the employer had a duty under section 440.39(7).” La Dove at 779. The La Dove court refused to apply the exception in its case even though the severity of the victim’s injuries limited his ability to make the preservation request.

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Contact us at 305-758-4900 or by email 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.

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. 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.