Florida Court of Appeal holds that employer/carrier entitled to recover benefits paid from third-party settlement after settlement date.

The claimant was injured at work when the elevator he entered suddenly stopped and then plunged into a free fall. The elevator bounced off the ground floor and then slammed onto the ground floor a second time, causing various injuries to the claimant.

While he received benefits from his workers’ compensation employer/carrier, he also sued the elevator operator. Pursuant to Section 440.39(3)(a), Florida Statutes, the employer/carrier filed a notice of lien in the third-party suit. The claimant did enter into a settlement in the third-party suit, but for over 750 additional days, he continued to receive workers’ compensation benefits at a cost to the employer/carrier of over $300,000. 

When the employer/carrier filed a motion with the trial court for equitable distribution to recover its lien on the third-party settlement, the trial court ordered the parties into non-binding arbitration to assist with calculating the appropriate lien amount.

Under Section 440.39(3)(a), Florida Statutes, an employer/carrier is theoretically entitled to 100% of what it has already paid and future benefits to be paid up to the claimant’s net settlement in a third-party case after deducting attorney fees and costs from the total settlement amount. As in most cases, though, the third-party settlement in the Lee case was one in which, as stated in 440.39(3)(a), the claimant could “demonstrate to the court that he or she did not recover the full value of damages sustained….” In such cases, the employer’s/carrier’s lien is limited to “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.” 

As a result of the arbitration, the parties agreed to a dollar amount representing the “full value” of the damages in the third-party suit. They further agreed the claimant did not recover the full value. Pursuant to the statutory calculation, the parties agreed the employer/carrier was entitled to 11.61% of the benefits paid as its equitable distribution from the settlement proceeds.

The real dispute, however, centered on what benefits the 11.61% was to be applied. More specifically, the parties disagreed on when the “valuation date” should be for determining the amount of an employer’s/carrier’s workers’ compensation payments. 

The claimant took the position the employer/carrier should only be reimbursed for 11.61% of the benefits it paid through the date of the third-party settlement—before the employer/carrier incurred over $300,000 in additional benefit costs. 

By contrast, the employer/carrier argued it should be reimbursed for 11.61% of the benefits it paid through the date of the equitable distribution, which included the over $300,000 in benefit costs. The trial court judge agreed with the claimant. 

The Sixth District Court of Appeal reversed and held the trial judge misinterpreted the plain language of Section 440.39(3)(a), Florida Statutes. Whether it is 100% or 11.61%, the statute clearly states an employer shall recover “what it has paid and future benefits to be paid.” Thus, while the statute does not set forth a “valuation date,” it is unnecessary given the clear directive in the statute entitling employers/carriers to reimbursement of either all or a percentage of benefits they pay up to a claimant’s net settlement amount. This is so whether the benefits have been, continue to be or will be paid in the future. Otherwise, the court explained, claimants would potentially receive double recovery for the same accident, which contravenes the philosophical underpinnings of the statute. 

Accordingly, the court remanded the case to the trial court to recalculate the equitable distribution using the total amount of benefits paid by the employer/carrier. 

_{What’s Hot in Workers’ Comp, Vol. 29, No. 3, March 2025, is prepared by Marshall Dennehey to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. We would be pleased to provide such legal assistance as you require on these and other subjects when called upon. ATTORNEY ADVERTISING pursuant to New York RPC 7.1 Copyright © 2025 Marshall Dennehey, all rights reserved. No part of this publication may be reprinted without the express written permission of our firm. For reprints or inquiries, or if you wish to be removed from this mailing list, contact tamontemuro@mdwcg.com.}