Jeffrey P. Gale, P.A. // UM/UIM Benefits Not Subject to 440.39 Florida Workers’ Compensation Lien

 

dollarsAn employee injured or killed in the course of his or her employment by the negligence or wrongful act of a third-party tortfeasor may receive workers’ compensation benefits and pursue a remedy by action at law against such third-party tortfeasor. (Where the employee has been killed, the third-party action will be handled through the decedent’s estate by a court appointed Personal Representative.)

Pursuant to Florida Statute 440.39, if the employee or his or her dependents accept workers’ compensation benefits, the employer or its workers’ compensation insurance company shall be subrogated to the rights of the employee or his or her dependents against such third-party tortfeasor, to the extent of the amount of compensation benefits paid or to be paid. This is known as the workers’ compensation lien.

In most instances, the lien does not result in a dollar-for-dollar recovery. The amount of the lien is reduced by the amount of all court costs expended in the prosecution of the third-party suit or claim, including reasonable attorney fees for the plaintiff’s attorney. Manfredo v. Employer’s Casualty Insurance Company, 560 So.2d 1162 (Fla 1990) explains the formula. (See Jeffrey P. Gale, P.A. // Florida Workers’ Compensation Liens — 440.39, the Manfredo Formula for a detailed breakdown of the formula.)

Work-related motor vehicle accidents implicate various types of insurance coverages. Of those various coverages, Bodily Injury Liability (BI) and Uninsured Motorist/Underinsured Motorist (UM/UIM) provide compensation claimed in actions at law for injury or death.

BI and UM/UIM cover the same losses. BI coverage is purchased by the tortfeasor, while UM/UIM is maintained by the person injured or killed. UM applies when the tortfeasor has failed to maintain BI coverage, UIM applies where the BI policy limits are below the sustained losses.

Even though BI and UM/UIM cover the same losses, the §440.39 subrogation right does not apply to UM/UIM benefits. See Volk v. Gallopo, 585 So.2d 1163 (Fla. 4th DCA 1991).

INTERESTING TWIST: In cases implicating BI and UIM, the underinsured motorist insurer has the right, pursuant to Sections 627.727(6)(a) & (b) Florida Statutes, to refuse permission to its insured to settle a claim with the liability insurer. If the underinsured motorist insurer refuses permission to settle, it must, within 30 days after receipt of the notice of the proposed settlement, pay to the injured party the amount of the written offer from the underinsured motorist’s liability insurer. This scenario arises where the BI settlement would not fully satisfy the claim for personal injuries or wrongful death so as to create an underinsured motorist claim, and the UIM carrier wishes to recover from the tortfeasor some or all of what it pays to its insured. It can only do this by keeping its insured from executing a settlement release in favor of the tortfeasor.  

Since the payment made by the UM/UIM carrier is in lieu of its insured being allowed to accept the BI settlement, is it subject to the 440.39 lien? According to Metrix South v. Rose, 758 So. 2d 1259 (Fla. 4th DCA 2000), the answer is Yes. Rose involved claims for workers’ compensation, BI, and UIM benefits. UIM refused permission to its insured to settle with the BI carrier, Allstate, for $100,000, choosing instead to pay the amount pursuant to Sections 627.727(6)(a) & (b) Florida Statutes. The workers’ compensation carrier claimed a lien on the proceeds. The trial court denied the claim, finding that the proceeds were UM proceeds, not subject to equitable distribution. The ruling was appealed. On appeal, the Fourth DCA reversed the trial court, holding that the $100,000, while paid by the UIM carrier, was really BI proceeds, thus subject to the lien.

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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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