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.
**************************************
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.