Employees injured while working in accidents caused by third parties may be entitled to compensation through Florida’s workers’ compensation system and its personal injury laws. In the context of this blog, a third party is a person or company other than an injured worker’s employer. Examples include manufacturers of defective machinery and negligent operators of motor vehicles.
Florida’s workers’ compensation system is a no-fault system, meaning that for an injured worker to be eligible for benefits, the fault of another in bringing about the accident need not be proved. This is one of the biggest differences between the workers’ compensation system and the personal injury system, which is fault based.
To prevent the person harmed from receiving a windfall recovery, some or all of the money received from the third party must be repaid to the employer or the workers’ compensation carrier in rough proportion to value of the benefits they furnished. In other words, employers and workers’ compensation carriers have subrogation rights against the third party proceeds. This right is commonly referred to as the workers’ compensation lien.
Workers compensaiton is a creature of statute – see Chapter 440 of Florida’s statutes – and the right of subrogation is derived, in particular, from Section 440.39(2).
The employer or carrier can agree to waive the lien. However, the waiver may come at a cost, typically a reduction in the amount of money the employer/carrier are willing to pay to settle the workers’ compensation case.
More often, employers and carriers do not agree to waive liens. Fortunately, very rarely does the amount paid to satisfy a workers’ compensation lien equal the full amount of the lien.
440.39 describes the formula for satisfying the lien. The formula has been explained in clearer terms in the Florida Supreme Court case Manfredo v. Employer’s Casualty Insurance Company, 560 So.2d 1162 (Fla 1990).
This is the formula: Third party settlement amount less (-) attorney fees and costs divided by (/) full case value = the % value of the wc lien.; and here is the formula by way of an example:
WC lien (medical, indemnity, settlement, etc.): $ 100,000
$ 250,000 third party settlement less fees (40%) and costs = $ 135,000
Full case value: $ 1,000,000. (Settled for less due to tough liability, coverage limits, etc.)
$ 135,000 divided by $ 1,000,000 = 13.5%
13.5% of $ 100,000 = $ 13,500.
Continue reading