Business Monday

Workers’ comp law ruled unconstitutional, now what?

WILKE
WILKE

On Aug. 13, Miami-Dade Circuit Judge Jorge Cueto declared Florida's Workers’ Compensation Statute, 440.01 et seq., unconstitutional. This ruling will be appealed and, ultimately, reviewed by the Florida Supreme Court. The decision is also likely be a focal point for the first legislative session after the November elections.

The basis for Judge Cueto’s finding was his analysis that the workers’ compensation benefits afforded injured employees after the statutory changes of 2003 no longer constitute a fair exchange for an employee’s legal surrender of negligence damages against the employer.

In his decision, the judge cites specific provisions of the 2003 statute that require an injured employee to pay a $10 co-pay for medical care and allow for the apportionment for medical costs for non-industrial conditions. Both of these requirements are instituted only after the employee reaches maximum medical improvement (MMI). Judge Cueto also expressed concerns regarding the loss of an employee’s right to wage-loss benefits after an accident.

However, instead of declaring unconstitutional the specific provisions referenced, Cueto declared the entire statute unconstitutional, thereby allowing the employee who brought the case to pursue traditional tort damages for personal injuries against its employer.

The implications of this ruling are far-reaching. The decision responds directly to the complaints by employee rights advocates that Florida workers’ compensation laws are simply a revenue-sharing function requiring employees to bear part of the employer’s cost of doing business.

Of course, the 2003 law declared unconstitutional was initially legislated, in part, to address the overwhelming cost and belief by employers that workers’ compensation benefits were so disproportionately high that fraud was rampant.

As an employer in Miami-Dade County, what does this decision mean? First, until the decision is stayed or an appellate decision is issued, the workers’ compensation law is unconstitutional for all employees injured in Miami-Dade County. Other circuit judges can use the ruling as a persuasive authority and, therefore, the finding could spread. But for now, the ruling is binding only to employees injured in Miami Dade County.

Second, if an employee chooses to pursue negligence damages, the employer can raise defenses previously not available in workers’ compensation claims. Specifically, the employer has every right to raise the defenses of comparative negligence, assumption of the risk, collateral source and related defenses. These defenses are not afforded under workers’ compensation laws.

Finally, what remains unanswered is the role of the insurance coverage. Historically, general liability insurers specifically excluded claims for injured employees. This was due to the mandatory provision of statutory workers’ compensation coverage. Now that employees can sue in tort just as any non-employee, will general liability insurers be required to provide insurance coverage for these claims? I would argue that, if by operation of law, there is no workers’ compensation statute, insurers will have no alternative but to provide liability coverage. Likewise, must employers continue to pay workers’ compensation premiums? As noted above, Cueto declared the entire statute unconstitutional — including those provisions which statutorily require most employers to have coverage in the first place.

Recommendations for employers include immediately consulting with their insurance brokers to discuss coverage options; strategizing with your legal professional as to the best options for reporting claims and defending litigation; carefully monitoring any appeals or stays issued through the attorney general’s office or judicial action; creating and implementing a litigation and risk-management program specific to its employee injuries; and finally, preparing for the financial realities of jury trials and related damages awardable to employees.

Cheryl Wilke, partner-in-charge of the Fort Lauderdale office of Hinshaw & Culbertson LLP, focuses her practice in the representation of employers in labor and employment matters. She may be reached at cwilke@hinshawlaw.com.

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