Appeal Expected Over Ruling Overturning Florida Workers’ Comp System

By | August 19, 2014

A Florida circuit court judge has ruled that the state’s workers’ compensation law is unconstitutional because it no longer provides adequate benefits to injured workers giving up their right to sue.

Florida 11th Circuit Court Judge Jorge Cueto handed down the ruling in a case (Padgett v. State of Florida No. 11-13661 CA 25) that could upend the state’s nearly 80-year workers’ compensation law.

The case has its genesis in a 2012 instance where a state government worker, Elsa Padgett, sustained an on-the-job injury. After a fall, Padgett had to have a shoulder surgically replaced and was forced to retire due to complications.

Padgett, along with several trial bar groups, argued that her workers’ compensation benefits were inadequate and the law unfairly blocked her constitutional right to access the court.

The workers’ compensation system is by law the “exclusive remedy” for injured workers. Injured workers are provided medical benefits and certain wage-loss benefits in exchange for forgoing the right to sue their employer in court.

Cueto, in a 20-page ruling, avoided making any specific comments on the details of Padgett’s case other than to rule in her favor.

Instead, Cueto focused on the exclusive remedy provision of the law, finding that due to the many cuts in medical and wage-loss benefits made by lawmakers over the years, the system no longer represents a fair deal for injured workers.

Cueto singled-out workers’ compensation changes made by lawmakers in 2003 that included one requiring injured workers to pay medical co-pays after reaching a point of maximum medical improvement. The 20o3 reforms also eliminated one class of wage-loss benefits while raising the eligibility criteria injured workers must meet to receive permanent benefits.

“The Act of 2003 no longer provides full medical benefits or any compensation for permanent partial disability,” opined Cueto, adding that “it is inadequate as an exclusive remedy for all injured workers.”

Florida Attorney General Pam Bondi, who did not directly intervene in the case on behalf of the state, nonetheless submitted a brief defending the 2003 law changes.

Bondi said that the law remains a reasonable alternative to a tort system, even as she acknowledged “some individual workers may be worse off with workers’ compensation in a particular case.”

Bondi also argued that the 2003 reforms were well within the legislature’s discretion since they were in response to an overwhelming public need: the high cost of workers’ compensation premiums.

Bondi cited a 2003 state Senate Banking and Insurance Committee report that found that in 2000 Florida had the highest premiums in the country and in 2001 was ranked second behind California. The report also said that Florida’s medical cost for permanent partial disability claims was twice the national average.

Since the 2003 reforms, lawmakers and state officials have praised the success of the reforms as workers’ compensation rates have been cut 56 percent.

Cueto, however, took exception to the fact that the workers’ compensation law was designed to primarily favor the cost of insurance to employers at the expense of injured workers’ benefits.

“The purpose of a workers’ compensation act is not for it to be used as a weapon in an economic war,” wrote Cueto. “Its purpose is to provide adequate compensation for on-the-job injuries in place of the tort remedy so as to relieve society from the cost of industrial injuries.”

Kimberly Fernandes, a partner with the Kelley Kronenberg law firm that represents insurance companies, said she believed Cueto’s ruling will be appealed and for now there will be no change in how the workers’ compensation system operates.

However, she acknowledged, that companies are taking the ruling seriously.

“The word on the street is that nobody wants to sit and let this happen,” Fernandes said. “But some say it is a signal of things to come, while others say it is just the product of a rogue judge.”

Mark Zientz, representing the Florida Workers’ Advocates, an intervenor in the case, said he was surprised at Cueto’s ruling despite the fact the judge ruled the way his organization wanted.

“It was sort of like the boy who said the emperor has no clothes. Everybody knows it, but nobody up until now has been willing to say it,” said Zientz.

Zientz expects that Bondi’s office will appeal the ruling. If and when that happens, Zientz said, the FWA plans to ask Florida’s Third District Court of Appeals to cede its jurisdiction to the Florida Supreme Court.

The state Supreme Court is already considering several other similar cases including a case [Westphal v. City of St Petersburg SC13-1930], where a lower court initially ruled that a 104-week limit on temporary benefits was unconstitutional. The lower court later reversed its ruling, but asked the high court to consider the case as a matter “of great public importance.”

Zientz takes it as a good sign that cases such as Westphal, and potentially Padgett, are making it to the Supreme Court.

“This is something that is on the Supreme Court justices’ mind, whether these low benefits are adequate as a replacement for a tort system,” said Zientz.

Property Casualty Insurers Association State Government Counsel Donovan Brown said Cueto’s ruling shocked the industry, business groups and other stakeholders.

“Everyone is concerned about the implications of this case,” said Brown. “The exclusive remedy provision of the law is one of the lynchpins of workers’ compensation in Florida.”

Brown said that all options are on the table when considering the industry’s next move. He said that includes exploring legal options and, if necessary, a legislative response to the ruling even it’s not yet clear what that would look like.

Time is of the essence, said Brown.

“The industry needs to take action as soon as possible,” said Brown. “Without that the law is influx and that will create a lot of uncertainty.”

Topics Legislation Workers' Compensation Florida

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