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Florida’s insurers are breathing easier after the state’s high court ruled that the state’s workers’ compensation law bars injured workers from seeking additional benefits in civil court.

The Florida Supreme Court recently handed down a ruling in a case (Morales v. Zenith Insurance Company SC13-696) that challenged a key provision of the state’s workers’ compensation law. At issue was the so-called “exclusive remedy” provision of the law that essentially codifies a compromise between labor and management stretching back to the 1930s. Under the provision, employers agree to provide medical and wage-loss benefits, regardless of who is at fault, in exchange for injured workers forgoing their rights to sue in civil court.

The insurance industry considers the exclusive remedy provision the bedrock principle of the workers’ compensation system.

The Morales case stemmed from a workplace accident that resulted in the death of Santana Morales while he was working for Lawns Nursery and Irrigation Designs, Inc.

Morales widow agreed to a workers’ compensation settlement with Lawns’ workers’ compensation and employer liability insurer, Zenith. That settlement included a release in which Ms. Morales agreed that the settlement would be her sole remedy.

However, Morales had also been pursuing a separate civil claim against Zenith under the employer liability portion of Lawns’ policy, claiming that her husband’s death was due to Lawns’ negligence. Morales obtained a $9.25 million judgment against Lawns, which Zenith refused to pay.

Zenith moved the case to federal court, which reversed the judgment based on the workers’ compensation exclusion provision in the employer liability policy that makes workers’ compensation the sole remedy.

On appeal, the Eleventh Circuit court said it was unclear if the workers’ compensation exclusive remedy in the employer liability policy effectively barred Morales from seeking additional damages in civil court.

The federal court requested that the Florida Supreme Court decide the issue.

Two-Part Policy

Florida Supreme Court Justice Judge Ricky Polston, in a 16-page opinion, upheld the exclusive remedy provision of the law.

Polston noted that the policy issued by Zenith to Lawns had two parts – the first part provided workers’ compensation coverage and the second part provided employers liability coverage.

Under the terms of the policy, the workers compensation part covered all benefits required under the state’s workers’ compensation law. The employer liability part requires Zenith to pay damages in certain cases, though it specifically does not apply to “any obligation imposed by workers’ compensation.”

An employer liability policy is generally triggered when a claim falls outside of the workers’ compensation law, such as when an employer’s or co-worker’s intentional act results in the injury or death of a worker.

“In other words, employer liability is a ‘gap-filler’ that provides protection to the employer in those situations where the employee has a right to bring a tort action,” wrote Polston.

In the Morales case, Polston noted that was not at issue and, as a result, Morales claim fell fully under the workers’ compensation law. “In this case, the estate did not have the right to bring a tort action against Lawns,” wrote Polston. “Rather, because the estate alleged that Lawns’ negligence caused Morales death, its exclusive remedy was under the Florida Workers’ Compensation Law.”

Polston also found that the agreement between Morales and Zenith also prevented her from seeking additional damages elsewhere. In Florida, injured workers can agree to receive a lump sum payment that covers all medical benefits and wage-loss benefits. By law, that agreement contains a release stating it constitutes an “election of remedies” by the worker.

The court found that the provision in the agreement precludes any further court action by an injured worker. “We read this provision to do what it says, namely to elect the consideration in the settlement agreement (i.e., a lump-sum payment) as the sole remedy for Morales’ death,” wrote Polston.

Zenith, as a party to the settlement, then has the right to enforce the terms of the agreement as the sole remedy for Morales’ claim. As such, Zenith is not liable for any other judgments that might be levied against it.

“The fact that the estate subsequently obtained a tort judgment against Lawns that should have been prohibited by both the release and workers’ compensation immunity does not somehow prevent Zenith from enforcing the remedy Morales elected,” the decision concludes.

Topics Florida Workers' Compensation Professional Liability