City of Hollywood v. Lombardi
| Decision Date | 19 October 2000 |
| Docket Number | No. SC96482.,SC96482. |
| Citation | 770 So.2d 1196 |
| Parties | CITY OF HOLLYWOOD, et al., Petitioners, v. Albert LOMBARDI, Respondent. |
| Court | Florida Supreme Court |
Scott J. Brook of Peters, Robertson, Demahy, Parsons, Mowers, Passaro & Drake, P.A., Fort Lauderdale, Florida, for Petitioners.
Richard A. Sicking, Coral Gables, Florida, for Respondent.
We have for review a decision of the First District Court of Appeal that passed upon two questions certified by it to be of great public importance. See City of Hollywood v. Lombardi, 738 So.2d 491, 494-95, 496-97 (Fla. 1st DCA 1999)
. We have jurisdiction. See art. V, § 3(b)(4), Fla. Const.
Albert Lombardi, the claimant in this workers' compensation case, began working as a building inspector for the City of Hollywood ("City") in 1986.1 See Lombardi, 738 So.2d at 492
. In September 1993, Lombardi slipped and fell while walking on a ramp in a home that he was inspecting. As a result of the fall, Lombardi suffered a shoulder injury. He was determined to be permanently and totally disabled as of December 19, 1994.
Lombardi's average weekly wage ("AWW") was $738.65, yielding a weekly compensation rate of $425. In January 1995, he began receiving benefits from the City's disability retirement pension plan in the amount of $2,623.37 per month. Lombardi had contributed $113 from his salary on a bimonthly basis to the pension plan. On May 12 and 15, 1995, Lombardi also received checks from his employer, the City, and its servicing agent Interrisk Concepts (hereinafter referred to collectively as "E/SA"), as payment for permanent, total disability ("PTD") benefits and supplemental benefits relating back to December 19, 1994.2
In addition to obtaining indemnity and medical benefits from the E/SA, Lombardi also filed a negligence action in the circuit court, as authorized by section 440.39(1), Florida Statutes (1993),3 against the homeowners of the property where he was injured. In accordance with the statute, the E/SA then became subrogated to Lombardi's rights against the homeowners, and the E/SA filed the appropriate notice of a lien on any proceeds from Lombardi's claim. See § 440.39(2)-(3), Fla. Stat. (1993). Lombardi and the homeowners reached an out-of-court settlement for $100,000, which was the limit of the homeowners' insurance policy. After deducting attorneys' fees and costs incurred in the action ($37,329), from the $100,000 settlement amount, Lombardi's net recovery from the homeowners was $62,671.
The E/SA then moved in circuit court for equitable distribution of the settlement funds, seeking payment of its lien. By the time of the hearing on the motion, the E/SA had paid Lombardi $41,228.76 in compensation benefits. After receiving evidence, the circuit court calculated that the total amount of Lombardi's damages was $250,000, which took into account a percentage reduction for comparative negligence. The court then determined that the $62,671 Lombardi received from the third-party action as his net recovery represented 25% of his total damages. As a result, the court decided that the E/SA was entitled to that same percentage of reimbursement on all past and future compensation and medical benefits. Accordingly, the court directed Lombardi to pay the E/SA $10,307.19, which was 25% of the $41,228.76 the E/SA already paid to him. The court also authorized the E/SA to reduce future indemnity and medical payments by 25% in further repayment of the lien.
In accordance with the circuit court's order, the E/SA reduced its weekly compensation payments by 25% and began making reduced payments of $318.75 (75% of $425.00). At this point, additional disputes arose that were related to the E/SA's payment of benefits. In particular, the E/SA notified Lombardi that it intended to assert an additional offset based on past benefits it paid Lombardi that exceeded 100% of Lombardi's AWW. The E/SA based its claim of entitlement to an additional offset upon section 440.20(15), Florida Statutes (1993), and this Court's decision in Escambia County Sheriffs Department v. Grice, 692 So.2d 896 (Fla. 1997). The other significant area of controversy that arose was whether the amount of the E/SA's lien should be capped at Lombardi's net recovery, or rather, whether the amount of the lien should be capped at 25% of Lombardi's net recovery due to the fact that Lombardi only received 25% of his total damages.
After a hearing, the judge of compensation claims ("JCC") entered an order making the following determinations that are pertinent to the issues we review: (1) it allowed the E/SA to continue its 25% lien reduction until $62,671 in benefits (the amount of Lombardi's net tort recovery) were fully recovered; (2) it allowed the E/SA an additional offset based on Grice to the extent that the combination of workers' compensation and Lombardi's disability pension benefits exceeded 100% of his AWW; and (3) it directed that the 25% lien reduction be applied before calculating the total benefits and determining the 100% cap for purposes of the Grice offset.
On appeal, the First District affirmed the JCC's holding that the lien recovery should be calculated first but certified the question to this Court. See Lombardi, 738 So.2d at 494-95
. In addition, the First District reversed the JCC's decision to allow the E/SA to recover the entire amount of the $62,671 net recoverv, finding that the E/SA was only entitled to a maximum recovery of $15,667.75 (representing 25% of the net recovery)4 and certified the question to this Court. See Id. at 495-97.
The First District also reversed the JCC's ruling that allowed the E/SA to further reduce its benefits by taking an additional offset based on Grice because "if workers' compensation benefits are reduced based on disability pension benefits claimant received, and to which claimant contributed, such reduction in compensation may be violative of section 440.21." Id. at 497.
The certified question that we discuss first is an issue that arises whenever a claimant, like Lombardi, receives a settlement from a third-party tortfeasor that is less than the full value of his or her tort claim. As specifically framed by the First District, the certified question asks this Court:
WHEN THE EMPLOYER/CARRIER IS ENTITLED TO A SUBROGATION LIEN UNDER SECTION 440.39, FLORIDA STATUTES (1993), AND THE CLAIMANT'S NET RECOVERY IN A SETTLEMENT WITH THE THIRD-PARTY TORTFEASOR IS LESS THAN 100 PERCENT OF THE CLAIMANT'S TOTAL DAMAGES, SHOULD THE EMPLOYER/CARRIER'S LIEN BE LIMITED TO A PERCENTAGE
This issue requires us to determine whether there is a cap on the E/SA's third-party lien based upon the percentage that Lombardi's net recovery is to the full value of the claim, or whether the E/SA's third-party lien is capped at the amount of Lombardi's net recovery. On appeal to the First District, Lombardi argued that because he had received only 25% of his total damages in the settlement of his tort claim, the E/SA's lien should be capped at $15,667.75, which represents 25% of his net recovery of $62,671. See Id. at 495. In other words, Lombardi asserted that the E/SA should receive only a "percentage of the percentage of total damages." Id. To the contrary, the E/SA maintains that it is entitled to receive reimbursement for the full amount of its lien limited only by the amount of Lombardi's net recovery.5
Both parties rely on the same language in section 440.39(3)(a), Florida Statutes (1999), which under its current version states as follows:
[I]f the employee ... can demonstrate to the court that he or she did not recover the full value of damages sustained, the employer or carrier shall recover from the judgment or settlement, after costs and attorney's fees incurred by the employee ... in that suit have been deducted, a percentage of what it has paid and future benefits to be paid equal to the percentage that the employee's net recovery is of the full value of the employee's damages ....
(Emphasis supplied.)
Because workers' compensation benefits are a creature of statute, see Travelers Ins. Co. v. Sitko, 496 So.2d 920, 921 (Fla. 1st DCA 1986),
our answer to the certified question must be based on statutory interpretation guided by this Court's prior case law interpreting the applicable statutes. See J.J. Murphy & Son, Inc. v. Gibbs, 137 So.2d 553, 562 (Fla.1962) ().
Over the years, section 440.39(3)(a) has undergone a series of changes. See generally Reginald E. Wilcox, Determining and Satisfying Liens for Workers' Compensation Benefits, Fla. B.J. 39 (Apr.1990). The amendment that is significant for our purposes occurred in 1989. At that time, the Legislature added the language that the First District relied on in concluding that the E/SA's equitable distribution recovery should be capped at a percentage of the percentage of the total damages that Lombardi recovered. See Lombardi, 738 So.2d at 496
. The following language was changed in 1989 (words stricken are deletions; words underlined are additions):
[I]f unless the employee or dependent can demonstrate to the court that he did not recover the full value of damages sustained the employer or carrier shall recover from the judgment or settlement, after costs and attorney's fees incurred by the employee or dependent in that suit have been deducted, a percentage of what it has paid and future benefits to be paid equal to the percentage that the employee's net recovery is of the full value of the employee's damages; provided, the failure by the employer or carrier to comply with the duty to cooperate imposed by subsection (7) may be taken into account by the trial court in determining the amount of the employer's or carrier's recovery, and such...
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