City of Hollywood v. Lombardi

• Decision Date: 05 August 1999
• Docket Number: No. 98-3186.,98-3186.
• Citation: 738 So.2d 491
• Parties: CITY OF HOLLYWOOD and Interrisk Concepts, Appellants/Cross-Appellees, v. Albert LOMBARDI, Appellee/Cross-Appellant.
• Court: Florida District Court of Appeals

738 So.2d 491

CITY OF HOLLYWOOD and Interrisk Concepts, Appellants/Cross-Appellees, v. Albert LOMBARDI, Appellee/Cross-Appellant.

No. 98-3186.

District Court of Appeal of Florida, First District.

August 5, 1999.

Scott J. Brook of Peters, Robertson, Parsons, Welcher, Mowers & Passaro, Fort Lauderdale, for Appellants/Cross-Appellees.

Richard A. Sicking, Coral Gables, for Appellee/Cross-Appellant.

ERVIN, J.

We are asked to address six issues in this workers' compensation case. The City of Hollywood and Interrisk Concepts, the employer and its servicing agent (E/ SA), assert that the judge of compensation claims (JCC) abused her discretion as follows: (1) in awarding penalties and interest on benefits totaling $8,478.75 that were paid on May 12, 1995; (2) in compelling the E/SA to take its 25 percent reduction for the subrogation lien before the application of the 100 percent average weekly wage (AWW) cap authorized by section 440.20(15), Florida Statutes (1993), and Escambia County Sheriffs Dep't v. Grice, 692 So.2d 896 (Fla.1997); (3) by failing to award the E/SA a credit for overpayment arising from the 100 percent AWW cap and resultant offsets; and (4) by awarding costs and attorney's fees to claimant. In his cross-appeal, claimant Albert Lombardi contends that the JCC erred as a matter of law (1) in capping the amount recoverable under the subrogation lien at $62,671, which was the total amount of claimant's recovery; and (2) in allowing the E/SA to apply the AWW cap so as to reduce workers' compensation payments rather than disability retirement pension benefits. For the reasons set forth below, we affirm the first three issues urged by the E/SA, decline to reach its fourth issue and, reverse those raised by claimant.

The facts in this case are not in dispute. Lombardi, who is currently 73 years of age, began working for the City as a building inspector in 1986. On September 14, 1993, he suffered a compensable shoulder injury when he slipped and fell while walking on a ramp at a home he was inspecting. Treatment complications occurred and Lombardi was determined to be permanently and totally disabled as of December 19, 1994.

Lombardi's AWW was $783.65, yielding a compensation rate of $425. Instead of compensation benefits, Lombardi began receiving benefits in January 1995 from the City's disability retirement pension plan in the amount of $2,623.37 per month.¹ Lombardi contributed $113 from his salary on a bimonthly basis to the pension plan. On May 12 and 15, 1995, claimant received checks from the E/SA as payment for permanent, total disability (PTD) benefits and supplemental benefits relating back to December 19, 1994. Payment of PTD benefits continued, based on the $425 compensation rate, until September 17, 1995, when the E/SA began reducing the amount by 25 percent due to its subrogation lien, which is discussed below. No supplemental benefits were paid after May 15, 1995.

Although Lombardi obtained indemnity and medical benefits from the E/SA, he also elected to file a negligence complaint in circuit court, as authorized by section 440.39(1), Florida Statutes (1993), against the homeowners of the property where he was injured. Under section 440.39(2), the E/SA then became subrogated to Lombardi's rights against the homeowners to the extent of the amount of compensation benefits paid and to be paid. The appropriate notice was filed by the E/SA under section 440.39(3), establishing a lien on Lombardi's claim. He and the homeowners eventually reached an out-of-court settlement for $100,000, which was the limit of their insurance policy coverage.

Thereafter, the E/SA moved for equitable distribution of the settlement funds in circuit court, seeking payment of its lien. At the time of the May 5, 1995, motion hearing, the E/SA had paid $41,228.76 in compensation benefits to claimant. Expert testimony was taken, and the circuit court found that claimant's total damages, after reduction of the amount for which Lombardi was comparatively negligent, were $250,000. Following the deduction of attorney's fees and costs incurred in the action ($37,329) from the $100,000 sum, Lombardi's net recovery was $62,671. The circuit court judge determined, after considering section 440.39(3), that the $62,671 Lombardi received was 25 percent of his total damages; therefore, the E/SA was entitled to the same percentage of reimbursement. In an order dated October 30, 1995, the court directed Lombardi to pay the E/SA $10,307.19, which is 25 percent of the $41,228.76 already paid to him, and it authorized the E/SA a reduction of future indemnity and medical payments by 25 percent in further payment of the lien.

After it had begun its reduction, the E/SA notified claimant by letter dated October 24, 1997, of its intention to assert an offset under section 440.20(15), Florida Statutes (1993), and Escambia County Sheriffs Dep't v. Grice, 692 So.2d 896 (Fla. 1997), based on benefits paid exceeding 100 percent of Lombardi's AWW, and sought reimbursement for overpayments.

Claimant raised the following claims at the workers' compensation hearing of December 2, 1997:(1) penalties and interest in connection with the compensation checks issued in May 1995, as they represented PTD and supplemental benefits dating back to December 19, 1994; (2) supplemental benefits from May 15, 1995, the date when the E/SA stopped paying them; and (3) the full amount of PTD benefits from September 17, 1995, or, alternatively, September 8, 1996, based upon his contention that the subrogation lien was paid in full as of those dates.

The JCC's order directed the E/SA to pay penalties and interest on the May 1995 payments and supplemental benefits from May 15, 1995, without any offset for disability pension or social security retirement, together with interest. It also allowed the E/SA to continue its 25 percent lien reduction until $62,671 in benefits were fully recovered, and, finally, it specified that future benefits were to be paid with an offset for the combination of workers' compensation and disability pension benefits in accordance with Grice, but the offset was not to be taken until after the 25 percent lien reduction was first calculated.

Turning to the issues raised by the E/SA on appeal, we affirm the first, regarding the award of penalties and interest on the May 1995 payments. Sections 440.20(7) and (9), Florida Statutes (1993), provide for the award of penalties and interest on any installment of compensation not paid within 14 days from the date when it is due. Because the payments made by the E/SA on May 12, 1995, related to benefits due as of December 19, 1994, it cannot be said that the JCC abused her discretion in awarding penalties and interest on the late payments. In so saying, we reject the E/SA's argument that it, in effect, overpaid Lombardi during this particular period based on its 25 percent lien reduction. The order granting the lien reduction was not entered until October 30, 1995; therefore, no overpayment of benefits existed in May 1995.

The E/SA's second issue concerns the order in which the 25 percent lien reduction and the 100 percent AWW cap and resultant offset are applied. The JCC found that the lien recovery should be calculated first, and then the workers' compensation/disability pension offset should be applied. We find no abuse of discretion in this ruling and therefore affirm.

Case law which has fleshed out the 100 percent AWW cap and resultant offset illustrates that the emphasis is on preventing the employer from being forced to provide the claimant with total benefits from workers' compensation and other collateral sources in excess of 100 percent of the claimant's AWW. See Grice; Barragan v. City of Miami, 545 So.2d 252 (Fla.1989)

; Domutz v. Southern Bell Tel. & Tel. Co., 339 So.2d 636 (Fla.1976); Brown v. S.S. Kresge Co., 305 So.2d 191 (Fla.1974). Because the total sum to be paid by the employer in benefits could not be determined until after the 25 percent lien reduction was applied, it was not unreasonable for the JCC to determine that the lien reduction should be allowed before the AWW cap and resultant offset. Nevertheless, because this is an issue of first impression, we certify the following question to the Florida Supreme Court as one of great public importance:

WHEN AN EMPLOYER/CARRIER IS ENTITLED TO REDUCE A CLAIMANT'S COMPENSATION BENEFITS AS A RESULT OF A SUBROGATION LIEN UNDER SECTION 440.39, FLORIDA STATUTES, SHOULD THE EMPLOYER/CARRIER APPLY THE LIEN REDUCTION

BEFORE OR AFTER CALCULATING TOTAL BENEFITS AND APPLYING THE 100 PERCENT AVERAGE WEEKLY WAGE CAP AND RESULTANT OFFSET AUTHORIZED BY SECTION 440.20(15), FLORIDA STATUTES, AND ESCAMBIA COUNTY SHERIFF'S DEP'T v. GRICE, 692 So.2d 896 (Fla. 1997)?

Under the third issue, the E/SA complains that the JCC abused her discretion by failing to allow it a credit for overpayments by virtue of the AWW cap and resultant offset for periods after December 19, 1994. The JCC ruled that future benefits were to be paid pursuant to the dictates of Grice, and that any previous offsets that could have been taken were administratively waived. We find no abuse of discretion in this ruling.

In affirming this point, we are aware of the provisions of section 440.15(13), Florida Statutes (Supp.1994), making an employee liable for any overpayments of indemnity benefits and allowing the employer/carrier to recover the overpayments by reducing compensation payments by 20 percent. See also Brown v. L.P. Sanitation, 689 So.2d 332 (Fla. 1st DCA 1997), wherein an employer/carrier was permitted to reduce compensation benefits to recover an overpayment caused by the employer/carrier's failure to apply the social security disability offset back to January 1, 1994, the effective date of section 440.15(13).

Nevertheless, we note that the E/SA is specifically claiming the overpayments based on Grice, an argument suggesting that Grice interpreted section 440.20...