Florida Erection Services, Inc. v. McDonald

• Decision Date: 23 February 1981
• Docket Number: No. VV-150,VV-150
• Citation: 395 So.2d 203
• Parties: FLORIDA ERECTION SERVICES, INC. and Risk Management Services Inc., Appellants, v. Raymer McDONALD, Appellee.
• Court: Florida District Court of Appeals

Page 203

395 So.2d 203

FLORIDA ERECTION SERVICES, INC. and Risk Management Services Inc., Appellants, v. Raymer McDONALD, Appellee.

No. VV-150.

District Court of Appeal of Florida, First District.

Feb. 23, 1981.

Rehearing Denied April 4, 1981.

Robert D. McAliley, of Brennan, McAliley, Hayskar, McAliley & Deckert, W. Palm Beach, for appellants.

Richard A. Sicking and Gerald A. Rosenthal, of Kaplan, Sicking, Hessen, Sugarman, Rosenthal & DeCastro, Miami, for appellee.

SMITH, Judge.

The carrier appeals a workers' compensation award imposing penalties for late payment of wage loss benefits, and assessing attorney's fees against the carrier based upon a finding of "bad faith" in the handling of the claim. The attorney's fees question and certain aspects of the penalty ruling present issues of first impression before this court, and require consideration of the drastic 1979 amendments to the Workers' Compensation Law.

The claimant was injured in a compensable accident on September 20, 1979. The carrier paid temporary total disability benefits through December 5, 1979, on which date according to the report of the claimant's treating physician he reached maximum medical improvement, with permanent impairment. The carrier properly forwarded to the claimant the notice required by Section 440.185(10), Florida Statutes (1979) (and the appropriate rule) of his possible entitlement to wage loss benefits, along with instructions for claiming such benefits.

The claimant submitted his request for wage loss benefits for the period December 5, 1979 to January 5, 1980. The carrier received the wage loss request on January 7, 1980, but its claims supervisor determined that the portion required to be completed by the employer showing wages paid was incomplete, and, in addition the claimant sent only the carrier's copy of the four-part form supplied to him by the carrier. A formal claim submitted by claimant's attorney was received by the carrier on January 14, 1980. Without any further investigation (so far as the records shows) of the claimant's entitlement to wage loss benefits, the carrier rejected the claim, but instead of notifying the claimant immediately, it waited fourteen days from the date of receipt of the wage loss request before mailing a letter to the claimant explaining that the employer's portion should be completed, and that he should submit the remaining three parts of the claim form.

The claimant thereafter responded through his attorney, who filed an amended form in which was included "-00-" in the appropriate blank indicating no wages received during the wage loss period. Additional demands were made by the carrier for submission of the entire four-part form. Further correspondence ensued between the claimant's attorney and the carrier, each accusing the other of attempted circumvention of the new Workers' Compensation Law. Wage loss requests were also filed for the months of January and February. The January request was approved on March 7, 1980, and the February request was approved March 10, 1980.

A hearing was held pursuant to the requirements of Section 440.34(2)(b) for the sole purpose of determining liability for interest, penalties and attorney's fees. At the hearing before the deputy commissioner on March 10, 1980, the carrier also accepted and commenced payment of the claimant's wage loss benefits for the period December 5, 1979 to January 5, 1980. The claimant, meanwhile, suffered a total lack of wages or wage loss benefits during the period from December 5, 1979 until March 7, 1980, the date on which the wage loss payments commenced. The deputy commissioner ordered payment of interest and a ten percent penalty for late payment, and awarded attorney's fees to claimant's attorney upon a finding of bad faith delay in payment of benefits.

We will first consider the assessment of a ten percent penalty. Section 440.20(7), Florida Statutes (1979), in pertinent part similar to former Section 440.20(5), Florida Statutes (1978), provides in part:

(7) If any installment of compensation for ... disability, permanent impairment, or wage loss payable without an award is not paid within fourteen days after it becomes due ... there shall be added to such unpaid installment a punitive penalty of an amount equal to ten percent ... unless notice (controverting claim) is filed ... or unless such nonpayment results from conditions over which the employer or carrier had no control.

Section 440.20(6) sets out the procedure to be followed if the carrier "controverts the right to compensation." Subsection (6) requires, among other things, that the notice set forth "the grounds upon which the right to compensation is controverted together with "a written explanation setting forth in detail the reason or reasons why the claim has been controverted.

On appeal, the carrier argues that it should be relieved of the penalty under the above statute because it filed a notice to controvert within twenty-one days, as required by Section 440.20(6). The deputy commissioner's order refutes this contention, and our review satisfies us that his ruling was correct. True, a notice to controvert was filed within twenty-one days of the carrier's receipt of the claimant's request for wage loss benefits. But the carrier's notice to controvert contains no mention of wage loss benefits. The notice contains a statement admitting payment of temporary total benefits from the date of accident to the date of maximum medical improvement, and contains a statement that the carrier controverts "any other benefits." Under the heading "Reason for Controverting," appearing on the notice form, as to "any other benefits," the notice states: "Not specific as required by W/C Rule 38F-3.10." The cited rule, Rule 38F-3.10, Florida Administrative Code, deals with claims generally, which are made using LES Form BCL-16. The rule specifically provides that wage loss claims shall be filed on LES Form BCL-13(b). The procedure for filing of wage loss claims, using Form BCL-13(b), is covered in Rule 3.18, Florida Administrative Code.

The notice to controvert, as to wage loss benefits, was insufficient under the statute. Even assuming that the wording "any other benefits" is broad enough to include the wage loss claim, it cannot be so construed in view of the specific reference to the rule governing claims generally, rather than Rule 3.18, the specific rule governing wage loss claims. More importantly, the notice did not comply with the requirements of subsection (6) in that it failed to specifically state "the grounds upon which the right to compensation is controverted," and the notice contained no "written explanation setting forth in detail the reason or reasons why the claim has been controverted." We note also from the record the carrier's concession "there was no Notice to Controvert filed over wageloss benefits," made through its attorney at the hearing before the deputy commissioner. The carrier's position on this appeal is thus contrary to the position taken below on this point. In our view the deputy commissioner correctly ruled that the notice to controvert did not comply with the statute, payment was not made within fourteen days, and the punitive penalty for late payment was properly assessed.

We next consider the assessment of attorney's fees under the "bad faith" provision. Section 440.34(2), Florida Statutes (1979), provides that a claimant shall be responsible for the payment of his own attorney's fees, except under limited circumstances set forth in subparagraph (a) of subsection (2), and except as provided in subparagraph (b), as follows (b) In cases where the deputy commissioner issues an order finding that a carrier has acted in bad faith with regard to handling an injured worker's claim and the injured worker has suffered economic loss. For the purposes of this paragraph, "bad faith" means conduct by the carrier in the handling of a claim which amounts to fraud, malice, oppression or willful, wanton or reckless disregard of the rights of the claimant. Any determination of bad faith shall be made by the deputy commissioner through a separate fact-finding proceeding; ...

The carrier argues that the "bad faith" definition contained in Section 440.34(2)(b) tracks the longstanding case law dealing with punitive damages. See Winn and Lovett Grocery Company v. Archer, 126 Fla. 308, 171 So. 214 (1936), and General Finance Corp. of Jacksonville, Inc. v. Sexton, 155 So.2d 159 (Fla. 1st DCA 1963). It follows, according to the carrier, that acts amounting to bad faith under the statute must be of sufficient gravity to justify an award of punitive damages in a tort action, in accordance with the rule stated in General Finance Corp. of Jacksonville, Inc. v. Sexton, supra, at 162, as follows:

The general rule is that exemplary or punitive damages are given solely as punishment where torts are committed with fraud, actual malice, deliberate violence, or oppression or with such gross negligence as to indicate a wanton disregard of the rights of others. Punitive damages are damages in excess of compensation and are authorized to be inflicted when the wrong done partakes of a criminal character, though not punishable as such, or consists of aggravated misconduct or a lawless act resulting in injury to the plaintiff.

The carrier maintains that it cannot reasonably be inferred from the evidence of its actions that it was guilty of the type of malice, intent, or reckless disregard of the rights of the claimant that would support a recovery of punitive damages. By insisting that the claimant comply with the directions on the wage loss request form, the carrier states that it has done nothing except to act upon its belief as to the requirements of the new Workers' Compensation Law. The carrier relies upon language in General Finance Corp. of Jacksonville, Inc. v. Sexton, supra, in which the court noted a defense to a punitive damage claim, under...