Sanford v. Alachua County School Bd., AI-466

• Decision Date: 28 December 1982
• Docket Number: No. AI-466,AI-466
• Citation: 425 So.2d 112
• Parties: Nieda SANFORD, Appellant, v. ALACHUA COUNTY SCHOOL BOARD and Kemper Insurance Company, Appellees.
• Court: Florida District Court of Appeals

Page 112

425 So.2d 112

Nieda SANFORD, Appellant, v. ALACHUA COUNTY SCHOOL BOARD and Kemper Insurance Company, Appellees.

No. AI-466.

District Court of Appeal of Florida First District.

Dec. 28, 1982.

Rehearing Denied Feb. 3, 1983.

Thomas W. Davis of Barton, Cox & Davis, Gainesville, for appellant.

Jack A. Langdon of Jones & Langdon, Gainesville, for appellees.

BOOTH, Judge.

This cause is before us on appeal from an order of the deputy in a workers' compensation proceeding denying lump sum advance payment of all permanent total disability benefits, based on the deputy's finding that advance payment materially prejudices the employer/carrier. We reverse.

The facts are that Neida Sanford, a 62-year-old teacher with 16 years experience, fractured her hip in a fall on September 19, 1977. Dr. Moore performed a closed reduction of the hip fracture on the date of the accident, inserted a prosthesis in the hip on January 24, 1978, and finally replaced the entire hip joint on February 2, 1979. Claimant was accepted as permanently and totally disabled by the employer/carrier on June 28, 1979, based upon Dr. Moore's letter stating that she would be unable to return to work due to her hip injury and that she suffered a permanent impairment of 70 percent of her lower extremity. She was paid compensation at the rate of $119 per week.

In an attempt to become productive and to counteract the effects of inflation on the value of her workers' compensation award, claimant submitted a request for an award of the commuted value of all future compensation. At a hearing before the deputy commissioner, her attorney introduced tables indicating a life expectancy of 21.5 years, resulting in a total payment of permanent total disability benefits in the amount of $89,678.84, after computation to present value at the four percent statutory discount rate. Claimant testified that she would invest the award in real estate rental property and presented evidence of her ability to manage such an investment. The employer/carrier cross-examined claimant's witnesses but presented no testimony to rebut her evidence.

The deputy commissioner entered an award denying claimant's request for lump sum advance payment because he found that it would materially prejudice the rights of the employer/carrier in two ways: (1) the statutory discount rate of four percent "in and of itself" would materially prejudice the rights of the employer/carrier as of the date of the hearing, and (2) advance payment would deprive the employer/carrier of the right to later challenge the claimant's status as permanently totally disabled if she were to regain her earning capacity.

Section 440.20(11)(d), Florida Statutes (1977) states that, when an application for an advance payment in excess of $2,000 is opposed by the employer or carrier, the deputy commissioner may order it paid if he finds that it is "for the best interest of the person entitled to compensation, will not materially prejudice the rights of the employer and carrier, and is reasonable under the circumstances of the case." There has been no testimony that the lump sum payment is not in the best interests of the claimant; the employer/carrier has not rebutted her evidence of a sound, workable plan. Both parties agree that the payment of the lump sum will cost the carrier more than installment payments, due to the variance between the statutory discount rate and the interest rates presently available in the investment market. The issue is how these two factors are to be weighed in determining what is reasonable under the circumstances.

There is little case law in any jurisdiction concerning "material prejudice to the employer" or related concepts. No case has been cited to the court, and our research has disclosed none, holding that the variance between the discount rate and the investment potential of the award has constituted "material prejudice" to the employer. ¹ We note that the workers' compensation statute providing for lump sum payment has been seen as intended to enhance the value of benefits by giving the employee, rather than the employer/insurer, immediate use and control over the total amount, otherwise payable in installments. Umbreit v. Quality Tool, Inc., 225 N.W.2d 10, 302 Minn. 376 (1975).

This court is bound to enforce Section 440.20(10), Florida Statutes (1977), which provides for a four percent discount rate. The validity of that statute has not been challenged by the employer/carrier....