Florida Court Clarifies When a Workers’ Compensation Carrier’s Subrogation Lien Should be Calculated Following a Third-Party Settlement

In the recent case of Liberty Mutual Insurance Company v. Robert A. Lee, et al., Case No.: 6D2023-2377, the Florida Court of Appeals ruled that a workers’ compensation carrier’s subrogation lien should be calculated following a third-party settlement on the date of equitable distribution rather than the actual date of the third-party settlement.

The case involved Mr. Lee, who was injured when an elevator in the medical center where he worked plummeted to the floor without stopping, injuring him. At the time, Liberty Mutual (Liberty) was the workers’ compensation carrier for the employer, and it paid benefits to Mr. Lee and on his behalf. Mr. Lee eventually sued the elevator operator, and Liberty filed a subrogation lien in the case under F.S. 440.39(3)(a).

After the third-party case settled, Liberty sought its pro rata share of the settlement amount for the benefits it had paid. While the parties agreed that Liberty was entitled to 11.61% of the benefits paid as its equitable distribution from the settlement, a dispute arose over when to calculate that amount. Lee took the position that Liberty should only be reimbursed for the benefits it paid through the date of his third-party settlement. Liberty, on the other hand, argued it should be reimbursed for its percentage of the benefits it paid through the date of equitable distribution. This created a dispute over the proper “valuation” date. The reason it mattered in this specific case is that after the date of the third-party settlement agreement, Liberty paid out over $300,000.00 in benefits on behalf of Lee.

The Sixth District Court of Appeal ruled that Liberty was entitled to its equitable distribution as of the date of distribution of the settlement funds rather than the actual date of settlement. The court held that Lee’s suggestion that the date of settlement should be used found no support in the statute and, in effect, provided a double recovery for Mr. Lee by using the date of settlement.

If you have questions regarding this finding or any other workers’ compensation question, Rayford H. Taylor, Esquire can be reached at (404) 954-6949, or by e-mail at rtaylor@hallboothsmith.com.

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