Florida Supreme Court ()
The family of a man killed on the job wants the Florida Supreme Court to enforce a judgment that the insurance industry argues would gut the state’s worker’s compensation law.
During oral argument Thursday, Tracy Raffles Gunn of the Gunn Appellate Practice in Tampa asked the court to answer certified questions posed by the U.S. Court of Appeals for the Eleventh Circuit regarding the enforceability of a $9.5 million judgment.
The family of the man crushed to death in a landscaping accident seeks the judgment despite the fact it already collected worker’s compensation benefits. The intent of workers’ compensation law is to provide immunity from tort claims.
The judgment for Leticia Morales, widow of Santana Morales Jr., was the result of a one-day wrongful death jury trial on damages in 2005 in state circuit court. The circuit judge had previously entered a default on liability because the employer, Lawn Nursery and Irrigation Designs Inc., never responded to discovery. The employer was not present nor was it represented at trial.
Morales and the other named family survivors then filed a lawsuit in 2010 in federal court to collect damages on a bad faith claim against the employer’s insurer. Zenith Insurance Co.
U.S. District Judge James Moody Jr. in the Middle District dismissed the case in Zenith’s favor, ruling the tort action—a simple negligence cause of action—was excluded by worker’s compensation law.
The Morales family appealed to the Eleventh Circuit, which deferred to the Supreme Court to answer three questions:
• Does the estate have standing to bring its breach of contract claim against Zenith under the employer liability policy?
• If so, does the employer liability provision excluding obligations imposed by worker’s compensation law operate to exclude coverage of the claim?
• If the estate’s claim is not barred, does the release in the worker’s compensation settlement prohibit collection?
Gunn argued the federal judge erred in dismissing because the employer’s policy had two parts—worker’s compensation and employer’s liability.
The Moraleses sought to collect under the second part, although commercial general liability policies are normally in place to protect employers against third-party claims.
Also, Gunn noted the state lawsuit was filed in 1999, before Zenith settled the worker’s compensation claim. Zenith was aware there were two claims.
Zeniths’ workers compensation settlement, Gunn noted, “does not refer to a settlement of the tort claim. In fact, the agreement never mentions the tort claim nor the employer liability coverage whatsoever.”
Gunn sought reliance on Wright v. Hartford Underwriters Ins. Co., a 2002 Fourth District Court of Appeal decision, to establish the survivors’ right to bring a claim under the employer liability portion of the policy, and to establish the worker’s compensation exclusion didn’t apply.
However, Justice Jorge Labarga disagreed, arguing the Wright plaintiff differed because the claim was for gross negligence.
Zenith’s supposed exposure to a judgment arising from a tort claim occurred because more than two years into the state civil action, Zenith instructed its attorneys to withdraw from Lawns Nursery’s defense. It never got that case dismissed.
Elliott Scherker of Greenberg Traurig in Miami, speaking for Zenith, argued that Zenith withdrew because Lawns Nursery ceased to exist. There was no defendant responding to the lawyers appointed to their defense.
“It wasn’t that we abandoned the case,” Scherker said.
“Let’s assume the insured did everything possible,” Justice Barbara Pariente said. “He still has a case pending. In ordinary course, don’t they still have to get it dismissed?”
Scherker claimed the worker’s compensation settlement did settle the case. Any defense of the client after that, he said, should be at the discretion of the insurer, but it shouldn’t be an obligation.
Scherker warned that if the court rules in favor of the Morales family, “what this would unleash is a plaintiff could sue a shaky employer, and not notify the insurance company at all. The shaky employer disappears or puts up a weak defense and the employee can get damages the next day.”
Friend of the court briefs were filed by the Florida Association of Insurance Agents, the Associated Industries of Florida Inc., Florida Chamber of Commerce and many other business interests.
The Florida Justice Reform Institute said in its brief that if the family is not barred from collecting the judgment, workers’ compensation immunity would be all but obliterated in a flurry of frivolous lawsuits.
The Florida Department of Financial Services workers’ compensation claims database reflects there were 50,215 workers’ compensation claims made in 2012.
“Allowing even a fraction of these claims to be litigated would incredibly burden an already overloaded court system,” the Justice Reform Institute said.
The justices seemed to wrestle with Zenith’s failure to get the tort case dismissed, but they appeared reluctant to go as far as weakening the workers’ compensation exclusion.
“An obligation based on simple negligence claim can’t be anything other than an obligation based on workers’ compensation law,” Justice Charles Canady argued. “What does this exclusion cover? Reason does not go out the door. We have to look at all of this in context. What does it leave?”