Since 1935, employers who have insured against workers’ compensation claims by employee shave enjoyed being immune from tort actions. Nevertheless, the workers’ compensation and employer liability insurance policy has coverage under Part II for lawsuits by employees against employers for on-the-job injuries. Part I, workers’ compensation coverage has no dollar limits. Part II does. Part II covers those situations where the employee is able to avoid the ‘exclusive remedy.’
The initial idea for compensation was a sort of quid pro quo. The employer was to provide reasonable compensation benefits and a safe workplace. Benefits were to be paid without consideration of fault in exchange for tort immunity.
In recent years workers’ comp rights and benefits have been eroded in order to solve what was labeled a ‘crisis’ affecting employers; premiums that were too high. The ‘crisis’ was really nothing more than another skirmish in the economic war between the states in which each state uses low workers’ compensation premiums to attract and keep business interests in the state.
This war was predicted in the Report of the National Commission on State Workmens’ Compensation Laws issued in 1972. The unanimous conclusion of the commission was that state compensation laws provided inadequate benefits. The main barrier to adequate compensation laws was the competition between the states. Florida has even labeled past amendments to the workers’ compensation law (Chapter 440 Fla. Stat.) “economic development laws.”
The Florida law has evolved since the mid-1970s with benefit cut after cut and even some employee favorable amendments in 1974 have been eroded since then so as to be worthless today. The 1974 promise of the Papy amendments was to make the law adequate so as to fend off passage of the Federal Minimum Standards Act for State Workers’ Compensation Laws. The ruse worked. The federal threat went away and down went Florida benefits for on the job injury. The exclusive remedy remains. But it too has been eroded by appellate decisions designed to level the playing field.
The theory of estoppel as to assertion of the exclusive remedy defense was explained recently in Coastal Masonry v. Gutierrez. If the employer or the carrier advises the employee that the claim is not covered by workers’ comp, ie: that the accident or injury did not arise out of, or in the course and scope, of the employment, the exclusive remedy vanishes.
A challenge was raised to the constitutionality of the 1990 benefit take-away amendments to the law. In a decision upholding the constitutionality of the compensation law, the Florida Supreme Court held that where a claim was compensable before the amendments and was no longer compensable as a result of the amendments, the employee retained her common law tort action rights.
One of the specific situations mentioned by the court was in the area of recreational and social activity. Benefits for injuries that occur during employer sponsored events, with few exceptions, are not compensable. If an employer wishes, it can buy an endorsement that would cover employees during these activities, thereby protecting the employer from tort actions. Employers are allowed to contract for the provision of benefits better than those required by the law. Few, if any, do. Immunity can be bought. In Texas, where being insured for workers’ compensation is optional, employers who go bare and who voluntarily provide benefits better than the state act requires are rarely sued as reported by the Texas Association of Responsible Non-Subscribers.
Recently an employee of Gallagher Bassett was injured on the job. Gallagher Bassett is a third party administrator of workers’ compensation claims. The employee sued and the case was removed to the federal district court on diversity. The issue of Gallagher’s immunity from suit arose in the district court. The court denied the defense in a comprehensive review of this subject. Picon v. Gallagher Bassett is well worth reading.
Before the legislative assault on the rights of injured workers starting in the mid-1970s workers enjoyed presumptions and favorable evidentiary rules that made their claims easier to prove. Benefits were relatively fair and there were few if any opportunities to avoid the exclusive remedy.
All that has changed. The exclusive remedy itself is under attack in the courts. The pendulum having swung too far in favor of employers has started to swing back. Just how far it will go has not yet been determined. Insured employers should increase the limits of liability coverage under Part II of the policy. Better safe than sorry.
Miami-Dade Circuit Judge Jorge Cueto ruled Aug. 13 that the exclusive remedy was unconstitutional. On Aug. 20, he denied a motion for rehearing filed by the attorney general’s office in FWA, WILG, Padgett v. State of Florida, Case No. 11-13661 CA 25.
Mark Zientz, Daily Business Review
August 25, 2014