Case NotesFlorida Law

Case Note – A CHALLENGE TO THE DEFENSE OF “EXCLUSIVE REMEDY” FOR EMPLOYER LIABILITY

By: William G. K. Smoak, Esq., Ryan Hoyle, Esq. and Ashleigh Price, Esq.

In what currently amounts to an advisory opinion, The Honorable Jorge E. Cueto, trial judge in the Eleventh Judicial Circuit, ruled that Fla. Stat. § 440.11 is unlawful, invalid and unconstitutional. As the Attorney General for the State of Florida noted, the Court’s ruling does what no other court in Florida has done – declare Florida’s worker’s compensation framework unconstitutional.[1] Given the potential implications of this decision it is important to understand the rationale behind the Court’s ruling and why it is unlikely to be upheld or supported by appellate review.

In Florida Workers’ Advocates (FWA) v. State of Florida, Eleventh Judicial Circuit In and For Miami Dade County, Florida Case No. 11-13661 CA 25, a three (3) count negligence action was filed by Plaintiffs, Jorge and Nelida Cortes, against Jorge’s employer Velda Farms. Defendant Velda Farms asserted the affirmative defense of workers compensation immunity under Section 440.11, Fla. Stat. The Plaintiffs then filed an amended complaint, seeking a declaratory action addressing the constitutionality of Sections 440.09(1)(b), and 440.11, Fla. Stat. Shortly thereafter, the Florida Workers’ Advocates (FWA) and Workers’ Injury Law & Advocacy Group (WILA) moved to intervene in the declaratory action and were granted the right to participate.

After the Plaintiffs filed their declaratory action and FWA and WILA intervened on Plaintiffs’ behalf, Defendant Velda Farms withdrew the affirmative defense related to exclusive remedy under Fla. Stat. §440.11 (2003). Following the Defendant’s withdrawal of its exclusive remedy defense, FWA and WILA sought, and successfully had Velda Farms severed from the Declaratory Relief Count, leaving the interveners, FWA and WILA, as parties to the declaratory action by the court’s order. The court’s order also mandated that the State of Florida be listed in the pleading as “Respondent,” although as the Attorney General noted in a later response to show cause, the State did not move to intervene in the matter, and was not a defendant to the Plaintiffs’ amended complaint.  After the court’s ruling on the severance of the declaratory action, neither the original Plaintiffs nor the original Defendant were parties to the action, and the matter proceeded independently without them.

Interveners moved for summary judgment on their declaratory action, a motion denied by the court as there was no certain class of individuals involved in the matter who may be impacted by the court ruling on the constitutionality of 440.11, and thus, the court’s ruling would amount to nothing more than an advisory opinion[2]. Importantly at this time, the defense of “exclusive remedy” was no longer raised as part of any pleading.

Thereafter, unrelated party Elsa Padgett, through counsel, moved to intervene, and was granted leave to do so.  The Court found that Intervenor Elsa Padgett presented a present controversy over the validity of s. 440.11, Fla. Stat. (2003). Together with Padgett, FWA and FIWA filed an amended motion for summary judgment seeking a declaration as to the validity of s. 440.11, Fla. Stat. (2003).

Current Florida Law

Under current Florida law, Section 440.11 Fla. Stat., provides that the liability of an employer prescribed in Fla. Stat. §440.10 shall be exclusive in place of all other liability, including vicarious liability, of such employer to a third-party tortfeasor and to the employee.  Section 440.11 does provide exceptions to the “exclusive remedy” provision: 1) an intentional tort committed by the employer that causes the injury or death of the employee [subsection (b)(1)];  or 2) when the employer engages in conduct that the employer knew was “virtually certain” to result in injury or death [subsection (b)(2)].  Importantly for employers, the virtual certainty exception requires the employee prove by clear and convincing evidence that “the employer engaged in conduct that the employer knew,  based on prior similar accidents or explicit warnings specifically identifying a known danger, was virtually certain to result in injury or death to the employee, and the employee was not aware of the risk because the danger was not apparent and the employer deliberately concealed or misrepresented the danger so as to prevent the employee from exercising informed judgment about whether to perform the work.”  Fla. Stat. §440.11(1)(b)(2). The burden employees face in proving an employer acted intentionally, or with “virtual certainty” is extremely high.

Thus, in Florida, employers facing suit from an injured employee have available the defense of “exclusive remedy” provided for in Section 440.11, Fla. Stat., which, absent an employee proving one of the very demanding exceptions enumerated in subsections (b) 1 & 2, ensures that the remedy for injured employees is workers compensation.  Exposure for employers is limited, and as a trade-off for employees, workers compensation is a no-fault system of benefits.

The Eleventh Judicial Circuit’s Ruling on ”Exclusive Remedy”

In ruling on the interveners’ amended motion for summary judgment, Judge Cueto found that the workers compensation act, and specifically the “exclusive remedy” provision under Section 440.11, Fla. Stat., is no longer an adequate remedy in place of common law tort as required by the 14th Amendment to the U.S. Constitution or by the Florida Constitution.   Judge Cueto found that the Act became unconstitutional as an exclusive remedy in stages:

  • In 1968 the Act provided employees with full medical care benefits and indemnity benefits for permanent partial disability, and employers with a defense of “exclusive remedy” while offering employees and employers the right to “opt-out” of workers compensation coverage.
  • In 1970, the opt-out provision (which allowed employees to ‘opt out’ the State Workers Compensation system) of the Act was repealed and no reasonable alternative or additional benefit was provided.
  • In 1973, Florida changed from a contributory negligence to a comparative negligence state, however, the Act failed to increase Worker’s Compensation to account for the fact that there was now a much greater chance of recovery for employees. In 2000, the Act eliminated permanent partial disability while providing no reasonable alternative.
  • In 2003, the Act was amended so it no longer provided full medical care or any compensation for partial loss of wage earning capacity.

Taken in total, Cueto reasoned that the slow erosion of permanent partial disability benefits from Chapter 440, Fla. Stat., effectively renders the “exclusive remedy” provision of the Act unconstitutional, as no additional benefits or remedies have been afforded to injured workers while the above detailed provisions have been stripped away.

Judge Cueto determined that he had authority to rule on the interveners’ motion because Intervener Padgett, as a worker, represented a class of individuals who, with certainty, would be impacted by the court’s decision on the declaratory action.

The concerns with Judge Cueto’s ruling are self-evident. Absent a provision providing that workers compensation is the exclusive remedy for workers injured on the job, Florida employers will be faced with a significant increase in tort claims filed by injured employees, and the increased costs associated with defending those claims, and resolving the claims.  The very reason why workers’ compensation benefits have been limited, reducing excessive costs to the insurance system and encouraging a return to the labor force, would be stripped away.

Flaws with Florida Workers’ Advocates (FWA) v. State of Florida and why it is not likely to be Adopted

As significant as the 11th Circuit’s advisory ruling is, the flaws within its rationale are equally significant. The conclusions reached by Judge Cueto are unfathomable under the current state of the law, and cannot stand up to jurisdictional or constitutional arguments.   At the time of the court’s ruling on the declaratory action, there was no defendant, and no plaintiff, only interveners; thus, significantly, there was no pending cause of action, and the court lacked subject matter jurisdiction to hear interveners’ motion.

Jurisdictional Flaws

On its face, the court lacked jurisdiction to hear the declaratory action; there were no defendants to the matter and no claim to hear.

Velda Farms, the only named Defendant in the matter, was severed from Count IV (the Declaratory Relief Count) and dismissed from the Count on April 1, 2013.  The Order severing stated that Velda Farms was not permitted to respond and was not to be identified as a Defendant.

The April 1, 2013 Order also stated that Count IV would go forward to be tried separate against the State of Florida, Office of the Attorney General, even though the Attorney General was not a named party and did not intervene.  Importantly, service of notice on the Attorney General, pursuant to Fla. Stat. §86.091 and Fla. R. Civ. Pro. 1.071, does not make the Attorney General a party to an action where the constitutionality of a state statute is in question.  Bondi v. Tucker, 93 So.3d 1106, 109-11.  (Fla. 1st DCA 2012).  Watson v. CLaughton, 34 So.2d 243, 246 (Fla. 1948).  Rather, the Attorney General has discretion whether to intervene pursuant to Fla. Stat. §86.091. Thus, although the State is listed as a “Respondent,” because they had not chosen to intervene, they were not a party to the matter – no defendant was. Importantly, neither the State nor the underlying defendant would be the proper part to the Interveners’ constitutional challenge: the proper defendant to a constitutional challenge is the state official designated to enforce the statute, Atwater v. City of Weston, 64 So. 3d 701 (Fla. 1st DCA 2011).

Absent a defendant to the declaratory action, there was no one against whom the court could enter judgment. Ervin v. Taylor, 66 So.2d 816,817 (Fla. 1953) (reversing a decree “addressed to no one” and directing the matter be dismissed even though Attorney General received notice and filed a reply, because “There were on adversaries, and being none, there was no actual controversy”).  A trial court lacks jurisdiction to hear a new claim brought within a case that has been terminated by dismissal, even where the intervention occurs before dismissal. E. Cnty Water Control Dist. v. Lee County, 884 So. 2d 93 (Fla. 2nd DCA 2004).

Further, Count IV of the underlying complaint, the Corteses’ declaratory action, had been dismissed. The interveners did not file any new pleading, or assert independent claims. Accordingly there was no controversy for the Court to rule upon.  An Intervenor take the pleadings as it finds them when they intervene and as such the Intervenors in the instant matter lacked a claim to pursue as Count IV has been dismissed.  Omni Nat’l Bank v. Ga. Banking Co., 951 So. 2d 1006, 1007 (Fla. 3d DCA 2007).  At the time of the dismissal of Count IV, the court lost jurisdiction to hear the arguments of Intervenors as the court did not have jurisdiction “to hear a new claim brought within a case that has been terminated by a dismissal”.  E. Cnty Water Control Dist. v. Lee County, 884 So.2d 93 (Fla. 2d DCA 2004).

Finally, and as the AG noted in its Response to Show Cause, intervener Padgett has not alleged that she has attempted to assert a cause of action against her employer, or that her employer would assert a defense of “exclusive remedy.”  She cannot show a present, ascertained controversy and some party with interests adverse that would present the court with a proper issue to be heard.

The court originally denied Interveners’ summary judgment motion, only re-hearing it when Padgett intervened. Given this well established pattern of jurisdictional case law, it is unfathomable that the 11th Circuit proceeded with issuing its finding.

The Current Law is Constitutional

If the 11th Circuit had justifiable reason to reach the merits of the matter (and again, they did not), any claim against the constitutionality of the exclusive remedy provision of the Chapter 440 would fail.

The Florida Supreme Court has long recognized that, where the legislature changes the elements of damage or remedy rather than eliminating the cause of action, it is acting within its “legislative prerogative” White v. Clayton, 323 So. 2d 573, 575 (Fla. 1975). Workers compensation benefits are by their very nature, limited. The workers compensation system is designed to provide employees with “limited medical and wage loss benefits, without regard to fault…in exchange for the employee relinquishing his or her right to sue in tort.” Aguilera v. Inservices, 905 So. 2d 84, 89 (Fla. 2005). The system is designed to provide employees with an efficient, if less lucrative remedy for on-the-job injuries in exchange for having to prove fault. Acton v. Ft. Lauderdale Hosp., 418 So. 2d 1099, 1101 (Fla. 1st DCA 1982).  Thus, the fact that injured workers have limited remedies at their disposal is provided for with the application of a no-fault system, and is a factor well known to Florida courts.

Here, the changes to Chapter 440, specifically the provision allowing for permanent partial benefits is not, as Interveners and the 11th Circuit suggest, an elimination of a remedy, but simply a change to the elements of remedy available for applicants of workers compensation coverage. The 11th Circuit and interveners overlook the true benefit of workers compensation coverage, namely the certainty that comes with a no-fault system and medical benefits with some indemnity payments.  Moreover, they overlook the fact that Florida courts have consistently upheld the provisions of Chapter 440, and specifically Section 440.11, even where benefits are reduced, as was the case here. See Perez v. K-Mart Corp., 418 So. 2d 1052 (Fla. 3rd DCA 1982); Eller v. Shova, 630 So. 2d 537 (Fla. 1993).

Current Posture

The Attorney General of the State of Florida has filed an appeal to the 3rd District Court of Appeal in Miami.  The appellate court can also ‘pass’ on the review of the decision and send the matter directly to the Florida Supreme Court.  If the ruling by Judge Cueto is upheld on appeal, however, it will become binding on the other Circuit Courts (as it will be the only appellate court to have issued a ruling on the matter).

In the interim, it is likely that a significant rise in direct action employer negligence suits will be filed by injured employees against their employers in Miami-Dade County, citing this ruling for support of the position, during the pendency of whatever happens with the case.

 

[1] The 11th Circuit issued a July 24, 2014, Show Cause Order to the Attorney General of the State of Florida, to which the AG responded.

[2] In denying the original motion for summary judgment, the court noted there was no present, actual, and practical need for a declaration.

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