Employer can't recoup benefits from proceeds of legal malpractice settlement

The Florida District Court of Appeal held that the employer was not entitled to a portion of the funds the claimant received in a legal malpractice settlement with the attorneys who mishandled his products liability case.

Case name: Columbia v. Brewer, No. 1D07-5658 (Fla. Dist. Ct. App. 10/22/08).

What it means: An injury suffered as a result of legal malpractice does not occur in the course of a claimant's employment, and the defendants in a legal malpractice case are not third-party tortfeasors under Florida law. As a result, the claimant's employer is not entitled to recoup the workers' compensation benefits it has paid from the proceeds of the legal malpractice settlement. Instead, it may sue the third party that caused the claimant's injuries if the claimant fails to do so within one year after the cause of action accrues.

Delaware: Division announces workers' compensation rate (09/10/12)
Ohio: Outpatient medication formulary may restrict some drugs (12/22/11)
Washington: Hearings to focus on cranes in construction work (09/29/11)
Florida: Division clarifies loss data reporting (10/06/11)
Oregon: Bulletin addresses worker leasing companies (11/01/12)

Summary: The claimant was injured by a paving machine in the course and scope of his employment and received workers' compensation benefits from his employer. He also settled a legal malpractice case with the attorneys who were representing him in a products liability case. The attorneys failed to file suit against the manufacturer of the paving machine before the statute of limitations expired. The employer sought to recoup the benefits it paid by filing a lien against the malpractice settlement proceeds. The District Court of Appeal upheld the discharge of the lien on the grounds that the defendants in the legal malpractice case were not third-party tortfeasors under Florida law.

The DCA explained that an employer's right to subrogation is recognized "solely as a creature of statute." Florida's workers' compensation law does not specifically address an employer's interest in a legal malpractice case arising out of the employee's claim against a third-party tortfeasor who causes or contributes to the initial workplace injury. Therefore, the DCA had to determine whether an injury caused by legal malpractice occurs in the course of employment. It concluded that unlike injuries flowing from medical malpractice, injuries from legal malpractice do not increase the employer's liability.

In addition, an employer who wishes to recoup its expenses has a remedy under Florida's workers' compensation law. If the claimant sues the third-party tortfeasor, the employer may file a notice of payment of compensation and medical benefits in that action. If the claimant doesn't file suit within one year, the employer may sue the third-party tortfeasor directly.

November 17, 2008

Newsletter Sign-up