Ray Boutwell is a former equipment operator employed by the Escambia County Board of County Commissioners. On July 25, 2006, he was directing traffic at a roadside job site, when he was struck from behind by a moving dump truck. As a result of the accident, the claimant sustained severe injuries to his back, including multiple spinal fractures, with associated lower extremity pain and weakness. Subsequently, he also injured his neck in conjunction with a fall caused by his accident-related lower extremity weakness.
Following the initial accident and subsequent fall, the claimant underwent lumbar and cervical spine surgeries, which unfortunately were only minimally successful in addressing his ongoing symptoms. Consequently, the claimant was ultimately accepted as permanently and totally disabled. Thereafter, in 2012, the County approved the settlement of all past and future indemnity benefits in exchange for the lump sum payment to the claimant of $200,000.00, inclusive of attorney's fees and costs. Medical benefits remain open, and this proposed resolution of the outstanding lien will have no effect upon the claimant's continued entitlement to medical care under the workers' compensation statute. At present, the claimant continues to undergo long-term pain management treatment.
In addition to his workers' compensation claim, Mr. Boutwell pursued a products liability action against Mack Trucks, the original manufacturer of the truck that struck him at the time of the accident; Gulf Coast Truck & Equipment Company, an authorized Mack dealer that purchased the truck from Mack and ultimately sold it to Escambia County; and Ox Bodies, a company that was hired by Gulf Coast to outfit the truck with a dump body. Mr. Boutwell asserted that the truck should have had more effective back-up alarms and a video camera.
Pursuant to Section 440.39, Florida Statutes, Escambia County and Meadowbrook Insurance Group, the excess insurer, retain a lien on any recovery by the claimant from any third party that caused the July 25, 2006 accident. On May 13, 2015, the parties attended a lengthy mediation in the above-outlined liability case. Following more than nine hours of negotiations, the defendants agreed to pay the claimant $725,000.00 in complete settlement of any and all liability claims associated with the July 25, 2006 accident. However, the proposed settlement is contingent upon the Board of County Commissioners and Meadowbrook both agreeing to accept $45,000.00 in complete satisfaction of the outstanding workers' compensation lien.
Recovery on a lien pursuant to Section 440.39 is controlled by the formula outlined in Manfredo v. Employer’s Casualty Insurance Company, 560 So.2d 1162 (Fla. 1990). Effectively, the County and its insurer are permitted to recover on the lien at the same rate as the claimant recovers on the full value of his case against the allegedly at-fault third parties (i.e. Claimant’s Net Third-Party Recovery/Total Value of Third-Party Case = Lien Recovery/Total Value of Lien). In making this calculation, the claimant’s net recovery includes only the funds that he actually receives. Attorney’s fees and costs must be excluded from the claimant’s net third-party recovery and thus operate to reduce any lien recovery.
In the typical litigated case, the workers' compensation carrier attempts to recover at least 20% to 30% of the full value of the lien in accordance with the Manfredo formula. Unfortunately, however, in this case, such a recovery will not be possible. As discussed above, the claimant's third-party case has provisionally been settled for $725,000.00. However, his attorney will receive 40% of that amount ($290,000.00) as an attorney's fee, plus $172,000.00 in costs accrued in litigating the case. Thus, after accounting for fees and costs, the claimant's net recovery amounts to just $263,000.00.
Currently, the full value of the lien amounts to $869,919.38. This figure excludes certain payments made on the workers' compensation claim that cannot be recovered in conjunction with the lien. If one assumes that the claimant's $6 million valuation is correct, then the County and Meadowbrook would be entitled to recover 4.383% of the total lien value, which equates to $38,131.46. At the lower valuation of $5 million, the County and Meadowbrook would be entitled to recover 5.26% of the total lien value, which equates to $45,757.76.
In order to avoid further litigation, the claimant and his attorney have agreed to pay $45,000.00 from the settlement proceeds in full satisfaction of the lien. Brian T. Hanley, as the Worker’s Compensation Counsel for Escambia County, recommends acceptance as a very reasonable settlement of the lien in this matter. Should the Board decide not to approve the proposed resolution, the civil settlement likely will not move forward, and the case will likely proceed to trial. If the claimant prevails, then the lien recovery could potentially be higher; however, with all of the competing theories of fault, there is no guarantee. Moreover, if the claimant fails to prevail at trial, there will be no recovery on the lien at all. If the Board rejects the proposed resolution, and the parties nevertheless decide to proceed with the provisional settlement, the County would need to pursue an equitable distribution proceeding in circuit court. Given the various factors outlined above, Mr. Hanley believes it is unlikely that an equitable distribution proceeding would yield a greater lien recovery, and the County would also incur additional costs associated with litigating the matter.
After considering all of these factors, Mr. Hanley recommends that the Board approve the proposed resolution and agree to accept $45,000.00 in full satisfaction of the outstanding lien. As discussed above, the proposed resolution must also be approved by Meadowbrook, the excess insurer, and it will not affect the claimant's continued entitlement to medical benefits under the workers' compensation statute.
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