Opinion ID: 1954878
Heading Depth: 1
Heading Rank: 3

Heading: when the employer/carrier is entitled to a subrogation lien under section 440.39, florida statutes (1993), and the claimant's net recovery in a settlement with the third-party tortfeasor is less than 100 percent of the claimant's total damages, should the employer/carrier's lien be limited to a percentage of the percentage of the net recovery?

Text: Id. at 496-97. This issue requires us to determine whether there is a cap on the E/SA's third-party lien based upon the percentage that Lombardi's net recovery is to the full value of the claim, or whether the E/SA's third-party lien is capped at the amount of Lombardi's net recovery. On appeal to the First District, Lombardi argued that because he had received only 25% of his total damages in the settlement of his tort claim, the E/SA's lien should be capped at $15,667.75, which represents 25% of his net recovery of $62,671. See Id. at 495. In other words, Lombardi asserted that the E/SA should receive only a percentage of the percentage of total damages. Id. To the contrary, the E/SA maintains that it is entitled to receive reimbursement for the full amount of its lien limited only by the amount of Lombardi's net recovery. [5] Both parties rely on the same language in section 440.39(3)(a), Florida Statutes (1999), which under its current version states as follows: [I]f the employee ... can demonstrate to the court that he or she did not recover the full value of damages sustained, the employer or carrier shall recover from the judgment or settlement, after costs and attorney's fees incurred by the employee ... in that suit have been deducted, a percentage of what it has paid and future benefits to be paid equal to the percentage that the employee's net recovery is of the full value of the employee's damages .... (Emphasis supplied.) Because workers' compensation benefits are a creature of statute, see Travelers Ins. Co. v. Sitko, 496 So.2d 920, 921 (Fla. 1st DCA 1986), our answer to the certified question must be based on statutory interpretation guided by this Court's prior case law interpreting the applicable statutes. See J.J. Murphy & Son, Inc. v. Gibbs, 137 So.2d 553, 562 (Fla.1962) (Work[er's] compensation is entirely a creature of statute and must be governed by what the statutes provide, not by what deciding authorities feel the law should be.). Over the years, section 440.39(3)(a) has undergone a series of changes. See generally Reginald E. Wilcox, Determining and Satisfying Liens for Workers' Compensation Benefits, Fla. B.J. 39 (Apr.1990). The amendment that is significant for our purposes occurred in 1989. At that time, the Legislature added the language that the First District relied on in concluding that the E/SA's equitable distribution recovery should be capped at a percentage of the percentage of the total damages that Lombardi recovered. See Lombardi, 738 So.2d at 496. The following language was changed in 1989 (words stricken are deletions; words underlined are additions): [I]f unless the employee or dependent can demonstrate to the court that he did not recover the full value of damages sustained the employer or carrier shall recover from the judgment or settlement, after costs and attorney's fees incurred by the employee or dependent in that suit have been deducted, a percentage of what it has paid and future benefits to be paid equal to the percentage that the employee's net recovery is of the full value of the employee's damages; provided, the failure by the employer or carrier to comply with the duty to cooperate imposed by subsection (7) may be taken into account by the trial court in determining the amount of the employer's or carrier's recovery, and such recovery may be reduced, as the court deems equitable and appropriate under the circumstances, including as a mitigating factor whether a claim or potential claim against a third party is likely to impose liability upon the party whose cooperation is sought, if it finds such a failure has occurred because of comparative negligence or because of limits of insurance coverage and collectibility. Ch. 89-289, § 21, at 1771, Laws of Fla. The legislative history of the statute is silent as to the purpose of the 1989 changes. See Fla. S. Comm. on Ins., CS for SB 896 (1989) Staff Analysis (May 19, 1989). The First District, however, determined that the statutory language at issue was a codification of the formula set out in Nikula [v. Michigan Mutual Insurance, 531 So.2d 330 (Fla.1988)] and Manfredo [v. Employer's Casualty Insurance Co., 560 So.2d 1162 (Fla.1990)]. Lombardi, 738 So.2d at 496. At the same time, the First District recognized that both of these cases addressed earlier versions of section 440.39 and that neither Nikula nor Manfredo address this precise issue. Id. In Nikula, this Court addressed whether, under the 1981 version of the statute, the employer's lien reduction should be based upon the ratio of settlement amount to full value rather than based on the percentage of comparative negligence. [6] 531 So.2d at 330. The Court rejected the argument that the lien should be based on the percentage of the claimant's comparative negligence and instead held that the employer's lien shall be based upon the ratio of settlement amount to full value of damages. Id. at 330-31. Thus, the Court determined that the employer's lien should have been for 24% of benefits because the employee received 24% of his total damages. Id. at 331. In Manfredo, this Court interpreted both the 1981 and 1983 versions of the statute and again affirmed that, using the ratio of net recovery to the judicially determined full value of the third-party claim, the carrier in this case is entitled to 32.7% of the amounts previously paid to Manfredo, and the carrier may deduct 32.7% from future payments to Manfredo. 560 So.2d at 1165. By deleting the phrase because of comparative negligence, in 1989, the Legislature eliminated the portion of the statute that had caused confusion before Nikula regarding the calculation of the equitable distribution percentage. Thus, by adding the phrase the employer or carrier shall recover ... a percentage of what it has paid ... equal to the percentage that the employee's net recovery, the 1989 amendment appears to be a codification of our holding in Nikula that a percentage reduction is determined by the percentage of the net recovery to the full value of the damages, rather than the percentage of comparative negligence. [7] Ironically, it was the addition of that language in 1989 that has led to the dispute in this case as to whether there is also a percentage of a percentage cap on the E/SA's recovery. Although the E/SA asserts there is language in Nikula and Manfredo that supports its position, neither Nikula nor Manfredo addressed the issue presented by the certified question. Rather, this Court addressed this issue long ago in Aetna Insurance Co. v. Norman, 468 So.2d 226, 228 (Fla.1985). In Norman, we held that the employer's lien on recovery was capped at the claimant's net recovery and that the court should have used the net tort recovery by the claimant as the amount which must be satisfied before the carrier need recommence full payment of future benefits. Id.; see Bussert v. Holley, 653 So.2d 1146, 1147 (Fla. 4th DCA 1995). Although this Court decided Norman under a prior version of section 440.39, neither the earlier statute nor the present statute specifically addresses the issue of the cap on the lienor's recovery. However, the legislature is presumed to know the judicial constructions of a law when enacting a new version of that law. Brannon v. Tampa Tribune, 711 So.2d 97, 100 (Fla. 1st DCA 1998); see Schwartz v. Geico Gen. Ins. Co., 712 So.2d 773, 775 (Fla. 4th DCA 1998). Furthermore, the legislature is presumed to have adopted prior judicial constructions of a law unless a contrary intention is expressed in the new version. Brannon, 711 So.2d at 100. Accordingly, we find nothing in the 1989 legislative changes to section 440.39 that would, either expressly or by implication, overturn this Court's holding in Norman, 468 So.2d at 228. Norman therefore represents a binding judicial construction of the equitable distribution statute that remains unchanged after the 1989 amendments. [8] We recognize that the conclusion we reach here may, in certain cases, result in a claimant's net tort recovery being consumed by the repayment of the carrier's lien. Nonetheless, we find that if the Legislature intended to enact such a significant change in the law and so drastically limit the lien rights of carriers by shifting to the percentage of a percentage formula, the Legislature would have expressed this intent clearly in the statute. [9] To the contrary, we find that the addition of the phrase relied on by Lombardi was intended to codify Nikula and it left our holding in Norman intact. Accordingly, we quash the First District's decision on this issue and answer the certified question in the negative.