Florida's Giant Double Feature

Thursday, March 27, 2008 | 0

By George Kagan
Miller, Kagan, Rodriguez and Silver (MKRS)

One big case (false identity "fraud”) and one huge case: (costs assessed against non prevailing parties -- every non-prevailing party -- every time: i.e., claimant beware!)

March 10 saw two landmark cases from the District Court. It can be said one went “for” certain kinds of claimants, but the other went “against” nearly every claimant. We issue a “double feature” landmark alert discussing each case under separate subheading starting with the biggest news first:

F.A. Richard and Associates and Palm Beach County School Board vs. Fernandez, 1st District Court of Appeal case #1D07-2623, 3/10/08.

IN A NUTSHELL Section 440.34(3) means what it says and says what it means: If E/C should prevail in “any proceedings before a JCC, there shall be taxed against the non-prevailing party the reasonable costs of such proceedings, not to include attorney’s fees.”

Two months after being handed a defeat in a “causation” claim, claimant was served the bill: $13,266.14, for costs, from the E/SA, despite having brought fourth a “good faith” claim (this was claimant’s defense to the cost motion, and it must be presumed this was not a claim deemed frivolous or actionable under Section 440.32 (where costs and in some cases fees can be gotten from party bringing proceedings without reasonable grounds).

There are no exceptions permitted, and E/C need not file a specific motion, pleading or pre-trial stipulation before “prevailing” in order to qualify for reimbursement. In short, consider the apple cart definitely upset.

ANALYSIS: This remarkable 2004 measure has been tried numerous times before, with mixed results because, after all, what is being requested is simply, exactly what the statute says –but for one reason or another there seems to have been a collective sense of denial about such a potent measure which, taken literally as it is now, is seen by some to threaten stability of the act.

The court borrowed from circuit civil cases where it said, essentially, there’s nothing new here: parties in civil litigation have long been on notice costs are possible when a lawsuit is brought.

The unsettling difference here is: this social legislation was founded in part on the premise one party has disproportionately greater litigation resources, yet, with removal of all presumptions (Section 440.015); the sharp limitation on fees to the “weaker” party (“protecting” that party from predatory fee agreements – with no corresponding limit on the party with the better resources) -- now topped off by very substantial risk shared “equally” for costs of litigation (where benefits themselves have been largely reduced, and a large part of a claim may be medical bills which would not produce “revenue” for the claimant in the first instance).

In short, some are saying this may be a bit too much of a good thing.  But that is a “maybe one day” issue; this is now, and for now, the employer gets a tremendously powerful new chess piece on the board.

PRACTICAL APPLICATIONS/CONSIDERATIONS/CONCERNS:

There is no obligation to file any pleading until after E/C prevails, suggesting no strict deadline (in this case E/C filed two months after the order of denial).

Therefore the possibility exists (though untested) a prevailing party, E/C or claimant, may bring the motion any time within the statute of limitations (i.e. one year after an “all or nothing” compensability order)

This may open some doors previously thought closed -- i.e. claims denied in the later half of 2007!

Costs -- not fees! The court made clear the new ruling pertains only to costs note fees, exactly what the statute says. However, there have been controversial rulings regarding the extent of “costs” over the last few years (i.e. including paralegal expense).

The significant “costs” in this case probably related to the exposure theory of the claim and large discovery bill often associated with same.

Given the sword over each party’s head, it seems incumbent on each party to not objections to arguably needless or superfluous litigation steps taken by the other (i.e. unnecessary depositions) in advance, so that costs can be attacked as excessive more readily “after” a negative award when it otherwise might sound like “sour grapes.”

The most troublesome passage to reconcile with day to day function, and one on which the court did not elaborate is: what is a “prevailing party”? Obviously the answer is simple in a “compensability” claim but what about a petition for five benefits where three are denied and two are awarded?

On the one hand, claimant has “prevailed” -- but so has E/C.

This suggests (caution: this is only a suggestion) pro rata distribution of costs attributable to the benefits obtained (possibly offset by costs associated with those “lost.”)

In short, there may be proceedings devoted to this one issue (which would not seem independently capable of creating new fee exposure for the E/C).  Example: say claimant in this very case suffered a minor initial injury which she said “lead to” the disease, where E/SA filed a total controvert, and an “award” allows a few weeks of TTD but denial of PTD and enormous medical bills; Claimant will have “prevailed” in getting “something” but obviously the lion’s share of costs pertain to a denied claim. We will see.

Of course the overarching practical consideration is “collectability,” which is to say a judgment against a day laborer in the amount of $13,672.00 is not worth spending a lot toward actually obtaining, but it may be useful to at least have the award of costs which can be turned into a rule nisi if aggressive tactics are warranted by either the file or the particular claimant.  (Caution; space does not permit full analysis here but the statutory framework suggests E/SA cannot take an offset against ongoing indemnity benefits as an “overpayment”).

There is no possibility of “now” recovering costs after there has been a “settlement” arrived at after an order of denial.

It is unlikely (but not out of the question) claimant’s mere voluntary dismissal will suffice as E/C’s requisite “prevailing.”

BOTTOM LINE: Best use of this new chess piece is the encouragement of settlement: “all” reasonable offers are now much more “difficult to refuse”.  A sober reevaluation will have to be made of claimant’s counsel’s oft-heard phrase “Well, for that kind of money, my client wants to roll the dice!”

The question that claimant has gotta be asking herself now is: Are ya feelin' lucky?

False Identity “Fraud”: The other shoe has dropped: Nothing to see here folks!

WHAT HAS HAPPENED: It was undisputed Claimant misrepresented his identity (false social security card) in obtaining employment, i.e. that he violated Section 440.105(4)(b)(9) FS 2005. The court has now finally given us the answer to the question: what do we do with the worker who misrepresents identity in getting a job later implicated in an accident claim? The answer is, generally, nothing (except of course, pay the claim -- unless there are unique circumstances, discussed below, not seen very often).

There is also one note of caution (see Special Note, near conclusion).

IN A NUTSHELL; A Claimant who only submits false identity, such as a social security number, on the application for employment (i.e., not for the purpose of securing benefits in a workers’ compensation claim) remains entitled to file a claim for benefits after injury on such job.

However, if after the accident Claimant republishes the same false identity in any furtherance of the claim (such as in a doctor’s office, in a statement, a petition, a DWC 19., etc.), then  Section 440.09(4) will almost certainly apply to work a forfeiture of that claim.

ANALYSIS; This ruling removes a fertile source of friction between claims, their counsel, JCC’s, Claimants and their counsel. Everyone was circling around one another with this “issue” but few were willing to lunge with only this weapon in hand. Now the Court has told us: Nothing to see here folks, move on. The decision is a little difficult to reconcile with the literal language of the Act, given the Court’s homage to literal language in the preceding case, i.e., the word “or” in the following phrase:

“To knowingly present or cause to be presented any false, fraudulent, or misleading oral or written statement to any person as evidence of identity for the purpose of obtaining employment or filing or supporting a claim for workers’ compensation benefits.”

Some rules of statutory and even constitutional construction would seem to require an interpretation that such false identity be regarded as vitiation of contract of employment, just as a “Martin v. Carpenter” type misrepresentation would (why should the undocumented worker be given a “pass” for misrepresenting identity in “the contract” whereas we “throw the book at” the worker who merely misrepresents a prior condition?)

The point is moot, however, given this clear and definite decision (short of Supreme Court involvement).

There is one situation where the Court’s decision can apply, in terms of the hiring process itself, and that is: the worker who is injured on a “Sunday” and applies for work on a Monday in the hopes of getting the medical care, etc., using false identification. That worker has, literally, used false identification to get employment, to get benefits.

Special Note: MKRS’s Fraud Unit Administrator Jeff Korte and lead fraud counsel, Mark Kluger remind us: Even though this case tells us Claimant remains ineligible for benefits where “only” false identity information is given (not relied on in any claim for benefits) - - this apparently does not relieve E/C from its obligation to report the incident to the State of Florida, Division of Insurance Fraud.

The elements of the criminal offense will have been met wherever false information is submitted on an application for employment under the statute as presently written, so the prudent course is to report.

BOTTOM LINE: “Good news” remains in recent developments whereby the Court has more or less abandoned its idea “ there is no administrative cutoff” where “fraud” is suspected -- its pretty clear now administrative suspension of benefits remains available as an indispensable tool in a self-executing act. Also in tact are the greatly expanded opportunities to prove the commission of prescribed acts established in such cases as MKRS’s own Village of North Palm Beach v. McKale, 911 So.2d 1282 (Fla. 1st DCA 2005) and Wright v. Uniforms for Industry, 772 So.2d 560 (Fla. 1st DCA 2000).

In short, in addition to the republication of false identity after an injury, continue to be on the lookout for misrepresentations of nearly every shape and size provided it is made with the idea of getting or keeping benefits flowing (e.g., location of a claimant’s car on a particular night, McKale).

George Kagan is a partner in the Miller, Kagan, Rodriguez and Silver law firm (MKRS), a legal defense firm with offices throughout Florida.