Florida Supreme Court Upholds Workers’ Compensation As Exclusive Remedy in Zenith Case, Rejects Additional Damages Sought

 

The Florida Supreme Court (“Court”) issued a unanimous decision today, December 4, 2014, in Leticia Morales v. Zenith Insurance Company, upholding the workers’ compensation system as the exclusive remedy for injured parties.  

Morales v. Zenith was a workers’ compensation-related wrongful death lawsuit that ultimately evolved into a bad faith claim.  A separate tort case was filed by the Morales estate seeking additional damages, which the Court rejected.

The original lawsuit was prompted when Santana Morales Jr. was killed while working for a landscaping company.  His surviving spouse, Leticia Morales, entered into a workers’ compensation settlement agreement with the employer’s workers’ compensation and liability insurer, Zenith Insurance Company.  As part of the settlement agreement, Ms. Morales signed a release that specified the settlement agreement was the sole remedy with respect to the insurance coverage that Zenith provided to the employer. 

In a separate wrongful death lawsuit, Morales’ estate alleged that his employer’s negligence had caused his death and obtained a default judgment against the employer for $9.525 million.  When Zenith refused to pay the judgment, Morales’ estate sued Zenith in state court under its employer liability policy, alleging that Zenith had breached it.  Zenith removed the case to federal court, where the federal court ruled that the policy’s workers’ compensation exclusion barred the suit and entered summary judgment in Zenith’s favor. 

On appeal, the United States Court of Appeals for the Eleventh Circuit certified the following three questions of Florida law to the Florida Supreme Court:

• Does the estate have standing to bring its breach of contract claim against Zenith under the employer liability policy?
• If so, does the provision in the employer liability policy which excludes from coverage obligations under the workers’ compensation law exclude coverage of the estate’s claim against the insurer for tort judgment?
• If the estate’s claim is not barred by the workers’ compensation exclusion, does the release in the workers’ compensation settlement agreement prohibit the estate from collecting the tort judgment?

In the favorable Opinion issued today, the Florida Supreme Court answered all three of the Eleventh Circuit’s questions in the affirmative.  The Morales estate did have standing to sue Zenith, but the exclusion in the employer’s liability policy excluded coverage of the estate’s tort judgment against the employer.  Additionally, the release in the workers’ compensation agreement precludes the Morales estate from collecting tort judgment from Zenith.

A copy of the opinion is attached.

Zenith is one of three workers’ compensation challenges before the Florida Supreme Court.  The others are Castellanos v. Next Door Company and Westphal v. St. Petersburg.  

Castellanos v. Next Door Company involves the constitutional validity of a statute governing the award of attorney’s fees in workers’ compensation claims.  

In Westphal v. St. Petersburg, addressing a question certified in the case from the First District Court of Appeal, the Florida Supreme Court is being asked to consider whether a worker who is totally disabled as a result of a workplace accident, but still improving from a medical standpoint at the time temporary total disability benefits expire, is deemed to be at maximum medical improvement by operation of law, and therefore eligible to assert a claim for permanent and total disability benefits. 

 

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