On December 4, 2014, the Florida Supreme Court issued its opinion in Morales v. Zenith Ins. Co. Before we discuss the decision, let’s run through a brief summary of the case and how it ended up before the Florida Supreme Court.
While employed by Lawns Nursery, Santana Morales, Jr. was crushed to death by a palm tree. Morales’ widow settled the workers’ compensation claim with Lawns Nursery and its workers’ compensation/ employer’s liability carrier, Zenith. The settlement included a release specifically choosing workers’ compensation as the sole remedy under Zenith’s workers’ compensation/employer’s liability policy.
Morales’ estate had a separate wrongful death lawsuit pending at the time of the workers’ compensation settlement. That suit alleged that Morales’ employer, Lawns Nursery, had been negligent in causing Morales’ death. The state Circuit Court entered a default judgment of $9.25 million. Zenith refused to pay the judgment and Morales’ estate sued Zenith alleging that the employer’s liability policy had been breached. The breach of contract issue was moved to federal court, which issued a judgment in favor of the carrier, Zenith.
The next appeal was to the United States Court of Appeals for the Eleventh Circuit whose opinion was that Florida law is “unsettled” regarding the question of whether Morales’ estate has standing to sue Zenith under the employers’ liability part of the policy. The Eleventh Circuit Court certified three questions 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 “any obligation imposed by workers’ compensational law,” operate to exclude coverage of the estate’s claim against Zenith for the tort judgment?
- If the estate’s claim is not barred by the workers’ compensation exclusion, does the release in the workers’ compensation settlement agreement otherwise prohibit the estate’s collection of the tort judgment?
In short, the Florida Supreme Court answered “yes” to all three questions. The Florida Supreme Court specifically describes the “coverages provided by workers’ compensation and employer’s liability insurance as ‘mutually exclusive.'” In other words, when an incident is within the scope of the workers’ compensation law, it is excluded under the employer’s liability portion of the workers’ compensation policy.
By Judy Boling, Vice President, Workers’ Compensation