A. PR 89-007 Worker's Compensation Offset In Florida

DATE: July 13, 1989

1. SYLLABUS

Where Florida attorneys were inserting a clause in Worker's Compensation settlements which appeared to be contrary to the procedures approved in Swain v. Schweiker, 676 F.2d 543 (11th Cir. 1982), we informed the agency that these agreements could not affect the Social Security Administration's authority to offset under applicable statutes.

(Worker's Compensation Offset in Florida - CCIV LAdams] - to ARSA, OHA, Atl., 07/13/s9)

2. OPINION

Your office has been informed that several recent hearings conducted in overpayment cases have disclosed that some law firms in Florida have the following clause inserted in Worker's Compensation settlements:

“The parties acknowledge the case is worth substantially more money. However, the employee/claimant (E/C) has reduced the settlement amount in consideration of the Social Security benefits they anticipate the claimant will receive. Therefore, since the E/C has already taken the offset in calculating the settlement amount, the Social Security Administration is precluded from doing so at a later date.”

You note that this clause presents problems in that: (1) it is inserted as an addendum following the signatures of parties; (2) the E/C is induced to accept a settlement (usually a final, lump-sum payment) upon advice of counsel that such lesser sum accepted will not be subjected to any offset by the Social Security Administration; and, (3) when an overpayment (based upon Worker's Compensation offset) is not waived, claimants are bound by the prior “lesser” settlement received in the Worker's Compensation case.

When asked to provide the legal authority for such a clause attorneys have just replied that this language is permitted by Florida law without submitting any legal references to support the statement. Your office is concerned about the impropriety of such a clause in that it appears to contravene the Eleventh Circuit decision in Swain v. Schweiker, 676 F.2d 543 (11th Cir. 1982), as adopted in Social Security Ruling No. 83-29c.

The S~ decision held that Florida law did not reduce Worker's Compensation until the receipt of Social Security benefits. Since your office is unaware of any' changes in Florida Worker's Compensation statutes, you have concluded that disability insurance benefits due claimants for periods prior to the month of Social Security adjudication continue to be subject to offset under Section 224(a) of the Social Security Act, 42 U.S.C. §424(a), because the provisions of Section 224(d) of the statutes remain inapplicable to that period of time.

We have reviewed the S~ decision and Florida Worker's Compensation statutes, particularly FSA §440.15(10)(c). There have been no changes in Florida statutes which would alter or modify the S~ decision. Furthermore, there have been no cases which have changed the decision in the S~ case.

As to the particular settlement clause, the Social Security Administration is not a party to this agreement and cannot be bound by its terms (at least to the extent it is inconsistent with statutory requirements). Likewise, the Social Security Administration has a right to offset under Section 224(a) of the Social Security Act, 42 U.S.C. §424(a), which cannot be abrogated through a contract between private parties and a state agency. Additionally, these contract provisions cannot supersede Florida statutory provisions.

It is unlikely that Florida statutes would even address tile legality of the aforementioned clause. This appears to be an ethical issue involving the failure of an attorney to appropriately advise a client or to inadvertently mislead a client. There is probably nothing the Social Security Administration can legally do to prevent an attorney from including the settlement addendum in Worker's Compensation cases until we receive a challenge to our offset based on the terms of a settlement agreement with the aforementioned clause. However, any ethical considerations involved in this matter can probably be referred to the Florida Bar Association by your office.