VOLUME XVII, NUMBER 8
August, 2005

FROM THE CORNER OFFICE

Brian C. Powers and Stephanie H. Luongo will be presenters at the ACE-SCLA Conference, in Orlando, Florida, October 7, 2005. The topic: Catastrophic Claims & the Florida Hurricanes of 2004: Lessons Learned from Charley, Frances, Ivan & Jeanne.

FLORIDA COURTS CONTINUE TO GRAPPLE WITH PROPOSAL FOR SETTLEMENT STATUTE

In Warren Arnold Dryden v. Kathleen M. Pedemonti, 30 FLW D992 (Fla. 5 th DCA 2005), the Fifth District Court of Appeal affirmed the trial court’s order striking a proposal for settlement on the grounds that it was invalid because the release terms required by the proposal were ambiguous and were not stated with sufficient particularity.

This dispute arose from a November, 1999 automobile accident between Dryden and Pedemonti. Subsequent to being sued by Pedemonti, Dryden filed a proposal for settlement in the amount of $12,500.00, which stated, in pertinent part:

Relevant conditions: In consideration of this proposal for settlement, the Defendant will require the Plaintiff to execute a release of all claims against the Defendant and all persons legally liable for the Defendant’s actions in connection with the incident upon which the above styled cause of action is based, including the provision under which the Releasor shall indemnify and hold harmless their Releasees as to any and all liens and subrogated interest of any third party by virtue of any services or benefits provided by the Releasor, including but not limited to, hospital liens, doctor’s liens, worker’s compensation liens, CHAMPUS liens and any other liens, and the entry of a final order of dismissal with prejudice, or a satisfaction of judgment whichever is elected by the Defendant. (Emphasis added).

Pedemonti did not accept the proposal, nor did she file a motion to strike the proposal or otherwise object to the proposal prior to trial. Rather, Pedemonti chose to go to trial, which resulted in a final judgment in the amount of $6,423.58. Subsequent to trial, Dryden sought attorney’s fees and costs pursuant to Florida Rule of Civil Procedure 1.442. In response, Pedemonti filed a motion to strike the proposal for settlement, on the grounds that the proposal’s release language was invalid because it would have extinguished her first party PIP and health insurance claims. After a hearing on the matter, the trial court struck the proposal finding an ambiguity created by the “election of the satisfaction of judgment or a release whose language they have not seen.”

In an opinion by Judge Sharp, the Fifth District affirmed the trial court’s striking of the proposal. The opinion notes that when the attorneys for Dryden and Pedemonti were asked during oral argument whether the release clause language contained in the proposed settlement would potentially extinguish Pedemonti’s first party PIP and health insurance claims, Dryden’s attorney said it clearly would not, and Pedemonti’s attorney said it clearly would or could. In short, the court reasoned that the language in the proposal which gives the defendant the right to elect between a satisfaction of judgment or a dismissal with prejudice, was ambiguous. Judge Griffin concurred specially with opinion, ostensibly seeking to limit the precedential impact of the decision to this case alone.

Finally, Judge Pleus offered a lengthy and biting dissent, ultimately suggesting that parties be estopped from attacking a proposal for settlement on the grounds of ambiguity or invalid conditions, unless that party has raised such objections within 30 days of receiving the proposal. Alternatively, Judge Pleus suggested that Rule 1.442 be amended to refect such a requirement. Judge Pleus’s dissent sought to hold parties accountable for their decisions to gamble with a jury trial. Conversely, the majority’s decision in this case would enable a party to circumvent an award of attorney’s fees under Rule 1.442, thus allowing a party to roll the dice with impunity on a jury trial.

Joshua D. Selmyer

WORKERS’ COMPENSATION CARRIER IS NOT ENTITLED TO SUBROGATE AGAINST CLAIM FOR SPOLIATION OF EVIDENCE

In general, an employee who is injured in the course of employment by the negligence or wrongful act of a third-party tortfeasor may accept compensation benefits from the workers’ compensation carrier and at the same time pursue an action against the third-party tortfeasor. However, the injured employee will not be allowed to keep both the entire amount of compensation benefits and the entire amount of damages awarded in the third-party lawsuit. Double recovery by the injured employee is prevented by a statutory scheme of subrogation set out in Florida Statute Section 440.39. Under Section 440.39(2), a compensation carrier is entitled to limited subrogation for the benefits paid or to be paid to the injured employee but only under very strict conditions. The compensation carrier’s subrogation right only arises when the employee suffers a “compensable injury,” i.e., an injury arising directly from or in the course of employment for which compensation benefits have been paid.

The Fourth District Court of Appeal recently dealt with this issue when it reviewed the application of Florida Statute 440.39 in James Shaw v. Cambridge Integrated Services Group, Inc.. In Shaw, a worker’s compensation carrier sought to recover a pro-rata share of the damages an injured employee recouped from the employer as a result of a claim for negligent destruction of evidence employer/insured. Basically, the injured employee was receiving compensation benefits from the carrier and simultaneously sued its employer as a result of the employer’s destruction of a defective ladder. The employee argued that the employer’s spoliation of evidence prevented a full recovery in an action against the manufacturer of the ladder and, thus, an independent loss of probable expectancy of recovery. The underlying suit Builder’s Square v. Shaw, 755 So.2d 721, is well known for its holding that the employer has a duty to preserve evidence which the injured employee may need to prosecute a products liability action where the injury is the result of a defective product. At trial, the jury awarded damages against the employer which presumably made up the difference in the amount the employee would have recovered if the ladder had been available during the suit against the ladder manufacturer. The employer’s Workers’ Compensation carrier demanded payment of a share of the damages awarded against the employer.

However, contrary to the carrier’s position, the Appellate Court held that the facts in Shaw did not support the invocation of the carrier’s right to subrogation under §440.39, Florida Statute. The court reasoned that a claim for spoliation of evidence is not an injury which arises out of and in the course of employment. The fall from the ladder is the compensable injury; the loss of the ladder occurred after the compensable injury. It is a subsequent, separate event. Thus, the occurrence giving rise to the spoliation claim is the effect of the loss or destruction of the evidence which does not arise until the underlying action is completed. Since the injured employee’s spoliation claim did not seek compensation for the bodily injury sustained, for related loss of time at work, and/or for related medical bills and medical treatment, the compensation carrier would not be entitled to invoke its subrogation rights. The bottom line was that the court did not consider the employee’s loss of a probable recovery in the underlying suit as a so called “compensable injury” under the statute.

Tana R. Sachs Copple

FOURTH DISTRICT COURT OF APPEALS RECOGNIZES EXISTENCE OF NEGLIGENCE CAUSE OF ACTION AGAINST PHARMACIES DISPENSING LAWFULLY PRESCRIBED MEDICATIONS

Robert Powers as the Personal Representative of the estate of his deceased wife brought an action against the defendant pharmacies, Your Druggist, Inc. and B.A.L. Pharmacy, Inc. d/b/a The Medicine Shoppe, alleging that the pharmacies owed his wife a duty commensurate with the prevailing professional standard of care to preserve and provide for her health, safety and welfare. The plaintiff’s deceased wife was receiving treatment for ongoing neck and back pain. The treating physician had prescribed a minimum of six (6) varieties of drugs and narcotics including OxyContin/Oxycodone, Percocet, Soma, Xanax, and Diazepam. Gail Powers, age forty-six, collapsed unconscious in her home on October 21 st and died the next day. An autopsy established that the cause of death was “combined drug overdose.” Robert Powers v. Shirin H. Thobhani, M.D., et al., 30 FLW D1377 (June 1, 2005).

The trial court dismissed the estate’s complaint with prejudice based upon the premise that Florida law does not recognize a negligence claim against a pharmacy for properly filling a lawful prescription. On appeal, the Fourth District was unwilling to affirm the lower court’s ruling that there were no set of alleged or discoverable facts upon which a negligence claim could be sustained against the defendant pharmacies.

The Fourth District’s determination relied on a 1965 Supreme Court decision which held that a druggist who fills a prescription warrants that “he has used due and proper care in filling the prescription (failure of which might also give rise to an action in negligence.)” McLeod v. W.S. Merrell Co., Division of Richardson – Merrell Inc., 174 So. 2d 736 (Fla. 1965). Additionally the District Court relied on the standards imposed upon pharmacists by §465.003(6), Florida Statutes which provides in pertinent part that “as an element of dispensing, the pharmacist shall, prior to actual physical transfer, interpret and assess the prescription order for potential adverse reactions, interactions, and dosage regiment she or he deems appropriate in the exercise of her or his professional judgment… The pharmacist shall also provide counseling on proper drug usage… if in the exercise of her or his professional judgment counseling is necessary.”

The court reasoned that because the prescriptions in the subject case involved narcotics which could easily lead to overdose and the combination of which would easily lead to the user’s death, negligent liability could be imposed against this pharmacy for failing to use due and proper care in filling the prescriptions, even if the prescriptions are filled in accordance with the physician’s instructions on the basis that the prescription created an unreasonable risk of harm on its face. Further, the court determined that pursuant to the law, Florida pharmacists are specifically charged with a general knowledge of prescription medication and the risks presented by taking prescription drugs and are therefore able to evaluate and explain the operative risks of taking medication or a series of medications. Therefore the provisions of §465.003(6) legislatively establish a strong public policy basis to impose upon pharmacists a duty to warn customers of the risks inherent in filling repeated and unreasonable prescriptions with potentially fatal consequences.

Because the Fourth District’s holding in the subject case directly conflicts with opinion by the First District Court of Appeal (Johnson v. Walgreen Co., 675 So. 2d 1036 (Fla.1 st DCA 1996)) and the Fifth District Court of Appeal (The Estate of Sharp v. Omnicare, Inc., 879 So. 2d 34 (Fla. 5 th DCA 2004)), the Fourth District certified a conflict between its opinion and those of the First and Fifth District courts to the Florida Supreme Court or resolution. Recently, courts of other jurisdictions have recognized the negligence liability of pharmacists for breaching the duty to fail to warn patients or to notify prescribing physicians of obvious inadequacies appearing on the face of prescriptions which create a substantial risk of serious harm for the ultimate consumer. We would expect the Florida Supreme Court to follow suit.

Andrew DeGraffenreidt