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.