Thursday, July 7, 2016

On Pleading and Procedure, an Interesting Florida Appellate Case

There is an old adage in legal circles, win at trial. This is because a great many trial decisions are affirmed on appeal (and appeals are expensive). Many attorneys would therefore much rather be the appellee (defending the trial judge's decision in their favor) than the appellant (trying to convince the appellate court that the trial judge was wrong). 

It is even harder to convince the appellate court that it is mistaken. However, many times a party that has sought appellate review will be disappointed with an outcome from the Court and will file a Motion for Rehearing. This is essentially asking the appellate court for a clarification, a better explanation, or a different decision. A great many such motions are denied. It is even possible for an appellate court to deny them without considering them (some court opinions include a phrase like "no motion for rehearing will be considered," sort of the legal equivalent of "because I am the mom and I said so;" pretty hard to argue with).

On July 7, 2016 the Florida First District Court of Appeal decided THG Rentals and Sales of Clearwater v. Arnold, Case No. 1D15-970. This was one of those rare rehearing situations in which the Court agreed to take a second look. That makes it interesting to some. But, the case is worthy of note by all because it provides some guidance to the community on the defense of misrepresentation. Appellate courts have two important roles. The first is deciding a particular case before it. The second, which is frankly far more important and too often forgotten or neglected, is providing analysis and guidance that educates and informs the public of how a law works. 

The second is more important because, armed with this knowledge, a multitude of attorneys will perform more effectively and successfully in many future cases involving that law. Because of the importance of this point, the publication of opinions and the ability to use those decisions as authority in future cases is critical to the American judicial system. Thus my infatuation with stare decisis.

in Arnold  The Employer/Carrier raised a "misrepresentation defense." Essentially, it claimed that the employee had made statements that were not true. In Florida, making untrue statements can have significant consequences. This "misrepresentation defense" is discussed specifically in the Florida Rules of Workers' Compensation Procedure, Rule 60Q6.113(2)(h):

(h) Any defense raised pursuant to Sections 440.09(4)(a) and 440.105, F.S., and any affirmative defense, must be raised with specificity, detailing the conduct giving rise to the defense, with leave to amend within 10 days. Failure to plead with specificity shall result in the striking of the defense. Any objections/ responses to the affirmative defenses must be pled with specificity. (Emphasis added in bold. all italic is direct quote).

The key words in this rule, some would argue, are "specificity,"  "specificity," and "specificity." They liked it so much, they said it three times?  

The Court in Arnold  explained that the Employee alleged multiple injuries, and the Employer "began denying entitlement to benefits 'based on misrepresentation.'" Some further specificity about the misrepresentation was provided in the pretrial stipulation as: “‘Misrepresentation,’ in violation of §§ 440.09 and .105, F.S. (physical abilities and post-accident earnings).” So this defense was known at least several weeks prior to trial. 

Although known, the injured worker first objected to the specificity of the defense two days before trial in a filing called a "trial memorandum." Two days prior to trial the injured worker claimed that the defense of "misrepresentation" "lacked the specificity required by rule 60Q-6.113(2)(h)." The memorandum was not unexpected. Under the Rules, each party is supposed to file a trial memorandum two day before trial. See Rule 60Q6.116(7). So, that same day, in its memo, the Employer coincidentally provided "substantial additional factual detail and legal argument about the basis of the misrepresentation defense."

The trial judge concluded that the defense was therefore "plead with sufficient specificity." However, at trial, the injured worker proceeded with claims regarding a knee injury, but did not proceed regarding claims related to a back injury. The Judge concluded that the "misrepresentation" that was plead and described related to this back injury and therefore the judge denied the "misrepresentation defense" as to the claims for benefits regarding the knee. 

The appellate court concluded that this was error, and that "the JCC too narrowly analyzed the E/C’s defense by considering only whether the alleged misrepresentation related to Claimant’s knee." The Court explained that the misrepresentation statute is not so narrow, and that it is "illegal for any person to 'knowingly make, or cause to be made, any false, fraudulent, or misleading oral or written statement for the purpose of obtaining or denying any benefit or payment under this chapter.' 

The "misrepresentation" defense can have significant implications. As the Court explained, “it is not necessary that a false, fraudulent, or misleading statement be material to the claim." In fact, the law has effects even when there is no work accident. Furthermore, the Court added, "if Claimant made any misrepresentation for the purpose of obtaining benefits, then he is barred from entitlement to benefits." This is a profound and serious outcome. It is because of this potential detriment, loss of all benefits, that the rules require notice of the defense, and more importantly, notice with "specificity." The injured worker, who risks losing all benefits, should know the specifics of any alleged misrepresentation so that such allegations might be confronted and perhaps disproven or impeached. 

The Court addressed this subject in significant detail in Arnold. It noted that the "responses to Claimant’s PFBs" provided notice of “misrepresentation.” Some additional detail came with the pretrial, "two broad categories." But, these allegations "failed to identify any statement upon which it was basing its misrepresentation defense." As such, the defense was not plead "in sufficient detail to satisfy the rule" at the time of the pretrial. 

But, the Court concluded that the memorandum filed two days prior to trial did provide sufficient specificity. Some would feel that this specificity came to late, and too close to trial. There is some merit in that argument, on its face. The Court noted, however, that an injured worker may object to a defense for failure of specificity. In this case, the worker did, but only two days prior to trial, in the trial memorandum, and on the same day this additional specificity was provided by the Employer. And so, the Court concluded that both "parties then proceeded to hearing fully informed of the specific grounds for the E/C’s misrepresentation defense. Both parties’ rights were protected."

To some, this will be a decision that evokes strong feelings and reactions. But, there are lessons in this decision for the entire marketplace. 

For employers: saying "misrepresentation" or saying word that along with some broad statutory references is not sufficient specificity. The Court seems to suggest that to be "plead 'in sufficient detail to satisfy the rule,'" it may be that the employer has to "identify (a) statement upon which it (is) basing its misrepresentation defense." 

For workers: if the employer does not provide sufficient specificity, the worker may object to the defense. In this regard, timing may be important. An objection two days prior to trial may result in a more specific statement and little time in which to react and prepare. The lesson is perhaps to object as soon as a generic "misrepresentation" is raised?

The outcome of the case is important for the parties. The Court has answered their questions, and provided guidance to the trial judge. But, arguably more important, the Court has expounded upon the operation of the "misrepresentation defense" under the rules and provided guidance that may provide clarity and therefore assistance to lawyers throughout the workers' compensation bar. An interesting decision worth the read. 

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