In a previous article, we discussed the possibility that Florida employers may soon be paying substantially more for workers’ compensation insurance. Unfortunately, this possibility has become a reality.
On October 5, 2016, the Florida Office of Insurance Regulation (OIR) issued a final order approving an overall statewide workers’ compensation insurance rate level increase of 14.5 percent. This rate increase was prompted by the National Council on Compensation Insurance (NCCI), which is a licensed rating organization authorized to submit workers’ compensation insurance rate filings on behalf of Florida insurance companies.
On June 30, 2016, NCCI submitted an amended rate filing to the OIR requesting:
- A 19.6 percent rate increase;
- To be effective October 1, 2016;
- For all new, renewal and outstanding policies.
After holding a public hearing and disapproving NCCI’s proposed rate increase, but conditionally approving a modified rate increase, the OIR finally approved:
- A 14.5 percent rate increase;
- That will be effective December 1, 2016;
- For new and renewal policies (rates will not change for current in-force policies).
According to the OIR, this rate increase is justified by three recent legal developments that have affected Florida’s workers’ compensation system.
- The Castellanos Case. Attorney’s fees in workers’ compensation cases are governed by a statutory fee schedule. Under this mandatory schedule, attorney’s fees must be a fixed percentage of the workers’ compensation benefits secured on behalf of an injured worker. For example, attorney’s fees must equal 20 percent of the first $5,000 of benefits secured and 15 percent of the next $5,000.
On April 28, 2016, this statutory fee schedule was deemed unconstitutional by the Supreme Court of Florida. Without this statutory cap, attorneys may be entitled to collect more fees than before.
- The Westphal Case. On June 9, 2016, the 104-week statutory limitation on temporary total disability benefits was deemed unconstitutional by the Supreme Court of Florida. According to the Court, injured workers who have not yet reached maximum medical improvement before their 104 weeks of temporary total disability benefits end do not have a reasonable alternative to tort litigation.
This, the Court held, effectively denies these workers of their constitutional right of access to courts. As a result of the Court’s ruling, injured workers may now collect temporary total disability benefits for up to 260 weeks.
- Updated Health Care Provider Reimbursement Manual (HCPRM). The Florida Workers’ Compensation HCPRM sets out the policies, guidelines, codes and maximum reimbursement allowances for services and supplies furnished by health care providers under the workers’ compensation statutes. The most recently updated manual, which includes higher allowances, became effective July 1, 2016.
According to the OIR, the decision to approve an overall combined average statewide rate increase of 14.5 percent was made after a thorough review of NCCI’s rate filing and careful consideration of hundreds of public comments and testimony received from interested stakeholders. Since workers’ compensation insurance rates are set by the OIR, Florida employers affected by this decision will not be able to avoid the rate increase.
However, there are ways for employers to lower workers’ compensation insurance costs, such as promoting employee safety and maintaining a safe work environment.
Please contact us if you would like more information about controlling workers’ compensation insurance costs.
Additional information is also available in our weekly Risk Management Newsletters.