Brett Stiegel, FRSA Self Insurers Fund, Inc., Administrator
Two recent Florida Supreme Court decisions are about to greatly increase the rates for workers’ compensation insurance in Florida. The first opinion issued on April 28, 2016 known as Castellanos vs. Next Door Company declared a section of the workers’ compensation law that limited a claimant’s attorney fees to a statutory schedule as being unconstitutional and requires that Judges give consideration to awarding hourly attorney fees instead. The result is that attorney fee awards are going up dramatically, often
much greater than the value of any benefit that is obtained by the attorney for the claimant, with hourly fees commonly averaging in the $250 to $350 range. An example is a recent case where an attorney was awarded a “reasonable” fee of $42,000 at an hourly rate of $350, for securing benefits of $8,956 on behalf of the claimant. The statutory attorneys’ fee under the 2003 law that was just ruled unconstitutional would have been $1,593 for securing these same benefits. The difference ($1,593 vs $42,000), and it all goes to the attorney! This Supreme Court decision effectively takes the Florida workers’ compensation system back to where it was prior to the 2003 reforms; the same reforms that ultimately helped reduce rates by over 60 percent!
The second case known as Westphal vs. the City of St. Petersburg decided on June 9, 2016 also found a section of the workers’ compensation law that had been in effect since 1994 (22 years) limiting temporary disability benefits to 104 weeks as also being unconstitutional. This ruling also takes the workers’ compensation system back in time to when roofing rates soared to highs in the $55 range, as opposed to the current rate of $18.60 in effect today.
The combined result of these two cases, along with an already approved change that was going to impact medical provider reimbursement rates, has caused the State approved rating organization, National Council on Compensation Insurance, known as NCCI, to file a rate change increase request of 19.6 percent to be effective on October 1, 2016. It should be noted that this is only
the first year effect that the NCCI is filing an increase for, and that it could be anticipated that future increases will continue to be expected due to these very adverse rulings. The biggest impact on the filing is certainly because of the Castellanos decision and makes up 15 percent of the requested overall 19.6 percent requested increase, all as a result of going back to an hourly attorney fee payment system.
The Florida Office of Insurance Regulation (OIR) has scheduled a hearing on August 16, 2016 to review the NCCI rate filing request. It is hard to predict how the OIR will rule on this rate filing request, as these are certainly untested waters with no one really knowing what the ultimate effect will be to the workers’ compensation system based on these adverse Supreme Court rulings. One
thing is certain, without future Legislative change to try to address the effects of these rulings, expect that your workers’ compensation insurance costs will be going up, and perhaps dramatically. In the short term and for 2017, you should be preparing today to budget for some type of increase, likely in the 15 to 19.6 percent range and likely effective on October 1, 2016 to all policies in effect as of that date.
The FRSA and FRSA Self Insurers Fund, Inc. will be in attendance at the OIR/NCCI rate hearing and we will keep you posted in future articles in Roofing Florida and via Roof Flash. In the meantime, you should contact your local State Representative and Senator to make sure they know you expect them to do something in the next legislative session to address fixing what the Supreme Court has broken.
Previous Article
Next Article