Cam Fentriss, FRSA LEGISLATIVE COUNSEL
If you don’t want people to notice what you are doing, create a distraction. That is exactly what the workers’ comp claimant lawyers are doing right now. Let’s break this down.
In 2003, the Florida Legislature put limits on what lawyers for injured workers can collect in attorney fees because a) the system is supposed to be “self-executing” which calls for very few lawsuits, and b) injured worker lawyers were making so much money, often more than the injured workers were getting in benefits. It was a substantial cost driver that was responsible for a large portion of
the high workers’ comp rates.
In May of last year, the Florida Supreme Court threw out those limits and we are back to an attorney fee free-for-all. Right away, a number of cases came in for a landing and claimant lawyers were awarded large fees – some very large. Put another way, it took no time at all to get back to the level of abuse that caused the need for the 2003 changes.
With a stack of cases lined up for the big fee hand-outs, it stands to reason that workers’ comp rates must go up – they have to because the increased attorney fees are a BIG increase in cost to the system.
Claimant lawyers know that their grab for fees is solid evidence for an increase in rates, but they don’t want legislators, employers, or employees to focus on that. They will try to distract us, hoping we don’t notice that they are responsible for the increase. Their manufactured distraction needs to be something like making some statement that gets everyone’s attention because it sounds good and it seems like it could be true, but it is not, and NCCI and insurers will be motivated to spend a lot of time and money trying to explain the whole complicated process and drag out the useless discussion past the end of the legislative session in May – if possible. That is very convoluted.
The claimant lawyers have thrown their smoke bomb into the crowd, asserting that NCCI is shady and that they manipulate rate calculations with an evil adding machine in a dark corner of some basement. Claimant lawyers are trying to convince us that NCCI is calculating proposed rates in secret without showing anyone how they arrive at their figures, and, making things worse, the Office of
Insurance Regulation (OIR) is just letting them get away with it. Wrong. That is just not true – not even close.
In our 20 plus years of experience dealing with NCCI, we know they provide an absolute ton of material to explain their proposed rates. In fact, FRSA and FRSA Self Insurers Fund frequently use their material, ask questions, make comments, and propose changes. The proposed rate filing NCCI submits to the OIR is reviewed in excruciating detail by the staff at OIR and they almost always counter - they rarely just rubber stamp what is submitted. Anyone who suggests the process is not open and above board and that proposed rates are not thoroughly vetted is ignorant or just not paying attention.
Part two of the claimant lawyers’ distraction is to advocate for “open rating,” rather than the uniform rates proposed by NCCI, a rating organization that exists for the purpose of collecting data and forecasting rates. If we had open-rating, then each insurance
company would apply to OIR for approval of the rates it wants to charge. On the surface, it sounds great because a company that wants your business could get approved to charge lower rates. But think it through: the advantage would go to the largest insurers because these are the companies that can afford to charge less to gain market share. What happens once they gain enough market share?
If the large national insurance companies can undercut rates long enough to drive out the competition (small Florida workers’ comp carriers), then, once that is complete, they can and will call for much higher rates because they will control the market. Even before they drive smaller Florida companies out of business, they will create very real tension and chaos for employers looking to fi nd coverage because they will also be controlling what they demand from employers before they are willing to write a policy.
You may ask why claimant lawyers want to promote something that could reduce the number of insurers available to provide coverage because, after all, insurers are the ones who write those big juicy checks these lawyers want so badly. Chances are they are either not thinking it through, do not understand the concept of profit and loss, or they just figure, since employers are required to provide the coverage, the government would step in and bring back the “good old days” of the Florida Workers’ Compensation Joint Underwriting Association (FWCJUA) for coverage.
The moral of this story is that claimant lawyers who stand to get filthy rich from worker’s comp litigation are not the experts or go-to authority on how best to calculate workers’ comp rates or make coverage available because, on that subject, they have a GIANT conflict of interest.
If they try to convince you to support open rating or doing away with NCCI, please ignore it. We need to concentrate on making sure the workers’ compensation system is affordable for employers and helps injured employees by using funds for benefits, rather than attorney fees.
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