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News Service Of Florida

The News Service of Florida provides journalists, lobbyists, government officials and other civic leaders with comprehensive, objective information about the activities of state government year-round.

Pension numbers increase budget pressure

State analysts agreed Thursday to lower the expected rate of return on Florida’s $154 billion pension fund, which will put more pressure on lawmakers as they craft a new state budget.

The decrease from a 7.6 percent return to 7.5 percent will require an additional $124 million in state funding in the 2018-2019 budget to keep the pension fund financially sound, according to the state’s long-range fiscal analysis.

It’s the fourth year in a row that analysts, meeting as the Florida Retirement System Actuarial Assumption Conference, have lowered the assumed rate of return on the pension fund, which was 7.75 percent in 2013.

Amy Baker, coordinator for the Legislature’s Office of Economic and Demographic Research, said more adjustments can be expected given long-term projections for the national and global economies.

“We in all certainty will be back here looking to make an incremental change next year,” Baker said. “I think the drumbeat is definitely building over time to show that continuing downward adjustments are going to be necessary.”

The assumed rate of return for the fund, which pays retirement benefits for school teachers, state workers, county workers and other public employees, is important because it could potentially hurt the state’s credit rating if it is deemed too unrealistic by independent financial analysts.

On the other hand, lowering the expected gains from a massive collection of stocks, bonds, real estate and other assets in the fund means government agencies will have to increase their contributions to make sure there is enough money to pay retirement benefits in the long term.

Going from a 7.6 percent return to a 7.5 percent return will require an additional $124 million in the new state budget to cover school system employees, state workers and university employees, according to the state’s recently approved long-range financial outlook. Lawmakers will craft the budget during an annual session starting in January.

But the $124 million figure does not cover county government workers, who make up about 23 percent of 630,000 active workers covered by the fund. Counties will have to come up with additional money to cover their workers.

The rate reduction came after new evaluations from independent financial consultants projected a 30-year rate of return for the pension assets in the range of 6.6 percent to 6.81 percent.

It also follows a trend of other major public pension funds reducing their assumed rates of return, according to a report from the firm Milliman, one of the financial consultants.

Four funds in California and New York have reduced their rates to 7 percent or are in the process of doing so. A Texas fund is at 8 percent, although officials have talked about a cut to 7.5 percent.

The rate reduction to 7.5 percent for Florida will bring it in line with a median assumed rate of return for the 126 largest public funds.

In addition to having the nation’s fifth-largest public pension fund, Florida has one of the financially strongest retirement plans in the country.

At a 7.6 percent assumed rate of return, the Florida fund was projected to be able to pay 85.4 percent of its future obligations, with a $24.9 billion long-term unfunded actuarial liability, according to Milliman.

The unfunded liability rises to $27.9 billion with a 7.5 percent rate of return, with the ability to pay 84.4 percent of future obligations.

Ash Williams, head of the State Board of Administration, told the state analysts that investment opportunities are not “as robust” as they once were.

“Things are hard everywhere,” he said. “There is no ocean of untapped opportunity that you can get and scale and play in a prudent manner.”

Williams said not to expect “some sort of quantum change in returns from what the broad market expectations are.”

The lower projected rate of return is built on several key assumptions, including a long-term climate of low interest rates and low inflation.

Christian Weiss, an economic adviser to Gov. Rick Scott, said he was skeptical about those projections, noting oil prices could rise and a major federal tax cut could spur inflation.

Don Langston, staff director for the House Ways and Means Committee, said he did not have any expectations for a higher rate of return and he had suggested a 0.15 cut in the state’s rate, although he agreed with compromise of 7.5 percent.

But he said government agencies that rely on the pension fund need to be prepared for future rate of return reductions.

“They should be expecting to continue to have this downward pressure on the assumption rate or the investment rate, with consequent budgetary impacts as well,” he said.

Republished with permission of the News Service of Florida.

Workers’ comp drops off legislative map

Crisis, what crisis?

Just a year after dire predictions that the state’s economy was in peril due to rising insurance costs, Florida businesses could see an average 9.3 percent reduction in workers’ compensation premiums in the coming year under a rate filing Insurance Commissioner David Altmaier will consider later this month.

If approved, manufacturing businesses could see a 10.3 percent reduction in their workers’ compensation rates, and rates for office and clerical businesses could decrease by 11.3 percent.

While it may be good news for those who pay the premiums, the proposed reduction filed by the National Council on Compensation Insurance presents a hurdle for business lobbyists and special interests who have warned lawmakers for more than a year that a pair of 2016 Florida Supreme Court rulings would drive workers’ compensation rates so high that employers would be forced to slash jobs.

Bill Herrle, executive director of the National Federation of Independent Business in Florida, acknowledged that after traveling the state in the summer of 2016 discussing the issue and spending the majority of the 2017 session unsuccessfully pushing a workers’ compensation bill, it’s not a priority this year.

Enthusiasm to tackle the complicated issue has waned since the proposed 9.3 percent reduction was filed in August, he said.

“We still believe the rates are going to go up, but when rates are going down, we don’t have wind in our sails,” Herrle said.

House Commerce Chairman Jim Boyd, a Bradenton Republican, worries about attorney involvement in the workers’ compensation insurance system and has asked members of his committee to receive an update during a meeting next week in Tallahassee.

Nevertheless, Boyd, an insurance agent, acknowledged that there isn’t a need for legislative action if Altmaier approves lower workers’ compensation rates for the coming year.

“I’m not sure doing anything this year would be appropriate or prudent,” Boyd said.

Workers’ compensation is a no-fault system meant to protect workers and employers. It is supposed to provide workers who are injured on the job access to medical benefits they need to be made whole. Those who are injured for at least eight days also are entitled to indemnity benefits, or lost wages. In exchange for providing those benefits, employers generally cannot be sued in court for causing injuries.

While the system is supposed to be self-executing, injured workers hire attorneys when there are disputes over the amounts of benefits they should receive.

Preliminary data from the National Council on Compensation Insurance (NCCI) shows that Florida businesses paid nearly $3.8 billion in workers’ compensation premiums in 2016, up from about $2.8 billion in 2012. The costs for the mandatory coverage are the 33rd highest in the nation.

In 2003, with Florida facing some of the highest premiums in the country, the Legislature passed a sweeping rewrite of the workers’ compensation system that, among other things, tied the recovery of plaintiff attorneys’ fees to percentages of the amount of recovered benefits. Workers’ compensation judges were precluded from awarding additional hourly fees for plaintiffs’ attorneys.

In a 2016 ruling known as Castellanos v Next Door Company, the Florida Supreme Court said the strict fee caps violated injured workers’ due process rights and authorized judges to award fees outside the fee schedule if adhering to it yielded unreasonable results.

Following the ruling NCCI, which files workers compensation rates for all insurance carriers in the state, requested a 19.6 percent increase in rates, effective Oct. 1, 2016. The majority of the hike, NCCI said, was attributable to the Castellanos ruling.

The Florida Office of Insurance Regulation rejected the rate request and, instead, agreed to approve a 14.5 percent increase effective Dec. 1, 2016.

That increase triggered repeated predictions by business groups that the state’s economic recovery would stall. They pleaded for the Legislature to act, but lawmakers ended the 2017 session without reaching a compromise on a workers’ compensation bill.

Now, heading into an election year with the expected rate decrease and with hurricane recovery demanding attention from the Legislature, it is unlikely lawmakers will want to tackle the complicated workers’ compensation issue.

Edie Ousley, vice president of public affairs for the Florida Chamber of Commerce, said a need still exists. Even if Altmaier agrees to NCCI’s proposed rate reduction, Ousley said, workers’ compensation rates will still have increased over the last two years and, she said, would be some of the highest rates paid by employers across the Southeast.

“While regulators have proposed somewhat of a reduction, the net effect is still an increase in rates leading to higher bills for job creators and a lack of predictability,” Ousley said.

Florida Workers’ Advocates, an association that represents plaintiffs’ attorneys and injured workers, is at odds with business interests such as the Florida Chamber.

But Florida Workers’ Advocates President Mark Touby, a plaintiffs’ attorney, agreed with Ousley that workers’ compensation rates are not predictable for employers. He put the blame on NCCI, which is the rating organization for the state and files proposed rates on behalf of all workers’ compensation insurance carriers. The rates are ultimately approved and set by the insurance commissioner after a public meeting.

While business groups in 2017 pushed for attorney-fee caps, Florida Workers’ Advocates asked the Legislature to consider changing the ratemaking process after a Leon County circuit judge ruled that NCCI violated the state’s “Sunshine Law” when it came to public records and public meetings. An appellate court later reversed the decision.

“The fact that rates are going down is artificial,” Touby said, adding that until the public has access to NCCI’s information, the rates, and whether they increase or decrease, won’t be fully understood.

The group also lobbied the Legislature last year to reconsider the benefits afforded to injured workers.

But Touby said he doesn’t expect to be pushing those changes this year.

“This didn’t get less important,” said Touby, who represented Marvin Castellanos, the named plaintiff in the 2016 Supreme Court ruling. “It’s just not that burning issue right now because other things have popped up that need attention.”

Republished with permission of the News Service of Florida.

Broward nursing home expands lawsuit against state

A Broward County nursing home has expanded a lawsuit challenging moves by Gov. Rick Scott‘s administration that effectively shut down the facility after residents died following Hurricane Irma.

The Rehabilitation Center at Hollywood Hills filed a lawsuit last month in Leon County circuit court challenging Sept. 13 and Sept. 14 state orders that placed a moratorium on patient admissions and suspended the facility from the Medicaid program. It filed an amended complaint this week that challenged a Sept. 20 emergency order that suspended the facility’s license.

The state Agency for Health Care Administration (AHCA) acted after eight residents of The Rehabilitation Center at Hollywood Hills died Sept. 13, three days after Hurricane Irma knocked out the facility’s air conditioning. Four other residents who were evacuated died later.

The Rehabilitation Center at Hollywood Hills filed the lawsuit Sept. 19 and followed with the amended complaint Tuesday, contending that the state did not have adequate grounds to prevent the facility from operating. The lawsuit seeks an injunction against the state.

“These actions by AHCA do not meet the essential requirements of law for entry of immediate emergency orders by a state agency because the administrative orders are completely devoid of factual allegations, and as stated, lack the required specificity and particularity, as to any improper conduct or wrongdoing on the part of Hollywood Hills,” the amended complaint said.

But in the emergency order suspending the license, the state agency said nursing home officials failed to properly evacuate residents when conditions became unsafe during the three days without air conditioning.

“The respondent’s (nursing home’s) deficient conduct is widespread and places all future residents at immediate threat to their health, safety and welfare,” the order said. “The respondent has demonstrated that its physical plant and its management cannot provide an environment where residents can be provided care and services in a safe and sanitary manner.”

Circuit Judge James Shelfer has scheduled a hearing for Oct. 27. Meanwhile Thursday, Scott released a statement calling on the state Constitution Revision Commission to consider proposals that could help protect residents of nursing homes and assisted living facilities. The commission will put proposed constitutional amendments on the November 2018 ballot.

Republished with permission of the News Service of Florida.

Rick Scott shifts storm focus to Panhandle

After spending much of the past month focused on Hurricane Irma, Gov. Rick Scott will shift Thursday to the one region of Florida that was largely unscathed from that mammoth storm: The Panhandle.

Scott will appear Thursday at emergency-management facilities in Escambia and Bay counties, as a newly formed tropical depression could turn into a hurricane in the Gulf of Mexico and threaten Northwest Florida.

The storm, still dubbed Wednesday as Tropical Depression 16, could hit the Gulf Coast as a hurricane Sunday, though the exact path remains unclear, according to a National Hurricane Center forecast.

Scott is scheduled to appear at 9 a.m. Thursday at Escambia County Emergency Management and at 11:15 a.m. at the Bay County Emergency Operations Center, according to his office.

Republished with permission of the News Service of Florida.

Interior Secretary heading to South Florida

U.S. Interior Secretary Ryan Zinke will be in South Florida this week reviewing damage from Hurricane Irma and getting a briefing about Everglades restoration efforts, according to his office.

Zinke will receive a briefing Thursday on Everglades restoration at Lake Okeechobee, assess storm cleanup Friday at Big Cypress National Preserve and discuss Everglades National Park Saturday with U.S. Sen. Marco Rubio and other members of Florida’s congressional delegation.

Republished with permission of the News Service of Florida.

USF survey says Floridians feeling financial stress

With many people worried about a lack of high-paying jobs, 60 percent of Floridians say they feel financial stress in their households, according to results of the 2017 USF-Nielsen Sunshine State Survey released this week by the University of South Florida.

The survey found that six in 10 Floridians feel at least some financial stress, though that is down from 71 percent in 2015. The most financial stress was found among unemployed people, households with incomes under $35,000, African-Americans, people without college educations and women.

The survey also found the most stress in South Florida, where costs of living are higher than in other parts of the state.

“The biggest threat to Florida’s economy, Floridians say, is the lack of well-paying jobs — and their concerns are on the rise,” University of South Florida political-science professor Susan MacManus, the project director, wrote in a summary of the survey results.

The survey of 1,215 Floridians was conducted from July 24 to Aug. 14 and has a margin of error of 2.8 percentage points.

Republished with permission of the News Service of Florida.

Intensifying storm could threaten Gulf Coast

Tropical Depression 16 is expected to intensify into a tropical storm within 24 hours while traveling north into the Gulf of Mexico. A forecast cone from the National Hurricane Center projected the storm will make landfall as a hurricane this weekend somewhere between New Orleans and Tampa Bay, with the Florida Panhandle as the center point.

National Weather Service meteorologist Kelly Godsey said atmospheric conditions are favorable for a quick intensification of the storm, and residents need to prepare.

“It’s not terribly unusual to see storms this time of year develop,” Godsey said. “What is particularly concerning however is that the water is very warm in the northwestern Caribbean. The fuel is really there to get this storm to intensify quickly.”

If Tropical Depression 16 gains strength, it will be known as Tropical Storm Nate.

One logistical issue facing the state is that Florida State University is scheduled to host the University of Miami in a football game Saturday afternoon in Tallahassee. The game was already postponed once because of Hurricane Irma last month. As of early Wednesday afternoon, FSU said it was monitoring the storm, but no change in the schedule had been announced.

Republished with permission of the News Service of Florida.

Court overturns state board on charter schools

Pointing to similar cases in other parts of Florida, an appeals court Wednesday overturned a decision by the State Board of Education that would have cleared the way for two charter schools in Indian River County.

The ruling by a three-judge panel of the 4th District Court of Appeal was a victory for the Indian River County School Board, which in 2015 denied two charter-school applications filed by Somerset Academy, Inc. Backers of the charter schools took the issue to the State Board of Education, which rejected the decision of the Indian River board and said Somerset Academy should be allowed to move forward with the schools.

Wednesday’s ruling by the appeals court said the Indian River board had “clear and convincing evidence” on a series of issues that supported the denial of the proposed charter schools. As an example, the appeals court said the Indian River board showed that the applications failed to meet financial requirements included in state law.

“The School Board painstakingly pointed out how Somerset’s applications patently showed that Somerset’s intended budget was financially unrealistic and untenable,” said the 10-page ruling, written by appeals-court Judge Carole Taylor and joined by judges Melanie May and Cory Ciklin.

The case focused heavily on a state law aimed at helping replicate “high-performing” charter schools. Somerset Academy’s applications in Indian River County sought to replicate a high-performing middle school and a high-performing elementary school that it operated in Miami-Dade County, the appeals court said.

But the State Board of Education’s handling of replication proposals also has drawn legal challenges in other parts of the state. Wednesday’s ruling said the 5th District Court of Appeal overturned a state board decision in a Seminole County case, while the 2nd District Court of Appeal overturned a state board decision in a Polk County case.

In the Indian River County case, the 4th District Court of Appeal said it was adopting a standard used in the Seminole and Polk cases that said school boards need to have “clear and convincing” evidence to support their denials of proposed schools.

Along with finding evidence of inadequate financial information, the 4th District Court of Appeal supported other conclusions of the Indian River board, including that Somerset had failed to show it would comply with a federal desegregation order involving the county’s schools.

“Although Somerset stated in its applications that its proposed schools would be open to all students in Indian River County, Somerset failed to sufficiently specify how it would comply with the requirements of the desegregation order to achieve racial balance reflective of the community or otherwise offer a viable student and employee recruitment plan to address the federal desegregation order requirements,” the appeals court said. “For example, the recruitment plans submitted by Somerset failed to address the type of transportation needed to achieve diversity.”

Republished with permission of the News Service of Florida.

Telehealth panel eyes insurance, licensing

To increase the use of telehealth in Florida, a panel is recommending that insurance companies be required to reimburse health care providers for telehealth services and that the Legislature authorize participation in interstate “compacts” that make it easier for doctors and other providers to be licensed in a variety of states.

The Telehealth Advisory Council held a two-hour-plus teleconference Tuesday, with members reviewing a draft copy of a 32-page report that will be sent to the governor and Legislature later this month.

Agency for Health Care Administration Secretary Justin Senior, the chairman of the advisory council, said a copy of the report would be posted publicly and that another meeting will held before the panel votes on the final version.

“I really appreciate all the work that has gone into this. I really think it’s coming together nicely,” Senior told members of the council.

Telehealth, at least in part, involves using the internet and other technology to provide services to patients remotely. The Legislature for years grappled with telehealth and how it should best be used and regulated. In 2016, lawmakers passed a bill creating the advisory council and directed it to survey the current level of telehealth participation in the state, identify obstacles and make recommendations on how those obstacles can be eliminated.

Recommendations in the report run the gamut, from making clear that a practitioner/patient relationship can be established through telehealth to providing a definition for telehealth.

Perhaps the most controversial recommendation, though, is that the Legislature require insurance companies to reimburse health care providers for telehealth services as though the care were provided face-to-face.

Moreover, the draft report also recommends that insurance companies cover services provided via telehealth if the same services are covered for in-person visits.

The advisory board recommendation applies to commercial insurance coverage only. The report recommends, however, that the state support changes being considered by Congress that would make Medicare coverage of telehealth services less restrictive.

With regard to Medicaid, the advisory council is recommending that the state amend its Medicaid rules and allow reimbursement to providers for more telehealth services. Currently, Medicaid rules allow for reimbursement of live video conferencing only.

Advisory council member and Leon County EMS provider Kim Landry told The News Service of Florida Monday that the recommended mandates on insurance companies should go a long way to increasing access to telehealth services.

“Reimbursement has been an issue,” he said noting that he doesn’t expect every provider to gravitate toward telehealth but that the promise of reimbursement will help sway some physicians.

As of September, 34  states and the District of Columbia had established health-insurance parity laws to address gaps in coverage for telehealth services, according to the draft report. But only three of the states with telehealth parity laws explicitly mandate that the reimbursement for telehealth services be the same as for in-person care.

The advisory council worked with the Office of Insurance Regulation, the Department of Health and the Agency for Health Care Administration in polling insurance companies, facilities and providers about telehealth.

The findings showed that only 6 percent of practitioners in Florida reported using telehealth, which was below the national average of 16 percent.

Those who did offer telehealth services were recent converts, with 55 percent reporting doing so for the first time in the last year.

The poll also showed hospitals in Florida lagged behind their peers nationally in the use of telehealth. While 45 percent of hospitals responding to the Florida survey reported using telehealth, that was less than the 52 percent of hospitals (with another 10 percent in the process) in a 2013 national poll.

Results of the Florida survey showed that for health care practitioners, the top barriers for telehealth were financial. Practitioners were concerned about the required investments, adequate reimbursement for services and a financial return.

In addition to tackling reimbursement, the advisory council also weighed in on licensure requirements, recommending that “health care practitioners be licensed in Florida prior to being allowed to provide care to a patient in Florida.”

To make the licensure process easier, the council is recommending that the Legislature authorize Florida to participate in multi-state practitioner licensure compacts so long as the eligibility requirements for licensure equal or exceed the state’s existing requirements.

The advisory council also is recommending that, similar to the boards of medicine and osteopathic medicine, the various health care regulatory boards and councils be given specific authority to develop rules necessary to implement telehealth.

Republished with permission of the News Service of Florida.

Pam Bondi goes to Nevada

Drawing on lessons learned after a nightclub massacre last year in Orlando, Attorney General Pam Bondi and members of her office will be in Las Vegas the next few days to help victims of the nation’s latest mass killing.

Bondi, along with Emery Gainey, director of the Division of Victim Services and Criminal Justice Programs, and five advocates are traveling at the request of Nevada Attorney General Adam Paul Laxalt.

The Florida officials hope to use what they learned following the 2016 Pulse nightclub killings in Orlando to help in the aftermath of a mass shooting Sunday night that left at least 59 people dead in Las Vegas.

“Sadly, (in) Florida we know what we’re doing after the Pulse nightclub,” Bondi said Tuesday before an afternoon flight to Las Vegas.

Bondi said the situation in Las Vegas is similar to the Pulse shooting in that many victims of the Orlando massacre or their family members weren’t from Florida.

Many of the 59 people killed and more than 500 injured in Las Vegas had traveled from other states to a three-day, outdoor country music festival. They were shot by a gunman who fired from a room in the nearby Mandalay Bay hotel and casino.

“We need to help them work through the legal process, connecting with their families and by getting them services,” Bondi said. “Sadly, so many of the victims who died don’t live in Nevada, so help with burial and helping them get back to their respective states.”

Advice will range from transporting bodies across state line to expenses for family members and victims, grief counseling and simply contacting family members, Bondi said.

“There is no amount of counselors in Nevada that could possibly assist, due to the magnitude of this tragedy,” Bondi said.

The National Association of Attorneys General has asked all its members to send advocates. Bondi said Florida might send more than the five advocates who will be on the ground Wednesday in Las Vegas.

“This is many, many more victims, many hundreds in the hospitals throughout Nevada,” Bondi said. “So we also have offered, at their request … training all the other advocates.”

The Pulse attack left 50 people, including the shooter, dead and another 58 injured. The targets at Pulse were mostly young, gay and Hispanic.

The gunman, who said he was inspired by the terrorist group ISIS, was shot dead by police. The Pulse massacre had, until Sunday, been considered the nation’s deadliest mass shooting.

Republished with permission of The News Service of Florida.

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