AIF sounds alarm on workers comp changes in Jacksonville

Las Vegas Strip transforms into a Grand Prix.

In Jacksonville, Associated Industries of Florida held the last of three planned town hall meetings Wednesday to discuss the impact of the state’s workers’ compensation system on employers and employees.

The Jacksonville event included Sens. Aaron Bean and Audrey Gibson and Rep. Cyndi Stevenson in the audience.

This is a timely initiative for AIF: the insurance industry seeks a nearly 20 percent hike in rates for employers, one which could negatively impact the state economy.

It was pointed out the vast majority (16.8 percent) of this increase would benefit trial lawyers.

Tom Feeney, president of AIF, noted that in 2003, Florida had the highest workers’ comp rates in the country. AIF and others led a reform that cut rates by 60 percent; now, however, things appear headed in the other direction given recent Supreme Court decisions.

“The system has worked extremely well until now,” Feeney said, adding that “five of the seven Supreme Court members are extremely hostile to business.”

Terming the ruling a “calamity that is about to befall the business community,” Feeney introduced a variety of speakers to provide insight.

“The problem that is about to inundate your fellow business men and women,” said Feeney, is the “Supreme Court’s fault.”

AIF General Counsel Tammy Perdue practices worker’s comp law, and asserted “workers comp plays a big role in keeping Florida’s economy vibrant.”

Before 2003, Perdue notes “it was very difficult for businesses to find workers’ compensation coverage,” given the pressures inflicted by onerous rates.

“The business crisis … was a crisis of both affordability and availability,” Perdue added, saying it got to a “fever-pitch level” until a Senate bill passed in 2003 — SB 50A — which led to stability, a condition augmented by an “economic boom” from 2004 to 2006, especially in the construction sector.

The bust later that decade led to “a lot of companies totally going out of business” and “companies leaving the state,” said Perdue.

“In 2003, if these workers’ comp reforms hadn’t happened, think about how bad things would have been,” Perdue said, regarding the “economic bust times.”

The Supreme Court decisions AIF finds objectionable: Castellanos v. Next Door Company, which eliminated caps on claimant attorney fees, and Westphal v. St. Petersburg, which declared a two-year limitation on temporary total disability benefits unconstitutional.

The total anticipated impact on the economy: $714 million, given the expected 19.6 percent uptick in workers comp costs, after the Oct. 1 requested implementation.

The insurance commissioner, ultimately, will make the call, said Perdue, on the effective date and the increase in costs, which could be on existing policies and policies upon renewal.

One possible option, said Perdue, is a special session, one AIF would push for if there is enough member interest.

“Whether or not this needs to be addressed by the Legislature this fall is still unknown,” Perdue said, “given that we don’t know what the insurance commissioner is going to do.”

Workers comp attorney Jim McConnaughhay noted from 2003 to 2016, the “in excess of 60 percent rate decrease” happened, suggesting what happened in 2003 “worked.”

“The problem we addressed in 2003,” he said, was rooted in escalated attorney’s fees.

“It was not at all unusual for an injured worker’s attorney to get $100 in increased benefits and get a $20,000 fee … for minute issues that could have been resolved” otherwise.

“The incentive was to file claims. Litigate all you can,” McConnaughhay added.

That was the reason for the cap on attorney’s fees, he said, restricting fees to a “percentage of recovery.”

For a $30,000-a-year employee, said a contractor, costs went from $16,000 a year in 2003 to $5,400 today. Companies would misclassify employees to get around it in the roofing and construction sectors, and overburdened state agencies couldn’t investigate these discrepancies.

The fear is these impacts could recur again if these cost escalators kick in.

The politicians had their say, in addition to the professionals.

Sen. Bean, who was in the House then, noted that in 2003, “the business community stormed the capital,” decrying the impacts on businesses across the state, with NFIB and AIF leading the way.

His goal: “to put the worker first.”

Sen. Gibson, a freshman representative then, was on a select committee related to this issue.

Gibson wondered about “having a special session before a ton of new members are immersed,” saying “there’s going to be 46 new House members” and a number of new ones in the Senate.

“I hope you will impress on the speaker and the Senate president that we do need a special committee,” to evaluate the changes made via court cases.

“It’s about trying to make the worker whole, and that’s the bottom line,” Gibson said.

Gibson, after the event, noted a balance will have to be struck between the 2003 legislation and the Supreme Court decision.

“I’m not sure if that takes a special session,” Gibson said. “If there is no hint of compromise between the parties, there is no point in having a special session.

Rep. Stevenson noted “this issue has been on the radar,” and is a “critical issue” to be dealt with.

“This sounds like the raiders,” Stevenson said, adding the “issue is are we going to squabble over pennies.”

“We want to have a process where employees are taken care of and the bad actors are reined in,” Stevenson added, noting “when people are gaming the system, we all pay.”

Stevenson, regarding a special session, believes it would be contingent on having a “solid place to land,” and that the special session could be concurrent with committees before the regular session.

The Jacksonville event completed the 2016 “Helping Florida Work” Town Hall Tour. Expect more AIF activism on this issue going forward though.