A circuit court judge Wednesday struck down a 14.5 percent increase in workers’ compensation insurance rates due to begin taking effect next month, ruling that a ratings agency violated the Sunshine Law in preparing its rate proposal.
Judge Karen Gievers said the National Council on Compensation Insurance, or NCCI, failed to open its deliberations to the public or provide its data to an actuarial expert retained by the plaintiff in the case.
Since NCCI was acting as an agent of the Florida Office of Insurance Regulation, Gievers, said, it was subject to the state’s open–government requirements.
The rate hike “must be found to be void ab initio” — that is, from the start — “because the lack of sunshine so permeated the process,” Gievers wrote.
“The decision today will save Florida’s businesses deep millions of dollars in premium increases that are now set aside from a Dec. 1 effective date,” said Ron Sachs, a spokesman for plaintiff James Fee.
“NCCI is very disappointed in the decision of the Leon County Circuit Court,” marketing communications director Dean W. Dimke said in a written statment. “We continue to believe that NCCI and the Florida OIR have fully complied with the law. NCCI plans to appeal the trial court’s decision.
“The office is in the process of reviewing the order to determine next steps,” said Amy Bogner, a spokeswoman for Insurance Commissioner David Altmaier.
The insurance office was also a defendant in the lawsuit.
The rate increase, approved in October, alarmed business interests, including the Florida Chamber of Commerce and Associated Industries of Florida, both of which formed task forces to address it.
NCCI attributed the increase to Florida Supreme Court rulings striking both the state’s cap on attorney fees in workers’ compensation disputes and a two-year cap on temporary permanent disability payments.
Business and insurance leaders blamed the attorney fee ruling, Castellanos v. Next Door Co., handed down on April 28, for most of the increase — the idea being that higher attorney fees will drive up insurance costs both in themselves, and in leading employers to settle disputes for higher amounts to avoid litigation.
The Legislature is widely expected to seek a fix during its regular session next spring.
Bill Herrle, Florida director for the National Federation of Independent Business, and a member of the AIF task force, did not treat the ruling as good news.
“This is the trial bar’s unscrupulous tactic to put blinders on the Legislature and conceal the ridiculous fees they extract from the workers’ comp system,” Herrle said.
Fee, the plaintiff in the legal challenge, is a Miami worker’s compensation attorney suing as an employer who buys coverage.
He pointed to state law requiring rate-making agencies like NCCI to open deliberations of their internal decision-making committees to the public.
NCCI replied that it long abandoned its committee structure, so the provision no longer applied.
But Gievers noted that NCCI employees nevertheless conducted multiple meetings to discuss the rate proposal, both internally and with insurance office representatives.
She faulted both agent and agency for “not providing notice to the public or giving the public an opportunity to be present or heard at meetings between NCCI and OIR.
“Neither NCCI nor OIR (nor the two acting together) is legally authorized to change the law, only the Legislature is empowered to change our laws,” she continued.
“Until meeting in the sunshine and public records laws are changed, the defendants must comply by conducting the public meetings in the sunshine while providing the public records requested.”
Mark Touby, president of Florida Workers’ Advocates, called the ruling “a tremendous victory for Florida businesses and the workers they employ,” and said it would promote a “clear and open” ratemaking process.
“It is our hope that this well-reasoned ruling will put a halt to NCCI’s history of secret meetings and outrageous rate-hike requests, which only served to bail out the insurance companies’ alarming pattern of denying legitimate claims and then making Florida employers cover the cost of those errors,” Touby said.
“This might sound like a victory, but Florida businesses shouldn’t be fooled by this classic trial lawyer tactic,” said Carolyn Johnson, director for business, economic development and innovation policy at the Chamber.
“The rates may not go up on Dec. 1, but this is only temporary. What won’t stop, however, is that trial lawyers will use this time to continue enjoying the benefit of unlimited legal fees in workers’ comp cases, while they are also seeking higher attorney fees for claims retroactively impacted as far back as July 2009. It’s a lucrative deal for billboard trial lawyers.”