Michael Moline
As debate opened Tuesday over Florida’s 14.5 percent increase in workers’ compensation premiums, trial attorneys on the Florida Senate’s Banking and Insurance Committee targeted the group that proposes insurance rates for carriers in the state.
Sens. Greg Steube and Gary Farmer Jr., both attorneys, endeavored to shift the focus from attorney fees — widely blamed for rising workers’ comp rates — and onto the need for carriers to compete rather than charge common rates.
“I support a competitive marketplace,” committee member Greg Steube said following the hearing. “That’s one of the things the committee and the Legislature should look at.”
Chairwoman Anitere Flores, herself an attorney, said the issue was “definitely on the table” during what she hopes would be a thorough look at the situation.
“It seems that the NCCI and rate-making portion is something that had not been really discussed in previous workers’ compensation reforms,” Flores said.
Committee members Steube, Randolph Bracy and Debbie Mayfield had trial lawyer support in their recent campaigns. Farmer is a past president of the Florida Justice Association, representing trial attorneys.
NCCI is the National Council on Compensation Insurance. The group operates around the country, but Florida is one of just a few states in which it proposes rates on behalf of all carriers to state regulators — in Florida’s case, the Office of Insurance Regulation.
That office relied on NCCI data in developing the rate increase that began to take effect on Dec. 1. Businesses will absorb the higher premiums as they file for new or renewed policies during the next year.
The 1st District Court of Appeal has allowed that increase to take effect pending litigation over whether NCCI and the insurance office violated Florida’s open-government laws by closing its internal deliberations and documents to the public.
NCCI cited its inability to discuss that open court case in declining to appear during Tuesday’s hearing, Flores said.
“It’s hard to conduct a meeting when you know the answers you’re going to get are, ‘We can’t talk about that,’ “ Flores said.
However, “they were watching,” she said of NCCI. “I would hope they see the message and the tone and the questions that are being asked by the committee members.”
The hearing featured testimony by a range of business and attorney groups, a risk manager for Bay County, and organized labor.
The business side tended to blame greedy lawyers for the rate hike. Those interests point to Florida Supreme Court rulings declaring unconstitutional business-friendly reforms enacted in 2003, including a measure tying attorney fees to benefits secured without regard for the amount of legal work required.
The insurance office blames that one ruling — Castellanos v. Next Door Co. — for around 10 percent of the 14.5 percent hike.
The other side blamed greedy insurers. Richard Chait of the Florida Justice Association urged going after any excess profits, letting workers choose their own doctors, and establishing a mid-tier category of benefits for workers not yet deemed permanently disabled.
And he wanted to liberalize attorney fees, which he called “the great equalizer” and “the only hammer in the system” available to workers.
“Any one who comes before you and suggests that the Castellanos case and the return of reasonable fees creates a crisis is essentially admitting a business model to deny benefits,” Chait said.
Jim McConnaughhay, a defense-side workers’ compensation attorney speaking for Associated Industries of Florida, said a task force would release its AIF’s proposals for dealing with the rate hikes in January.
A representative of the Florida Chamber of Commerce said its own task force’s recommendations would be ready at about the same time.
Bill Herrle, Florida director for the National Federation of Independent Business, a member of AIF’s task force, and a veteran of the workers’ compensation debate, said Florida has a diverse marketplace, with around 200 Florida-based and national carriers and a self-insured sector.
He warned that returning competition to the marketplace carries its own dangers — “It leads to the potential for one big carrier to come in and say, ‘OK, now we’re going to run it tight and low-ball this for a couple of years until we buy in market share. And then where are you after that, when you don’t have all the carriers you desire?”
He called a House proposal to let businesses opt out of the system and take their chances in the trial courts “truly a remedy of last resort.”
2 comments
Carol Corbitt
December 13, 2016 at 6:14 pm
I have seen injured workers receive incredibly awful care which left them permanently disabled, then offered minimal payments . Do some research around the state , you will be appalled at the poor care. One woman had heavy machinery fall on her back. Only treatment offered was OxyContin . She had good insurance but was not allowed to use it because injury was under workmanship comp. then they said she could return to work and gave her an assignment 5o miles away when she was not allowed to drive. Never had any X-rays or all those other tests that most people are given for spinal injuries.
Mark L. Zientz
December 14, 2016 at 12:35 pm
Legislators: Follow the money. Not the ‘contributions’ to your campaigns that flow in as soon as a topic like workers’ comp or medical malpractice or abortion is ‘leaked’ as being on your agenda. Make the people who testify before legislative committees take the oath to tell the truth. Prosecute those who lie. Ask the right questions. To do that you need to have the FWA actuary advise you. FInd out how much in administrative costs is really a profit for a carrier or employer owned other business, like transportation, investigation, translations, utilization review, MSA compliance, peer review, house counsel, etc. When you know those facts, then ask why a carrier would spend tens of thousands for defense of an $800.00 bill, one that was clearly owed despite the carrier raising 15 defenses to payment, not one of which was accepted by the Judge (Castellanos). Ask why attorney fees paid by carriers should be inlcuded in the rate base if carrier paid fees only happen when claimants prevail against wrongful denials. Ask why penalties and interest paid for late payments of benefits should be included in the rate base. As for competition being bad, that’s non sense. If all carriers charge the same premiums for the same classifications of jobs, the efficient non litigious carrier makes a large profit while the carrier that fights every claim makes a reasonable profit. Insurance is not a public utility. There is no reason to guarantee any profit at all. Some years you do well, some years you lose money. If you are an insurance company your business is risk. In Florida the only risk is to the Guarantee associations that take over when a carrier pulls so much money out of the company that it is left without assets to pay claims. Carriers and employers are so used to paying so little to satisfy their obligations to injured workers (21% of the cost acccording to a 2015 study by OSHA) that they call it a crisis when they are asked to pay more of the real cost of injury. Why not just cut WC premiums to Zero. Repeal chapter 440. Put that idea on the table and see how many employers will scream like a stuck pig. Let employers have to pay for liability insurance to cover their unsafe workplaces and watch them squirm. They will beg to have WC reinstated, at almost any cost, when they see what they are getting away with now. Study the cost of a pure liability system to employers. If you think attorney fees are high now, wait until they can collect 40% from their clients instead of the approx. 10% workers’ comp lawyers are allowed to charge if the client has to pay the fee. Clients pay 100% of the attorney fee on all lump sum settlements. You wouldn’t consider shifting the cost of a broken machine to the taxpayers, why are you shifting the cost of broken bodies to the taxpayers?
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