Workers’ compensation insurance rates could go down again for Florida employers.
The National Council on Compensation Insurance this week filed with the state Office of Insurance Regulation a proposal that would lead to an average 5.4 percent rate decrease for employers, effective Jan. 1.
The recommended rate changes are based on claims-experience data as of the end of 2018. More than 90 percent of the data analyzed came from policies that took effect after a 2016 Florida Supreme Court decision that struck down strict caps on attorney fees in workers’ compensation cases, according to the organization known as NCCI, which makes annual rate filings on behalf of insurers.
In a document accompanying this week’s filing, NCCI attributed the recommended rate reduction to a variety of issues, including a declining frequency of on-the-job accidents.
“For decades, with few annual exceptions, frequency has continued on a clear downward path driven by technology, safer workplaces, improved risk management, and a long-term shift from manufacturing to service sectors. NCCI has no expectation that this trend will change course,” NCCI said in a document accompanying the filing.
The NCCI proposal is just a recommendation to the Office of Insurance Regulation, which can accept the proposed reduction or ask that it be changed, either up or down.
Workers’ compensation insurance has long been a divisive issue in Tallahassee because of the breadth of its impact. It touches disparate interests including injured workers, employers, health-care providers, insurance companies and workers’ attorneys.
It’s meant to be a self-executing system that provides health benefits and lost wages to injured workers while protecting employers from civil lawsuits stemming from on-the-job injuries.
While the system is generally set up to avoid lawsuits, disputes about workers’ benefits can often lead to legal fights, which is when attorney fees come into play.
Pointing to high rates, the Republican-dominated Legislature in 2003 passed a sweeping rewrite of the workers' compensation system that, among other things, put strict limits on fees for attorneys representing workers. The fee law was tweaked in 2009.
But in 2016, in a case known as Castellanos v Next Door Company, the Florida Supreme Court ruled the fee law violated constitutional due-process rights because it prevented challenges to the "reasonableness" of attorney fees awarded in workers’ compensation cases.
The ruling stemmed from a case in which an attorney was awarded the equivalent of $1.53 an hour in successfully pursuing a claim for benefits for a worker injured in Miami
The ruling sent reverberations through the state’s business and insurance sectors. The Office of Insurance Regulation subsequently approved a 14.5 percent rate increase that took effect in December 2016.
But in the following years, regulators have ordered rate decreases, with a 9.5 percent reduction in 2018 and a 13.9 percent reduction in 2019.
Business and insurance groups have long argued that attorney fees drive up workers’ compensation premiums. Fearing a return to higher rates after the 2016 Supreme Court ruling, the groups have pushed the Legislature to reinstate some fee restrictions, though lawmakers have not made changes.
Bill Herrle, executive director of the National Federation of Independent Business in Florida, said the workers’ compensation system is healthy because the economy is good.
“It’s masking the problem of attorney fees in the system,” Herrle said.
NCCI cautioned in its documents that “the full effects of that (court) decision will still not materialize for several years to come as workers compensation insurance is a ‘long-tail’ line that often involves a long period of time for claims to be resolved.”
Herrle said his push to have the Legislature tackle workers’ compensation had not been sidetracked and indicated it could be included in a broader legislative discussion about legal changes and what is known as tort reform.
“We are optimistic as well for workers’ compensation to be addressed,” Herrle said.
