TALLAHASSEE – Florida's Chamber of Commerce doesn't know how the state's Office of Insurance Regulation will decide on a 20 percent workers' compensation insurance rate hike request but has a good idea how such an increase will affect small businesses, a chamber official said during a recent interview.

"We do know that workers' comp rates will be going up and that the impact will be a significant burden to job creators," Florida Chamber of Commerce Director of Business Economic Development and Innovation Carolyn Johnson said during a Florida Record interview.

 

The Office of Insurance Regulation announced earlier this month that the National Council on Compensation Insurance had issued an amended rate. The amended filing would increase the council's initial proposed combined average rate increase from 17.1 percent to 19.6 percent, according to the announcement.

The state Chamber of Commerce was quick to warn about the negative economic impact of that increase.

“Small businesses create two of every three jobs in Florida, and a workers’ comp rate increase as significant as this could force these businesses to choose between paying higher workers’ comp rates and hiring new employees,” Chamber President and CEO Mark Wilson was quoted in a press release issued shortly after the Office of Insurance Regulation's announcement. “A 19.6 percent rate increase will cause uncertainty among job creators and may even force a decline in Florida’s job growth.”

Office of Insurance Regulation has scheduled a public hearing on the rate increase request Aug. 16 in the Jim King Committee Room of the 401 Senate Office Building at 404 S. Monroe St. in Tallahassee. Should the rate increase be approved, the change would go into effect Oct. 1.

A spokeswoman for the National Council on Compensation Insurance declined a Florida Record request for additional comment but pointed a statement released by the council that she said provides all information she is able to share at this time.

The National Council on Compensation Insurance's amended rate filing was prompted by two recent Florida Supreme Court rulings about the state's attorney fee provision and temporary disability benefits. In Castellanos v. Next Door Co., the high court ruled in April that the state’s mandatory attorneys’ fee schedule in workers’ compensation litigation violates the due process clause of both the Florida and U.S. constitutions. That ruling prompted Florida’s business and insurance leaders to forecast a jump in workers' compensation rates of at least 20 percent.

In Westphal v. City of St. Petersburg, the Florida Supreme Court ruled In June that the state’s statutory 104-week cap on temporary disability benefits also is unconstitutional.

Earlier this month, the Florida Chamber of Commerce warned that job growth in the state would be jeopardized by the recommended 19.6 percent workers' compensation hike. Florida's Chamber of Commerce already has noticed increases in attorney fees, Johnson said.

"Because of the Castellanos and Westphal decisions, especially Castellanos, the workers' comp system will be bearing extra costs," Johnson said. "We are already seeing evidence of attorneys' refiling cases to receive an hourly fee instead of the sliding scale that was in place prior to the Castellanos decision."

Increased costs to the system mean that rates also need to increase, Johnson said.

 "For example, in the Castellanos case, the attorney requested $350 an hour in attorney's fees, which would have totaled around $37,500," Johnson said. "The injured worker only received $800 in benefits, so the attorney received less than $200 in attorney's fees. So in this one case, an additional $37,300 would be received by the attorney."

The Florida Chamber of Commerce has called upon the state legislature to address the issue and Johnson said small business owners also need to take action.

"Get involved," Johnson said. "Contact your legislator to express the need for a legislative remedy as a result of the two workers' comp decisions and let the Office of Insurance Regulation know how the rate increase will impact your business."

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