Job growth threatened by recommended increase in workers' comp rates

By W.J. Kennedy | Jul 7, 2016

Florida business leaders warned late last week that a recommended 19.6 percent jump in workers’ compensation rates will jeopardize a run of job growth in the state stretching back over four years.

TALLAHASSEE - Florida business leaders warned late last week that a recommended 19.6 percent jump in workers’ compensation rates will jeopardize a run of job growth in the state stretching back over four years.

“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,” Mark Wilson, president and CEO of the Florida Chamber of Commerce, said in a statement. “A 19.6 percent rate increase will cause uncertainty among job creators and may even force a decline in Florida’s job growth.”

The Boca Raton-based rating bureau, National Council on Compensation Insurance (NCCI), recommended the rate increase beginning Oct. 1. The appraisal stems from back-to-back state Supreme Court decisions toppling laws designed to keep workers’ compensation costs in check.

In early June, the high court ruled in Bradley Westphal v. City of St. Petersburg that the state’s statutory 104-week cap on temporary disability benefits was unconstitutional.

In April, the court found the state’s workers’ comp attorneys fee schedule unconstitutional in the case of Castellanos v. Next Door Co.

After the Castellanos ruling, some Florida business leaders said that a special legislative session was imperative to rework the law and circumvent the ruling. But election year politics squashed any enthusiasm for calling legislators back.

“With the elections coming up, I don’t think at this point anyone is looking at a special session,” Kathy Mears, chief of staff for Florida Speaker of the House Steve Crisafulli, said.

One legislative source said another deterrent was the terrorist attack in Orlando.

“How can we come back and do workers’ compensation without doing something on gun control,” the source said. “Politically, that just doesn’t fly.”

In the Castellanos case, the claimant’s lawyer requested a fee of $350 on a $850 award in benefits. A judge of compensation claims (JCC) said the fee was justified, but under the fee schedule had to limit it to what amounted to $1.53 per hour. 

In the majority opinion, Justice Barbara J. Pariente, wrote: “Without the ability of the attorney to present, and the JCC to determine, the reasonableness of the fee award and to deviate where necessary, the risk is too great that the fee award will be entirely arbitrary, unjust, and grossly inadequate. We therefore conclude that the statute violates the state and federal constitutional guarantees of due process.”

What constitutes a reasonable rate was set down in the 1968 Lee Engineering & Const. Co. v. Fellows decision, which listed the factors to be considered in determining fees.

But faced with run-away costs in the workers' comp system, the Florida legislature in 2003 approved sweeping changes to the law, the fee schedule among them. In most instances, the caps amount to approximately 10 percent of the award.

Then in Murray v. Mariner in 2008, the Supreme Court ruled that the caps did not permit a “reasonable” recovery for attorneys; they could receive awards above the caps. So in 2009, the legislature struck the word “reasonable” in relation to attorneys’ fees, again limiting attorneys to only those amounts allowed under the caps.

In response to the Castellanos ruling, NCCI filed a 17.1 percent increase last month for state workers’ comp rates.

A hearing is planned this month with Florida’s Office of Insurance Regulation (OIR) to discuss the rate increase.

In the Westphal case, the Florida Supreme Court ruled 5-2 that cutting off disability benefits after 104 weeks to a worker who is totally disabled and incapable of working, but who has not yet reached maximum medical improvement, is unconstitutional.

The justices turned to a prior limitation of temporary disability benefits, upping the limit to five years (260 weeks).

In the June 9 ruling, Pariente wrote that the statute is unconstitutional under Article I, Section 21 of the Florida Constitution, “as a denial of the right of access to courts, because it deprives an injured worker of disability benefits under these circumstances for an indefinite amount of time—thereby creating a system of redress that no longer functions as a reasonable alternative to tort litigation.”

Any special session would have likely been held concurrent with the November organization session, when lawmakers will return to Tallahassee after the general elections. Any revisions to the workers' comp law will now almost certainly wait until the scheduled start of the regular session next March.

Want to get notified whenever we write about any of these organizations ?

Sign-up Next time we write about any of these organizations, we'll email you a link to the story. You may edit your settings or unsubscribe at any time.

Organizations in this Story

Florida Chamber of Commerce Florida Supreme Court

More News

The Record Network