Raising new questions about Florida’s legal climate, a workers' compensation study found that costs per claims filed by Florida workers rose by 4 percent annually from 2014 to 2018 and then doubled to 8 percent in 2019/2020, just prior to the onset of the COVID-19 crisis.
The study by the nonprofit Workers Compensation Research Institute (WCRI) in Massachusetts found that increases in Florida claims costs since 2014 were largely driven by growth in medical payments and indemnity benefits related to lost wages after worker injuries. Soaring attorney fees of nearly 77 percent since 2015 and more lump-sum settlements in workers' comp cases were also cited in the study released this month.
The study compared the performance of workers' comp systems in 18 states using a number of metrics for the period of 2014 through March 2020.
“Compared with the other 17 states, growth in costs per claim in Florida since 2014 was faster than in most states, due to more rapid increases in medical payments and indemnity benefits per claim,” Ramona Tanabe, the WCRI’s executive vice president, said in an email to the Florida Record.
Claim cost drivers in Florida revved up in the wake of two 2016 Florida Supreme Court decisions, Castellanos v. Next Door Co. and Westphal v. City of St. Petersburg, according to the report. Those rulings found the state’s previous worker attorney fee schedule and its time limits on disability benefits unconstitutional.
“Another area that may be related to lump-sum settlements and may be affected by the 2016 Supreme Court decisions is attorney involvement,” the study states. “Both the percentage of claims with defense attorneys involved and the frequency of worker attorney involvement in Florida increased … following the Castellanos and Westphal decisions.”
Total costs per claims in Florida over the time period studied was higher than in most other states in the study. Florida’s increase was 4.7 percent per year, compared to an 18-state median of 2.6 percent, according to the study, which can be purchased at the institute's website.
The two court decisions prompted the state to extend the time period to pay out disability benefits and move to an hourly rate for workers’ attorney fees. This may have led to higher lump-sum settlements, an increase in attorney involvement in claims and higher attorney fees, the study says
The Florida Office of Insurance Regulation increased workers compensation rates after the 2016 court decisions but since 2018 has approved several rate decreases.