Worker’s Over-Compensation?

In 1935 my grandfather wrote Florida’s first worker’s compensation law and ever since then my family has been deeply involved in the evolution of this law in addition to the fact that we’ve written such coverage for businesses of all types since 1950. By law businesses with four (4) or more employees (and one [1] or more for most construction businesses) must carry such worker’s compensation insurance or face severe fines if they are found to not have this protection. With this in mind two developments over the last month are important for our business insurance client’s to monitor and deserving of some comment as follows.

Florida Worker’s Comp Rates To Reduce in 2015?
NCCI Proposes 2.5% Decrease In Florida Rates

Late last month the National Council on Compensation Insurance (NCCI) filed a workers’ compensation rate proposal for 2015 with the Florida Office of Insurance Regulation (OIR). NCCI is proposing an overall average rate decrease of −2.5%, to be effective for all new and renewal policies starting January 1, 2015. NCCI is the national regulatory entity that issues all rates, rules and regulations related to worker’s compensation and for which state insurance departments follow and use.

If NCCI’s proposed rates are approved by OIR, this would be the first rate decrease since 2010, after 4 consecutive years of rate increases. Between 2003 and 2010 Florida rates decreased by nearly 65% following changes the state made to the law to reduce litigation attached to worker’s claims. Prior to the 2003 an estimated 75% of all employees hired attorney’s when filing worker’s compensation claims (more about the litigation that is now testing whether the 2003 changes that so dramatically reduced work comp rates are constitutional below). At that time some would suggest that the Florida law was one of ‘over’ compensation, or at the very least claim costs that were larger than needed.

To finalize the 2015 rates the OIR will hold a hearing on the NCCI’s recent suggestions in mid-October and will issue its ruling shortly thereafter. OIR can either approve the rate decrease as filed or disapprove the filing and ask NCCI to make a new filing that either increases rates or that provides for an even greater rate decrease.

Miami-Dade Judge Rules Florida Workers’ Comp Law Violates Constitution

On August 13, 2014, Judge Cueto in Miami-Dade County issued a ruling finding that the Florida law is, in his view, unconstitutional in a case entitled Florida Workers’ Advocates, Workers’ Injury Law & Advocacy Group, and Elsa Padgett v. Office of the Florida Attorney General. Judge Cueto ruled that the Florida workers’ compensation law (Chapter 440) violates the Florida constitution because, in his opinion, the benefits paid to injured workers are not sufficient to justify workers’ compensation as the exclusive remedy for workers who are injured on the job. The Florida Attorney General has appealed the ruling to the 3rd District Court of Appeal in Miami, which can either hear the case or send it straight to the Florida Supreme Court.

While this ruling raises numerous questions about the future of Florida’s workers’ compensation system, there are a few things to keep in mind:

1. This case is actually not a workers’ compensation case; the injured party did not file a claim against his employer to get benefits for an on-the-job accident, and it was not heard by a workers’ compensation judge (i.e., a Judge of Compensation Claims or “JCC”). Unless and until this ruling is heard and ruled on by a higher court (i.e., the 3rd District Court of Appeal or the Florida Supreme Court), it is not precedent that other courts follow.

2. There are three other important workers’ compensation cases currently pending before the Florida Supreme Court: Westphal v. City of St. Petersburg (which deals with the adequacy of benefits paid to injured workers), Zenith Insurance Company v. Morales (which deals with whether workers’ compensation is the exclusive remedy available to workers who are hurt on the job) and Castellanos v. Next Door Company/Amerisure Insurance Company (which will decide whether the current limitation on attorney fees in workers’ compensation cases is constitutional).

An unfavorable ruling by the Supreme Court in any one of these cases would be much more catastrophic to the current law than the ruling by the Miami-Dade judge, in its current posture. Removal of worker’s compensation law as the sole remedy to worker’ who suffer an accident or injury on the job would open employers to civil litigation and no longer offer the statutory protection businesses enjoy today as a result of the long standing law. The Supreme Court returns this week from its summer recess, and a ruling in the Westphal and Zenith cases is expected soon.

As has been the case since 1950, you can and should count on your professional agent’s and underwriters here at Morris & Reynolds for the guidance and answers that you need and deserve related to worker’s compensation as well as all of your business insurance and employee benefit’s needs. For the honor of providing your protection, thank you.

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