Pointing to a major Florida Supreme Court ruling on attorneys’ fees, state regulators issued an order Tuesday that said workers’ compensation insurance rates should increase 14.5 percent starting later this year.
The long-awaited order by the Florida Office of Insurance Regulation trimmed a proposal that called for increasing rates 19.6 percent. Nevertheless, business groups immediately warned that a 14.5 percent increase would hurt employers.
“Today’s workers’ compensation rate increase is a hard hit to small business owners and our economy,” Bill Herrle, executive director of the small-business group NFIB/Florida, said in a prepared statement. “While the [insurance] commissioner has done what was necessary in response to the Supreme Court undoing legislation that capped attorneys’ fees and maintained reasonable rates, our small business owners will be paying the price.”
The National Council on Compensation Insurance, which makes workers’ compensation rate filings for the insurance industry, had proposed a 19.6 percent increase to take effect Oct. 1. Tuesday’s order said the 14.5 percent increase is contingent on the National Council on Compensation Insurance revising its filing by an Oct. 4 deadline to incorporate changes requested by regulators.
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The 14.5 percent increase would take effect Dec. 1 and apply to new policies and renewal policies. The Office of Insurance Regulation said the increase would not affect “in-force” policies, meaning many businesses would not see higher rates until their policies come up for renewal.
The National Council on Compensation Insurance, commonly known as NCCI, issued a statement Tuesday saying it was reviewing the order and will respond to the request for a revised filing “in a timely manner.”
Most of the expected rate increase stems from an April ruling by the Supreme Court that said a limit on attorneys’ fees in workers’ compensation cases was unconstitutional. The Supreme Court ruling, in a case known as Marvin Castellanos v. Next Door Company, involved an attorney being awarded the equivalent of $1.53 an hour in successfully pursuing a claim for benefits for a worker injured in Miami.
Business groups have long argued that limiting attorneys’ fees is a critical part of holding down workers’ compensation insurance costs. But critics have contended that the state’s fee limits favored insurers and took away legal rights of injured workers, at least in part because workers would have a hard time finding legal representation in pursuing claims.
Much of the debate is rooted in a 2003 overhaul of the workers’ compensation system by then-Gov. Jeb Bush and the Republican-controlled Legislature. Florida businesses at the time faced some of the highest insurance rates in the country. The overhaul, which included strict limits on attorneys’ fees and other changes, ultimately led to a 60 percent drop in insurance rates.
The April Supreme Court ruling and Tuesday’s order set the stage for what likely will be a renewed debate about the workers’ compensation system during the 2017 legislative session. Along with business groups such as NFIB, the Florida Chamber of Commerce and Associated Industries of Florida, the debate is expected to include plaintiffs’ attorneys, labor unions and insurers.
“Florida is on the verge of finding itself right where it was in 2003 with some of the highest workers’ compensation rates in the nation,” Tom Feeney, president and CEO of Associated Industries of Florida, said in a prepared statement Tuesday. “We must make sure this doesn’t happen by developing sound solutions to our state’s workers’ compensation system.”
Mark Touby, an attorney who is president of the group Florida Workers’ Advocates, blamed insurers for the rate increase and said his group is “extremely disappointed” in Tuesday's decision.
“The leadership of the Florida Legislature has indicated that the workers' compensation system will be the focus of much attention in the upcoming legislative session,” Touby, who represents injured workers, said in a prepared statement. “We look forward to the opportunity to work with Florida’s leaders to ensure fairness for job creators while protecting the rights of injured workers.”