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Insurance Companies Hike Rates on Florida’s Workers’ Comp

The Florida Office of Insurance Regulation (OIR) recently approved a statewide workers’ compensation rate increase of 14.5% that took effect at the end of 2016. This means that the rates insurance companies charge businesses to insure them against employee injuries will go up, overall.

The insurance industry blames the rate increase on two recent Florida Supreme Court rulings that reversed reforms that were passed in 2003.

No matter what the reason, the increase is sure to shake up businesses and increase insurance companies’ profits.

Businesses throughout Florida are surely concerned about the upcoming increases, which no doubt will raise what they pay for workers’ compensation insurance.

This number was reached after insurance carriers pushed for an even higher hike. In September 2016, OIR did not approve the insurance companies’ filing for a 19.6% increase, stating that an increase of that much on new, renewal, and current policies was not justified.

“After a thorough review of the workers’ compensation insurance rate filing submitted by the National Council on Compensation Insurance and careful consideration of hundreds of public comments and testimony received from interested stakeholders, the Florida Office of Insurance Regulation has issued an order that gives contingent approval to an overall combined average statewide rate increase of 14.5 percent versus the requested 19.6 percent,” OIR said in a press release.

So, why the increase?

Insurance carriers want the public to believe that the rate increase stems from attorney greed. But it’s not civil trial attorneys who are raising their rates. It will be the insurance companies—who proposed the increase—that will see an immediate 14.5% increase in their revenues. In an effort to make the attorneys who represent injured workers look avaricious, the filing cited two cases as the cause for the increase: Castellanos v. Next Door Company and Westphal v. City of St. Petersburg.

Castellanos v. Next Door Company

In Spring of 2016, the Florida Supreme Court ruled that the state’s mandatory attorneys’ fee schedule for workers’ compensation cases was unconstitutional. The law was thrown out as a violation of due process according to Florida’s and the U.S. constitution.

The case that changed the attorneys’ fee schedule was that of Castellanos v. Next Door Company. After Mr. Castellanos was injured on the job, he sued his employer Next Door Company and its insurer, Amerisure. This case eventually led to the Supreme Court ruling that fixed attorney’s fees violated a citizen’s right to proper representation.

Prior to this ruling, the issue has been brought up in as many as 18 lower court cases.

The original schedule that was passed in 2009, stated that attorneys representing injured workers could be paid no more than “20 percent of the first $5,000 of the amount of the benefits secured, 15 percent of the next $5,000 of the amount of the benefits secured, 10 percent of the remaining amount of the benefits secured to be provided during the first 10 years after the date the claim is filed, and 5 percent of the benefits secured after 10 years.

In some cases, this amounted to the attorney being paid less than minimum wage for their time and effort.

Specifically, in the Castellanos case, the attorney’s fee turned out to be $1.53 per hour for 107.2 hours. This is 5 times lower than the minimum pay allowed for an hour of work in Florida.

The Supreme Court said that while the laws are designed so that Florida’s workers’ compensation system delivers benefits to injured workers in an efficient and fast manner, but “in reality the system has become increasingly complex to the detriment of the claimant, who depends on the assistance of a competent attorney to navigate the thicket.”

It’s hard to find a competent person of any profession that is willing to work for $1.53 an hour.

Still, some of Florida’s business trade groups say that workers’ comp lawyers just want to be paid more than they should.

In reality, it is much easier to deny an injured person’s claim, if they cannot find an attorney to represent them. If no attorney will work for a dollar and a half an hour, the claimant is left to face the multibillion-dollar insurance companies, and their teams of lawyers, on their own.

Ten-percent of the new increase is blamed on the Castellanos ruling. When in reality, allowing attorneys to charge a reasonable fee does not really cost the insurance companies anything. Where it will cost them, is in not getting away with denying merited claims because there nobody there to defend the injured worker.

Westphal v. City of St. Petersburg

This past summer, the Florida Supreme Court found another law pushed by the insurance companies to be unconstitutional. In this case, Westphal v. City of St. Petersburg, the high court ruled that the state’s statutory 104-week cap on temporary disability benefits was unconstitutional.

Before this ruling, insurance companies could, by law, end any benefits after 2 years, whether the injured party was healed or not. Workers who were completely disabled and incapable of working, but who had not yet reached maximum medical improvement, were completely cutoff after this time period.

The 5-2 ruling was in favor of a plaintiff named Bradley Westphal in his case against the City of St. Petersburg. Bradley suffered a severe back injury while moving furniture during a firefight. Bradley worked for the St. Petersburg Fire Department.

Westphal had exhausted his temporary disability benefits but was refused permanent benefits because his doctors could not yet determine his long-term prognosis. This left him without any benefits, short or long-term, even though his doctors said that he should not return to work.

The decision restored a previous cap that now allows injured workers to be paid for their disability up to 5 years.

The idea of Florida’s workers’ comp system is to prevent the need for litigation (much like Florida’s PIP laws) by giving injured workers a guaranteed way to pay for any injuries. But when insurance companies lobby for laws that restrict much-needed benefits in order to protect or increase profits, it defeats the entire point.

Justice Barbara Pariente stated that the statute is unconstitutional because it serves “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…creating a system of redress that no longer functions as a reasonable alternative to tort litigation.”

If a person is disabled—and the insurance that was supposed to protect them quits paying long before they are healed—they really have no choice but to sue. The Courts addressing of this flawed law will hopefully mend some of this controversy.

2.2% of the increase is blamed on this case. The remaining few percent are blamed on a change to the Florida workers’ comp manual.

What does this really mean?

The simple fact is, everyone is trying to protect his or her own wallet. And understandably so. Workers want to know that they will be compensated if they a suffer head injury while working for their employer. Attorneys want to know that they will be paid a reasonable fee for their hard-worked hours and years of academic and professional knowledge. And insurance companies want to make as much money as possible; we all do. But the problem is that these rate increases hurt small businesses, and the old laws hurt injured workers. The insurance companies never suffer.

These two rulings do not prove that attorneys are greedy, but instead that Florida’s workers’ comp system was flawed. The overturning of these two laws—allowing attorneys to charge a reasonable rate and allowing disabled people to collect until they are healed—is a step in the right direction.

OIR has claimed that if cases brought against insurance companies continue to increase, which has been the case since the Supreme Court’s rulings, then there could be a more substantial increase in workers’ compensation costs in the near future.

But claims are not increasing in the area of workers’ comp for any malicious reason; though they would have you believe this. Claims are increasing because the laws now allow injured workers to fight on a more even playing field. In the past, they could deny or sever benefits all they wanted and no one could really stop them. But now, injured workers and their attorneys have a fairer shot at getting the compensation injured victims deserve.

Of course, nobody is happy that workers’ comp rates will increase by nearly 15%. If you’re a small business owner, you probably didn’t budget for this huge increase. And when the local economy is hit, we all feel it. But let’s not pretend as if this is an issue of attorney greed. This is simply an issue of unfair laws being made right, which will be inconvenient for the companies who lobbied to tilt the laws in the first place.

Dolman Law Group

Dolman Law is a personal injury firm in the New Port Richey, Florida area. One of our goals is, of course, to make a living. But we want to do that by helping those who cannot fully help themselves. Insurance companies have entire teams of lawyers who they can afford to pay whatever it takes to protect their shareholders’ profits. But when a hard-working citizen is injured, it’s just them against a giant. Our firm seeks to make the unfortunate situation fairer. If you or a loved one has been injured on the job, contact our firm for a free consultation at (727) 853-6275. We look forward to helping you.

Dolman Law Group
5435 Main Street
New Port Richey, FL 34652
(727) 853-6275