The Committee on Banking and Insurance, chaired by Senator Anitere Flores (R-Miami, Monroe), today passed Senate Bill 1582, Workers’ Compensation Insurance, by Senator Rob Bradley (R-Fleming Island). The legislation addresses recent legal challenges and outlines several reforms needed to bring stability to the workers’ compensation rates paid by Florida businesses.
“For too long, laws concerning workers’ compensation have been caught in a tug-of-war between the Legislature and the Judiciary,” said Senate President Joe Negron (R-Stuart). “This cycle of protracted litigation creates an environment of instability for businesses and uncertainty for workers. Senator Bradley’s legislation is an important step towards a more stable rating system that provides fairness to both businesses and injured workers.
“Significant increases in the cost of workers’ compensation insurance make it difficult for businesses to develop long-term financial plans, which can lead to delays to the job creation and capital investment that fuels Florida’s economy,” said Senator Bradley. “This legislation concentrates efforts on stabilizing rates and improving competition between insurers, which is important for Florida businesses and the workers they employ.”
SB 1582 requires insurance carriers to authorize or decline requests for authorization from health care providers within three business days. The request is deemed authorized if the insurance carrier fails to respond. The bill also requires a claimant to state with specificity the amount of each requested benefit at issue in a petition, and requires judges of compensation claims to dismiss petitions that do not contain such specificity.
The bill amends statutes relating to temporary total disability benefits and temporary partial disability benefits from 104 weeks to 260 weeks, consistent with the Florida Supreme Court decision in Westphal v. City of St. Petersburg. In keeping with the First District Court decision in Miles v. City of Clearwater, the bill deletes the prohibition against attorneys and others to receive a fee or other consideration unless approved by a Judge of Compensation Claims (JCC).
The legislation converts Florida to a loss cost state, similar to 38 other states that allow a rating or advisory organization to file the rates that are projected to cover losses. Under this system, insurers are required to file separately the remaining components of the rates needed to cover expenses and profit, known as loss costs multipliers, encouraging competition among insurers for the remaining components.
Attorney fees continue to be a major driver for rate increases. An effort to rein in those fees by the Legislature was overturned by the Florida Supreme Court in Castellanos v. Next Door Company, a 5-2 ruling last year. Therefore, the legislation retains the statutory fee schedule for setting claimant attorney’s fees but directs the JCC to consider factors in each case and allows the JCC to decrease or increase the attorney fee subject to a maximum hourly rate of $250. The legislation also provides that an insurer’s defense and cost containment expenses are excessive if they exceed 15 percent of the insurer’s incurred losses for the average of the three most recent calendar years. Each insurer must return amounts over 15 percent DCCE to employers via either a cash refund or credit toward the future purchase of insurance.
Workers’ Compensation Rates
Senator Bradley Introduces Legislation to Stabilize Workers' Compensation Rates
Senator Rob Bradley (R-Fleming Island) today filed Senate Bill 1582, Workers’ Compensation Insurance. The legislation addresses a number of recent legal challenges and outlines reforms needed to bring stability to the workers’ compensation rates paid by Florida businesses.
“While I believe comprehensive legislation to overhaul the entire workers’ compensation system and reduce rates is our ultimate goal, the current cycle of enacting laws that impact businesses only to have those changes overturned by the courts creates instability for businesses that must be avoided,” said Senator Bradley. “My goal in filing this bill is to concentrate efforts on stabilizing rates and introducing more competition between insurers. The bill also incorporates recent court decisions to avoid costly and protracted litigation.”
The legislation filed today requires insurance carriers to authorize or decline requests for authorization from health care providers within three business days. The request is deemed authorized if the insurance carrier fails to respond. The bill also requires a claimant to state with specificity the amount of each requested benefit at issue in a petition, and requires judges of compensation claims to dismiss petitions that do not contain such specificity.
The bill amends statutes relating to temporary total disability benefits and temporary partial disability benefits from 104 weeks to 260 weeks, consistent with the Florida Supreme Court decision in Westphal v. City of St. Petersburg. In keeping with the Florida Supreme Court decision in Miles v. City of Clearwater, the bill deletes the prohibition against attorneys and others to receive a fee or other consideration unless approved by a Judge of Compensation Claims (JCC).
“Making meaningful comprehensive changes that can withstand judicial scrutiny should be the goal,” continued Senator Bradley. “This legislation incorporates significant provisions that will stabilize rates and bring Florida in line with 38 other states that encourage more competition among insurers and limit the amount of the insurer’s defense fees that can be passed on to businesses, while not subjecting businesses to a tug-of-war between the Legislature and the Judiciary.”
The legislation converts Florida to a loss cost state, similar to 38 other states that allow a rating or advisory organization to file the rates that are projected to cover losses. Under this system, insurers are required to file separately the remaining components of the rates needed to cover expenses and profit, known as loss costs multipliers, encouraging competition among insurers for the remaining components.
Attorney fees continue to be a major driver for rate increases and an effort to rein in those fees by the Legislature was overturned by the Florida Supreme Court in a 5-2 ruling last year. Therefore, the legislation retains the statutory fee schedule for setting claimant attorney’s fees but directs the JCC to consider factors in each case and allows the JCC to decrease or increase the attorney fee subject to a maximum hourly rate of $250. The legislation also provides that an insurer’s defense and cost containment expenses are excessive if they exceed 15 percent of the insurer’s incurred losses for the average of the three most recent calendar years. Each insurer must return amounts over 15 percent DCCE to employers via either a cash refund or credit toward the future purchase of insurance.
