On October 6th, the Florida Office of Insurance Regulation issued a final order approving a 14.5% increase to its workers’ compensation insurance rates. This increase apples to both new and renewed policies effective in Florida as of December 1st, 2016. On the bright side, this is better news than the proposed increase by the National Council on Compensation Insurance (NCCI) of 19.6%.
The underlying reason for the majority of this increase is due to a Florida Supreme Court ruling this past April (Castellanos v. Next Door Company) which found the mandatory attorney fee schedule per the Florida Statutes being unconstitutional as a violation of due process under both the Florida and United States Constitution. In this case the plaintiff was awarded benefits of $822.70, and the attorney was limited to 20% or $164.54. The attorney sought a fee of $36,817.50. By this ruling, attorneys may bring any small claim that comes their way as their “payday” would not be limited by this previous 20% cap. Should the coming year turn into the Wild West of claims, we may see future workers’ comp rate increases, in essence, to solely compensate the attorneys.
“Putting job creators and injured workers first is the right thing to do to keep Florida’s workers’ compensation system working. Unfortunately, the Florida Supreme Court’s ruling is not about safety or protecting workers. The effect of the Castellanos decision is to raise costs for no other reason than so plaintiff trial lawyers can raise fee.” said Mark Wilson, president and CEO of the Florida Chamber of Commerce.
A smaller portion of the total rate increase is due to a Florida Supreme Court ruling this past June (Westphal v City of St Petersburg) which found the 104 week statutory limitation on temporary total disability benefits per the Florida Statutes also being unconstitutional because it causes a statutory gap in benefits in violation of an injured worker’s constitutional right of access to courts. The new limitation is 260 weeks.
One way to counteract this is to ensure the safety of your workforce and try to eliminate injuries, take advantage of credits such as the Drug Free Workplace and the Safety Credit, and look for carriers and policies that provide dividend plans or rebates. While these may not provide a dollar for dollar offset, it may provide some relief.