Florida’s workers’ compensation law has been ruled unconstitutional by four different recent court rulings. The offending provisions are Florida’s statutory attorney fee schedule, the 104-week limit on temporary wage replacement benefits and the prohibition against injured workers paying for their own attorney. These rulings led to the Office of Insurance Regulation (OIR) ordering a 14.5 increase in premiums, effective December 1, 2017.
Reducing premiums has become a top priority for the business community this session, focusing on reducing attorney fees. The Legislature has been working on addressing this problem, trying to balance the need to address the court rulings, protect injured workers, and reducing premiums.
Legislation is trying to strike a balance between constitutionality and reform. The House has approved a workers’ comp bill (HB 7085) and the Senate is close to approving its version (SB 1582). Both bills address the court rulings—they increase the benefit limit from 104 to 260 weeks, allow workers to pay their attorneys and allows attorney fees to deviate from the schedule. But there are significant differences between the two bills.
Senate Bill 1582
This bill would require the Judge of Compensation Claims (JCC) to consider factors in determining if the attorney fees should be increased or decreased, based on a maximum hourly rate of $250. The bill also eliminates the attorney fee cap of $1,500 on medical only claims.
More information would be required to be provided in petitions for benefits filed with the OJCC and requires OJCC to dismiss petitions without the information. This includes the date of “maximum medical improvement” and the date that permanent benefits would begin.
The bill also changes the way rates are set. Florida currently requires rating organizations to file a “full rate,” which includes all costs. The bill would change to a “loss costs” rating system, where the filed rate excludes expenses and profits. Most states use this system. The bill would limit defense and cost containment expenses of insurers to 15 percent of incurred losses.
The bill would also extend benefits to firefighters who have multiple myeloma or non-Hodgkin’s lymphoma.
House Bill 7085
This bill also allows a JCC to deviate from the fee scheduled after considering other factors; however, the maximum is set a $150 per hour. This is only allowed when the statutory fee is considerably different than the customary fee charged by defense attorneys in the community. Workers would be responsible for any additional fees if required by their retainer agreement with their lawyer. The bill also would require the claimant and their attorney to make a good faith effort by to resolve the dispute before filing a petition. It also prohibits the award of carrier paid attorney fees for services provided prior to the filing of a petition for benefits.
Insurers would be allowed to uniformly reduce premiums by up to 5 percent. Like the Senate bill, the House would also limit defense and cost containment expenses of insurers to 15 percent of incurred losses.
The reimbursement of outpatient care would change from a charged base system to reimbursement at 200% (unscheduled care) and 160% (scheduled surgery) of Medicare.
Costs Must Be Reduced
Differences between the House and Senate bills will be difficult to reconcile but the Legislature must get together to get this done. A 14.5 percent workers comp premium increase will be a significant blow to Florida’s businesses and economy. The Legislature is to be commended for tackling this tough issue. The first concern is the legal deficiencies and both bills address those. Costs must be reduced while insuring that injured workers are adequately compensated. Each bill has its advantages, but the House bill looks like one that does a better job of achieving those difficult goals.
For more information on Florida’s workers’ compensation system, and a history of how we got here, see this Florida TaxWatch analysis.
 All workers’ compensation insurers must file rates with the OIR. The law allows an insurer to join a licensed rating organization, which makes such filings on its behalf. All Florida workers’ comp insurers are members of the National Council on Compensation Insurance.
 Full rates include benefits, loss adjustment expenses, commissions, taxes, general administrative expenses, profits, and contingencies.