Rising workers compensation rates could strain Florida businesses—especially in hands on industries. And the increase will likely test loyalties in the state Legislature.
Two Florida Supreme Court decisions earlier this year are prompting a 14.5 percent increase in workers comp insurance rates. One case, Westphal v. St. Petersburg, has to do with the cut off for disability payments. The other, Castellanos v. Next Door Company, overturns statutory limits on attorney’s fees.
Florida’s Insurance Commissioner David Altmaier explains, “The requested rate increases that NCCI submitted to us related to those two were a 15 percent rate increase from the Castellanos decision and a 2.2 percent increase for the Westphal decision.”
NCCI is the National Council on Compensation Insurance—a group responsible for filing rate requests on behalf of the industry.
Altmaier says his office approved the Westphal portion of the filing.
“The Castellanos decision, however,” he says, “we ratchetted that back several percentage points and approved 10.1 percent.”
The remaining increase comes from changes in how health care providers are reimbursed.
New rates are set to take effect December first, but the issue is far from settled.
“It’s too significant of an issue,” Mark Delegal says.
He a lobbyist at the firm Holland Knight, and represents a number of business interests including the Florida Chamber.
“Our state has been the beneficiary of 13 years of reduced workers compensation losses and rates,” Delegal says. “And that’s been very good and that’s helped us position ourselves as a state as an economic leader.”
Delegal thinks the approved rate increase—large as it is—can’t keep pace with attorney’s fees, and he says some of his clients will be squaring off with the state’s trial lawyers in the next legislative session. Delegal believes minor changes could put the lid back on attorney’s fees which would help keep premiums in check, and he thinks the size of the rate hike might help focus lawmakers’ attention on the issue.
“So when you get a smaller number,” he says, “four would’ve been worse than 14—but a smaller number, it would be less pressure on the Legislature to take action.”
But at the August workers comp rate hearing Mark Touby rejected the notion attorney’s fees are out of control in the first place. He represented Castellanos before the Supreme Court, and in that case, the state formula for attorney’s fees worked out to about $1.50 an hour. Touby says the problem isn’t lawyers logging unnecessary hours—it’s insurers denying rightful claims.
“Now they have to pay an attorney fee. One that is adequate one that is constitutional, why? Because that’s what fair,” he says. “That’s our constitution. That’s our system. That’s what keeps everything working properly.”
For Christina Wolcott it’s a high-stakes debate that hasn’t hit home yet. She’s the office manager for Stubbs Roofing, and business has been brisk since the company opened its doors in 2013. But roofers rack up some of the highest workers comp premiums already, and an increase will only make her job more difficult.
“It kind of puts a bad taste in the business owners’ mouths, because if we work really hard to keep everything running, and then we have this additional costs that just keep getting thrown at us it’s very aggravating,” she says.
Wolcott says at the end of the day consumers will bear the cost. Her annual premiums are already in the tens of thousands, and she says raising rates higher could be bad for workers, too.
The ones she hasn’t hired yet.
“You know it’s just a—that becomes a very large business decision to make if I’m going to add on employees,” she says. “[It’s] not so easy as just OK, we need more people lets hire them on, since we’re going to be paying thousands of dollars on that person per year.”
