Florida businesses will see a third consecutive cut in annual workers compensation rates in 2020 – a 7.5 percent slash that exceeds a national insurance bureau’s recommended decrease by more than 2 percent.
Florida Insurance Commissioner David Altmaier issued an order cutting workers’ compensation insurance rates by a 7.5 percent beginning Jan. 1.
The National Council on Compensation Insurance (NCCI) – which provides rating metrics on behalf of insurance companies – suggested in August that the state reduce workers’ compensation rates by 5.4 percent.
In its analysis, the NCCI cited “technology, safer workplaces, improved risk management and a long-term shift from manufacturing to service sectors” as reasons for its proposed 5.4 percent rate decrease.
“NCCI has no expectation that this trend will change course,” it said.
In his order Thursday, Altmaier cited October testimony by an NCCI representative in identifying a sustained decline in workers’ compensation claims as justification for adding 2.1 percent to the 5.4 percent recommended reduction.
“From 2010 to 2017, the frequency of workplace injuries declined from 22.4 per million of wage-adjusted premium in 2010 to 16.9 per million of wage-adjusted premium in 2017,” Altmaier wrote. “According to NCCI, claim frequency decline for workers’ compensation is not unique to Florida for numerous years frequency has been declining countrywide similar to Florida.”
He said NCCI maintains “claim frequency decline is due, in part, to safer workplaces, enhanced efficiencies in the workplace, increased use of automation, and innovative technologies” and repeated NCCI’s “no expectation that this trend will change course” projection, noting “that decline is expected to continue in the future.”
Following a 14.5 percent increase in 2016, Florida’s workers’ comp rates have gone down by a combined 13.8 percent – by 9.5 percent, plus another 1.8 percent as a result of the Federal Tax Cuts and Jobs Act (TCJA), in 2018, and by 13.4 percent beginning January 2019.
The 7.5 cut means rates will have dipped by nearly a third since their 2016 peak.
While three years of consecutive declines is good news for employers, the state’s Office of Insurance Regulation (OIR), lawmakers and businesses remain concerned with the potential – and some say pending – fallout from the Florida Supreme Court’s Castellanos v. Next Door Co. 2016 ruling.
In that case, a lawyer awarded the equivalent of $1.53 an hour for more than 107 hours pursuing a claim challenged a state law capping attorney fees in workers’ comp cases.
The court determined the state law violated constitutional due-process rights because it didn’t allow for appealing “reasonableness” of fee awards.
In the wake of the ruling, the OIR approved a 14.5 percent rate increase in December 2016, prompting business and insurance groups to lobby lawmakers to reinstate fee restrictions.
Despite rate decreases in 2018, 2019 and 2020, NCCI stated in August that “the full effects of that [court] decision will still not materialize for several years as workers compensation insurance is a 'long-tai' line that often involves a long period of time for claims to be resolved.”
Reinstating workers’ compensation fee caps is a priority for the Florida Chamber of Commerce, Associated Industries of Florida and the National Federation of Independent Business.
Two bills seeking to do that were proposed during the 2019 session but failed to make it out of committee.
House Bill 1399, sponsored by Rep. Cord Byrd, R-Neptune Beach, proposed reducing workers’ compensation rates 5 percent by tying payments to rates established for Medicare.
HB 1399 would also have allowed a judge to dismiss a petition if a claimant fails to make “a good faith effort” to resolve a dispute before seeking litigation.
In addition, HB 1399 clarified caps on temporary total disability benefits for the first time since another 2016 Florida Supreme Court decision, Westphal v. City of St. Petersburg, found the state’s 104-week cap on temporary total disability benefits was unconstitutional.
HB 1399 proposed placing a 260-week cap on total temporary benefits, but allow an additional 26 weeks if an injured worker has not reached “maximum medical improvement” by the end of those five years.
Senate Bill 1636, sponsored by Sen. Keith Perry, R-Gainesville, was similar to HB 1399 but did not provide a 26-week extension and capped attorney fees at $150 an hour and limited overall payment to $1,500.
As of Friday, there were at least 17 pre-filed 2020 bills with some reference to workers’ compensation, but none propose the measures included in 2019’s HB 1399 and SB 1636.
The bills include companion Senate-House legislation seeking to reorganize components of the Florida Insurance Guaranty Association and a bill to extend workers’ comp benefits to correctional officers being treated for post-traumatic stress disorder.
HB 415, pre-filed on Oct. 21 by Rep. Amy Mercado, D-Orlando, would define post-traumatic stress disorder as an “occupational disease compensable by workers' compensation benefits” for the state’s 16,000 corrections officers.
John Haughey is the Florida contributor to The Center Square.