Workers' Comp Increase Takes Effect TODAY--December 1

Posted on: December 01, 2016

Today, December 1, workers' compensation rates will increase by 14.5 percent for all new and renewal policies.  Prior to the Thanksgiving holiday, a Leon Circuit Court judge voided the 14.5 percent rate increase on the grounds that the National Council on Compensation Insurance and the Office of Insurance Regulation did not follow the requirements of the "Sunshine Law."  This decision has since been appealed, allowing the rate increase to take effect today, as planned.

Background:

After sharing with the business community for months that an increase could happen, it is now official-The Florida Office of Insurance Regulation (OIR) has given contingent approval for an overall statewide workers' compensation rate increase of 14.5% to take effect December 1.

Earlier this summer, the National Council on Compensation Insurance (NCCI) filed for a 19.6% increase following the Florida Supreme Court's rulings on two cases: Castellanos v. Next Door Company and Bradley Westphal v. City of Petersburg.

The 28 April decision on Castellanos v. Next Door Company abolished Florida's attorney fee structure which was originally established in 2003. The 2003 reforms were put in place to help stabilize out-of-control workers' comp rates which at the time were the highest in the country, and during the last 13 years have helped lower rates nearly 60 percent.

The 9 June ruling on Bradley Westphal v. City of Petersburg extends the limitation on temporary total disability benefits available to an injured worker from two to five years before permanent disability benefits may be pursued. This change is expected to increase the value of open indemnity claims involving substantial injuries, as well as re-open claims that were previously closed.

OIR has also stated that the increase would be effective on December 1 for new and renewal business, with no change in rates for current in-force policies, despite NCCI's recommendation that it be applied on a pro-rata basis for the remainder of each policy term.  According to the press release from the OIR, an overall combined average statewide rate increase of 14.5%, the individual rate impacts will include:

  • A 10.1% statewide average rate increase for the April 28th Florida Supreme Court decision in the case of Castellanos v. Next Door Company, which  found the mandatory attorney fee schedule in Section 440.34, Florida Statutes, unconstitutional as a violation of due process under both the Florida and United States Constitutions.
  • A 2.2% statewide average rate increase for the June 9th Florida Supreme Court decision in the case of Westphal v. City of St. Petersburg, in which the Florida Supreme Court found the 104-week statutory limitation on temporary total disability benefits in Section 440.15(2)(a), Florida Statutes, unconstitutional because it causes a statutory gap in benefits in violation of an injured worker's constitutional right of access to courts. The Supreme Court reinstated the 260-week limitation in effect prior to the 1994 law change.
  • A 1.8% statewide average rate increase related to updates within the Florida Workers' Compensation HCPR Manual per Senate Bill 1402. The manual became effective on July 1, 2016.

A legislative solution for both court cases is needed to help keep rates affordable for job creators.  The CEP is monitoring this issue and supporting the efforts of those organizations and individuals in the public and private sectors which are working to halt any further increases in workers' compensation rates.

If you would like to join the CEP's advocacy network and receive updates on workers' compensation and other key issues impacting your business, please email Tamara Fleischhaker, VP of Business Advocacy & Partner Services:  Tamara@OcalaCEP.com or call the CEP at 352.629.8051.

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