Florida: Insurance commissioner to increase workers' comp rates due to ruling

Workers' compensation rates in Florida will increase an average of 6.4 percent in April.

Insurance Commissioner Kevin McCarty recently announced the rate hike, which was slightly lower than the 8.9 percent rate increase recommended by the National Council on Compensation Insurance in November.

NCCI recommended an 18.6 percent rate increase over two years based on the Florida Supreme Court's ruling in October in Murray v. Mariner Health Inc. In that case, the court eliminated the statutory caps on attorney's fees that were imposed under the 2003 legislative reforms and provided for a return to the "reasonable fee" standard for attorneys handling workers' comp claims. At the time, McCarty predicted that the ruling would stall the recent pattern of rate decreases.

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"It's very early to know for sure what the full impact of the Supreme Court's decision on workers' compensation rates will be," he said. "But, if history holds true, we will see these rates start to go up as more attorneys get back involved -- likely extending the litigation process -- with workers' compensation cases."

"I am cautiously optimistic that business leaders and the plaintiff attorneys will get together and propose an amendment to our law that will help to ensure that workers' compensation insurance remains affordable for our employers, while also protecting injured workers by ensuring their access to courts, medical care and other necessary benefits," he added.

Increase comes after several rate cuts. Before the legislative reforms, Florida consistently ranked in the top two states with the highest workers' comp rates. However, post-reform, the state dropped out of the top 10 rankings. The reform legislation instituted provisions for enhanced fraud compliance and revised permanent and temporary disability definitions. It also set new parameters for attorney and physician compensation and improved dispute resolution procedures.

In October, McCarty approved an 18.6 percent reduction in rates, which went into effect Jan. 1. It was the sixth consecutive drop in workers' comp rates since the passage of the legislative reforms. With that change, McCarty said the cumulative statewide average rate had decreased more than 60 percent since 2003. This represented the largest consecutive cumulative decrease on record in Florida workers' comp rates, dating back to 1965.

McCarty said the approved increase in rates will add about $172 million in insurance costs for Florida employers. However, combined with the 18.6 percent decrease that took effect in January, he said the net effect still is a savings of $438 million.

February 19, 2009

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