Florida: Comp reforms did little to reduce attorney involvement, study finds
The Workers Compensation Research Institute, a nonprofit policy research organization in Cambridge, Mass., released the study which examined the impact of the reforms. Among the legislative changes, the reforms limited the fees paid to attorneys to a contingent fee -- a percentage of actual benefits that injured workers receive -- in cases involving indemnity payments. Prior to the reforms, attorneys could receive a contingency fee, an hourly fee, or both at the discretion of the judge.
Researchers said that, in concept, the provision could have reduced incentives for attorneys to take cases, especially those where the contingency fee was small. However, the findings of the study indicated that a significant proportion of Florida's injured workers were able to hire attorneys to represent them in workers' comp cases after the reforms, even in many cases that generated small attorney's fees. Only slightly fewer workers retained attorneys after the reforms than prior to their passage, WCRI said.
Legal, legislative debate.
The attorney's fees reforms have been a great source of debate in the state in recent months. In October 2008, the Florida Supreme Court eliminated the statutory caps on attorney's fees in Murray v. Mariner Health and Ace USA. In that case, the petitioners argued that the 2003 reforms made it very difficult for workers to hire attorneys, especially in cases that would generate small attorney's fees. They argued that the reforms deprived injured workers of their right to access the courts, due process, and equal protection of the law.
Earlier this year, Insurance Commissioner Kevin McCarty recommended a 6.4 percent workers' comp rate increase based on the anticipated impact of the ruling. However, lawmakers pushed through legislation to reinstate the caps. Shortly after the legislation was signed into law in May, McCarty rolled back the increase.
Highlights of the study.
Researchers analyzed more than 47,000 cases where some income benefits were paid to the injured worker. The study found that after the reforms -- cases arising between October 2003 and September 2004 -- 38 percent of workers with indemnity claims had attorneys, compared with 43 percent before the reforms. When the study controlled for changes in the characteristics of cases, it found that the proportion of workers who had attorneys after reforms was 3.6 percent lower than similar cases prior to the reforms. That means that one in 12 workers who had an attorney prior to the reforms would not retain one after the reforms, researchers said.
"This reduction could be due to the limit on hourly fees for workers' attorneys," the study noted. "However, it may be due to other reform provisions that changed benefit levels, hence the payments to both workers and their attorneys."
The study also reviewed nearly 9,300 cases with permanent partial disability and/or lump-sum payments under $2,500, yielding attorney's fees of less than $500. Here the study found that a substantial proportion of workers were able to hire attorneys after the reforms. For cases arising between October 2003 and 2004, 34 percent of workers with indemnity claims and PPD and/or lump-sum payments of under $2,500 had attorneys -- versus 37 percent of workers prior to the reforms. Even in cases where the claims payments were under $1,000, 21 percent of workers had attorneys after the reforms. When the study controlled for changes in the characteristics of these cases, researchers said the evidence was mixed but supported at most small impacts of the reform on the typical worker's ability to hire an attorney.
Analyzing cases with PPD and/or lump-sum payments under $1,000 and under $2,500, the study found a reduction of 1 percentage point in attorney involvement. Researchers said this evidence suggested no decline or a small decline in the ability of workers to retain an attorney. However, when analyzing cases under $1,500 and under $2,000, the study reported a small, but statistically significant effect of the reforms on attorney involvement -- with retention of attorneys lower by 2.5 percent to 3.4 percent.
July 6, 2009
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