NCCI: Florida ruling on temporary total disability may affect comp rates
A Florida appeals court has agreed to rehear a controversial case involving the time limit of temporary total disability benefits. Workers' comp insurers are hoping the court will alter its decision that could cost the state's workers' comp system upwards of $65 million, according to NCCI.
The Florida-based rate making and research organization analyzed the direct and potential indirect costs of the decision to determine its estimate. Depending on the outcome of the rehearing, NCCI will determine whether a proposal to adjust the state's workers' comp rates is warranted.
The case was Bradley Westphal v. City of St. Petersburg (See
case summary under the Regulatory/Legal
Updates). The Florida 1st District Court of Appeal determined that the 104-week maximum duration of TTD benefits defined by Florida statutes is unconstitutional, which reestablished the previous 260-week limit.
Westphal sustained severe injuries and received TTD benefits for the allowed 104 weeks. However, since he had not reached maximum medical improvement at the time, he was denied permanent total disability benefits and was ineligible for benefits even though he was incapable of working. The DCA said the "statutory gap" created violated his constitutional right to receive justice without denial or delay.
NCCI analyzed the potential impact of the case, looking specifically at temporary disability claims, permanent disability claims, medical benefits, and direct and indirect costs. The organization said studies have shown indirect costs could be 50 percent or more of the direct impact.
The analysis concluded:
- Temporary disability claims. The potential impact on these would be at least $30 million since the TTD benefit duration increased from 104 weeks to 260 weeks, NCCI said. Included are estimated indirect costs. Changes in claimant behavior could drive indirect cost increases if, for example, some injured workers were to delay returning to work since the TTD benefits would not be terminated after 104 weeks.
- Permanent disability claims. While the decision likely would have a minimal impact on permanent total disability claim costs, it could impact the healing period for permanent impairment benefit claims. NCCI estimates that could increase by $25 million.
- Medical benefits. While there would be no estimated direct impact on medical costs, NCCI said there is a potential for an indirect impact as a result of the decision. Claimants may alter their behavior and attempt to delay reaching MMI in order to continue receiving TTD benefits. The costs for medical care prior to a claimant's receiving MMI are generally higher than they are once MMI is reached. That could add an estimated $10 million to system costs.
- Additional considerations. Increased litigation will likely follow the decision, NCCI said, as employers and injured workers seek clarity. "This will result in additional impacts on the workers' comp system ... such as increased administrative costs, higher insurers' loss adjustment expenses, and likely delays in reaching settlements and the determination of awards to claimants." Additionally, NCCI said the court could determine the 260-week limit on TTD benefits is also unconstitutional, which could increase costs further.
Read more at the WorkersComp Forum homepage.
April 29, 2013
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