5 Common Workers Compensation Mistakes that Cost Employers Money

The cost of Workers’ Compensation is based upon three primary factors:

  • The payroll for the business
  • The employee’s job classification
  • The employer’s claims history

The premium (excluding any discounts) for workers’ compensation insurance is calculated as follows:

Payroll (per $100)  x  Classification Rate  x  Experience Modifier  =  Premium

With this in mind, let’s review some of the most common mistakes an employer can make that may affect their Workers’ Compensation rate.

Common Workers Compensation Mistakes [Read more…]

Florida’s Workers’ Compensation System Dealt Another Blow

The Florida Supreme Court just released their ruling on the high profile Westphal v. City of St. Petersburg case. The justices declared that the state’s statutory 104-week cap on Temporary Disability Benefits is unconstitutional.

The Westphal case involved a former City of St. Petersburg firefighter who suffered from a workplace injury that left him with multiple surgery’s and unable to return to work. He had exhausted his Temporary Benefits but was refused Permanent Disability because his long-term recovery could not be determined. So, even though he was not deemed as Permanently Disabled, he was unable to return to work.

The court said that to cut off disability benefits after 104 weeks to a worker who is totally disabled and incapable of working, but who has not yet reached maximum medical improvement is unconstitutional. They opted to revive a previous limitation, increasing the limit to 260 weeks (5 years).

This ruling comes just months after the Castellanos case ruled the statutory limit on attorney fees was unconstitutional. These two decisions are an indicator of major changes in the Florida’s workers’ compensation system. Together, they will completely change the landscape of the system as we know it. We can see the beginning of these effects with the proposed rate increase by NCCI just a few weeks ago.

What Does This Mean for Employers?

Workers' CompensationMany insurers anticipating this ruling have either continued benefits or accepted claimants as permanently totally disabled. In other words, some of the impact may be lessened with current cases that are open. The lengthened temporary benefits will increase claims costs, which in turn will affect workers’ compensation rates and potentially keep claims open for longer periods, affecting experience mods.

We expect to see many changes in the workers’ compensation marketplace in the next few years as rates and insurers react to these cases. It is crucial for employers to have an advisor who is knowledgeable and has a proactive approach to claims.

NCCI Proposes Rate Increases for Florida Workers’ Compensation

 The Case Heard ‘Round the State

As you may remember, back in April, the Florida Supreme Court ruled the case of Castellanos vs. Next Door Company as unconstitutional. This ruling eliminated the statutory caps on claimant attorney fees and allowed a return to hourly fees. Claimant attorneys are now able to earn greater compensation on workers’ compensation claims.

Proposed Rate Increases

As we suspected, NCCI has proposed a rate increase of 15% for the first year. This is what NCCI has estimated the first year’s impact will be from these increased fees and systems costs in Florida.

On May 27, 2016, NCCI submitted its filing to the Office of Insurance Regulation (OIR). It includes components for two law changes:

  • First year impact for Castellanos of 15%
  • Impact of 8% in response to SB 1402 which ratified updates to the Florida Workers’ Compensation Health Care Provider Reimbursement Manual

The combined impact of these two law changes would be 17.1% or $623 million dollars. NCCI proposes that the increased rates be applied to new and renewal policies, effective on or after August 1, 2016. They also propose that the increased rates apply to all policies, on a pro-rata basis, effective August 1, 2016.

If the OIR approves the rate increase of 17.1%, Florida would have the highest workers’ compensation rate in the southeast.

Workers' Compensation Rates Proposed to IncreaseKeep in Mind

The Castellanos decision impacts not only future cases, but past and current cases as well. The proposed rate increase does not take into account the increase in overall system costs. The retroactive nature of this case ruling may cause the costs of current cases to increase, and closed cases to reopen. NCCI is still in the process of estimating this liability and will provide more information at a later date.

At this point, this is only a proposed rate increase.  Once the State responds to NCCI’s proposed increase, W3 will keep you up to date on the impact to your workers’ compensation premium.

Now more than ever, you need an agency partner who is an advocate and stays on top of your workers’ compensation claims!

Florida Supreme Court Rules Limiting Attorney Fees in Workers’ Compensation Cases Unconstitutional

Workers' Compensation The Florida Supreme Court has finally ruled on the landmark case, Marvin Castellanos v. Next Door Company. This case argued that the claimant’s attorney fee schedule from the 2003 Florida Workers’ Compensation reforms was unconstitutional and kept claimants from due process.  The court ruled 4-3 that the attorney fee provision hindered an injured worker’s ability to acquire legal representation.  The entire case ruling can be found here.

What does this mean for employers and carriers?

  • All the attorneys who were sitting on workers’ compensation cases now will be filing with the Judge on Compensation Claims (JCC) for reasonable attorney’s fees. There will be an influx of litigation.
  • Any and all open claims will be affected by this decision. A strategic review of all open claims is a MUST.
  • Employers should not be surprised to see a rate increase. If you remember, the rates dropped over 60% due to the 2003 reforms.  Attorney’s fees attributed to a large portion of the lower rates.

The Florida Supreme Court still has the Bradley Westphal v. City of St. Petersburg case to rule on which has carriers and employers watching for more changes on the horizon. The Westphal case challenges the limit of temporary total benefits paid to claimants who have not reached physical maximum medical improvement, but at 104 weeks are considered to be at statutory maximum medical improvement (MMI).  Claimants are currently entitled to receive 104 weeks of temporary total benefits; then the benefits stop unless the claimant is considered permanently totally disabled (PTD).  There are criteria a claimant must meet to be considered PTD per the Florida Statutes.  Prior to the 2003 reform, if SSD accepted them, they were considered PTD for workers’ comp purposes also.  However, the threshold for PTD is much higher since the reform.

If Westphal were affirmed by the Florida Supreme Court, the number of weeks of temporary total benefits could be extended, but how many weeks is unknown.

For more information about this issue, please contact your Wallace Welch & Willingham agent.

Now more than ever, employers need a proactive and knowledgeable agency who knows about workers’ compensation claims.

120 Day Rule: The Workers’ Compensation Obstacle Course

120 Day Rule: The Workers’ Compensation Obstacle CourseIt seems every time you turn around there is another opinion issued by a Judge of Compensation Claims (JCC) or First District Court of Appeals and unfortunately, it is almost never in favor of the employer/carrier.  Each new opinion brings with it the likeliness of another hurdle or obstacle a workers’ compensation adjuster must deal with.

In May of this year the First District of Appeals rendered an opinion regarding major contributing cause (MCC) and 120 day rule.

The 120-day rule allows a carrier to delay the decision to deny an obligation to pay benefits for 120 days as long as the carrier pays for the requested benefits during the investigation period.

In this particular case the treating physician had attributed the claimant’s medical issues to be 60% pre-existing and 40% work-related.  Consequently, the carrier denied the claim entirely due to the major contributing cause for the need for treatment is over 50% pre-existing and there was never a compensable injury.  Even though the carrier had denied the claim, the claimant requested his one- time free change in physician.  The claimant’s attorney requested the (JCC) to determine if the claimant was entitled to the one time change in physicians even if the claim had been denied or basically asking the JCC to determine if a claimant can receive a one-time change in physician if there is no compensable injury. The JCC ruled in favor of the employer carrier stating the claimant is not entitled to benefits if there is no compensable injury.

However, the First DCA reversed the JCC ruling by stating the carrier did not notify the claimant in writing of the intent to investigate under the 120 day rule.

In the event one of your employees has a claim denied or the adjuster is investigating for possible denial, it is imperative to be sure the adjuster send the employee the 120-day letter to reserve those rights.

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NCCI Proposes 2.2% Rate Decrease in Workers’ Compensation

According to the Florida Office of Insurance Regulation, the National Council on Compensation Insurance (NCCI) has proposed an average Florida workers compensation rate decrease of 2.2 percent. This decrease includes a statewide average decrease of 1.9 percent, a reduction of the fixed cost expense applicable to every workers compensation policy from $200 to $160, and a change to the minimum premiums. The average overall decrease proposed is 2.2 percent and would take effect January 1, 2016. This is the second year in a row that rates have decreased.

Some key observations noted by NCCI include the following:

  • Loss experience shows overall improvement.
  • Indemnity and medical trends have declined, partially due to a decrease in frequency.
  • Loss adjustment expenses have decreased slightly but are still higher than the nationwide average.

The proposed rate level change for each industry is listed below.

Proposed 2016 Workers Compensation Rate Decrease By Industry

The Florida Office of Insurance Regulation “will review the filing to ensure the proposed changes are not excessive, inadequate, or unfairly discriminatory and evaluate its potential effects on the insurance marketplace and employers, who are required by law to carry this insurance on their employees,” the office said in its statement. The public hearing will take place in October. If approved by the State Insurance Office, the new rates would become effective January 1, 2016.

There are many factors that go into your individual workers’ compensation rates. Contact your WWW Representative if you have questions about how these proposed rates will affect your specific business.

Injured Volunteers

When a volunteer gets hurt, what exposure does a nonprofit have?

One of your volunteers is performing work for your agency and sustains an injury.  The injured volunteer receives medical treatment and asks you if you can take care of their expenses.  How should you respond to this request?

The easiest way to handle this situation is with a volunteer accident policy.  This policy will cover medical expenses for volunteers providing services to your organization.  Injured volunteers generally just want their medical bills paid.  In the absence of a volunteer policy, the injured volunteer might bring suit for medical bills along with pain and suffering damages.  This would involve a claim against your general liability and/or your workers’ compensation policy.  These types of claims are generally much more expensive and develop an adversarial relationship with a volunteer who should be an ally.

Workers Compensation or PIP: Which insurance will cover your loss?

It’s a beautiful day and your employee is driving down the road when, all of a sudden, he is struck from behind. Your employee is injured and the police are called. He goes to the hospital and is asked for his insurance. What does he do? Which insurance will cover him in this accident? In the state of Florida, Personal Injury Protection (PIP) no-fault insurance will cover medical treatment on your auto policy. However, since he was injured while working, wouldn’t Workers’ Compensation cover his medical treatment?

The answer is twofold. Yes, Workers’ Compensation will cover your employee injured in the auto accident, but so will his PIP insurance and your business PIP coverage. To which policy do you submit the claim? The injured worker has an option when this is the case. The treatment under both policies would be the same, but filing through Workers’ Compensation, the adjuster will monitor the employee’s treatment more closely and there is a better chance the injury claim will be expedited, helping the injured employee return to their pre-injured state.

When signing a subcontractor agreement, what concerns should I have regarding an indemnification clause or subcontractor agreement?

The scope and liability contained in a subcontractor agreement range widely, from very simple to the complex and punitive. Before signing a subcontractor agreement you should be aware of your responsibilities and liabilities imposed by that contract and whether your company has the means to accept the financial consequences and/or how your insurance will respond.

Definitely understand what risk you accept in the indemnification language. Typically the upstream party will impose an indemnification and hold harmless clause that at least requires you to indemnify them for liabilities where you are at least partially negligent. This may mean an indemnification for only your proportionate responsibility or upwards of their full sole negligence. Imagine your employee removes a safety barrier on a project in order to receive materials at the 3rd floor of a project, and fails to replace the safety barrier. Later an employee for another subcontractor, unaware the barrier has been removed, falls from the side of the building. That injured employee will likely see workers’ compensation and file a lawsuit against the building owner/contractor for negligence. If an indemnification agreement exists between the owners/contractor and you, you can expect the claim to be tendered to you for defense and indemnification. How will your insurance respond?

Your insurance coverage is equally important to the indemnification clause in the subcontractor agreement. If signing a broad (includes sole negligence of the owner) form indemnity agreement, then your insurance coverage should be the broadest available, with sufficient limits, as the indemnification agreement you have signed. This means your policies should include blanket waiver of subrogation for Auto, Work Comp, and General Liability, to prevent you insurance companies from tendering claims against the owner for their negligence that the owner will simply tender back to you under the indemnification agreement. Your policies should also include broad additional insured coverage to provide coverage for ongoing and completed operations (without a limitation of time after construction is completed) and provide coverage on a primary and non-contributory basis. Finally your policy should never include exclusions or restrictions that would place your company at financial risk due to an uncovered loss or an indemnification agreement. Examples of such exclusions/restrictions would be:

1)  Modification of the definition of “insured contract”, which reduces your liability coverage to respond when you are negligent “in whole or in part”. If you have signed an indemnification agreement to respond for the Owners/Contractors “sole negligence”, you may have a gap in coverage.

2)  Exclusion for residential construction. This would eliminate/reduce completed operations coverage for your work.