The cost of Workers’ Compensation is based upon three primary factors:
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.
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.
Many 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.
It 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.
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:
The proposed rate level change for each industry is listed below.
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.
