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 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.