As a result of three recent legal issues, Florida businesses will be seeing an average Worker’s Compensation rate increase of 19.6% as of October 1, 2016. The increase will apply to all policies in effect as of October 1st and will be on a pro-rata basis for the remainder of the policy’s term.
Two recent Florida Supreme Court decisions are to blame for the major increases. In the first case, Casetellanos vs. Next Door Company, the Court decided on April 28, 2016, that the mandatory attorney fee schedule was unconstitutional as a violation of due process. In the case Marvin Castellanos was injured during his employment at Next Door Company. Through the assistance of his attorney, Marvin was able to win in court against his employer and their insurance company. However due to the current attorney fee schedule, Mr. Castellano’s attorney only received $1.53 per hour for 107.2 hours of work. Due to the results of this ruling the National Council for Compensation Insurance (NCCI), the entity responsible for setting Work Comp premiums and setting expected loss rates, is requesting a 15% increase.
The next Florida Supreme Court case involves our great city of St. Pete. In Westphal vs. City of St. Petersburg the Court decided that it was unconstitutional to cut off disability benefits after 104 weeks to a worker who is totally disabled and incapable of working, but who has not reached max medical improvement. In the case, Bradley Westphal injured his legs in 2009 while working as a firefighter and paramedic for the city. Mr. Westphal had several back surgeries and exhausted the 104 weeks of temporary benefits. He was refused permanent benefits because the physicians could not determine a long-term recovery. In the ruling delivered on June 9, 2016, the Court extended benefits out to 260 weeks. As a result of the ruling, NCCI has proposed a 2.2% average rate increase.
Finally, NCCI has called for a 1.8% increase due to the Florida Workers’ Compensation Health Care Provider Reimbursement Manual updates that were effective July 1, 2016. These increases are due to the ever increasing costs of medical care.
Although some changes needed to be made to the Workers’ Compensation system, we believe that these changes will cause significant turmoil to both small and large businesses throughout the state of Florida.
We urge you to contact Brian Ford at BFord@InsuranceResourcesLLC.com or 727-345-0242 if you have any questions about your business’ potential increases.