Florida lawyers win, employers lose

November 17th, 2008 by Julie Ferguson

Florida employers have seen about a 60% rate decrease since the 2003 workers compensation reform but it looks like all that is about to change. NCCI has just filed for an 8.9% Florida rate increase in the wake of a recent Florida Supreme Court ruling. This is an enormous change, particularly in light of the 18.9 percent decrease that had been proposed prior to the ruling.
Why such a giant leap? In Murray v. Mariners Health/ACE USA, the court struck down a cap on attorney fees, which had been a hallmark in Florida’s 2003 workers compensation reforms. Hourly legal fees were eliminated and replaced with contingency fees capped at 20 percent of the award.
An article in Insurance Journal at the time of the ruling tracks some of the reaction by employer and industry groups. Unsurprisingly, this ruling is wildly unpopular with those groups. According to Cecil Pearce of the American Insurers Association:

“A key driver of claim costs prior to the reforms was hourly attorney fees, which made the cost of litigated claims 40 percent higher in Florida than in any other state because of the increased litigation. The 2003 reforms linked attorney fees to the value of benefits secured through a fee percentage schedule, eliminating the ability of claimant attorneys to bill by the hour. With that law now overturned, it is expected that an increase in workers’ compensation premiums will be inevitable.”

A 2001 benchmark study of Florida Workers’ Compensation Claim Costs conducted by the Workers Compensation Research Institute (WCRI) noted that Florida was among the most litigious of the eight large states studied. According to Richard A. Victor, executive director of WCRI:

“The involvement of defense attorneys in workers’ compensation claims – an indicator of litigiousness – is highest in Florida and growing … About 30 percent of claims with more than seven days of lost time involved defense attorneys in Florida, a nine percentage point increase for claims with 24 months’ experience since 1994. By contrast, defense attorneys are involved in less than 8 percent of claims in Texas and Wisconsin.”

The study revealed that defense attorney expenses were also the highest in Florida at more than $2,600 per claim – three times higher than Connecticut, the study state with the lowest expenses.
A Florida Insurance Council Backgrounder on 2003 Comp Reforms noted that today, “The percentage of workers’ comp cases with attorney involvement remains higher in Florida than the national average – 20 percent in Florida compared to about 16 percent nationally. The percentage of cases where the injured employee represents him or herself is the same or less than before the 2003 reforms.”

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