Monday, January 15, 2018

House Votes to Cap Claimants’ Attorney Fees at $150 an Hour

By J. Todd Foster

On the fourth day of the 2018 legislative session, members of the Florida’s House of Representatives voted along party lines to pass a bill that would cap claimants’ attorney fees at $150 an hour even though a 9.5% rate decrease went into effect 11 days earlier.

The House on Friday voted 74-30 to pass House Bill 7009, with Republicans supporting the measure and Democrats opposed.

Claimants’ attorneys decried the fee cap as a giveaway to insurance companies and said they get paid only when a carrier wrongfully denies benefits.

Business and insurance group, which are clamoring for lower claimants’ attorney fees, said the fast-tracked passage of House Bill 7009 was premature and that the legislation doesn’t go far enough.

The bill now moves to the Senate, where Republicans hold a 23-15 majority over Democrats.  The makeup of the House is 76 Republicans and 40 Democrats.

Sponsoring Rep. Danny Burgess, R-Zephyrhills, who chairs the Insurance & Banking Subcommittee, said he worked two years on a compromise bill that would address the state Supreme Court’s constitutional concerns over Florida’s statutory fee schedule.

The high court ruled 5-2 in Castellanos v. Next Door Co. that the formula was unconstitutional because it did not allow for reasonable fees in complex, labor-intensive cases.

The ruling triggered a 14.5% rate hike by the National Council on Compensation Insurance in 2016 but then a recent 9.5% decrease based on favorable experience for insurers during 2014 and 2015 policy years.

The statutory fee formula, which is still used along with departure fees approved by judges of compensation claims, requires claimants’ attorneys to receive 20% of the first $5,000 in benefits secured, 15% of the next $5,000, 10% of the remaining amount of benefits secured during the first 10 years after a claim is filed, and 5% of the benefits secured after 10 years.

HB 7009 would allow hourly or so-called “departure” fees, up to $150, outside of the statutory fee schedule if the total payment would amount to less than 40%, or greater than 125% of the customary amount a defense attorney would have earned in the same locality.  

The bill also includes other workers’ compensation reforms:

•  Requiring a good-faith effort by claimants and their attorneys to resolve disputes before filing a petition for benefits; eliminating carrier-paid attorney fees for services occurring before the filing of a petition; and attaching attorney fees 45 days, rather than 30 days, following the filing of a petition.

•  Requiring the judge of compensation claims to dismiss a petition for lack of specificity, without prejudice, within 10 days or 20 days, depending upon whether a hearing is required.

•  Eliminating the charge-based reimbursement of health care facility outpatient medical care, and setting reimbursement at 200% of Medicare for unscheduled care and 160% for scheduled surgeries.  If no Medicare fee exists, current reimbursement standards would apply.

A House staff analysis is HB 7009 is here. 

It will be another one to two years before regulators and NCCI can determine the full effect of the April 2016 Castellanos ruling.  But early data from the Office of Judges of Compensation Claims show that claimants’ attorney fees increased 36% in fiscal 2017.  Defense bills still accounted for nearly 58% of the $439,609,031 in total legal fees paid during the period ending June 30.

“There is no need to implement a massive workers’ compensation rewrite in the absence of real post-Castellanos data,” said William W. Large, president of the Florida Justice Reform Institute, a tort reform advocacy group.

“Right now, we don’t have a clear picture of what the post-Castellanos data means, and until such time, the Legislature should not do anything,” Large said in a telephone interview.

Seventeen business and employer organizations on Wednesday wrote House members that HB 7009 did not go far enough to address what they called the major cost driver of claimants’ attorney fees.

The organizations ranged from home builders to local government associations, retailers, food processors and local insurers.

“We respectfully urge the House to stand ready for reform once the full impact of the Castellanos case is realized,” the letter states. “It is our assertion that until post-Castellanos claims data is applied as the basis for workers’ compensation rates, reform efforts may prove premature and ultimately, inadequate.”

One of the signatories, the Florida Chamber of Commerce, praised the sponsoring lawmaker’s efforts. But Carolyn Johnson, the chamber’s director of business, economic development and innovation policy, on Friday said, “We continue to have concerns that the bill doesn’t go far enough and that we should wait until we fully understand the impacts of Castellanos.”

Miami claimants’ attorney Mark Touby, who represented Marvin Castellanos in the groundbreaking court case, issued a statement on behalf of Florida Workers’ Advocates, a group that advocates for injured and disabled workers.

“The Florida House has once again struck out on an important opportunity to bring meaningful rate reform and transparency to the many businesses required to pay workers’compensation insurance in Florida,” Touby said. “After hearing doom-and-gloom warnings from the insurance industry that the sky was falling and rates needed a double-digit increase, those misleading claims have now been proven to be false and we are whiplashed by a nearly double-digit decrease in rates.”

“This rollercoaster ride of rates is indisputably bad for Florida’s businesses, and the legislation approved by the Florida House today turns the workers’ compensation grand bargain into a grand illusion,” he said.

Touby said the bill ultimately would hurt Florida’s businesses by delaying and denying medical care to workers “while lining the pockets of the insurance industry.”

Maitland claimants’ attorney Geoff Bichler called the legislation “foolish” and said it imperils workers’ compensation as a viable exclusive remedy.

“My firm will not accept contingent fee cases with $150 an hour caps, and we will continue to fight for reasonable fees as a penalty against employers and carriers found to have wrongfully denied benefits,” Bichler said.

 Winter Park defense attorney W. Rogers Turner Jr. said the House staff analysis contains no language on why a maximum $150 hourly fee is or isn’t reasonable and that it appears it is “just presented as an amount.”

“My guess is that it would be attacked as arbitrary and unreasonable, among other things,” Turner said.

Logan McFaddin, regional manager for the Property Casualty Insurers Association of America, called HB 7009 a “reasonable compromise.”

During a rigorous round of floor debate Friday, Rep. Joseph Geller, D-Aventura, warned that the

$150 hourly cap likely would be struck down by the high court and that the rate is so low that injured workers would be unable to find representation.

Rep. Sean Shaw, D-Tampa, a claimants’ attorney, decried the blame game on “big bad attorneys.”

“I get all these letters from industry groups about the sky and how it’s already fallen,” Shaw said. “The sky never fell. Rates went down.”

Rep. Rob Rommel, R-Naples, said the 14.5% rate hike effective last year cost his small business more than $4,000 in higher premiums and that he is “terrified” about what’s going to happen to claimants’ attorney fees in the next five years.

HB 7009 sponsor Burgess said the rate increase spiked premiums by more than a half-billion dollars and that the Castellanos decision was singularly responsible for more than $360 million of that.

 “You’ve seen the lightning. You see the lightning before you hear the thunder. You see the flash, the 14.5% increase. The thunder is going to be heard in 2018 and 2019 and any year afterward if we don’t do anything,” said Burgess, a business and contracts lawyer.

HB 7009 now moves to the Senate.

Senate President Joe Negron, R-Stuart, said at a press conference Thursday that several senators had expressed interest in reforming attorney fees. But he said those reforms also should include defense fees.

“I think we should consider a workers’ compensation proposal that’s fair to injured workers and that also provides predictability to employers, and makes sure that legal costs on both sides — claimant’s side and defense side — are reasonable,” Negron said.

“Employers only want to pay attorney fees that are necessary … and want them to be as low as possible,” he said.

https://ww3.workcompcentral.com/news/story/id/0111b65bf07a6f7b12d4b4e540e05de58c42d119 

Reprinted courtesy of WorkCompCentral.

Wednesday, November 15, 2017

Attorney Fee Cap Passes First House Hurdle

By J. Todd Foster

The Florida House Commerce Committee on Tuesday passed a bill that would cap claimants’ attorney fees at $150 an hour.

The 18-8 vote was largely along party lines — with Republicans in favor and Democrats opposed — for Proposed Committee Bill 18-01. The measure will receive a regular bill number before it advances to other committees.

One Democratic lawmaker on the Commerce Committee said that even if the proposed legislation is passed into law, the state Supreme Court will strike it down as unconstitutional because it conflicts with the high court’s Castellanos decision.

Justices ruled in April 2016 in Marvin Castellanos v. Next Door Co. that Florida’s statutory fee schedule was unconstitutional because it did not allow for “reasonable” fees in unique circumstances, such as in complex, labor-intensive cases.

“I think the bottom line is we’re going to see this bill, even if it passes, get struck down because it seems to conflict with the Supreme Court ruling because it has attorney fee caps. Some things in the bill are probably worth doing, but I still think it’s premature,” said Rep. Joseph Geller, D-Aventura.

He added that the cost impacts of the Castellanos decision will not be known until at least a year.

“But the way we passed it today, we might as well have done nothing,” Geller said.

The bill mostly mirrors House Bill 7085 from last session. It would allow judges of compensation claims to award claimants’ attorneys an hourly fee of up to $150 if they qualify for payment outside the statutory fee schedule.

The current formula is for claimants’ attorneys to receive 20% of the first $5,000 in benefits secured, 15% of the next $5,000, 10% of the remaining amount of benefits secured during the first 10 years after a claim is filed, and 5% of the benefits secured after 10 years.

To qualify for a so-called “departure fee” outside the schedule, the statutory fee would have to come out to less than 40%, or greater than 125%, of the customary amount a defense attorney would have earned in the same locality, based on an analysis of local defense attorneys’ hourly rates.

Florida Workers’ Advocates issued a statement saying the proposed bill “would turn the workers’ compensation grand bargain to protect injured workers into a grand illusion.”

The organization argues that any workers’ compensation reforms should include converting Florida into a loss-cost system instead of an administered pricing system that requires all carriers to charge the same rates.

FWA President Mark Touby, a Miami claimants’ attorney who represented Castellanos, said his group “will continue to work to ensure that increased competition, more transparency and other essential components of meaningful workers’ compensation reform are included in any legislation that ultimately passes.”

The National Council on Compensation Insurance recommends full rates to regulators in Florida and three other states — Arizona, Idaho and Iowa. Massachusetts and Wisconsin also have administered pricing for workers’ compensation, but each state has its own rating bureau.

The Castellanos ruling triggered the vast majority of a law-only 14.5% rate hike effective Dec. 1, 2016, based on NCCI projections. But NCCI followed that rate increase with a 9.8% rate decrease that was approved by the Office of Insurance Regulation last week based on favorable carrier experiences for policy years 2014 and 2015, before the Castellanos ruling.

The National Federation of Independent Business said the bill that passed Tuesday was essentially the same bill it supported fewer than six months ago as legislators wound down their 2017 session.

But NFIB/Florida Executive Director Bill Herrle said in an emailed statement Tuesday that the recent rate decreases — 9.5% for the statewide overall rate level and 9.8% for the overall premium level — were unexpected and could dull the business community’s call for a cap on claimants’ attorney fees.

Herrle said that if the bill that passed the Commerce Committee on Tuesday is the final bill, his group would support it, however.

“If it represents just an opening bargaining position, then we’ll probably end up with a bill we cannot support,” he said.

William W. Large, president of the Florida Justice Reform Institute, which champions tort reform, said the Commerce Committee bill doesn’t go far enough and that lawmakers need to wait for post-Castellanos experience data one to two years from now.

“After the Castellanos data comes in, I think the Legislature will find that an approach that makes the employee/claimant have some skin in the game by paying a portion of the fees will be the most prudent approach,” Large said. “But, right now, everyone needs to slow down and take a deep breath and wait until the post-Castellanos actuarial data rolls in.”

In addition to capping claimants’ attorney fees at $150 an hour, the Commerce Committee bill would require attorneys to file at least five days before the pretrial and final hearings statements verifying their hours on the case and specifically allocating the hours worked on each benefit claimed.

The proposed 41-page bill contains many other revisions to Florida’s workers’ compensation system by:

•  Increasing the duration of temporary total disability benefits to 260 weeks from the 104-week cap that the Supreme Court in June 2016 declared unconstitutional in Westphal v. City of St. Petersburg.
•  Authorizing within five business days after receipt of a request a one-time second opinion by a physician of the employee’s choice who is not professionally affiliated with the previously authorized physician. After the second opinion, the employee would be required to write the carrier naming the physician he or she has selected.
•  Making the injured worker responsible for remaining attorney fees if required by a retainer agreement.
•  Allowing carriers to reduce premiums by up to 5% if they disagree with the filings made on their behalf by NCCI.
•  Eliminating charge-based reimbursement of outpatient medical care in favor of reimbursement at 200% of the Medicare rate for unscheduled care and 160% of the Medicare rate for scheduled surgery.
•  Allowing carriers to wait 45 days to pay claimants’ attorneys instead of the current 30.
•  A House staff analysis cites a preliminary estimate by NCCI of the impact of many provisions of the Commerce Committee bill, including that it would trigger “moderate to significant” decreases in overall workers’ compensation costs.

NCCI defines a moderate decrease as between 1% and 3% of system costs, and a significant decrease as 5% and greater.

See Full Article

Reprinted courtesy of WorkCompCentral.

 

Tuesday, October 10, 2017

Claimants’ Attorney Fees Nearly Tripled in Year After Castellanos

By J. Todd Foster 

The amount of hourly fees awarded to claimants’ attorneys nearly tripled in fiscal year 2017 over the prior year, but stakeholders warned Monday that the increase most likely is related to the hoarding of fee petitions until after the Florida Supreme Court released its decision in the Castellanos case.

According to unreleased data that will be published later this year in the annual report by the Office of Judges of Compensation Claims (OJCC), claimants’ attorneys’ hourly fees went from a statewide total of $25.9 million in fiscal 2016 to $75.4 million last year – a 191% increase.

  

David Langham, the OJCC’s deputy chief judge, cautioned that the 2017 numbers could be artificially high and the 2016 data artificially low because attorneys were anticipating the high court’s April 2016 decision in Marvin Castellanos v. Next Door Co.

The high court ruled that Florida’s statutory attorney fee schedule was unconstitutional because it did not allow for reasonable fees in some cases. The decision opened the door for attorneys to submit fee petitions going back to cases filed on and after July 1, 2009.

Langham said it is not yet possible to determine whether or by how much hourly fees were driven by pent-upcases with lawyers awaiting the Supreme Court’s decision, or if Castellanos represents a significant trend.

But he suspects the former.

“Some attorneys have told me they decided to park the fee issue on the side of the road and say, ‘I’m going to wait to see what the Supreme Court does,”‘ Langham said.  “After Castellanos, a lot of those (fee issues) were jump-started.”

Since 1979, claimants’ attorneys have had a statutory fee formula: 20% of the first $5,000 secured for workers, 15% of the next $5,000, 10% of the remainder secured during the first 10 years after the claim was filed, and 5% of the benefits secured after 10 years.

Before 2003 reforms, the formula was the starting point; hourly fees were still allowed depending on case complexity, hours worked and other factors.

After 2003, however, the formula became absolute. So in 2008, the state Supreme Court ruled in Emma Murray v. Mariner Health and Ace USA  that claimants’ attorneys were entitled to reasonable hourly fees outside the formula when employers/carriers wrongfully denied benefits.

The Legislature quickly responded by deleting the word “reasonable” from the fee statute, 440.34, and capping claimants’ attorney fees at the formula. (Defense fees are not capped.)

That 2009 legislative action is what the Florida Supreme overturned in Castellanos. Ever since, the business and insurance communities have pushed lawmakers to enact a new fee system that would pass constitutional muster. Several competing bills aimed toward that end failed to pass earlier this year.

Stakeholders agree that it will be difficult to gain legislative reforms in 2018 because of the recent proposal by the National Council on Compensation Insurance to reduce rates by 9.3%.

“I would be surprised if someone would be able to get traction on the attorney fee issue in the Legislature with a proposed 9.3% decrease,” said Orlando defense attorney Rogers Turner.

He said it was “pretty good bet” that the fiscal 2017 numbers corning out of OJCC on attorney fees are due to delays in fee petitions.

Carolyn Johnson, director of business, economic development and innovation policy at the Florida Chamber of Commerce, said the OJCC numbers appear to confirm a $1 billion unfunded liability projected by NCCI over the retrospective consequences of Castellanos.

She noted that the unfunded liabilities were not even considered in an earlier 14.5% rate increase, only the return to hourly attorney fees.

“I could envision that the fee backlog will be reduced or eliminated, but I think attorney fees will still be higher than they were pre-Castellanos,” Johnson said. “I have this vision in my head of trial lawyers feeding at an open trough, a buffet of increased attorney fees.”

Bill Herrle, executive director of the National Federation of Independent Business Florida, said it’s much too early to say that delayed fee petitions are to blame for increased hourly fees.

“Should Castellanos stand, we believe that it will drive litigation, particularly with smaller cases, which would be the most profitable type of cases for plaintiff attorneys,” Herrle said. “Workers’ compensation has a long tail, so we’ll be waiting a while for any ‘I-told-you-so’s.’ “

To demonstrate the long-tailed nature of comp claims, take the case of David Fickey v. Montgomery Wards, which currently is before the OJCC even though it has an accident date of Feb. 8, 1943.

Seventy-four years ago, Fickey was an automobile sales specialist for Montgomery Wards in Tampa and hurt his back while carrying a battery and then got hit in the head with a jack.

To view his claim, click here, then click on case search at the upper left and key in Case Number 16-021217.

On Aug. 31, 2016, Fickey filed a petition for benefits seeking a walk-in tub, a raised toilet seat, bathroom safety bars and an adjustable bed.

Adjuster Saundra Woodley with Travelers said in a response to Fickey’s petition that she has requested additional information from the worker’s treating physician but heard nothing back. Now the case is being litigated before the OJCC with a final hearing set for Dec. 18.

William W. Large, president of the Florida Justice Reform Institute, an anti-tort group, said Castellanos will permanently increase litigation behavior patterns.

“The 191% increase has to do with behavioral economics. The Castellanos decision removes the cost-containment measures passed during the 2003 session and essentially revives the concept of fee for service,” Large emailed.

“This will alter the behavior of claimants’ attorneys and lead to more claims being filed. The ‘parked’ fee petition phenomena is an example of the Castellanos decision altering claimants’ attorneys’ behavior,” he said.

Tampa claimants’ attorney Mike Winer agreed that many of his peers held back fee claims for years, “hoping that a reasonable fee might be the standard.”

But Winer said any increases in claimants’ attorney fees are the fault of insurers and that such fees are awarded only when benefits are wrongfully denied to injured workers.

Carriers fought many cases for years in the belief they would face only a 10% penalty if they lost, he said.

“Many carriers took very dubious defenses to trial and didn’t pay benefits when they should have, and now they are having to pay for those ill-advised claims decisions,” Winer said.

“I maintain that 2017 marks an artificially high year for fees because of these factors. Carriers are now in a more timely fashion and are not indiscriminately denying benefits that are obviously due with the same frequency as in the past. These factors and the passage of lime will cause the numbers to even out to a more predictable and reasonable level,” he said.

The OJCC data show that the average attorney fee by the hour in fiscal 2016 was $176.48, compared to $247.95 in 2017, a 40.5% increase.

Litigation volumes are measured in Florida with two metrics: “petition for benefits” and “new case.”

The OJCC’s Oct. 5 blog explains the metrics here

OJCC statistics show that:

•   New cases filed increased only 0.54% in fiscal 2017 over the prior year, from 31,165 to 31,334. Since fiscal 2003, the number of new cases filed has dropped 45%.

•   Petitions for benefits increased 4.61% in fiscal 2017 over the prior year, from 67,265 to 70,365.

See Full Article 

Reprinted courtesy of WorkCompCentral.

 

Wednesday, May 10, 2017

Appellate Court Says Ratings Firm and Regulators Did Not Violate Sunshine Law

By J. Todd Foster

An appellate court on Tuesday reversed a trial court ruling that the National Council on Compensation Insurance and Florida regulators violated the state’s Sunshine Law when deliberating last year’s rate hike.

The 1st District Court of Appeal’s panel decision came down to the definition of the word “committee.” The court accepted NCCI’s contention that its actuary, Jay Rosen, singlehandedly arrived at the recommended rate increase.

The increase was allowed to go into effect Dec. 1 pending the appeal. More than three-quarters of the increase was due to a Florida Supreme Court decision in April 2016 that the state’s statutory fee formula for claimants’ attorneys was unconstitutional because it did not allow for reasonable fees in some cases.

Miami claimants’ attorney James Fee, a former defense lawyer and an owner of Druckman & Fee, sued NCCI and OIR, contending they violated Section 627.091 of Florida Statutes. That law provides that whenever a committee of a recognized rating organization with responsibility for workers’ compensation and employer’s liability insurance meets to discuss rates, it must do so in public under the state’s Sunshine Law, Section 286.011 of the Florida Statutes.

“Thus, under the plain and ordinary meaning of the terms ‘committee’ and ‘meet,’ Rosen, in his individual capacity, does not act or ‘meet’ as the statutory rate-determination committee contemplated by section 627.091(6),” Justice Lori S. Rowe wrote for the majority of the appellate panel.

 Justices Susan L. Kelsey and Harvey L. Jay III concurred.

The opinion states that the Sunshine Law applies to formal and informal meetings only when two or more members of the same board or commission meet to discuss a matter on which action will be taken later.

“A ‘committee’ has been defined as a ‘subordinate group,’ not a single person,” Rowe wrote. “The plain language of the statute thus extends sunshine requirements only to rate filings; actions taken by OIR subsequent to receiving a rate filing (approval, disapproval or deviation); and appeals of OIR’s actions. The only portion of the statute that has any nexus to NCCI’s activities in this case is the rate filing itself.”

Until 1991, NCCI’s Classification and Rates Committee deliberated on recommended rate filings, but that panel disbanded 26 years ago for all of its state clients nationwide because of antitrust concerns.

NCCI provides advisory loss costs for 34 states and the District of Columbia and recommends full rates to regulators in Florida and three other states — Arizona, Idaho and Iowa. In Illinois and Indiana, NCCI provides recommendations for both loss costs and full rates.

Fee could not be reached for comment Tuesday. Maitland claimants’ attorney Geoff Bichler said he hopes Fee will appeal the reversal to the state Supreme Court.

“The decision today insulates NCCI from basic transparency that everyone should embrace in the rate-making process,” Bichler said. “The rate-making process is a critical component of the workers’ compensation system that affects every person in the state of Florida to some degree. When NCCI determines that a court decision requires a rate adjustment, and OIR uses that determination to approve a rate hike, the people have a right to know how that conclusion was reached.”

The court decision came one day after the Florida Legislature adjourned its 2017 session and failed to overhaul the workers’ compensation system over the business community’s concerns of rising costs related to the attorney fee issue.

David Langham, chief deputy judge of the Office of Judges of Compensation Claims, said the 1st DCA ruling was not surprising.

“I thought the characterization of one person as a committee was difficult,” Langham said. “If one person is a committee, then any person speaking with someone at the water cooler could be a Sunshine Law violation.”

Insurers applauded the ruling and said it was expected.

“It appears that this lawsuit was an attempt to divert attention away from needed workers’ compensation reform in Florida,” said Trey Gillespie, assistant vice president of workers’ compensation for the Property Casualty Insurers Association of America.

“NCCI is a private organization that was not created by a public entity and clearly is not a governmental body subject to the sunshine and public records laws. The evidence was very clear that NCCI did not utilize a rate-determination committee to finalize the filing with OIR,” he said.

The American Insurance Association said the trial court ruling, had it stood, would have meant that NCCI could never deliberate out of a public session.

“The Office of Insurance Regulation has always conducted their review of rate filings in a transparent and professional manner, and the opinion of the 1st DCA affirms that as well,” said Ron Jackson, AIA Southeast region vice president. “As the DCA’s opinion noted, the construction of the law placed upon it by the plaintiff, Mr. Fee, and the circuit court was an overbroad and incorrect application of the terms of the law.”

Coral Gables defense attorney H. George Kagan emailed that an appeal to the Supreme Court would be a long shot.

“While it was extremely important to those involved – each of whom having also fought the good fight it certainly seems – and while there was understandable curiosity, even suspicion, about the rate process, its ‘Gone with the Wind’ news now,” Kagan said.

Fee sued NCCI and OIR on Aug. 10. Leon County Circuit Judge Karen Gievers ruled Nov. 23 that “clear and convincing evidence” showed that NCCI and OIR held a series of illegal “secret” meetings that resulted in “shutting the public out of meaningful participation in the rate-making process.”

NCCI chief legal counsel Steve Sibner said in a telephone interview Tuesday that Florida has one of the most transparent rate-making processes in the country.

“We’re obviously pleased with the decision,” Sibner said. “I can tell you from my standpoint we always believed we and OIR were in compliance with Florida law.

“OIR has a public hearing each time we submit a filing. In this case, they conducted a public hearing that was four hours long. People had a chance to speak and to submit written comments for a long time afterwards. All of the documents submitted to the OIR were made public. There has been appropriate public scrutiny,” he said.

OIR issued only a brief statement: “We’re aware of the ruling and pleased by the outcome.”

The Florida Justice Reform Institute, a tort reform organization, applauded the appellate court’s reversal, saying there was no evidence NCCI used a committee as part of its actuarial analysis.

“NCCI used an actuary, and the actuarial work product was reviewed. Since there wasn’t a committee used as part of the actuarial analysis, there was not a public records violation,” said William Large, the institute’s president.

Florida Workers’ Advocates called the ruling disappointing and said it would have a “substantial impact” on Florida businesses and their workers.

“This decision underscores how important it is for the Legislature to stand up to the greedy insurance industry and establish a fair and transparent rate-making process that fosters competition,” Mark Touby, FWA’s president, said in an emailed statement. “With the next legislative session just eight months away, we look forward to working with the Senate and House to achieve this goal, which is so important to Florida’s economic future.”

NCCI’s original rate filing last summer was for a 19.6% increase, but the ratings firm pared it down to 14.5% after the OIR directed it to do so.

Ultimately a hike of 10.1% was needed, NCCI said, to cover the Supreme Court’s ruling in Castellanos v. Next Door Co. The high court found the attorney fee formula in Section 440.34 of the Florida Statutes unconstitutional as a violation of due process under both the state and U.S. constitutions because it made no allowances to ensure attorney fees would always be reasonable.

The state Supreme Court’s decision in Westphal v. City of St. Petersburg warranted another 2.2% increase, NCCI said. The court found in Westphal that the 104-week statutory limitation on temporary total disability benefits was unconstitutional and should revert to the 260-week limitation in effect before a 1994 law change.

Those two court decisions will cost employers $1.5 billion in the first year because of higher attorney fees and unfunded liabilities that will occur as claimants’ attorneys return to court to get their fees increased for old cases, NCCI says.

The remainder of the 14.5% rate hike was for updates to provider reimbursement manuals.

See Full Article

Reprinted courtesy of WorkCompCentral.

 

Friday, April 14, 2017

By J. Todd Foster

The Republican-led Senate Appropriations Committee on Thursday defied every major business organization in Florida and joined Democrats in unanimously passing a workers’ compensation reform bill that includes hourly attorney fees capped at $250.

SB 1582, sponsored by Sen. Rob Bradley, R-Fleming Island, now heads to the Rules Committee before a possible floor vote. The Legislature adjourns May 5.

The measure would require a reconciliation with the House version, HB 7085, which caps hourly claimants’ attorney fees at $150. Unlike its Senate counterpart, the House bill would keep Florida an administered full rate state instead of the loss-cost system used by 38 other states.

HB 7085 has been scheduled for a vote by the full House of Representatives on Tuesday.

Before the 16-0 Senate Appropriations vote Thursday, Bradley’s bill was amended to make multiple myeloma and non-Hodgkins lymphoma compensable as occupational diseases for firefighters. A separate amendment was approved to move $850,000 from the Insurance Regulatory Trust Fund to the Florida Office of Insurance Regulation in order to hire eight new full-time employees, and to cover other OIR and OJCC administrative costs associated with SB 1582.

The National Council on Compensation Insurance estimates in a preliminary cost impact analysis that SB 1582 could result in small to moderate system savings of $36.5 million to $109 million a year.

Like HB 7085, SB 1582 would codify two state Supreme Court decisions by allowing for reasonable attorney fees, and increasing the maximum duration of temporary total and partial disability benefits from 104 weeks to 260 weeks. Raising the TTD and TPD cap to five years “would have no impact on WC system costs in Florida,” NCCI actuary Jeff Eddinger wrote.

By allowing judges of compensation claims to deviate upward and downward from the fee schedule, and by imposing a $250 hourly cap, system costs could experience small to moderate decreases, the NCCI analysis states.

NCCI defines a “small,” or less than 1%, impact as up to $36.5 million; a “moderate,” or 1% to 3%, impact as up to $109 million; and a “sizable,” or 3% to 5%, impact as up to $182 million.

Going from an administered rate system to loss costs “may result in a significant shift in the way that workers’ compensation (manual) rates are determined in Florida” but “would not directly affect the benefit costs paid to injured employees,” the NCCI analysis states.

David Langham, deputy chief judge of the Office of Judges of Compensation Claims, said after the committee vote that SB 1582 “seems to have an awful lot of support.”

“The real question on everybody’s mind right now is, how do these key bills get reconciled?” he said. “Are they (both chambers) both going to agree on the House bill or the Senate bill? Or will they agree to disagree, which means nothing happens and we stop right here and wait until next year?”

The Florida League of Cities opposes SB 1582 because of the firefighter cancer amendment, saying it would cost local governments at least $4 million a year.

That amendment was sponsored by Appropriations Committee Chairman Sen. Jack Latvala, R-Clearwater, and the panel’s vice chair, Sen. Anitere Flores, R-Miami.

Latvala said 40,000 Florida firefighters would be affected by the amendment and that the science is solid: Firefighters are 50% more likely to contract multiple myeloma and non-Hodgkins lymphoma than the general population.

“I’ve worked with the league to take many of their concerns into consideration, and they’re still against the bill,” Latvala said angrily. “I’m done compromising. Yes or no, it’s time to vote.”

Winter Park claimants’ attorney Geoff Bichler, who represents many first responders, applauded the firefighter amendment and said it’s past time that the law is changed to recognize toxic exposures.

“Too many of these brave and selfless public servants are stricken with a horrible diagnosis at an early age, and I believe this bill is the first step in recognizing the need to improve safety in the workplace to minimize the incidence of cancer in the fire service,” Bichler said Thursday.

Bichler opposes the attorney fee provisions of SB 1582, however, saying an hourly rate for claimants’ attorneys could be seen as arbitrary and unconstitutional.

“It seems a shame that the Legislature is not more concerned about how it might make the system function more efficiently and enhance benefits for injured workers, but all the oxygen is being sucked out of the room by the fight over attorney fees,” he said.

Among the bill’s opponents are chambers of commerces and organizations representing the poultry industry, home builders, restaurant owners, lodging, roofing and sheet metal contractors, the Farm Bureau, the Sheriffs Risk Management Fund, retailers, builders and contractors, and the Florida Justice Reform Institute.

“Unfortunately, this bill in its current form is a cost driver and will lead to increased litigation, which could jeopardize the current workers’ compensation system,” William Large, president of the Justice Reform Institute, a tort reform advocate, said in a telephone interview Thursday.

SB 1582, he said, incorporates the findings of the state Supreme Court in Lee Engineering & Construction Co. v. Fellows from 1968, when the court held that judges should be able to determine reasonable claimants’ attorney fees by evaluating case complexities and other factors

Bradley’s bill provides for judges of compensation claims to consider the time and labor required to prosecute a claim; customary fees based on geographic area; the amount of money involved in the case; and the experience, reputation and ability of the claimant’s attorney.

Carolyn Johnson, director of business, economic development and innovation policy for the Florida Chamber of Commerce, said reforming workers’ compensation remains a top priority for the business community. She said organizations like hers hope to work with Bradley to “improve” SB 1582 before its next stop at the Rules Committee.

SB 1582 also takes aim at excessive defense attorney fees. It would require insurers with 15% or greater defense and cost-containment expenses, measured in incurred losses for three accident years, to give policyholders a cash refund or credit toward future premiums.

The American Insurance Association said it opposes the defense and cost-containment expense provision, and the departure fees for claimants’ attorneys.

“We and the business community think the best response is claimant-paid attorney fees, but it does not appear the Florida Legislature is inclined to move in that direction,” said Ron Jackson, AIA Southeast region vice president. “We still have questions about both bills and possible further amendments, but at this point, we think the House version is preferable.”

Two other workers’ compensation bills are slated for Senate committee hearings on Monday:

SB 1088, by Sen. Victor Torres, D-Kissimmee, goes before the Banking and Insurance Committee at 4 p.m., and would make mental injuries compensable for medical and indemnity benefits for first responders, even without physical injuries. The evidence standard would be “preponderance” and not “clear and convincing.”

SB 1008, by Sens. Bradley and Keith Perry, R-Gainesville, goes before the Government Oversight and Accountability Committee at 4 p.m. and would exclude from public records requirements the names of injured workers or those killed on the job.

https://www.workcompcentral.com/news/article/id/472f15fcba484fcf87372edafd9139554cb69085

Reprinted courtesy of WorkCompCentral.