August 16, 2016
Thank you Commissioner Altmaier. And thank you to the Office of Insurance Regulation and Insurance Consumer Advocate Sha’Ron James for your open door policy on an issue that will substantially impact Florida’s competitiveness as well as the job creators that depend on it.
At the Florida Chamber, we believe that putting job creators and injured workers first is the right thing to do to keep Florida’s workers’ compensation system working.
Unfortunately, the Florida Supreme Court’s ruling in the Castellanos case is not about safety or protecting workers. The effect of the decision is to raise costs for no other reason than so plaintiff trial lawyers can raise fees.
In fact, in the Castellanos case, the plaintiff argued that the plaintiff trial lawyer should receive $38,000 in attorney fees for a case in which the injured worker was awarded only $800. That’s $800 for the injured worker, and $38,000 for the trial lawyer.
As we predicted, trial lawyers are back, suing even more. What we’ve seen since May is an increase in lawsuits – a result of the Castellanos and Westphal rulings that allow plaintiff trial lawyers to reach back into the past and seek higher fees on old cases.
So, how much is this going to cost?
NCCI tells us that the increase in lawsuits by trial lawyers, combined with the 19.6 percent workers’ comp rate increase, will cost Florida businesses potentially $1 BILLION or more in unfunded liability. That’s a lucrative deal for personal injury trial lawyers, but a raw deal for injured workers who won’t gain a dime, and may even be out of work longer.
Thirteen years ago, Florida had the highest rates in the United States. We were losing our competitiveness.
The Florida Chamber joined with then Governor Bush to help pass reforms that – over the course of the last 13 years – dropped workers’ comp rates by nearly 60 percent. That put Florida on par with other states, and also helped injured workers get back to work 10 days faster after experiencing an injury on the job.
That will all change as a result of the court’s decision. In fact, the proposed increase would mean Florida will have the highest rates in the Southeast.
Today I want to shed light on how this is going to impact Florida. The Florida Chamber has been talking to employers across Florida.
In fact, the Florida Chamber’s Workers Comp Task Force has already met more than half a dozen times to hear from large and small businesses, trade associations, and local chambers of commerce and workers comp experts.
Take, for example, Ron John Surf Shop. CEO Debbie Harvey, who co-chairs the Florida Chamber’s Workers’ Comp Task Force, says a 20 percent increase in workers’ comp rates means Ron Jon will no longer be able to add a new, mid-level employee to their team next year.
I wish I could tell you this is an outlier story, but it is not. Unfortunately, that’s the impact an increase of this magnitude could have on businesses – making them choose between hiring new employees or paying higher workers’ comp premiums.
This increase is particularly troublesome, and causing uncertainty. Especially considering many small businesses haven’t budgeted for dramatically higher workers’ comp fees.
Florida businesses care about their injured workers and want to make them whole. That’s how the system was designed to work.
But now, thanks to the Supreme Court and especially thanks to plaintiff trial lawyers, it’s ok to collect fees nearly 50 times as much as the injured workers judgement.
I remember when Florida had the highest rates in the country, and my fear is with this increase, we’ll have the highest rates in the Southeast. And rates could potentially spiral out of control again.
One thing is for certain, this will have a negative impact on Florida’s business climate.
It will likely impact Florida’s 60 consecutive months of job growth.
And perhaps most disturbing, is that this will be a self-inflicted wound that advantages trial lawyers instead of workers.
I encourage OIR to be 100 percent actuarially honest about what these massive fees the trial lawyers are pushing will do to the system. The more honest you are about what these cost are going to be, the more clear it will be that immediate action by the Florida Legislature will be necessary.
The Florida Chamber and the Florida Chamber’s Workers’ Comp Task Force look forward to working with OIR, the Division of Workers’ Compensation, and the Florida Legislature on developing a remedy to the Supreme Court’s decision.
On behalf of the Florida Chamber of Commerce and job creators in Florida, thank you.