State Regulators Increase Workers’ Comp Rates by 14.5 Percent
Green Lights Plaintiff Trial Lawyers to Increase Their Compensation
Following the encouragement of many in the business community to make Florida’s workers’ compensation rate as actuarially sound as possible, state regulators today announced a 14.5 percent increase – an increase that green lights plaintiff trial lawyers to increase their own compensation on the backs of job creators, the Florida Chamber of Commerce said.
“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 is not about safety or protecting workers. The effect of the Castellanos decision is to raise costs for no other reason than so plaintiff trial lawyers can raise fees,” said MARK WILSON, President and CEO of the Florida Chamber of Commerce.
The Florida Office of Insurance Regulation today contingently approved the 14.5 percent workers’ comp rate increase following two Florida Supreme Court decisions that declared portions of Florida’s workers’ comp system unconstitutional. In one case in particular, Castellanos, 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. This accounts for nearly two-thirds of the rate increase.
The increase follows a mid-August public hearing in which the Florida Chamber’s Wilson testified saying:
“…this will have a negative impact on Florida’s business climate. It will likely impact Florida’s 61 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.”
For employers, the nearly 15 percent rate increase – which takes effect December 1, 2016 for new and renewal policies – is particularly troublesome because many small businesses haven’t budgeted for dramatically higher rates. For Debbie Harvey, CEO of Ron Jon Surf Shop and Co-Chair of the Florida Chamber’s Workers’ Comp Task Force, the 14.5 percent workers’ comp increase means the famous surf shop will no longer be able to add a new, mid-level employee to their team next year.
“This isn’t an outlier story. Unfortunately, this is the impact an increase of this magnitude could have on businesses – making them choose between hiring new employees or paying higher workers’ comp premiums,” said MARK WILSON, President and CEO of the Florida Chamber.
A legislative solution for both court cases is needed to help keep rates affordable for job creators.
The Florida Chamber has a long history of helping to keep Florida’s workers’ comp system working. In the last 13 years, the Florida Chamber has led efforts to help lower rates by nearly 60 percent. Since the 2003 workers’ comp reforms were enacted, injured workers returned to work 10 days faster.
Those efforts continue today, as the Florida Chamber’s Workers’ Compensation Task Force has been engaging Florida’s highest elected leaders and working with top legal minds to develop the right solution. In addition to task force meetings, regional meetings have taken place across Florida, and our local chamber federation is actively engaged – assessing the impact it will have on local businesses, and joining efforts toward solutions.
The Florida Chamber’s Workers’ Comp Task Force is co-chaired by Debbie Harvey, CEO of Ron Jon Surf Shop and Steve Knopik, CEO of Bealls Inc. Steve Knopik will be leading a panel discussion at this week’s Future of Florida Forum on workers’ comp with Senator Bill Galvano and other legislative leaders.
Florida Chamber of Commerce Testimony To Office of Insurance Regulation Regarding Workers’ Compensation Rate Hearing
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.
Florida Small Businesses Report Business Is Improving But Economic Uncertainties Remain
Workforce Quality Becomes Increasing Concern
TALLAHASSEE, FL (March 28, 2016) –Results from the latest Florida Chamber of Commerce Small Business Index Survey show that 54 percent of Florida’s small businesses expect to hire over the next six months. However, challenges remain with growing concerns about the economy and limited access to a skilled workforce.
For the second quarter in a row, Florida’s small businesses listed their top concern as economic uncertainty. Second on the list was workforce quality with 15 percent of respondents, followed closely by access to capital with 13 percent of respondents indicating it was their top issue. Approximately 63 percent of respondents expected sales to increase, down from 79 percent in last quarter’s survey.
“There is still optimism in Florida’s small business community, but the overall outlook is less positive than it was in the last quarterly survey. Certainly there are concerns in the international economy that may affect economic uncertainty for all Florida businesses,” said Dr. Jerry Parrish, Chief Economist and Director of Research, Florida Chamber Foundation.”
The Florida Chamber’s Small Business Index Survey shows:
- Top Issues Facing Small Businesses: Economic uncertainty (19 percent), workforce quality (15 percent), access to capital (13 percent), government regulations (10 percent), healthcare costs (8 percent) and lawsuit abuse (6 percent).
- Investments: 53 percent of the small businesses surveyed have plans to increase investments in plant or equipment in the next year, up from 50 percent in last quarter’s survey. Permanently eliminating the manufacturing and equipment sales tax was a top legislative priority for the Florida Chamber of Commerce.
- Respondents: 33 percent of respondents employ less than five full-time employees, 46 percent of respondents employ 5 to 49 employees, 5 percent employ 50 to 99 employees and 16 percent of respondents employ 100 to 500 employees.
“Small businesses are the life blood of Florida’s economy and create two out of three jobs in our state,” said Debbie Harvey, Chair, Florida Chamber of Commerce Small Business Council and President, Ron Jon Surf Shop. “The Florida Chamber will continue to champion small businesses in the effort to stimulate economic growth and create new jobs.”
The Florida Chamber’s Small Business Index Survey was conducted electronically March 8, 2016 through March 24, 2016. Click here to view the full report.
The Florida Chamber of Commerce is the voice of business and the state’s largest federation of employers, chambers of commerce and associations, aggressively representing small and large businesses from every industry and every region. The Florida Chamber works within all branches of government to affect those changes set forth in the annual Florida Business Agenda, and which are seen as critical to secure Florida’s future. The Florida Chamber works closely with its Political Operations and the Florida Chamber Foundation. Visit www.FloridaChamber.com for more information.