Groups Warn Against ‘Premature' Workers' Comp Changes

After lobbying the Legislature to makes changes to the workers’ compensation insurance system for the past 18 months, business leaders are backing off this year.

The Florida Chamber of Commerce, Associated Industries of Florida and 15 other organizations sent a letter last month to the primary sponsor of the House workers’ compensation bill advising him that any changes the Legislature makes to the system could be “premature and ultimately, inadequate” and that the current House bill doesn’t do enough to control attorney fees.

But bill sponsor Danny Burgess, R- Zephyrhills, said he will continue to press for the measure (HB 7009) despite the apparent lack of support from industries that, in the past, have pushed lawmakers to act.

“It’s hard for me to understand not wanting to push forward with everything we got,” Burgess, chairman of the House Insurance & Banking Subcommittee, told The News Service of Florida.

The National Federation of Independent Business-Florida supported similar legislation to last year. But the group’s executive director, Bill Herrle, now says passing the House bill would be a “setback.”

 He described himself as the “uncheerful cheerleader.”

“We have to appreciate the effort, but we just don’t think team business gets a win in the end,” Herrle says of his association’s reversal.

The House passed the bill in a 74-30 vote on Jan. 12, but the measure has not been heard in the Senate. Burgess said he has spoken to several senators about having it considered. He has not, however, spoken to Sen. Anitere Flores, who chairs the Banking and Insurance Committee, where the bill would have to be heard.

Much of the issue for business groups centers on plaintiffs’ attorney fees, which business contend drive up insurance costs.

The Florida Supreme Court in a 2016 ruling known as Castellanos v Next Door Company, said Florida’s then-restrictive fee caps violated injured workers' due process rights. The court authorized judges to award fees outside a fee schedule if adhering to it yielded unreasonable results.

Following the ruling, the Office of Insurance Regulation approved a 14.5 percent rate hike that took effect in December 2016, and business groups lobbied the Legislature to restrict attorney fees.

The House in 2017 responded by passing a bill that would have capped attorney fees at $150 per hour in certain circumstances. It had the support of NFIB Florida, the Florida Chamber and Associated Industries of Florida. But the bill ultimately didn’t pass the Senate.

Subsequently, rates for 2018 did not increase. Indeed, Florida Insurance Commissioner David Altmaier approved a 9.8 reduction. But the filing was based on information from policy years 2014 and 2015 and didn’t include much data on cases settled following the Castellanos ruling.

For the 2018 session, the House recycled its 2017 workers’ comp bill. But on the eve of floor consideration, business groups sent the letter to Burgess and every member of the House suggesting that lawmakers should have access to additional data before passing anything.

“We respectfully urge the House to stand ready for reform once the full impact of the Castellanos case is realized,” the letter reads.

The business community is confident that additional time will underscore the push to restrict attorney fees, but it faces major opposition from plaintiffs’ attorneys and groups such as labor unions.

Business groups are buoyed by the findings of an Office of the Judge of Compensation Claims report that shows a 36 percent increase in the amount of workers’ compensation legal fees paid on behalf of injured workers in fiscal year 2016-2017.

The report showed that in all, attorney fees in the workers’ compensation system totaled nearly $440 million that year. The majority --- nearly $254 million --- were forked out by employers defending workers' compensation claims, not to plaintiff’s attorneys.

The House bill attempts to address the attorney fees, but “respectfully, we assert that more can be done in the area of attorney fees to control system costs without jeopardizing benefits to Florida employees,” the business groups wrote in the letter.

But Burgess said attorney fees must pass constitutional muster, and he said that the ones currently in his bill would meet that test.

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