5 Facts about Workers’ Comp Reform,
Castellanos, and
Westphal
Confused about what the recent Florida Supreme Court decisions in
Castellanos v. Next Door Company,
Westphal v. City of St. Petersburg, and the Florida legislature’s failure to pass workers’ compensation
reform mean? Here is what you should know about the turmoil surrounding
Florida’s workers’ compensation system.
1.
Fees for Injured Workers’ Attorneys are no Longer Limited by the
Mandatory Fee
Schedule
In
Castellanos, the Florida Supreme Court held that the mandatory fee schedule in Florida
Statutes section 440.34 that applies to attorneys who represent injured
workers is unconstitutional. The Florida Supreme Court reasoned that the
statute was unconstitutional as a violation of due process because it
did not allow judges to determine the reasonableness of the fees awarded
to attorneys representing injured workers. Judges are now free to make
their own determination of what constitutes a reasonable fee based on
several factors described in the court decision. As a result, the
National Council on Compensation Insurance (NCCI) cited the potential for increased litigation, petitions for benefits,
and claim costs to justify its requested rate hike of 17.1%. Whether the
extent of the fee hikes will be ultimately justified remains yet to be seen.
2.
The Statutory Limit of 104 Weeks of Temporary Partial Disability Benefits is
Unconstitutional
Justice Pariente, writing for 5-2 majority, reasoned that the only interpretation
of the plain language of Florida Statutes section 440.15(2)(a) was that
temporary partial disability benefits would stop and the injured worker’s
impairment would be determined the earlier of: (1) when the employee has
reached the statutory maximum of 104 weeks of temporary disability benefits;
or (2) when the employee reaches maximum medical improvement. This interpretation
led to the conclusion that the 104 week limit created a statutory gap
in benefits, violating the injured worker’s constitutional right
to access to courts. The Florida Supreme Court implemented a fix by reviving
the 1994 amendment to the statute allowing for up to 260 weeks of temporary
disability benefits.
3.
It is Going to Cost Money
Florida businesses face a 14.5% workers’ compensation insurance rate
hike effective December and the possibility of additional rate increases.
Despite the fact that the Office of Insurance Regulation (OIR) did not
find support for the NCCI 19.6% rate increase, it did decide that a 14.5%
rate increase was acceptable. On May 9, 2017, Florida’s First District Court of Appeals’
opinion in
National Council on Compensation Insurance et al. v. James F. Fee, Jr. reversed the Leon County Circuit Court’s order invalidating the
Office of Insurance Regulation’s approval of the 14.5% increase
and reinstated the rate increase that originally took effect in December 2016.
4.
Do Not Expect Any Immediate Relief
The Florida legislature did not pass legislation addressing
Castellanos or
Westphal, leaving Florida’s workers’ compensation system in its current
chaotic state. Lawmakers filed two separate bills in the Florida House
of Representatives,
House Bill 7085, and the Florida Senate,
Senate Bill 1582 in response to the Florida Supreme Court decisions. Ultimately, the Senate
and the House were unable to agree on attorney fee caps proposed by the
competing bills – the Senate version capped attorney fees at $250
per hour while the House version proposed a $150 per hour cap. Additional
issues included a provision in the Senate bill that would move Florida
to a loss-cost system in an attempt to reduce premiums.
5.
All Hope is Not Lost
The continued rate increases should keep the pressure on Florida lawmakers
and motivate them to pass legislation addressing the issues raised by
Castellanos and
Westphal in the 2018 legislative session. To put things in perspective, the
Florida Office of Insurance Regulation’s Annual Worker’s Compensation
Annual Report for 2016 compared Florida with other major populous states and concluded that “Florida
has one of three most competitive workers’ compensation markets
of the major populous states.” However, the report also noted that
the dramatic shift in Florida’s loss cost for the 10 largest policy
classes is concerning and may threaten the competitive nature of Florida’s
workers’ compensation insurance market. We expect the topic of workers’
compensation reform to remain a hot topic for the upcoming legislative
session as Florida attempts to balance the need for a modern workers’
compensation system with its interest in keeping and attracting employers
to the state.
Deirdre F. Aretini, Esquire
Cristal Law Group