You may recall the recent ruling contained in the Supreme Court decision in Westphal v. City of St. Petersburg, 194 So.3d 311 (Fla. 2016). This was the case that found the 104 week limitation on Temporary Total Disability benefits to be unconstitutional and reinstated the law under a prior version of the WC statute allowing for 260 weeks of TTD. The Westphal decision was published by the Florida Supreme Court shortly after an even more toxic ruling for Florida business in the Castellanos decision which I am sure you remember as vividly as a nightmare. The Florida Supreme Court eliminated the cap on employer-paid fees to claimant attorneys in that beauty. Surely you remember these back-to-back bomb-shells as these two cases were the sole reason for the recent increase of 14.5 percent in workers’ compensation premiums that goes into effect for new policies written after December 1, 2016.
As harsh a blow as we received from the Westphal decision, those of us in the insurance industry were left scratching our heads as it was not entirely clear whether the Westphal decision only affects Temporary Total Disability benefits or if the opinion was to be read more broadly to also affect Temporary Partial Disability. Surely the case would be limited to TTD all of us hoped. In fact, the reasoning by the Supreme Court seemed to only apply specifically to TTD and the same “hardship” to employees realized by the 104 week limitation on TTD is a completely different situation than an employee who is actually released to return to work in some capacity. Well … so much for wishful thinking.
The suspense and confusion is over for now but not in a good way. A few days ago, the First DCA entered an Order in the matter of Jones v. Food Lion in which the panel made clear that the assault on Florida Employers will continue. Both TTD and TPD now have a combined bank of 260 weeks increasing the available temporary compensation from two years to five years.
Arguably, this decision has an even greater impact on the cost of claims than the Westphal decision. If an injured worker remains completely out of work after two years from the accident date, there is a good chance that the employee will eventually qualify for Permanent Total Disability benefits anyway. Consequently, whether the claimant is getting TTD of PTD does not move the needle much. However, the real exposure is with TPD which is when the injured employee is released to return to work but has been assigned physical limitations to observe that will potentially impact the claimant’s short term wage earning capacity. In addition to the obvious dramatic increase of exposure theoretically created, this may have the secondary unintended consequence of encouraging treating physicians to delay the assignment of Maximum Medical Improvement. There is a reason why doctors often assign MMI just before the 104th week following the accident as they have been trained to do so by the WC law in FL. This is a basic economic principal of human behavior. Think about it in the context of ObamaCare; are people who pay nothing for healthcare in premiums or deductibles going to see the doctor more or less than they did when they had to pay for it. If I fill my dogs bowl to the top instead of half way is he going to eat the entire bowlful? Of course he is. He would eat the whole bag of dog food if it spilled over. In fact dog behavior is an excellent measure of human behavior (at least for us men). I digress.
As a quick example of the enormous impact of the Jones v. Food Lion decision, consider an employee who makes $600 per week prior to an accident. The overall potential payout in lost wages prior to MMI during the course of the claim because of this decision just increased from $41,600 to $104,000! Are you starting to see the “fire” at the end of tunnel? Not to worry, that is no fire … it is merely another NCCI premium increase request.