A May 27 rate filing submission by the National Council on Compensation Insurance (NCCI) – which represents 260 Florida workers’ compensation insurance providers – could mean that Florida Workers Comp Rates could soon skyrocket nearly 20%, as soon as August 1, 2016 on a pro-rata basis. Two recent legal changes are at the heart of the proposed rate increase.
The first involves an April Florida Supreme Court ruling in a case called Castellanos v. Next Door Co. In that case, employee Marvin Castellanos, who was injured on the job, sued his company, Next Door Co., and its insurance provider, Amerisure. The court ruled that a mandatory attorney fee schedule in the Florida statutes violates U.S. and Florida constitutional due process. Specifically, the court said the schedule makes it impossible for a claimant to get reasonable attorney’s fees, which, the court called “a critical feature of worker’s comp law” or refute the mandatory fee schedule.
The second legal change involves changes to the Florida Workers’ Compensation Health Care Provider Reimbursement (HCPR) Manual set forth in Senate Bill 1402. The new manual will become effective July 1, 2016.
Crunching the Numbers
NCCI’s filing proposes a $623 million (17.1%) rate increase, its first proposed increase since 2014. (A 4.7% rate decrease went into effect in January 2016.) Fifteen percent of the proposed increase is to cover the impact the Castellano ruling would have on Florida worker’s comp costs in its first year. The 1.8% remaining increase relates to worker’s comp cost increases related to the new HCPR manual. Rising workers’ comp costs may not be the only result of the Castellanos v. Next Door Co. ruling. Legal experts predict an influx of lawsuits challenging past claims settled with the now-unconstitutional fee schedule.
The Florida Office of Insurance Regulation plans to hold a public hearing in July to allow NCCI to explain the filing and stakeholders to make comments. If you do business in Florida, news of this filing will, understandably, be unwelcome. If you’d like to discuss what you can do to soften the blow to your own worker’s comp coverage, contact us at Newman Crane & Associates Insurance, (407) 859-3691.