After a Florida Supreme Court ruling last month that struck down a limit on attorney’s fees, workers-compensation insurance rates could go up an overall 17.1 percent, according to a proposal submitted Friday to state regulators.
The National Council on Compensation Insurance, which submits rate proposals for the workers-compensation insurance industry, said the hike should take effect Aug. 1. The Florida Office of Insurance Regulation will decide whether to approve the proposal, a process that could lead to a different rate change.
Major business groups quickly pounced on the rate proposal, which largely stems from an April 28 Supreme Court ruling that said a state law limiting fees for attorneys who represent injured workers was unconstitutional. The issue likely will spur a legislative battle, as business groups seek to curb increased rates.
“We can’t expect the economy to just keep growing with an unexpected and unproductive 17.1 percent ball and chain around every wage earner out there,” Bill Herrle, executive director of the National Federation of Independent Business/Florida, said.
The Office of Insurance Regulation said a public hearing will be held in July on the rate proposal.
Attorney’s fees have long been a highly controversial issue in the workers-compensation system, which handles disputes outside of the more-typical civil courts. Business groups blame legal fees for driving up insurance costs, while workers’ attorneys say adequate fees are needed to help injured people get representation.
The Supreme Court, in a 5-2 ruling, said that a 2009 law limiting attorney’s fees was a violation of due-process rights under the Florida Constitution and the U.S. Constitution because it prevented challenges to the “reasonableness” of attorney’s fees awarded in workers-compensation cases. The ruling stemmed from a case in which an attorney was awarded the equivalent of $1.53 an hour in successfully pursuing a claim for benefits for a worker injured in Miami.
In Friday’s filing, the National Council on Compensation Insurance, which is known as NCCI, said the Supreme Court ruling will increase costs in the workers-compensation system by 15 percent. An additional amount of the proposal deals with a law passed this year that relates to health-care provider reimbursements. In all, NCCI said the combined impact would total $623 million.
Workers-compensation rates vary by type of employer — for example, rates are higher for construction workers than for clerical employees — and increases also likely would vary.
Florida employers have seen a series of decreases in workers-compensation rates since lawmakers in 2003 passed a controversial overhaul of the system. The latest decrease, which took effect Jan. 1, was an overall 4.7 percent.
But after Friday’s proposal, Herrle and officials from the Florida Chamber of Commerce and Associated Industries of Florida signaled they will work to get the Legislature to make changes to prevent major increases. The Florida Chamber, for example, said it has a task force preparing a legislative proposal.
“The Florida Chamber will lead the charge to ensure small businesses aren’t crushed under the weight of increased workers’ comp rates, and that workers have access to quality health care so they can return quickly back to work,” Florida Chamber President and CEO Mark Wilson said in a prepared statement.
Associated Industries, meanwhile, said it plans to hold town-hall meetings in June and July in Tampa, Aventura and Jacksonville as part of efforts to spur legislative action.
“Today’s workers’ compensation rate increase filing by NCCI comes as no surprise,” Associated Industries President and CEO Tom Feeney said in a prepared statement. “Upon reading the Florida Supreme Court’s far reaching opinion … we warned that the unbridled hourly rate attorney fees the decision permitted would trigger a significant increase that directly hurts all Florida employers and will hamper continued job creation.”