Lawmakers look for answers on workers' comp
TALLAHASSEE, Fla. – With businesses bracing for rate increases, Florida House members this week began grappling with the tricky political and legal challenge of revamping the workers' compensation insurance system.
Staff members held briefings Tuesday and Wednesday to try to help lawmakers understand the complicated system, which is likely to be one of the highest-profile issues of the 2017 legislative session. Meanwhile, a newly elected House Republican released a proposal Wednesday that includes calling for workers' compensation insurance coverage to be optional for businesses.
The workers' compensation issue, closely watched by businesses, legal groups, labor unions and health providers, has re-emerged primarily because of two Florida Supreme Court rulings this year that found parts of the system unconstitutional. The most-significant ruling tossed out strict limits on fees that can be paid to attorneys who represent injured workers in disputes about benefits.
Regulators, largely as a result of those rulings, approved a 14.5 percent increase in workers' compensation rates. Those higher rates started to gradually take effect last Thursday, though a Leon County circuit judge ruled they should be blocked because of violations of the state's Sunshine Law during the ratemaking process. The issue of whether the new rates should continue is pending at the 1st District Court of Appeal.
Regardless, it appears that lawmakers will try to revamp the workers' compensation system during the coming months, touching off heavy lobbying by the various interest groups. Much of the lobbying will focus on the issue of attorneys' fees, but Kurt Hamon, staff director of the House Commerce Committee, told lawmakers that fixing the workers' compensation system likely will need to be broader than addressing the fee issue.
"Something to be considered when you're trying to craft solutions (is) that the solution probably should look at more than just dealing with the attorneys' fees issue," Hamon said during a briefing Tuesday. "It should be a broad-based solution that looks at the satisfaction within the system, the effectiveness of the system from both the employer and employee side of the issue."
With bills gradually starting to be filed for the 2017 session, freshman Rep. Cord Byrd, R-Neptune Beach, released a proposal Wednesday that includes what is known as an "opt-out" for businesses to decide whether to provide coverage. In a news release, Byrd, an attorney, pointed to an optional system in Texas that he said has worked well.
During a briefing Wednesday, Hamon said Florida allowed businesses to opt out of coverage from 1935 to 1978. He said big companies likely would be more able to "self-insure" than smaller businesses.
"One of the big issues is if the company is opting out, do they have the capability to actually absorb a loss?" Hamon said. "That's one of the questions is, if they self-insure, do they have the capital to actually cover a serious injury?"
Rep. Richard Stark, a Weston Democrat who is an insurance broker, said some employers already are effectively opting out by classifying workers as independent contractors to avoid buying workers' compensation coverage. He described it as "gaming" the system.
For decades, the workers' compensation system has been designed as a trade-off --- or, as Hamon described it, a "grand bargain." Essentially, businesses would provide coverage to take care of injured workers, while workers would largely give up the ability to file more-typical civil lawsuits to resolve disputes. Such disputes are usually handled through an administrative system by judges of compensation claims.
In 2003, with businesses facing soaring insurance rates, the Republican-controlled Legislature and then-Gov. Jeb Bush approved a controversial overhaul that changed benefits available to injured workers and also put strict limits on fees paid to attorneys who represent workers. The changes had the desired effect of driving down insurance rates, but they also led to legal challenges from attorneys for injured workers.
The Supreme Court rulings this year striking down parts of the system were largely an outgrowth of changes made in 2003.
Business groups are pushing heavily for lawmakers to again limit attorneys' fees, arguing that the fees inject additional costs into the workers' compensation system. But plaintiffs' attorneys are placing the blame for higher rates on the insurance industry.
Those already-developing battle lines will lead to pressure on lawmakers to try to come up with a solution in the coming months. During the briefings this week, lawmakers peppered Hamon and other staff members with questions about the issues.
"Have we contemplated ever scrapping it and trying to come up with a new system rather than trying to keep reforming and working within an old, broken system that seems to not really function in lieu of how it was designed to benefit the claimant, not the attorneys?" Rep. Larry Ahern, R-Seminole, asked at one point Wednesday.
News Service of Florida