As debate opened Tuesday over Florida’s 14.5 percent increase in workers’ compensation premiums, trial attorneys on the Florida Senate’s Banking and Insurance Committee targeted the group that proposes insurance rates for carriers in the state.
Sens. Greg Steube and Gary Farmer Jr., both attorneys, endeavored to shift the focus from attorney fees — widely blamed for rising workers’ comp rates — and onto the need for carriers to compete rather than charge common rates.
“I support a competitive marketplace,” committee member Greg Steube said following the hearing. “That’s one of the things the committee and the Legislature should look at.”
Chairwoman Anitere Flores, herself an attorney, said the issue was “definitely on the table” during what she hopes would be a thorough look at the situation.
“It seems that the NCCI and rate-making portion is something that had not been really discussed in previous workers’ compensation reforms,” Flores said.
Committee members Steube, Randolph Bracy and Debbie Mayfield had trial lawyer support in their recent campaigns. Farmer is a past president of the Florida Justice Association, representing trial attorneys.
NCCI is the National Council on Compensation Insurance. The group operates around the country, but Florida is one of just a few states in which it proposes rates on behalf of all carriers to state regulators — in Florida’s case, the Office of Insurance Regulation.
That office relied on NCCI data in developing the rate increase that began to take effect on Dec. 1. Businesses will absorb the higher premiums as they file for new or renewed policies during the next year.
The 1st District Court of Appeal has allowed that increase to take effect pending litigation over whether NCCI and the insurance office violated Florida’s open-government laws by closing its internal deliberations and documents to the public.
NCCI cited its inability to discuss that open court case in declining to appear during Tuesday’s hearing, Flores said.
“It’s hard to conduct a meeting when you know the answers you’re going to get are, ‘We can’t talk about that,’ “ Flores said.
However, “they were watching,” she said of NCCI. “I would hope they see the message and the tone and the questions that are being asked by the committee members.”
The hearing featured testimony by a range of business and attorney groups, a risk manager for Bay County, and organized labor.
The business side tended to blame greedy lawyers for the rate hike. Those interests point to Florida Supreme Court rulings declaring unconstitutional business-friendly reforms enacted in 2003, including a measure tying attorney fees to benefits secured without regard for the amount of legal work required.
The insurance office blames that one ruling — Castellanos v. Next Door Co. — for around 10 percent of the 14.5 percent hike.
The other side blamed greedy insurers. Richard Chait of the Florida Justice Association urged going after any excess profits, letting workers choose their own doctors, and establishing a mid-tier category of benefits for workers not yet deemed permanently disabled.
And he wanted to liberalize attorney fees, which he called “the great equalizer” and “the only hammer in the system” available to workers.
“Any one who comes before you and suggests that the Castellanos case and the return of reasonable fees creates a crisis is essentially admitting a business model to deny benefits,” Chait said.
Jim McConnaughhay, a defense-side workers’ compensation attorney speaking for Associated Industries of Florida, said a task force would release its AIF’s proposals for dealing with the rate hikes in January.
A representative of the Florida Chamber of Commerce said its own task force’s recommendations would be ready at about the same time.
Bill Herrle, Florida director for the National Federation of Independent Business, a member of AIF’s task force, and a veteran of the workers’ compensation debate, said Florida has a diverse marketplace, with around 200 Florida-based and national carriers and a self-insured sector.
He warned that returning competition to the marketplace carries its own dangers — “It leads to the potential for one big carrier to come in and say, ‘OK, now we’re going to run it tight and low-ball this for a couple of years until we buy in market share. And then where are you after that, when you don’t have all the carriers you desire?”
He called a House proposal to let businesses opt out of the system and take their chances in the trial courts “truly a remedy of last resort.”