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Proposed Workers’ Compensation Rate Increase

June 9, 2016

Florida employers will soon be paying more for workers’ compensation premiums. This was anticipated after the recent Supreme Court ruling regarding the cap on attorney’s fees that was ruled unconstitutional (Castellanos v Next Door Co.). NCCI has responded to the ruling by proposing a 17% rate increase. 15% was proposed to cover the first year impact of the Castellanos decision and an additional 1.8% increase related to the adoption of the 2015 Edition of the Healthcare Provider Reimbursement Manual.┬áThe 2015 Edition sets out the policies, guidelines, codes, and maximum reimbursement allowances for services and supplies furnished by health care providers under the workers’ compensation statutes.

This proposal was sent to the Florida Office of Insurance Regulation (OIR) on May 27th. The OIR plans to hold a public hearing in July to give NCCI and other stakeholders an opportunity to discuss the filing and its effects. If the rates are approved, worker’s compensation rates in Florida would be among the highest in the Southeast. It is important to note that this is only a proposal and that no changes have gone into effect.

NCCI proposed a 17% rate increase with an effective date of August 1, 2016 for new, renewal and additional worker’s compensation policies.┬áThe increase will apply to all workers’ compensation policies in effect as of August 1st on a pro-rata basis for the remainder of each policy term. Traditionally rates have gone into effect on January 1st. The rate increase takes into consideration the impact of the Castellanos decision on claims occurring on or after August 1, 2016, but the decision affects all open claims and closed claims where the statute of limitations has not tolled. Therefore, there will be a significant amount of unfunded liability for the insurance companies. This would likely be addressed in next year’s rate filing.

The industry is still awaiting the Supreme Court ruling on another landmark case, Westphal v. City of St. Petersburg regarding the constitutionality of the 104 week maximum on indemnity benefits. If that case is ruled in the plaintiff’s favor, there could be a similar reaction by NCCI.

We at Baldwin Krystyn Sherman Partners have contributed financial resources to the FAIA, who will be working to mitigate the effects of the recent change and rate increase. We understand the impact that the ruling and rate filing has on our clients and empathize with your concerns.