Fla. OKs Comp Rate Reductions, But Impact Uncertain

Workers’ compensation rates in Florida will go down by over 18 percent by the new year, but a state Supreme Court decision may make the lower rates short-lived.

Florida Insurance Commissioner Kevin McCarty gave his approval to an amended rate filing by the National Council on Compensation Insurance today—a filing that does not reflect the implication of the state high court’s ruling in Murray v. Mariners Health/ACE USA.

In the Murray decision, the court ruled that judges should have some discretion in awarding attorney fees in workers’ compensation cases. The court said that judges should be allowed to adjust the results of a formula instituted by lawmakers in 2003 when those results are not “reasonable.”

Lori Lovgren, state relations executive for NCCI, said the group “decided to wrap up” the filing it was ordered to resubmit by Mr. McCarty prior to the court’s ruling, rather than try to restart the process anew with an amendment to an already amended filing. Mr. McCarty rejected an earlier filing, ordering an 18.6 percent rate reduction rather than the 14.1 percent decrease proposed by NCCI.

That filing, she said, was made with an effective date of Jan. 1, 2009. In addition, however, she said that NCCI will begin work on a separate filing to account for the Murray decision with an effective date of March 1, 2009 that will be submitted some time in mid-November.

In a notice sent to NCCI affiliates, Ms. Lovgren noted that the standard procedure for filings makes it difficult if not impossible to get a post-Murray filing in place to take effect Jan. 1.

“We're working as quickly as we can to file no later than mid-November,” she said. She explained that Mr. McCarty intends to call a hearing, which has a 21-day notice requirement, and that the schedule is further complicated by the holidays.

“As you can see, 3/1/09 is pushing it,” she said.

Edward Domansky, a spokesman for the Florida Office of Insurance Regulation, said that a separate, post-Murray filing would not be out of the ordinary.

“As far as a new filing to reflect what the NCCI believes will be the effect of the Murray decision, they would be expected to make that filing,” he said. Once that filing is received, he added, “the OIR would then review it just as it does every filing to ensure that it properly documents the rate being requested.”

Announcing his approval of the NCCI filing, and the expectation of a post-Murray filing, Mr. McCarty noted that limits on attorney fees played a vital role in the reduction of workers’ compensation rates during recent years.

“The reduction of attorney participation in workers’ compensation cases has been cited as one of the significant causes of the reduction in rates since the 2003 legislative reforms,” he said. “Limitations on attorney fees have helped Florida employers to realize a significant savings on their workers’ compensation insurance.”

In the Murray case, the attorneys would have been due a total of $684.84 for their work on the case, which averaged out to $8.11 an hour for roughly 80 hours of work. The court ruled instead that they should be paid at roughly the market rate for such work, which was said to be $200 per hour, and awarded the plaintiff’s attorneys a total of $16,000. The amount was almost five times the amount received by the claimant.