• Florida Office of Insurance Regulation Reviews NCCI Rate Filing; Comments Open Until October 21, 2014
  • October 21, 2014
  • Law Firm: Colodny Fass P.A. - Fort Lauderdale Office
  • On October 14, 2014, the Florida Office of Insurance Regulation ("OIR") held a public hearing on the recent National Council on Compensation Insurance ("NCCI") workers' compensation filing, which proposes a statewide average voluntary market decrease of 3.3 percent on Florida's workers' compensation rates, effective January 1, 2015.

    Florida Insurance Commissioner Kevin McCarty opened the hearing, introducing the OIR staff in attendance, who included General Counsel Belinda Miller, Assistant General Counsel Steve Fredrickson, Property and Casualty Product Review Director Sandra Starnes, and Actuary Cyndi Cooper.

    In his opening statement, Commissioner McCarty noted that the NCCI submitted the filing on behalf of approximately 250 workers' compensation insurers conducting business in Florida.  NCCI's filing would decrease statewide workers' compensation premiums by approximately $78 million, it was explained. 

    It also includes a 0.8 percent decrease relating to the Florida Workers' Compensation Reimbursement Manual for Hospitals, the most updated version of which revised reimbursement schedules for both inpatient and outpatient services.  The Reimbursement Manual establishes maximum reimbursement allowances for certain qualifying procedures and increases both the per-diem reimbursement and stop-loss amount for hospital inpatient services.  The cumulative effect of this change is expected to amount to $26 million in workers' compensation insurance premium savings for Florida businesses.

    During the hearing, NCCI representatives made presentations to support the filing.  It was pointed out that, since October 2003, Florida workers' compensation rates have decreased a total of 57.5 percent.  If approved, NCCI's current filing would represent the first rate decrease in Florida since 2010.

    In 2003, Florida's average loss cost multiplier was 2.62--higher than that of most states'.  Now, Florida's average loss cost is 1.09 percent, which is similar to other southeastern states.  The average loss cost in NCCI's filing is 1.05 percent.

    Currently, Florida ranks 28th in the nation for workers' compensation costs-a decrease since 2003, when the state was ranked as the highest.  It was noted that Florida workers' compensation policies increased by 12 percent in 2013, inasmuch as 200,000 jobs were added throughout the state.

    The NCCI rate filing includes the following rate components and impacts:


    Rate Impact

    Change in Experience


    Change in Trend


    Change in Benefits


    Change in Loss Adjustment Expense


    Change in Profit & Contingency


    Change in Tax & Assessments


    Change in Production Cost and General Expense


    Overall Rate Level Change


    NCCI representatives also expressed concern about the pending legal challenges to Florida's workers' compensation system, the outcomes of which could have negative market impacts. The cases include:

    • Westphal v. City of St. Petersburg Risk Management--Addressing a question certified in the case from the First District Court of Appeal, the Florida Supreme Court is being asked to consider whether a worker who is totally disabled as a result of a workplace accident, but still improving from a medical standpoint at the time temporary total disability benefits expire, is deemed to be at maximum medical improvement by operation of law, and therefore eligible to assert a claim for permanent and total disability benefits. Oral arguments were held on June 5, 2014.
    • Morales v. Zenith Insurance Company--The Florida Supreme Court is considering three questions certified by the Eleventh Circuit stemming from a workers' compensation-related wrongful death lawsuit that ultimately evolved into a bad faith claim:
      • Does the (deceased worker's) estate have standing to bring its breach of contract claim under the employer liability policy?
      • If so, does the employer liability provision excluding obligations imposed by Florida workers' compensation law operate to exclude coverage of the claim?
      • If the estate's claim is not barred, does a release in the worker's compensation settlement prohibit collection?

    Oral arguments were held on April 10, 2014.

    • Castellanos v. Next Door Company/Amerisure Insurance-The Florida Supreme Court is contemplating whether the award of attorneys' fees based upon the schedule provided by Florida workers' compensation law is constitutionally adequate. Oral arguments have been scheduled for November 5, 2014.
    • Florida Workers' Advocates, Workers' Injury Law & Advocacy Group, Elsa Padgett v. State of Florida--On August 13, 2014, a Miami Circuit Court concluded that Florida's workers' compensation law is unconstitutional, holding that s. 440.11, F.S.--the exclusive remedy provision of Florida's Workers' Compensation Act--is invalid because it violates the Due Process Clause of the 14th Amendment of the U.S. Constitution and the Access to Courts provision of Article 1, s. 21 of the Florida Constitution. Florida's workers' compensation law was amended in 1968 to make workers' compensation the sole and exclusive remedy when an employee is injured in the workplace. Under current law, injured Florida workers do not have the option to sue their employers, but must seek benefits under the state's workers' compensation system. The Opinion explained that the subsequent changes to Florida's workers' compensation law had diminished the benefits available to injured workers to such a degree that the system denied injured workers access to courts and therefore is no longer constitutional. Florida Attorney General Pam Bondi filed a motion for rehearing, which was immediately denied. Ms. Bondi has filed a notice of appeal with the Third District Court of Appeal.

    Florida Insurance Consumer Advocate Steve Burgess testified at the hearing that he supported the rate filing, but did not agree with NCCI's 2.9 percent profit and contingency factor in its rate filing.

    A representative of the Florida Roofing Sheet Metal & Air Conditioning Contractors Association spoke in support of the rate filing.

    An Associated Industries of Florida representative testified that compared with that of 2003, Florida's workers' compensation insurance market is now competitive and thus attractive to business.

    Commissioner McCarty concluded the hearing, reminding attendees that the record would be open to the public for the submission of comments until October 21, 2014.