Lobbyist Warns Fla. Of Big WC Costs

By E.E. Mazier

NU Online News Service, Jan. 28, 11:50 a.m.EST? An insurance trade group representative pushing a newmeasure to reform Florida's workers' compensation system, said hewarns legislators of big rate hikes if the measure fails topass.

William Stander, government affairs representative for theAlliance of American Insurers' Southeast Region said he tellslawmakers if their choice is inaction- price increases couldsurpass 30 percent.

Mr. Stander is part of a coalition of insurer and employer tradegroups that last week presented a package of reform measures to thelegislature's House Insurance Committee. Their effort follows anunsuccessful bid for reform last year.

The package developed by the coalition identifies and recommendschanges to the "troubled Florida workers' compensation marketplacethat will cut to the heart of the system's primary cost drivers,ultimately improving the state's business environment," Mr. Standersaid.

He added that the measure essentially seeks to "take the moneyout of the middle that's fattening up the doctors and lawyers andpush it back out toward the edges, to the employers and employeesin the forms of lower rates and higher benefits."

According to the Alliance, the key elements of the packageinclude:

? Requiring claimants to pay attorney fees.

? Prohibiting hourly fees except for medical-only cases whichwould be capped at $1,000.

? Revising the definition of "catastrophic injury" in thecontext of qualifying for permanent total benefits

? Eliminating Social Security qualification as a presumption toqualifying for permanent total benefits.

? Eliminating exemptions for the construction industry "so thateveryone has to pay," Mr. Stander stated.

"The Florida workers' compensation system is in need ofsubstantial reform," said Nancy Schroeder, assistant vicepresident, workers' compensation for the National Association ofIndependent insurers. NAII is part of the coalition.

"The reform package before the Senate Banking and Insurancecommittee will provide for a balanced workers' compensation systemthat will increase weekly permanent partial benefits for workerswhile it corrects a number of problems that increase costs," shecontinued.

Mr. Stander noted that the reform measure sponsored by FloridaSenator Jack Latvala, R-Paul Beach, last year narrowly missedpassage.

Last year's proposal, which many insurers and small-employergroups cited as inadequate, resulted from a series of publicmeetings on workers' compensation reform.

Much of the objection to last year's measure had to do with "agreat deal of confusion as to how the bill would price out," Mr.Stander said.

There was also some concern, including among lawmakers, that thebill was not the product of "a larger group," he added. Instead,certain insurance industry experts and a large-employerorganization, Associated Industries of Florida, largely wrote thebill, Mr. Stander indicated.

He added that when the bill failed, the Alliance went to work onputting together "a strong, cohesive coalition of employers andcarriers to really work together on a draft we could all supportand then go in together to convince the legislature" to passit.

But in a classic "Catch-22" situation, members of the FloridaHouse Insurance Committee have now complained to the coalition thatthe resulting proposal is longer and more complicated than lastyear's measure.

As noted by Mr. Stander, "When you have a coalition put togethera bill, obviously the bill becomes large because everyone wants atleast a little bit of their ideas in the bill, otherwise there's noreason for them to buy into it."

But last year's bill was not the only basis of this year'sproposal. Before taking the idea to the insurance and employercommunities at large, Mr. Stander said, a task force of Alliancemembers produced a paper from a claims perspective entitled "A Callfor Reform: Florida Workers Compensation."

Mr. Stander added that the ultimate reform package also includesideas and suggestions from other coalition members.

From the insurance world, the coalition includes the Alliance,which is based in Downers Grove, Ill., the NAII based in DesPlaines, Ill., the Association of American Insurers based inWashington, D.C., and the Florida Insurance Council based inTallahassee, Fla.

Employer-group members of the coalition include AssociatedIndustries of Florida, Florida Retail Federation and the FloridaChamber of Commerce, all based in Tallahassee, as well as theNational Federation of Independent Business of Washington, D.C. andthe Associated Builders & Contractors of Rosslyn, Va.

According to the Alliance, Mr. Latvala will again sponsor thisyear's bill in the Senate.

But passage of the proposal this year will be difficult, Mr.Stander admitted. "It's difficult to do workers' comp in any year?and it's going to be especially difficult to do it when you'vehave redistricting and cabinet reorganization," he said.

Mr. Stander was referring to the fact that because the Floridalegislature does not have a separate session for redistricting, itwill be undertaking that task during the current session.

Additionally, the lawmakers will be looking at thereorganization of the cabinet-level post of treasurer/ insurancecommissioner. That post will be combined with the post of statecomptroller into the new position of state chief financial officerfor the state, Mr. Stander said.

These two factors could "politicize" the issue of workers' compreform, with lawmakers tempted to hold up the workers' comp measureto get through their redistricting map or cabinet reorganizationplan, he suggested.

Despite the foreseeable difficulties, the coalition isdetermined to press the point to lawmakers that workers' comp is insuch a "difficult position that if they don't do something now it'sreally going to come home to roost, and not in several years butmaybe next year," Mr. Stander stated.

He added that most lawmakers --who are subject to two-year termlimits --do not realize that the last time Florida passedcomprehensive workers' comp reform was in 1993. They also areunaware that this followed a 32 percent hike in workers' comppremiums in 1992, Mr. Stander stated.

He added that he likes to say to the lawmakers. "If you waituntil we have a 32 percent rate increase to provide you with theimpetus to pass comprehensive comp reform, that's going to be yourdecision."

In the coalition's view, the reforms are needed now, hesaid.