Florida employers have seen remarkable rate reductions in their workers' compensation premiums over the past six years -- an average of some 65 percent total and counting. The premium drops are universally acknowledged to be a result of the 2003 major overhaul of the state's workers' compensation system.
A new report from the Florida Department of Financial Services Division of Workers' Compensation seeks to detail the impact of a specific portion of that reform package. The legislation (HB 50-A) provided for, among other things, significant changes to compensability requirements for workplace injuries and illnesses. The comprehensive analysis, Impact of the 2003 Workers' Compensation Reform (Senate Bill 50-A) - Compensability, notes that the bill "mandated greater specificity both for injuries and illnesses qualifying as compensable and the standards for evidence supporting those conditions."
The research brief offers a detailed analysis of specific pre- and post-reform data and addresses the central question of whether the HB 50-A's more stringent requirements resulted in fewer workers qualifying for benefits. The analysis notes that, "Because eligibility for benefits is determined at different points in the workers' compensation system, the question of whether fewer workers receive benefits resolves into other questions:
- Have the changes to compensability prompted carriers to deny cases more frequently?
- Are workers litigating denials of compensability more often?
- Has there been a change in the number of workers receiving benefits following a denial of compensability?"
In an effort to answer those questions, administrative databases from various state divisions were culled for statistics. Information came from the Division of Workers' Compensation, which maintains the state's integrated database of all information on lost-time cases and denied cases, and the Medical Data Warehouse, which gathers information on medical bills paid for lost-time and medical-only cases. Both divisions compile their data from mandatory carrier reports. Additionally, the study factored in litigation and petitions-for-benefits data from the Division of Administration Hearings.
For comparison purposes, date-of-accident from January 2002 through September 2003 were used to represent the pre-reform period, while date-of-accident from October 2003 and later months marked the post-reform period.
While citing the usual caveats and disclaimers about "alternative explanations" for interpreting the data, the report detailed a number of differences in compensability outcomes between pre- and post-reform trends. The report offered these seven summary conclusions:
- In total number, and relative to the number of lost-time cases, denied compensability cases have increased in the post-reform period having mature data compared to the pre-reform period of January 2002 through September 2003.
- In the post-reform period, denied compensability cases have leveled off in total number and as a percent of lost-time cases following a growth period that began in the pre-reform period.
- Occupational disease cases in the post-reform period have remained unchanged as a percent of denied compensability cases and as a percent of lost-time cases.
- After rising steadily in the pre-reform period of January 2002 through September 2003, the number of litigated cases having compensability as an issue declined in October and November 2003 and trended steadily downward in a pattern roughly parallel to the downward trend in all litigated cases.
- Relative to lost-time cases, litigated cases involving compensability rose in the pre-reform period, declined sharply in October 2003 and continued to diminish slowly before leveling off late in 2004.
- In the post-reform period, the percent of denied compensability cases initiating litigation has declined sharply compared to the pre-reform period.
- The percent of initially denied cases obtaining lost-time benefits has declined in the post-reform period.
The report cautioned that because the state does not have complete medical data for medical-only cases for the pre-reform period, "benefits" in the analysis referred to indemnity benefits only. Also, no data was available concerning workplace injuries not reported to a carrier. If an injury occurred and the employee or employer sought redress outside the workers' compensation system, that data was not factored into the analysis. The report further acknowledged that the decline in litigation could be linked to the cap on claimant attorneys' fees that also was part of the 2003 reform package. The full report, replete with supporting graphs and charts, is available online at www.myfloridacfo.com/WC.
