Gov. Bush Signs Fla. Workers' Comp Bill

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By Michael Ha

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NU Online News Service, July 15, 3:25 p.m.EDT?Florida Gov. Jeb Bush today signed into law a billdesigned to reform the state's workers' compensation system bytightening benefit eligibility requirements and restricting legalfees.

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The measure, S.B. 50, which the governor signed at noon today inSt. Cloud, a suburb of Orlando, Fla., takes effect Oct. 1.According to proponents of the legislation, it should help repairFlorida's workers' comp system, which has been burdened by soaringcosts.

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"This legislation is a great example of what can happen when theFlorida Legislature works together. Florida's workers' compensationsystem was crumbling under the weight of rampant fraud andskyrocketing insurance costs," Gov. Bush said at today'ssigning.

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He said also that the measure will produce 12.5 percent costsavings to his state's workers' comp system.

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"Gov. Bush signed the bill at a construction site in St. Cloud,and that was very appropriate because construction companies havebeen really hard-hit by the problems in Florida's workers' compsystem," noted Julie Pulliam, public affairs director for theAmerican Insurance Association Southeast region. AIA is based inWashington, D.C.

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"We expect construction companies, along with other industries,will benefit from this new law," Ms. Pulliam told NationalUnderwriter.

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Cecil Pearce, A.I.A. vice president for the Southeast region,also added that this bill "represents the most important changes toFlorida's workers' compensation laws in 10 years, and they are longoverdue."

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Ms. Pearce pointed out that carriers' costs had escalated to an"unsustainable level" in Florida, and that they were paying out$1.27 for every dollar in premium. "Availability had also become anissue, as insurers questioned whether they could continue toparticipate in the Florida workers' comp market," she said.

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A new study released this week by the Workers CompensationResearch Institute also argued for the need to improve Florida'santiquated workers' comp system--the Cambridge, Mass.-basednonprofit research group found that, for 1999 claims evaluated inmid-2000, a workers' comp claim in Florida cost an average of$3,081.

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This average figure for the Sunshine State was some 18 percenthigher than the median for the 11 other large states also examinedin the group's study.

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According to Downers Grove, Ill.-based Alliance of AmericanInsurers, the new law would play a significant role in limiting thecost of insuring Florida workers against injury and even boostingthe state's economic strength.

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"By signing this bill into law, the governor has begun theprocess of easing the heavy burden that Florida businesses pay eachday by cutting the waste and fraud inherent in the state's currentworkers' compensation system," said William Stander, Southeastregional government affairs representative for the Alliance.

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Mr. Stander noted that Florida businesses currently pay thesecond-highest rates for workers' comp insurance in the country,while injured Florida workers get the second-lowest benefitlevels.

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Dave Anderson, Alliance vice president of workers' compensationand health, also predicted that the reduced workers' comp costswould help bring down the overhead for Florida businesses, "givingthe state's economy a needed lift and indirectly creating more jobsfor Florida citizens, particularly in the small-businessarena."

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The reform bill, among other things, increases fraud penaltiesand alters the criteria for determining "permanent totaldisability." The new bill, for instance, would eliminate the use ofthe Social Security disability test--instead, it would requireclear evidence from workers to ensure that they have truly suffereda "catastrophic injury" that makes them incapable of performing anywork.

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Another provision in the bill would limit hourly fees fordefense attorneys to medical-only cases. Such hourly paymentarrangements, some critics have argued, have tended to create anincentive for lawyers in stretching out legal disputes.

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Also included in the bill is a provision that repeals a loopholeused by some in the construction industry to avoid participation inthe workers' comp system.

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