Traditionally, after the enactment of any major insurance reforms, the spoken, and often times unspoken rule is that a certain number of years must pass before it can be fully evaluated. This maxim generally holds true depending on the line of insurance with the exception being if there is some crisis or timeline that requires lawmakers to act. For example, one or more major hurricanes can be enough to send lawmakers back to Tallahassee and address snags in the safety nets that are designed to ensure policyholders have the resources they need to cope with a disaster. In the case of auto personal injury protection insurance reform, lawmakers established their own deadline as a means to force themselves to deal with the issue. As it is Florida's no-fault law is scheduled to expire in October due to lawmakers' inability to hammer out a solution to the much-maligned law. The only thing standing between the sunset of the no-fault law and its possible resurrection is if the issue is included in a June special session on property taxes.

Arguably, the most regulated line of property and casualty insurance, workers' compensation, presents a different set of variables. Problems develop over time and often center on legal decisions that can take years to be resolved. That is why workers' compensation crises are systemic in nature and largely immune from the types of changes that require immediate action on the part of lawmakers. Case in point, after three years of study, lawmakers finally enacted the 2003 reforms, marking the first time in ten years that lawmakers enacted a new law. As a loose rule when it comes to workers' compensation, lawmakers, regulators, and employer/carriers generally adopt the position that it takes major reforms four years before they are fully reflected in the cost of claims and thoroughly tested in the courts. So far, the verdict on the 2003 reforms is positive as seen in the drop in employers' premiums and the economic performance of carriers. Lawmakers, however, did address a few workers' compensation issues in the 2007 session, most of which have debated by lawmakers over the past several years.

First Responders

After four years on lawmakers' agenda, the House and Senate finally agreed on a bill (HB 746) that would grant first responders certain rights under the 2003 laws. The bill basically addresses occupational disease claims and other medical treatments. The National Council on Workers' Compensation Insurance estimated that first responders' classes would increase by 5.4 percent or $11 million. The state's Division of Risk Management estimated it would cost $210,000 due to injuries involving state law enforcement agencies. The Florida Association of Counties and Florida League of Cities vigorously protested against the bill, which they maintained would significantly increase their workers' compensation costs. Since the overwhelming number of cities and counties are individually self-insured, NCCI does not collect information on the municipalities' claim costs, which means there is no pool of data to estimate the true impact of the law changes on the municipalities' workers' compensation costs.

The bill starts by defining which first responders are covered under the legislation. Relying on statutory definitions, the bill encompasses firefighters, emergency medical technicians, law enforcement officers, and medical and paramedic personnel who serve as hired employees or on a voluntary basis. One provision highly sought by the first responders addressed any adverse reactions a first responder may have due to a small pox vaccination. Due to the ongoing concerns about the possibility of terrorist attacks involving the use of small pox, the federal government encouraged front-line first responders to be vaccinated against the disease. However, the inoculation carries with it the possibility that a first responder could have a negative reaction. The federal government has set up a fund to compensate first responders and their families if a first responder suffers a medical problem due to the inoculation. However, that program is secondary to any state workers' comp benefits. The bill clarifies that an adverse reaction to a small pox vaccination would automatically be deemed a compensable injury. A total of roughly 4,000 individuals in the state have been inoculated with 14 individuals suffering a negative reaction. Another area addressed under the bill allows first responders to receive permanent and total disability supplemental benefits if their employer does not participate in the federal social security system.

One of the major points of the bill is a provision revising the standard of proof that a first responder must meet in order to collect benefits for toxic exposure claims. In 2003, the legislature changed the statutory proof stemming from exposures to toxic substances, occupational diseases, and repetitive exposure from a clear and convincing standard to a preponderance of the evidence, which is a much tougher legal standard.

The firefighters' union stated the increased rule of evidence was unfair and unnecessary, especially since the state Fire Marshall's office had already published a list of what it considered dangerous substances. As a result, the lawmakers reverted back to pre-2003 law and reinstituted the clear and convincing evidence standard. The bill makes several changes in the area of psychiatric injuries. In the pre-2003 law, for a mental or nervous injury to be compensable it must be the direct result of a physical injury. Case law from that period also established that for a finding of compensability there must be clear and convincing evidence that the psychiatric injury was directly linked to the initial injury suffered by the claimant. The pre-2003 law also placed no limits on the permanent impairment rates for a mental or nervous injury, and, likewise, placed no limit on temporary indemnity payments once the claimant reaches maximum medical improvement.

The 2003 law continued the precedent codifying that a mental or nervous injury must be shown by clear and convincing evidence that it was directly caused by a physical injury. The law, however, did include a provision that if the psychological injury were not the result of a physical injury, the claimant could still receive medical benefits. The law also placed a six-month cap on the payment of temporary benefits starting when the claimant reaches maximum medical improvement. Additionally, the 2003 law placed a one percent limit on permanent impairment benefits for mental or nervous injuries. Under the bill just passed by the legislature, the compensability of a mental and nervous injury is still linked to a physical injury. However, lawmakers agreed to remove the limit on temporary benefits and lifted the one percent cap on permanent impairment benefits.

Insurance Contracts

Lawmakers addressed one issue dealing with the business practices of general contractors hiring subcontractors. The issue hinged on whether general contractors can reject subcontractors who have insurance through self-insurance funds that are not rated by a national rating firms such as A.M. Best or Demotech. The bill creates Chapter 627.442, Florida Statutes, and reads as follows: “A person who requires a workers' compensation policy pursuant to a construction contract may not reject a workers' compensation insurance policy issued by a self-insurance fund that is subject to Part V. of Chapter 631 based upon the self-insurance fund not being rated by a nationally recognized insurance rating service.” There are currently four self-insurance funds in the state. They are the following: Florida Citrus, Business, and Industry Fund, the Florida Retail Federation Self Insurers Fund, the Florida Rural Electric Self Insurers Fund, and the FRSA Self Insurers Fund. None of these funds are rated by a national rating organization.

Owner-Controlled Insurance Programs

Another insurance bill clarified how workers' compensation coverage could be handled on “owner-controlled” insurance programs formed specifically to construct public projects such as highways. Under current law, the public works programs may secure various insurance policies for multiple employers needing coverage such as general liability and workers' compensation. The public works project is required to have a deductible or self-insurance retention of $1 million. The bill states that general contractors and subcontractors working on the job are not required to individually satisfy the eligibility required to secure a large deductible policy. However, general contractors and subcontractors can combine their payrolls separately under the owner-controlled project as long as the minimum deductible for the project is more than $100,000 or when the standard premium under the construction project is $500,000 or more.

Special Reports /

Lawmakers Sign Off on Workers' Comp Bills

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