The National Council on Compensation Insurance said it isdeciding whether to appeal the Florida insurance commissioner'sdecision today denying an 8.9 percent rate increase request forworkers' compensation insurance.

Florida's Office of Insurance Regulation asked NCCI to reducethe increase request by 2.5 points to 6.4 percent.

NCCI sought the hike after the Oct. 23, 2008 court decision,Emma Murray vs. Mariner Health and ACE USA, tossing outrestrictions on fees for attorneys representing injured workers.NCCI estimated the ruling would expand system costs.

The Florida Supreme Court decision found that workers' compreform legislation related to attorney fee changes passed on Oct.1, 2003 was contradictory.

NCCI said the ruling eliminated the statutory schedule forclaimant attorney fees and returned Florida to prereform law onclaimant attorney fees, namely hourly fees.

On Nov. 14, 2008, NCCI proposed an increase of 8.9 percent forthe Jan. 1, 2009 rate level. NCCI said it estimated that the fullimpact of the Murray ruling would be an increase in overall Floridaworkers' compensation system costs of 18.6 percent.

The organization said it anticipated that it would take twoyears for the full impact to be realized, and therefore proposed afirst-year increase of half of the full impact, or 8.9 percent inoverall system costs.

Insurance Commissioner Kevin McCarty in rejecting the requestcited disagreements with the data and methodology the NCCI used tocalculate the projected effect of the court's ruling.

NCCI had proposed an effective date of March 1, 2009 applicableto new, renewal and outstanding policies.

The state's Office of Insurance Regulation today issued an orderdenying the rate increase and requested NCCI make an amended filingfor an overall workers' compensation rate-level increase of 6.4percent applicable only to new and renewal policies effective April1, 2009 (not applicable to outstanding policies).

The OIR's order requested that NCCI amend its filing by Feb. 2.NCCI said it has the option to appeal and "is currently in theprocess of reviewing the order and making a decision on how torespond."

OIR said that over two years, the 6.4 percent increaserecommended by Commissioner McCarty could amount to a 13.1 percentincrease, unless changes to the system are made to minimize theimpact of attorney involvement.

In October 2008, Commissioner McCarty approved an 18.6 percentreduction in rates, effective Jan. 1 2009. It was the sixthconsecutive drop in workers' comp rates since the FloridaLegislature passed the reforms in 2003.

OIR said with the change, the cumulative overall statewideaverage rate decrease since 2003 is more than 60 percent. The NCCIoriginally had requested a 14.1 percent decrease in its filing ofAug. 27, 2008. The further reduction in rates had the potential tosave Florida employers more than $610 million.

When filed and approved, OIR said, Monday's recommended 6.4percent increase in rates would add about $172 million in insurancecosts for Florida employers. But in combination with the 18.6percent decrease that took effect Jan. 1, the net effect still is asavings of $438 million.

"It's very early to know for sure what the full impact of theSupreme Court's decision on workers' compensation rates will be,"said Commissioner McCarty in a statement. "But if history holdstrue, we will see these rates start to go up as more attorneys getinvolved, likely extending the litigation process with workers'compensation cases."

He added that he is "cautiously optimistic that business leadersand the plaintiff attorneys will get together and propose anamendment to our law that will help to ensure that workers'compensation insurance remains affordable for our employers, whilealso protecting injured workers by ensuring their access to courts,medical care and other necessary benefits."

He noted that prior to the legislative reforms, Floridaconsistently ranked No. 1 or No. 2 in the country for the highestworkers' compensation rates. Post-reform, however, Florida droppedout of the top 10 rankings.