The Legislature giveth, the Courts taketh away.
On October 23, the Florida Supreme Court issued its long-awaited opinion in the case of Emma Murray vs. Mariner Health Inc. and ACE USA, which sought to reverse part of the 2003 workers' compensation reform package limiting a claimant attorney's fees.
The Court called the fee language "ambiguous," opining that a "reasonable attorney's fee" should be determined based on factors in the rules regulating the Florida Bar, including time spent. That decision eliminated the statutory caps and allowed the return of hourly fees.
As promised, the National Council on Compensation Insurance (NCCI) soon sent Insurance Commissioner Kevin McCarty a new rate filing: "NCCI estimates that the full impact of Emma Murray will be an increase in overall Florida workers' compensation system costs of 18.6 percent. NCCI anticipates that it will take two years for the full impact to be realized, and therefore proposes a first-year increase of half of the full impact. This equates to a proposed first year rate level increase of 8.9 percent in overall system costs."
NCCI's filing "proposed that the increased rates apply to new and renewal policies that are effective on or after March 1, 2009. Additionally … the increased rates will apply to all policies in effect on March 1, 2009, on a pro-rata basis through the remainder of the term of these policies."
Sound bites were soon flying from all quarters.
The Florida Association of Insurance Agents: " … the progress could all be for naught since the reforms have just failed their first serious legal challenge. … Florida's high court overturned the attorney fee provision, which was the cornerstone of the savings enacted in 2003 and the loss of which threatens to wipe out all of the savings since then."
The Workers' Compensation Coalition for Business & Insurance Industry: "Today, the Florida Supreme Court delivered a blow to Florida's future economic prosperity with their decision to … reinstate hourly attorney fees. The Court's ruling could derail the success of Florida's current workers' compensation system … through potential rate increases that will constrict job growth and employee raises."
The Florida Chamber of Commerce: "This is just another example of plaintiffs' trial lawyers attempting to bleed more attorney fees from Florida employers… ."
Implying that this decision is a death knell for workers' compensation reform and cataclysmic for business is a bit over the top. We should all remember that rates have decreased more than 60 percent since 2003. NCCI's recent proposed rate increase – to take place over two years – follows on the heels of a rate decrease of the same percentage that comes into play January 1, 2009.
Sound bites are fine, and claimants' attorneys are not the most cuddly people, but they do not make or break the system on their own. As Herbert Hoover reportedly muttered as he shouldered the entire blame for the Great Depression: "I didn't know I was that powerful."
In fact, an entirely separate court decision that is just now hitting the news may have significant consequences. In accordance with a ruling earlier this year by the 1st District Court of Appeals, Florida's Three-Member Panel recently approved a new payment method for outpatient care under workers' compensation. The fees would be based on Medicare's Outpatient Prospective Payment System, adjusted using Florida-specific multipliers based on "usual-and-customary charges."
In a well-thought out rebuke of this methodology, industry guru Joe Paduda says, "Providers increase charges around 14 percent every year. This methodology now locks in that trend rate. This is going to end up costing the comp industry a lot more than many think."
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.