Big workers' compensation changes are coming to all Florida employers.
These are a result of recent Florida Supreme Court decisions, which led to the approval by the Florida Office of Insurance Regulation to increase the overall statewide workers’ compensation rate by 14.5 percent on Dec. 1. The increase applies to new and renewal business, with no change for current in-force policies.
But the costs don’t stop there.
Let’s look at what employers can do to protect themselves in the face of these changes.
To successfully navigate these issues, employers should set up or update a comprehensive claims-management strategy.
■ Start by implementing an effective hiring process and human resources program with well-documented policies and procedures. This is the first line of defense against hiring employees who look to profit from workers’ comp settlements at their employers’ expense.
■ Institute proactive injury investigation/claims reporting processes and share them with employees.
■ Establish a strategic return-to-work/modified-duty program for injured workers.
■ Ensure the timely and proper completion of the wage statement for your insurance carrier to determine the average weekly wage for an injured employee. Just being a few cents off can lead to substantial legal fees and increased claims.
■ Manage and communicate throughout the claim process. The employer, insurance carrier, health care provider and adviser partner (agent) should form an effective team to protect the interests of all parties.
Claims advocacy and prevention
Employers should either have an internal claims manager to monitor the process or outsource to an experienced claims advocate who can offer expert guidance to reduce the frequency and severity of claims. Ask your agent what the plan is to address the strategy and how they are accountable to you as the business owner and client.
Establishing a robust risk-management and workplace-safety program will help prevent and/or mitigate workplace injuries. And, as reported by the National Safety Council's “Injury Facts” 2014 edition, various studies have shown that an investment in proactive workplace safety processes can yield a return on investment of $2 to $6 for every $1 spent. A better safety record also will lead to lower workers’ compensation expenses in the future.
How Florida employers got to this point
Before 2003, workers’ comp cases often resulted in large legal bills, with Florida known for its high workers’ comp rates to pay those bills. The Workers’ Compensation Reform Act of 2003 was intended to reduce rates and fraud, improve injured worker benefits and generally make the process more efficient. But in what some are viewing as a swing of the pendulum in favor of workers and their claims, two 2016 Florida Supreme Court rulings have changed things dramatically.
The ruling in the first case, Marvin Castellanos v. Next Door Co., found that a 2009 law violated due process rights of injured workers by limiting attorney fees.
The second case, Westphal v. City of St. Petersburg,dealt with the limitation of temporary total disability benefits to 104 weeks. Certain unsettled claims involving accidents that occurred since Jan. 1, 1994, may now be retroactively eligible for benefits at a maximum of 260 weeks.
Effective claims advocacy, management and communication, along with robust risk management and work safety programs, will enable employers to be ready for the upcoming changes and continue to operate their businesses profitably.
Article appeared in the Sarasota Herald Tribune on November 14, 2016. Josh Helmuth is risk adviser in the Sarasota office of Lykes Insurance, a Florida-based commercial insurance firm.