April 7, 2003
Source: The Executive Office of the Governor
Governor Jeb Bush and Lt. Governor Toni Jennings today announced comprehensive workers’ compensation reforms at the Florida Homebuilders rally at the Capitol. Governor Bush said part of creating a stable business climate in
Florida requires reforming the state’s workers’ compensation system.
“ Florida ’s current workers’ compensation system is crumbling under the weight of increasing cost, endless litigation and rampant fraud,” said Governor Bush. “ Florida ’s businesses simply cannot afford to pay the skyrocketing workers compensation insurance costs any longer. Without these changes, workers’ compensation costs will continue to drive businesses out of the state, and even worse, out of business altogether.”
Governor Bush’s reform would provide a 15 percent decrease in insurance rates. These reductions would come from reducing attorneys’ fees, eliminating exemptions, and alternative dispute resolution reforms. The Governor’s plan will increase benefits for temporarily injured workers and modify the standards for permanent and total disability and still provide savings.
Lt. Governor Jennings, who along with Governor Bush has championed solutions to Florida ’s rising workers’ compensation costs, and helped reform the system, highlighted several of the problems with the current system.
“ Florida ’s workers’ compensation system has fallen far short of the purpose it was expected to achieve. Businesses, especially small businesses and not-for-profits, are having difficulty finding coverage, and the coverage they do have has increased dramatically in the past several years,” Lt. Governor Jennings said. “Medical practitioners at times refuse to treat workers’ compensation patients because of the system’s poor reimbursement rates and administrative burdens. We cannot continue to operate under this system.”
According to studies conducted by the National Council on Compensation Insurance (NCCI), costs for permanent total disability claims in Florida are almost three times the national average; medical costs for permanent partial claims are more than two times higher than the national average; and medical costs for temporary total disability claims are 60 percent higher than the national average.
Other components of Governor Bush’s worker’s compensation reform:
Increased Benefits for Injured Workers:
The goal of any workers’ compensation system should be to provide timely and effective medical treatment and economic support to injured workers at affordable cost to employers. In keeping with that intent of the workers’ compensation system, Governor Bush proposes that the statutorily established benefits for temporarily injured workers be increased to the national average. This increase in benefits will reduce the incentive for temporarily injured workers to seek permanent disability status in order to receive even greater benefits.
Increased Workplace Safety:
Florida ’s workers deserve to work in the safest workplaces possible. Governor Bush proposes a continuation of the current discount for employers who maintain a qualified workplace safety program. In addition, Governor Bush proposes increasing the availability of the University of South Florida ’s SafetyFlorida program, which provides businesses with safety consultation and guidance.
Speedier Claim Resolution:
As first envisioned, the workers’ compensation system was intended to provide injured workers with swift claim resolution so that they could quickly obtain their benefits. The current system is not achieving this goal, as a result of the current hourly fee compensation system for attorneys. Hourly fees promote delaying claim resolution to increase attorney fees. Governor Bush recommends eliminating the hourly fee and replacing it with the contingency fee system, which provides attorneys with proper compensation based on the benefits received.
Improved Access to Quality Medical Care:
Of the 40 states that have medical fees schedules, Florida has the lowest reimbursement levels, which on average are 17 percent below Medicare reimbursement levels. As a result, more experienced doctors do not treat injured workers. Governor Bush proposes increasing the reimbursement schedule for doctors treating injured workers. The Governor also proposes more stringent reviews to ensure that doctors are not unnecessarily treating patients for personal financial gain.
Reduce Tort Litigation:
Many employers find themselves subject to lawsuits, in addition to workers’ compensation claims. This is the result of loopholes and exceptions to workers’ compensation liability. Governor Bush proposes that current law be amended to clarify when workers’ compensation liability is to be exclusive. Governor Bush proposes restoring horizontal tort immunity for construction job site subcontractors. This will prevent subcontractors from having to purchase expensive liability insurance to protect themselves from lawsuits by other subcontractors on the same work site. The high cost of liability insurance, in addition to their workers’ compensation policies, unnecessarily exacerbates construction costs and is ultimately passed on to consumers.
Exemptions:
Exemptions currently in place for construction companies are being abused, despite reform last year by the Legislature. Governor Bush recommends eliminating these exemptions while maintaining the current exemption for small businesses.
Quicker Resolution of Medical Disputes:
Providing workers with quick resolution of medical disputes is critical. Governor Bush proposes a system that will ensure disputes are quickly resolved by giving doctors a greater say as to whether medical treatment is necessary and allowing doctor peer review.
Reduce Workers' Compensation Fraud:
Fraud continues to plague Florida ’s workers’ compensation system. Employers can under-report wages and misclassify employees, employees can fraudulently claim non-existent injuries, and construction companies can abuse the exemption process. Governor Bush proposes increasing penalties against both employers and employees for fraudulently gaming the workers’ compensation system. The Governor also proposes increasing the authority of the Division of Workers’ Compensation to impose sanctions against carriers and employers.
Increased Oversight and Enforcement:
Governor Bush proposes the Department of Financial Services be given broad regulatory authority to investigate, audit and sanction carriers.
In May 2002, the Governor issued an executive order creating the commission on Workers’ Compensation Reform. He charged the commission to study and make policy recommendations regarding the availability and affordability of workers’ compensation claims, changes necessary to reduce the cost of workers’ compensation insurance and the adequacy of benefits for injured workers.
For further information, please visit: www.myflorida.com.
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Florida's Challenge
In Florida , the workers’ compensation system has fallen far short of the purposes it was expected to achieve. According to National Council on Compensation Insurance (NCCI) studies: costs for permanent total disability claims are almost three times the national average; medical costs for permanent partial claims are more than two times higher than the national average; medical costs for temporary total disability claims are 60% higher than the national average; and medical and indemnity benefits for cases with attorney involvement average more than 37% higher than the national average
Florida businesses pay among the highest premium rates in the country for workers’ compensation insurance, while statutory benefits for injured workers are among the lowest in the nation. Businesses, especially small businesses, are having increasing difficulty in finding coverage. Medical practitioners at times refuse to treat workers’ compensation patients, blaming the system’s poor reimbursement rates and administrative burdens. The lack of a clearly defined and focused dispute resolution system has resulted in extensive litigation. Consequently, Judges of Compensation Claims are overwhelmed with large caseloads, case resolution is delayed, and costs are higher. Clearly, Florida ’s system is failing.
On January 31, 2003 , Governor Bush’s Commission on Workers’ Compensation Reform issued its findings and recommendation. The Commission evaluated Florida ’s workers’ compensation system and made policy recommendations in four critical areas:
The Commission found that Florida’s workers’ compensation system is crumbling under the weight of increasing cost, endless litigation and rampant fraud. Florida’s workers’ compensation system is also unduly burdened by extensive litigation. In cases with attorney involvement, medical and indemnity costs are more than 37% higher than the national average. According to a recent report by the Office of Judges of Compensation Claims, there has been a nearly 60% increase in litigation filings since 1998. In just the last year, the number of filings has increased nearly 20%.
Florida's Opportunity
The goal of any workers’ compensation system should be to provide timely and effective medical treatment and economic support to injured workers at affordable cost to employers. A properly functioning system will minimize the disruption to injured employees’ lives by quickly restoring them to their pre-injury economic potential, or as close to that potential as possible. Employers will also benefit, as the disruption to businesses as a result of the temporary loss of the skills and knowledge of the injured employees are minimized. Beyond the benefits to individual employees and employers, the economy as a whole will be more productive and competitive.
The following primary objectives in this reform will strengthen Florida’s economy:
Increased Benefits for Injured Workers:
Despite the high workers’ compensation premium paid by Florida’s employers, the statutory benefits for Florida’s injured workers remain among the lowest in the nation. In keeping with the original intent of the workers’ compensation system, which is to benefit both injured workers and employers, Governor Bush proposes that impairment benefits for injured workers be increased.
Increased Workplace Safety:
Florida’s workers deserve to work in the safest workplaces practicable. Governor Bush proposed continuation of the current discount for employers who maintain a qualified workplace safety program. In August 2000, Governor Bush designated the University of South Florida as the recipient of the Occupational Health and Safety Administration’s Safety Grant Program. Known today as USF SafetyFlorida, the program helps small employers whose workers experience a high rate of injuries and responds to requests by private businesses for safety consultation and guidance. Governor Bush proposes increasing the successful work of the USF SafetyFlorida program by making this valuable service readily available to help all of Florida’s businesses and its workers.
Reduced Litigation:
The dispute resolution process in the workers’ compensation system is in dire need of reform. As first envisioned, the workers’ compensation system was intended to relieve an injured worker from the unnecessary burden of having to endure lengthy litigation in order to obtain necessary benefits. The system has failed in that regard. Unfortunately, the dispute resolution process in the workers’ compensation system is unduly burdensome and unnecessarily delays injured workers from obtaining necessary health and wage benefits.
One significant reason for unnecessary litigation is the structure for compensating claimants’ attorneys. Certainly, the system must allow for an injured worker to obtain counsel, when necessary. However, the current hourly fee compensation system provides an improper incentive for claimants’ attorneys to delay case resolution and drives up the rate cost of litigation. According to the Office of Judges of Compensation Claims, during last year alone, approximately $223 million dollars was paid to claimants’ attorneys, while attorneys defending these claims were paid approximately $112 million dollars. The hourly fee should be eliminated. The contingency fee system currently in statute, which is also the norm in most tort cases, should apply to compensation cases.
Improved Access to Quality Medical Care:
Of the 40 states that have medical fees schedules, Florida has the lowest reimbursement levels, which on average are 17% below Medicare reimbursement levels. As a result of these low reimbursement schedules, the more experienced and higher quality doctors do not treat injured workers. Governor Bush therefore proposes increasing the reimbursement schedule for doctors treating injured workers. The Governor also proposes more stringent over-utilization review to insure that doctors are not unnecessarily treating patients for personal financial gain.
Reduce Tort Litigation:
Despite being required by law to purchase workers’ compensation coverage at an increasingly high cost, many employers continue to find themselves subject to tort lawsuits, in addition to workers’ compensation claims, through loopholes and other exceptions to the exclusiveness of workers’ compensation liability. Governor Bush therefore proposes that workers’ compensation statutes be amended to clarify the situations in which workers’ compensation liability is to be exclusive and to restore horizontal tort immunity for subcontractors on construction job sites.
Exemptions:
Unfortunately, one of the most contentious issues in the workers’ compensation system is construction exemptions. In 1997, a Statewide Grand Jury found that exemptions are often fraudulently obtained and used. Last year the Legislature amended the law regarding exemptions but, unfortunately, the law has not helped. After hearing extensive testimony on the issue of exemptions, the Commission recommended that construction exemptions be eliminated and that the current exemption for up to three owners of a corporation be maintained. Relevant groups, such as the Florida Homebuilders Association, agree with this recommendation. Governor Bush therefore proposes that this proposal be adopted by the Legislature.
Quicker Resolution of Medical Disputes:
Quick resolution of medical disputes is of the utmost importance for an injured worker. A worker injured on the job should not have to endure snail pace litigation for a decision whether he or she needs medical treatment. And doctors should have a greater say as to whether medical treatment is necessary. Governor Bush therefore proposes that a system, which includes peer review by doctors, be enacted which insures quick resolution of medical disputes.
Reduce Workers' Compensation Fraud:
Fraud continues to plague Florida ’s workers’ compensation system. Fraudulent activities occur in many ways including employers underreporting wages and misclassifying employees, employees fraudulently claiming non-existent injuries, and construction workers abusing the exemption process. Florida led the nation in 2000 with the number of cases referred for prosecution and the number of convictions for workers’ compensation fraud. More, however, must be done. Governor Bush proposed increasing penalties against both employers and employees for fraudulently gaming the workers’ compensation system. The Governor also proposed increasing the authority of the Division of Workers’ Compensation to impose sanctions against carriers and employers.
Increased Oversight and Enforcement of Insurance Companies:
The Governor’s Commission heard testimony from numerous injured workers who related that carriers frequently deny claims and benefits owed to the worker. Florida’s workers deserve better. Governor Bush therefore proposes that the Department of Financial Services be given broad new regulatory authority to investigate, audit and sanction carriers.
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