Stress. Admittedly the watchword for 2020 to-date. It ‘feels’ like nothing has gone right. And everything has gone wrong. (This series has addressed many topics confronting Florida’s businesses during this period, with corresponding remedial suggestions.1) Depressing, no?
Well… There may be one glimmer of hope for business budget planning. Florida’s Office of Insurance Regulation is reviewing a proposal by the National Council on Compensation Insurance proposal to lower, yes you read that right – lower, the average workers’ compensation insurance rates by 5.7%. That decrease, if approved, would be the fourth annual rate decrease – down 7.5% in 2020, 13.8% in 2019, and 9.5% in 2018.3
There is still work to be done before the rate decrease is finalized. For example, the proposed decrease does not account for pandemic-related inputs.4 It is time, then, for Florida’s businesses to offer their comments, which are due by October 23. The Office of Insurance Regulation will account for that input in its decision-making process to accept, decline, or request changes to the National Council on Compensation Insurance’s proposal.
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A company’s ultimate workers’ compensation rate as reflected in its annual premium is data-driven, incorporating the factors of that particular company’s work-related injury and illness claim, reserve, and payout history on a multi-year rolling history, called the ‘Mod Rate’. The Mod Rate is an algorithmic formula which can serve to increase or decrease a company’s annual workers compensation insurance premiums. It is incumbent on each business to carefully (and proactively) monitor its Mod Rate in tandem with its insurance agent. (Unless one likes paying too much year-over-year.)
One relatively simple practice is for a business to pay close attention to every prospective and actual case filing, and ensure those claims are accurate, reasonable, and fair to both employee and employer. Always the first order is worker health and safety, but unreasonable and fraudulent claims can be challenged. As a practical matter, it is easier, and more effective, to challenge an improper claim at the front-end using facts, than to try and reverse a decided payout. Once a loss payment has been rendered, often the only available recourse is to file a law enforcement criminal fraud charge, which can be challenging – at best – to prove.5
Workers’ compensation companies tend to prefer clearing their dockets of open reserves and cases by settling them promptly. It is the policy holder’s ‘job’ to respectfully object when they believe a claim should not simply be settled without proof. Remember – claims and payments are ‘baked’ into the Mod Rate and a company’s over-time workers’ compensation insurance rates.
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This is an issue with which a company cannot spend too much time with its business attorney, insurance agent, and its insurance carrier’s workplace safety consultants. Doing that work can have the collateral benefit of also reducing Occupational Safety and Health Administration claims and penalties.
So, get out the green eyeshades and benefit the bottom line.
2 Source: Regulators eye workers’ comp rate cut.
4 Ibid. “The filing was based on data as of the end of 2019, before the pandemic hit the state. A closely watched issue in the industry involves a 2016 Florida Supreme Court ruling, in a case known as Castellanos v. Next Door Company, that invalidated a law that placed strict limits on fees that could be paid to attorneys for injured workers. Business groups have long argued that the ruling would drive up costs in the workers’ compensation system. [National Council on Compensation Insurance Senior Actuary Jay] Rosen said expenses such as attorney fees have increased but that other “favorable” cost-related trends in the system have offset the increases stemming from the court decision.”
5 This statement comes from the writer’s personal experience as a former general counsel of a company who has had to process a number of claims over time.
Information about Bogin, Munns & Munns’ own response to Coronavirus readiness
– For more information, call Philip N. Kabler of the Gainesville, FL office of Bogin, Munns & Munns at 352.332.7688, where he practices in the areas of business, banking, real estate, and equine law. He has taught business and real estate law courses at the University of Florida Warrington College of Business Administration and Levin College of Law and is the President-Elect of the Eighth Judicial Circuit Bar Association.
NOTICE: The article above is not intended to serve as legal advice, and you should not rely on it as such. It is offered only as general information. You should consult with a duly licensed attorney regarding your Florida legal matter, as every situation is unique. Please know that merely reading this article, subscribing to this blog, or otherwise contacting Bogin, Munns & Munns does not establish an attorney-client relationship with our firm. Should you seek legal representation from Bogin, Munns & Munns, any such representation must first be agreed to by the firm and confirmed in a written agreement.