How Changes to Florida Laws Are Impacting Workers' Compensation Insurance

Employers in Florida should expect higher workers’ compensation claims costs in 2017, according to speakers on a webcast sponsored by Marsh’s Workers’ Compensation Center of Excellence (COE).

Two recent decisions by the Florida Supreme Court — Marvin Castellanos v. Next Door Company and Bradley Westphal v. City of St. Petersburg — have already had significant cost implications for the Florida workers’ compensation system and employers operating in the state, including eliminating statutory caps on attorney fees and reducing caps on temporary total disability benefits. As of December 1, 2016, workers’ compensation rates in Florida increased 14.5%.

These changes are likely to have both prospective and retrospective impacts on workers’ compensation claims in Florida, said Scott Lefkowitz, a partner at Oliver Wyman Actuarial Consulting. This means that not only will loss forecasts increase, but balance sheet accruals for the retained cost of old claims will also increase for employers operating in Florida.

The court decisions will also likely drive more litigation and higher costs per claim, sad Dan Jaffe, a shareholder at Florida-based law firm Rissman, Barrett, Hurt, Donahue, McLain & Mangan, P.A.

Among other effects, the rulings are expected to lead to more petitions for benefits, more discovery on each claim, higher defense bills, and higher settlement values.

To manage these higher workers’ compensation claims costs, employers must intervene and evaluate potential costs early in the life of each claim and work closely with defense attorneys to seek to quickly settle cases, among other tactics, Jaffe said.

Employers can also take steps to better manage claims, said Dennis Tierney, director of workers’ compensation claims in Marsh’s Workers’ Compensation Center of Excellence. For example, employers can update claims-handling instructions to reflect the new environment in Florida, take action to avoid litigation, and improve their medical management and return-to-work programs.

Listen to the webcast replay.