NCCI Proposes Decrease to Florida Workers Compensation Rates with 2015 Rate Filing

The Office of Insurance Regulation today received the 2015 Florida workers’ compensation rate filing by the National Council on Compensation Insurance (NCCI), which proposes a statewide average rate decrease of 2.5% – the first decrease in four years.  Per the NCCI, fewer claims and a lower amount of loss is responsible for the proposed rate decrease.

For more information about the NCCI filing, please read the NCCI Statement.

Risk Transfer Receives Golden 100 Award from Orlando Business Journal

Risk Transfer is honored to be a member of Orlando Business Journal’s Golden 100 List of Privately-Held Companies.  Several members of the Risk Transfer team will be attendance at the award ceremony today.  Each year, Central Florida companies are ranked by the gross revenue for the most recent year-end.  Last year marked a milestone in Golden 100 history with not one, but two, billion-dollar companies on the list.  We look forward to contributing to our community and Orlando Business Journal for years to come.

WCI and NCCI Hold Breakout Session for Workers’ Compensation Insurance Agents

For the PEO industry, I’d like to thank the Workers’ Compensation Institute (“WCI”) Co-Founders/Co-Chairmen Mr. James McConnaughhay and Mr. Steven Rissman for their long-term support of Professional Employer Organizations (“PEOs”). Over the years, Steve and Jim have provided PEOs and their extended family a forum to discuss matters of importance with the backdrop being the overall workers’ compensation market and all players of significance within it. There is nothing even close to this educational conference for any line of insurance in size and scope. Jim and Steve – nice job my friends in continuing to grow and expand an already outstanding event!

On that very theme, the WCI in conjunction with the National Council of Compensation Insurance (“NCCI”) held the very first Agent Breakout Educational Session. The summary of this two day event from the WCI site is as follows:

“The traditional role of the insurance agent in the workers’ compensation system is to sell a policy of insurance and when a claim is filed, refer the injured worker (assuming the agent even knows about the occurrence of an accident) to the claims department for the insurance company. That hands-off approach has changed for the successful agent dealing in the workers’ compensation system. Whether the impetus is customer retention, providing value added services, or creating increased marketing opportunities, the agent must play a vital role in assisting in the prevention of accidents on-the-job (risk management) or assisting the insured employer in navigating through the ever-increasing difficult tasks of timely complying with statutory and regulatory mandates. A session on Monday, August 18, at the Workers’ Compensation Educational Conference, is designed to help the agent understand workers’ compensation and be able to teach their customers their obligations under the law.”

I was honored to sit on a panel with two of the sponsors of the Agent Breakout Session – Pat Borowski, Senior Vice President of The Professional Insurance Agents of America (“PIA”) and Dennis Pillsbury, Executive Editor of Rough Notes magazine. We discussed areas of interest in the following areas:

Alternative Staffing Trends – The rapid uptick in the usage of both “Temporary Staffing” and PEO models, for what reasons and at what cost(s). Continued confusion between coemployment and contingent labor in light of the Affordable Care Act has spawned very close scrutiny by the actuarial bureaus, the regulators and the legislatures across the country.

Technology and its impact on the management and usage of big data. Quantum leaps in technological advancements coupled with the fact that 25% of all current Insurance Producers will retire by 2017 will create disruptions that will have the fast eat the slow versus the big eating the small.

Employment trends in the areas of oil and gas (fracking) and marijuana cultivation and usage

The need for carriers and agents to share information and data to do a better job for our policyholders. Areas like portfolio management and cost containment are good for everyone if properly aligned.

It was an honor to discuss these issues with Pat and Dennis and I look forward to next year’s agent track and hope to be a part of it again.

To highlight the importance of data management and visualization, RiskMD LLC has provided the following claims study on the Miami metropolitan area.  This view contemplates claims frequency and severity for a prominent book of co-employed Workers’ Compensation business and is updated in near real-time per the payroll uploads of its insureds.  We look forward to seeing you in beautiful Miami Beach for the 2014 Annual National Association of Professional Employer Organizations (NAPEO) Conference.

PCI’s Brown: Industry Needs Fast Response to Ruling on Florida Workers’ Compensation

Appeal Expected Over Ruling Overturning Florida Workers’ Comp System
By Michael Adams | August 19, 2014
Florida Underwriter

A Florida circuit court judge has ruled that the state’s workers’ compensation law is unconstitutional because it no longer provides adequate benefits to injured workers giving up their right to sue.

Florida 11th Circuit Court Judge Jorge Cueto handed down the ruling in a case (Padgett v. State of Florida No. 11-13661 CA 25) that could upend the state’s nearly 80-year workers’ compensation law.

The case has its genesis in a 2012 instance where a state government worker, Elsa Padgett, sustained an on-the-job injury. After a fall, Padgett had to have a shoulder surgically replaced and was forced to retire due to complications.

Padgett, along with several trial bar groups, argued that her workers’ compensation benefits were inadequate and the law unfairly blocked her constitutional right to access the court.

The workers’ compensation system is by law the “exclusive remedy” for injured workers. Injured workers are provided medical benefits and certain wage-loss benefits in exchange for forgoing the right to sue their employer in court.

Cueto, in a 20-page ruling, avoided making any specific comments on the details of Padgett’s case other than to rule in her favor.

Instead, Cueto focused on the exclusive remedy provision of the law, finding that due to the many cuts in medical and wage-loss benefits made by lawmakers over the years, the system no longer represents a fair deal for injured workers.

Cueto singled-out workers’ compensation changes made by lawmakers in 2003 that included one requiring injured workers to pay medical co-pays after reaching a point of maximum medical improvement. The 20o3 reforms also eliminated one class of wage-loss benefits while raising the eligibility criteria injured workers must meet to receive permanent benefits.

“The Act of 2003 no longer provides full medical benefits or any compensation for permanent partial disability,” opined Cueto, adding that “it is inadequate as an exclusive remedy for all injured workers.”

Florida Attorney General Pam Bondi, who did not directly intervene in the case on behalf of the state, nonetheless submitted a brief defending the 2003 law changes.

Bondi said that the law remains a reasonable alternative to a tort system, even as she acknowledged “some individual workers may be worse off with workers’ compensation in a particular case.”

Bondi also argued that the 2003 reforms were well within the legislature’s discretion since they were in response to an overwhelming public need: the high cost of workers’ compensation premiums.

Bondi cited a 2003 state Senate Banking and Insurance Committee report that found that in 2000 Florida had the highest premiums in the country and in 2001 was ranked second behind California. The report also said that Florida’s medical cost for permanent partial disability claims was twice the national average.

Since the 2003 reforms, lawmakers and state officials have praised the success of the reforms as workers’ compensation rates have been cut 56 percent.

Cueto, however, took exception to the fact that the workers’ compensation law was designed to primarily favor the cost of insurance to employers at the expense of injured workers’ benefits.

“The purpose of a workers’ compensation act is not for it to be used as a weapon in an economic war,” wrote Cueto. “Its purpose is to provide adequate compensation for on-the-job injuries in place of the tort remedy so as to relieve society from the cost of industrial injuries.”

Kimberly Fernandes, a partner with the Kelley Kronenberg law firm that represents insurance companies, said she believed Cueto’s ruling will be appealed and for now there will be no change in how the workers’ compensation system operates.

However, she acknowledged, that companies are taking the ruling seriously.

“The word on the street is that nobody wants to sit and let this happen,” Fernandes said. “But some say it is a signal of things to come, while others say it is just the product of a rogue judge.”

Mark Zientz, representing the Florida Workers’ Advocates, an intervenor in the case, said he was surprised at Cueto’s ruling despite the fact the judge ruled the way his organization wanted.

“It was sort of like the boy who said the emperor has no clothes. Everybody knows it, but nobody up until now has been willing to say it,” said Zientz.

Zientz expects that Bondi’s office will appeal the ruling. If and when that happens, Zientz said, the FWA plans to ask Florida’s Third District Court of Appeals to cede its jurisdiction to the Florida Supreme Court.

The state Supreme Court is already considering several other similar cases including a case [Westphal v. City of St Petersburg SC13-1930], where a lower court initially ruled that a 104-week limit on temporary benefits was unconstitutional. The lower court later reversed its ruling, but asked the high court to consider the case as a matter “of great public importance.”

Zientz takes it as a good sign that cases such as Westphal, and potentially Padgett, are making it to the Supreme Court.

“This is something that is on the Supreme Court justices’ mind, whether these low benefits are adequate as a replacement for a tort system,” said Zientz.

Property Casualty Insurers Association State Government Counsel Donovan Brown said Cueto’s ruling shocked the industry, business groups and other stakeholders.

“Everyone is concerned about the implications of this case,” said Brown. “The exclusive remedy provision of the law is one of the lynchpins of workers’ compensation in Florida.”

Brown said that all options are on the table when considering the industry’s next move. He said that includes exploring legal options and, if necessary, a legislative response to the ruling even it’s not yet clear what that would look like.

Time is of the essence, said Brown.

“The industry needs to take action as soon as possible,” said Brown. “Without that the law is influx and that will create a lot of uncertainty.”

Claims Frequency Down in Workers Compensation – NCCI

Great article from Risk & Insurance on claims trends…

One of the many beauties of PEO is our ability to follow these same trends two years before the carriers do. Our data has far, far less credibility then what NCCI looks at (“every flip of the coin”), but it is within the policy year (before audit) and the sample is enough to spot outliers and react quicker as a result…

WC Frequency Poised to Continue Long-Term Decline
Following a 2010 uptick, claims frequency has declined for three straight years at an average rate of about 3 percent per year.
By: Nancy Grover | August 18, 2014 • 3 min read
Topics: Claims | Workers’ Comp
downward dollar
Injuries involving the arms and shoulders bucked the trend of declining frequencies of most other body parts over the past five years. That’s among the findings in a new report on claims frequency in the workers’ comp industry.

While the Great Recession was likely responsible for frequency changes in recent years, other factors are now apparent. NCCI has drilled down into the particulars driving recent rates of injuries.


“The 2010 increase in frequency, the first increase in 13 years, may have been the result of recession-related factors,” said the research brief. “Despite the 2010 uptick, claim frequency resumed its decline in Accident Years 2011, 2012, and 2013. These are very positive signs that suggest that frequency will continue its historical long-term rate of decline.”

The research brief, Workers Compensation Claim Frequency — 2014 Update, expounds on data presented at NCCI’s Annual Issues Symposium earlier this year. The report also includes detailed information on frequency changes by selected claim characteristics and for policies with versus without small deductibles (see box).

Overall Trends
“Claim frequency increased 3.5 percent in Accident Year 2010, the first significant increase in frequency in 20 years,” the report states. “Following the 2010 uptick, claim frequency has declined for three straight years at an average rate of about 3 percent per year.”

Evidence suggests an influx of small lost-time claims contributed to the increase in claims frequency for AY 2010. Workers fearful of losing their jobs may have delayed filing claims in 2009, but then filed them when the economy began to rebound, the authors suggest.

“Despite the 2010 uptick, claim frequency resumed its decline in Accident Years 2011, 2012, and 2013. These are very positive signs that suggest that frequency will continue its historical long-term rate of decline.” — NCCI

One of the changes seen in the most recent figures is the significant decline in frequency of claims above $50,000 in accident year 2012. These claims declined by more than 7 percent, whereas claims between $10,000 and $50,000 declined by 3.1 percent and small claims declined by just 1.4 percent. A closer look reveals two major drivers in the larger claims category.

“Within the Part of Body group, we found that the frequency of lower back claims declined by 11 percent versus 6 percent for all other claims in the category,” the report says. “Similarly, within the Cause of Injury group, we found that the frequency of slip and fall injuries declined by 12 percent versus 4 percent for all other claims in the category.”

Additional Breakdowns
Over the last five years, the frequency of injuries for most body parts declined by 13.9 percent while the frequency of injuries involving multiple body parts declined by 22 percent.

The frequency rate for arm and shoulder injuries, which represent 15 percent of injuries, remained flat. “This may be influenced by an older workforce,” the report suggests, “where rotator cuff injuries are not uncommon.”

In terms of the injury type, frequency for permanent partial and temporary total claims were consistent with the overall decline of 13.9 percent for all injury types while fatal and permanent total claims showed more volatility each year, due to the smaller volume of these claims. The authors note that the figures are based on injury type reported as of first report and that the development of claim counts can differ considerably as they reach ultimate level.

“For example, subsequent to first report, some claims will become fatal claims and others will become PTD claims,” the report explains. “Fatal claim frequency at first report is more than three times higher than permanent total disability claim frequency. However, this difference will decline as claims age since more PTD claims than fatal claims will emerge beyond first report.”


Sprain/strain, comprising the majority share of claims by nature of injury, declined by 10 percent. That compares to a decline of 17 percent for all other categories combined. The frequency of carpal tunnel syndrome claims dropped by 25 percent, although the rate of decline has slowed in the most recent years.

In terms of the cause of injury, there was a steep drop in the frequency of cumulative injury claims — more than 18 percent. Injuries in the category of cut/puncture/scrape dropped by 23 percent. “A possible explanation is that the types of injuries in both of these categories may be relatively more preventable through loss control and safety measures.”

Nancy Grover is co-Chair of the National Workers’ Compensation and Disability Conference and Editor of Workers’ Compensation Report, a publication of our parent company, LRP Publications. She can be reached at
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NCCI Update on Endorsement, Definitions, and Data Subcommittees

The updates below are provided by the NCCI and its subcommittees representing PEO/Temp Staffing ventures such as 1) new PEO alternate co-employment endorsement, 2) PEO vs Temp Staffing definitions, and 3) POC/data reporting.  All related documents to this update are posted below the highlights and can downloaded to your computer or mobile device.

Endorsement Sub-Committee

  • PEO CO Alternate Co-Employment Endorsement  very well received
  • Additional research to be done by subcommittee to identify states where co-employment may be named something else and/or is not applicable to identify state exceptions that may be needed for the endorsement
  • No interest at this time in additional paper endorsements for adding and deleting clients
  • The subcommittee would like to continue on to:
    • Poll carriers on their use of the industry endorsements
    • Look into the interest in modernizing the forms with today’s language, and report back to the committee accordingly

Definitions Sub-Committee

  • It was discussed that both ASA and NAPEO are in agreement with the definitions provided; including sign-off from their respective Boards
  • The similarities and differences were discussed between PEOs and staffing firms
  • Recommendations on enhancing the definitions are requested  for review by the sub-committee

POC/Data Sub-Committee

  • Findings were well received and accepted by the committee
  • NAPEO expressed interest in working on an article for their magazine and possibly a webinar to work with clients to get carriers the information that they need that can ultimately be passed on to the state regulatory agencies through proof of coverage

PEO Meeting 7-23-14
PEO Data – POC Subcommittee Update 07-23-14
PEO Definition Final for NCCI
NCCI – Definitions
NCCI PEO Endorsement Subcommittee
NCCI PEO Specific Endorsments-State Grid
PEO CO Alternate Co-Employment Endorsement 5-19-14
Staffing Service Definition

69th Annual Workers’ Compensation Educational Conference

Join Risk Transfer and RiskMD at this year’s annual Workers’ Compensation Educational Conference.  We will be speaking during industry breakouts, hosting meetings with partners and clients, and also promoting the PEO industry with fellow experts from the NCCI, NAPEO, and FAPEO.  PEO Compass will be providing coverage of all conference agendas and breakout sessions, particularly the Professional Employer Organization (PEO) Breakout on Tuesday, August 19, 2014.

Click here to see full agendas for all sessions at this year’s WCI conference.

About WCI360 Annual Worker’s Compensation Educational Conference
The 69th Annual Workers’ Compensation Educational Conference® and the 26th Annual Safety and Health Conference will focus on national workers’ compensation and safety industries. This emerging national conference has evolved into a gathering of all stakeholders, regardless of jurisdiction or state, to study and be educated on issues of common concern – issues that have no geographical boundaries. Regardless of your interests, your positions in these two important industries, and your role, this conference is designed to provide something of significance for everyone. The unprecedented number of breakouts and the quality of presenters representing states throughout the country truly make this a national event not to be missed.

Breaking News: Florida Court Declares Workers’ Comp as Exclusive Remedy Unconstitutional

PEO Compass | Breaking PEO Industry NewsFlorida’s 11th Circuit Court has issued an opinion declaring workers’ compensation as an exclusive remedy unconstitutional. In a case brought before the court claiming that the current workers’ compensation law did not provide adequate benefits compared to the tort system, petitioners asked the court to decide if injured workers should have the right to pursue damages outside of the workers’ compensation system, thereby negating the exclusive remedy principle.

The basis of their case was that repeated legislative reforms have eroded the benefits initially intended under original workers’ compensation legislation.

The Petitioners included Florida Workers Advocates (FWA), and the Workers’ Law and Advocacy Group (WILG). WILG is a national organization of attorneys representing injured workers. FWA is an organization of attorneys representing injured workers in Florida. FWA’s counsels are Mark L. Zientz, Esq. and Ricardo Morales. Ramon Malca, Esq. represented WILG.

Circuit Court Judge Jorge Cueto, in a strongly worded opinion, has declared the exclusive remedy provision, statute 440.11, unconstitutional. Judge Cueto cited the “numerous repeal of benefits since 1968″, and specifically the Florida reforms of 2003, whereby the act “no longer provides any benefits for permanent partial disability”. He wrote, “I find that the Florida Workers’ Compensation Act, as amended October 1, 2003, does not provide a reasonable alternative remedy to the tort remedy it supplanted. It therefore cannot be the exclusive remedy. 440.11 is constitutionally infirm and invalid.”

Florida’s Attorney General may now attempt to intervene for the purpose of filing an appeal. The AG has 30 days with which to file such an appeal with the Third District Court of Appeal.

According to a summary written by one of the petitioners attorneys, Mark Zientz, “in the likely event of an appeal” they plan to ask the Third District Court of Appeal to ‘pass through’ jurisdiction to the Florida Supreme Court. This is because two other cases challenging the constitutionality of Florid’s 440 statutes, Westphal and Castellanos, are already pending before the Supreme Court.

The full post is available on