Behind the Scenes Insight of Major Acquisitions in Healthcare

Recently we learned that the Department of Justice, nine additional states (more to follow), and the District of Columbia, have moved to block two behemoth acquisitions in the healthcare insurance industry:  The purchase of Humana by Aetna, and Cigna by Anthem.  These two colossal unions would certainly change the landscape of healthcare delivery in the US; good, bad, or indifferent.  As with most situations, there are pros as well as cons.

Here are the basic facts:

Aetna has offered a purchase price of Humana for $37 Billion

Anthem of Cigna for $48 Billion

Having worked for more than a decade for major medical carriers, M&A rumors are common among major healthcare carriers.  Potential acquisition conversations were, and continue to be, a common theme of discussion at all levels amongst carrier employees.  Take Aetna/Humana for example.  This union has been rumored for more than 15 years now, and that’s just my personal experience on the topic.  It is true now that the two mega-carriers are closer than they have ever been to inking a deal, but the jury is still out on whether they will be allowed.

In an effort to put things in perspective, let’s look briefly at both potential takeovers and how they will impact the PEO community if consummated:

Aetna and Humana:

By far these are the two most dominant players in the PEO space.  This union would limit competition with certainty, however, the merger would also result in a combination of PEO best practices from an underwriting perspective, while dramatically enhancing network access, particularly for Humana.

Anthem and CIGNA:

As is pertains to writing PEOs, CIGNA is perhaps the most conservative, whereas Anthem has a dominant name with PEOs in specific markets such as California.  Anthem isn’t in every market, like Florida for example, while CIGNA is in most.  In my home state of Florida, CIGNA is a major player however doesn’t pursue PEO business.  An Anthem acquisition of CIGNA could very well open conversations on master policies for FL based PEOs, as well as other markets which would increase capacity overall.

In any given geographical market (pick your city), you will find strong carrier positions, and weak ones amongst the major health insurance carriers.  This is predominantly driven by discount positions, sales force presence, and network.  So for example, let’s look at Dallas.  Due to size, and the fact that it’s Dallas, one might think that 100% of the major carriers would be well positioned there, and one would be disappointed to find that not to be the case.  Dallas is dominated by Blue Cross and Blue Shield of Texas, and United Healthcare representing just one example of market inconsistency among countless others.  In the US, we have five major healthcare carriers each having different focal points and strengths.  The Department of Justice and others are blocking these two acquisitions due to the effect they will have on competition in the marketplace.  Taking five carriers to three, while keeping in consideration the example of Dallas, could very well leave the marketplace, in many areas, with one or two viable options for businesses regarding carrier choice for healthcare.  It’s for that primary reason that myself, and many others, support the direction of the DOJ and multiple states to disallow both transactions.

In the current sea of uncertainty on the topic, there remains one constant regardless of the outcome(s) of these transactions.  The PEO market will continue to grow, and we, as advisors to the industry, will make any and all needed adjustments to ensure our ability to deliver creative risk management solutions to the market.
James F. Hughes
Vice President
Libertate Insurance, LLC
C – 813.335.1588
O – 407.613.5475


New York Workers’ Compensation Rates to Go Up 9.3%

The third most populous state in the union approved a 9.3% workers’ compensation rate increase, predominantly due to increase of costs in the overall delivery system.

“According to NYCIRB, data actually supported a loss cost level increase of 9.6 percent across all classifications but it proposed the 9.3 percent increase after considering no change in the loss cost provisions for terrorism, natural disasters and catastrophic industrial accidents.”

“The hike reflects a continued rise in the cost of claims, according to the industry’s filing. While claim frequency is mostly stable, indemnity costs are rising at an annual rate of about 5.3 percent and medical costs at about 5.1 percent.

“Last year the state approved an average 5.9 percent increase in loss costs.”

This becomes effective on 10/1/16.


Pokeman Insurance Coverage?

Have you ever seen the pandemic that Pokemon Go has created in such a short time? Perhaps having a 15 year old boy that walks around in public places locked into his iphone celebrating the attainment of “Pokeballs” brings heightened awareness and understanding but I can’t pick up a paper or watch the NEWS without Pokemon being front and center.

Very intrigued of how the Pokemon phenomenon will impact insurance, safety and law enforcement….

This is a great article out of Insurance Journal:


The ‘Pokemon Go’ Files: 10 Tales of Trespass, Robbery, Murder and More

By Beatriz Costa-Lima and Mary Hudetz | July 15, 2016
The “Pokemon Go” craze across the U.S. has people wandering into yards, driveways, cemeteries and even an off-limits police parking lot in search of cartoon monsters, prompting warnings that trespassers could get arrested or worse, especially if they cross paths with an armed property owner.

Since the release of the smartphone game last week, police have gotten a flurry of calls from residents about possible burglars or other strangers prowling the neighborhood.
By midweek, few tickets have been issued, and there had been no reports of arrests or assaults on trespassers playing the game, whose object is use the phone’s GPS technology to find and capture animated creatures in real-world places.

“Be careful where you chase these Pokemon — or whatever it is you chase — because we have seen issues in other places with people going onto private property where a property owner didn’t want them on there,” said Assistant Police Chief Jim McLean in Pflugerville, Texas.

[Editor’s Note: See 10 tales of Pokemon risk, warnings, rewards and more at end of this article. It’s not all accidents and robberies. Some Pokemon players have performed public service while playing, such as catching a murder suspect and finding a missing body. Players locked into a graveyard were embarrassed but no harm was done.]

Some players have expressed worries on social media that the game could result in a fearful property owner pulling a gun — a scenario that could fall into a legal gray area in the nearly two dozen states with “stand your ground” laws that allow people wide latitude to use deadly force when they believe they are in danger.

McLean’s department posted a Facebook warning Monday after officers spotted a man playing the game in a section of a police parking lot where the public isn’t allowed. The player had to pass keep-out signs and go over a fence or under a gate to reach the area.

“I’m not sure how he got back there, but it was clear what he was doing,” McLean said. “He was playing a Pokemon game with his phone up in the air.”

Exeggcute, a Pokemon, is found by a Pokemon Go player, Tuesday, July 12, 2016, at Bayfront Park in downtown Miami. The "Pokemon Go" craze has sent legions of players hiking around cities and battling with "pocket monsters" on their smartphones. It marks a turning point for augmented reality, or technology that superimposes a digital facade on the real world. (AP Photo/Alan Diaz)

Exeggcute, a Pokemon, is found by a Pokemon Go player, Tuesday, July 12, 2016, at Bayfront Park in downtown Miami. The “Pokemon Go” craze has sent legions of players hiking around cities and battling with “pocket monsters” on their smartphones. It marks a turning point for augmented reality, or technology that superimposes a digital facade on the real world. (AP Photo/Alan Diaz)

$200 Ticket

In Utah, Ethan Goodwin, 17, of Tremonton, was slapped with a trespassing ticket that he worries could cost him up to $200 after he and a couple of friends went on an early morning Pokemon chase at an abandoned grain silo. He managed to catch three creatures.

“I wouldn’t say it was worth it, but I would say I’m glad I have the Pokemon I have now,” he joked. He added: “It’s a dumb game, really, really stupid.”

Fine Print

Every time the app is opened, a warning from game maker Niantic pops up, telling players to be aware of their surroundings. Players must also agree to fine print saying they cannot enter private property without permission.

There’s also a disclaimer that says Niantic is not liable for any property damage, injuries or deaths that result while playing.

But those warnings don’t seem to be getting through.

In Phoenix, police have started posting humorous and colorful warnings on social media, saying chasing the orange dragon Charizard is not a valid reason to set foot on someone else’s property.

Nor is chasing the cat-like Mewtwo, according to Boise, Idaho, police. They posted a Facebook message saying officers responded to several calls about players trespassing on private property and illegally trekking across parks after dark.

Playing in Traffic

Gamers are also being warned to watch for traffic while playing and not to drive while on the app.

One woman told WPXI-TV in western Pennsylvania that her 15-year-old daughter was hit by a car while playing the game and crossing a busy highway. The girl was hospitalized with an injured collarbone and foot, as well as cuts and bruises, said her mother, Tracy Nolan.

A sign at the National Weather Service in Anchorage, Alaska, informs Pokemon players that it's illegal to trespass on federal property. The staff started noticing an uptick of people in the parking lot after the location was included as a gym in the popular game. (AP Photo/Mark Thiessen)

A sign at the National Weather Service in Anchorage, Alaska, informs Pokemon players that it’s illegal to trespass on federal property. The staff started noticing an uptick of people in the parking lot after the location was included as a gym in the popular game. (AP Photo/Mark Thiessen)

Capt. Michael Fowler with the Hanahan, South Carolina, police said his department in the city of about 20,000 has gotten a few suspicious-activity reports related to “Pokemon Go,” including multiple calls from a woman who feared for her safety as she watched cars go in and out of a church parking lot across from her house.

“I didn’t know what was going on. The last time I heard about Pokemon was back in the ’90s,” Lynn Menges, 59, said.

Lt. Lex Bell, of the Unified Police Department in Utah, said officers outside Salt Lake City have responded to similar calls. Most come after dark, with residents saying they believe motorists driving slowly through their neighborhood may be casing their homes. In one instance, a woman mistook a few glowing cellphones for flashlights as players hunted characters near her daughter’s car.

Several cemeteries, including Arlington National outside Washington, have expressed worries about players on their grounds.

At Mobile Memorial Gardens in Alabama, president Timothy Claiborne said he has seen visitors walking or driving around with phones in their hands, playing the game. He asked people in about three dozen vehicles to leave over the past couple of days, earning him the title “chief of the Pokemon patrol” from the staff.

“I just think we need to continue to have respect not only for the dead but for those who are grieving the dead,” he said.

10 Pokemon Go Tales

It’s not all robberies and accidents. Some Pokemon  players have performed public service while playing, such as catching a suspected murderer and finding a missing body. Players locked into a graveyard at night were embarrassed but no harm was done. From this week’s files of The Associated Press come these tales of Pokemon Go risks, warnings and rewards:

Police: Man Robbed of Cellphone While Playing ‘Pokemon Go’

LAKE RONKONKOMA, N.Y. (AP) — Police on Long Island are investigating an armed robbery in which they say a cellphone was stolen from a man playing the popular “Pokemon Go” game on his smartphone. Suffolk County police say the 19-year-old man was walking in Lake Ronkonkoma while playing the game Wednesday evening when a car with at least three people pulled up alongside him. Police say one of the passengers told the victim to give him his cellphone. When the victim hesitated, another passenger showed him a gun and demanded the phone. The victim then handed over the phone and took off. No arrests have been made, and the investigation is ongoing.

Police: Someone Threw Fireworks at ‘Pokemon Go’ Players

BOCA RATON, Fla. (AP) — Authorities say someone threw fireworks at a man and his friends while they were playing “Pokemon Go.” Boca Raton police wrote on their official Facebook page that someone inside an SUV tossed fireworks at the group of Pokemon players outside a U.S. Post Office earlier this week and then sped off. No one was injured. It is unclear whether the group was targeted because they were playing the popular smartphone game, which encourages users to walk to local landmarks while searching for virtual Pokemon. The Sun reported police determined there wasn’t enough evidence to conclude that a crime had been committed. They instead called it a suspicious incident. Police Chief Dan Alexander on Sunday had warned the public about being aware of their surroundings while playing the game.

Two ‘Pokemon Go’ Players Help Catch Attempted-Murder Suspect

FULLERTON, Calif. (AP) — Two “Pokemon Go” players out hunting virtual monsters in Orange County ended up helping catch a man wanted in Northern California on suspicion of attempted murder. The Orange County Register reported 24-year-old Seth Ortega and 27-year-old Javier Soch were playing the popular smartphone game in a Fullerton park Tuesday when they noticed a man bothering a woman with three children. The men, college students and Marine Corps veterans, warned the man and kept an eye on him. When they saw him follow another woman with children, and then touch one of the kids, the roommates grabbed the man. Police arrested the man, 39-year-old Jacob Kells, for child annoyance and found that he had an outstanding warrant for attempted murder in Sonoma County. Officials have not released the suspect’s name.

Trio Gets Locked in Cemetery While Playing ‘Pokemon Go’

DUNMORE, Pa. (AP) — Three “Pokemon Go” players got locked inside a cemetery in Pennsylvania while hunting virtual monsters and needed police to let them out. Police in Dunmore told  The Times-Tribune of Scranton the trio didn’t realize the cemetery closed at dusk. They called police just after 9:30 p.m. Tuesday when they discovered the cemetery gates were locked. Dunmore Police Chief Sal Marchese said the three won’t be charged. At least one was an adult; no other details about the gamers were released.

Woman: Daughter Hit by Car While Playing ‘Pokemon Go’

TARENTUM, Pa. (AP) — A woman in western Pennsylvania says her 15-year-old daughter was hit by a car while playing the popular new “Pokemon Go” game on her smartphone. Tracy Nolan told WPXI-TV the game took her daughter across a busy highway in Tarentum during the evening rush. She said the girl had just finished playing the game when she was hit Tuesday around 5 p.m. She remains in the hospital Wednesday with an injured collarbone and foot, as well as cuts and bruises. The car’s driver stopped and held her daughter’s hand until emergency responders arrived.

Pokemon Players Distracted K-9 on Search, Lincoln Police Say

LINCOLN, Neb. (AP) — Officers say some people playing “Pokemon Go” accidentally interfered with a search for a mysterious man who’d fled from a Lincoln convenience store where a clerk was killed last week. The incident occurred around 2 a.m. Wednesday. Police say a store security guard noticed the man, who was dressed in camouflage clothing, wearing a hood, gloves, sunglasses and a bandanna over his face. The guard asked the man to remove his bandanna, but he ran off instead. Sgt. Randy Clark said officers reported later than a police dog taken to the scene to track the man got distracted by the scents of some people engrossed in the popular new smartphone game nearby. Police say they don’t think the man sought is connected to the slaying of store employee Robert Hanna.

Police: Man Robbed in Auburn While Playing ‘Pokemon Go’

AUBURN, Ala. (AP) — Four suspects have been arrested after a man told Auburn police that he was robbed at gunpoint while he was playing the popular “Pokemon Go” smartphone game. Auburn police said in a news release that the man was playing the game outside of a vacant building early Wednesday when he was approached by four men who attacked him and robbed him before fleeing in a vehicle. Authorities found the suspects in the area and recovered the victim’s stolen property. The suspects were charged with first-degree robbery and third-degree assault. Police urged players of the game to be aware of their surroundings in light of other armed robberies of people playing the game, which encourages people to wander in search of virtual Pokemon.

Three Pokemon Go Players Robbed at Gunpoint in Baltimore County

PARKVILLE, Md. (AP) — Authorities say three people were robbed at gunpoint in Baltimore County last week while playing Pokemon Go. Baltimore County police said in a statement Tuesday that the victims were playing the popular smartphone game in Pikeville early Thursday when they were approached by two suspects, one of whom was armed. Police say the robbers took the victims’ cellphones and money before fleeing. No was injured. The game encourages players to walk to local landmarks while looking at their phones for virtual Pokemon. The robbery occurred near an entrance to Belmont Park. County police spokesman Cpl. John Wachter told the Baltimore that investigators are still trying to determine whether the people were targeted because they were playing Pokemon Go. Authorities urged players to pay attention to their surroundings while playing the game.

Body Found in Wind River by Pokemon Go Player Identified

RIVERTON, Wyo. (AP) — Authorities have identified the man found dead in a central Wyoming river by a woman playing the popular smartphone game Pokemon Go. The Riverton Ranger reported that 28-year-old Jeffrey Day’s body was found floating in the Wind River near the city of Riverton on Friday. Authorities are awaiting the results of an autopsy to determine the cause of the Arapahoe man’s death, but say it appears to have been accidental and could be a drowning. Shayla Wiggens says she had been playing the new game, which sends players to real-world locations to capture virtual creatures, when she spotted the body in the water near a bridge. The incident comes as police in Missouri say four teens used Pokemon Go to lure victims to a location and rob them.

Bringing Consistency and Predictability to the Creation and Management of a PEO Master Health Policy

The purpose of this blog is to address what I believe to be, without question, the 2 largest hurdles within the PEO health insurance space:

1)  How does a PEO build a credible pool from scratch so as not to be adversely selected against?

2) How does a PEO prune their pool of business to become “risk attractive” to the major medical health insurance carriers?

At Libertate, we take great pride and ownership in our stewardship of risk management business, especially in the areas of workers’ compensation insurance pool formation (creating the master policy), efficient distribution through data management, and overall prediction of price and performance.  Our leader, Paul Hughes, has spent his career building master workers’ compensation policies for PEOs and now looks to understand how to more effectively acquire, price and manage workers’ compensation and health insurance side by side.  In order to make this process credible and meaningful, we are very proud to introduce our actuarial partner, Milliman.  By far they have the most meaningful and impactful value proposition in terms of how to price health and build pools for PEOs.  The actuarial models they use are based on the largest documented population of past participants which are deployed to predict future risk, approximately 75 Million.

Working in the National PEO health insurance space encompasses many complexities not generally experienced in the traditional risk and insurance markets.  The difference between placement of a 30-person group on an individual plan basis versus underwriting and pricing it as a part of a pool requires a far different skill set that is founded in actuarial science.  Specifically, the art of creating and managing pools of risk versus the understanding and pricing of an individual risk.  As it pertains to pooled PEO-sponsored medical plans for their respective client companies, we feel these complexities have created difficulty in building and then in managing to credibility an initial health insurance master policy.  We estimate that only 15% of all PEO’s (approximately 150) have a master PEO sponsored medical plan and we know we can move that needle with Milliman’s assistance and actuarial models.

Collectively with our PEO clients, we engage and work with them side-by-side to make underwriting and pricing decisions.  Milliman checks our work at least twice a year (quarterly available) to make sure that our pricing is on course for a predictable renewal and to sometimes give the tough advice as to what will be needed to ensure one.  Whether we are working within the governance of small group underwriting or pricing amongst various bands of a PEO master health insurance policy, Milliman brings predictive modeling to the forefront of the conversation and makes for the purchase of major medical health insurance a far more predictable and manageable process.

The bottom line is simple:  each PEO sponsored major medical plan MUST have risk “gatekeepers”.  That is our role in concert with Milliman and our client.  These are individuals and organizations (plural) who are tasked with protecting the risk.  That means protecting the risk which is accepted by the PEO to participate in the master program(s), as well as managing the risk upon renewal to retain favorable risks within the pool, and excuse inappropriate risks from the pool as defined client companies with high risk factors and/or claims experience.

Milliman is the most respected and recognized name in actuarial science. One could say that Milliman is the tallest giant in the room with regards to their abilities to forecast, manage, and model all things related to risk profiling.

In it we collectively illustrate the positive financial impact that partnering with Libertate will bring to your PEO, and your respective client companies regarding medical loss ratios, premiums, and the importance of having true stewards of your risk at the helm.

It remains unarguable that having a master medical/benefit plan within your PEO will encourage growth, and discourage client company turnover.  We see the PEO model as the very best model to properly deploy health insurance to small business (as well as workers’ compensation) and are excited about the opportunity of creating pools of risks for our clients that accelerates growth within the PEO community.


James F. Hughes
Vice President
Libertate Insurance, LLC
C – 813.335.1588
O – 407.613.5475
707 E. Washington Street, Orlando FL, 32801


Florida Workers’ Compensation Rates – So Now What?

As has been reported, the NCCI has requested a dramatic 19.6% workers’ compensation rate increase from the State of Florida to cover necessary pricing as a result of 2 recent court rulings and the adoption of a new Florida fee schedule.

So what now?

The State of Florida has the final say on workers compensation rates.  In Florida, all carriers must use the same base manual rates as approved by the State(usually on a per annum basis).  This is unlike other states where carriers can file for their own loss cost multipliers (LCM’s), and within the confines of what a given State will allow, therefore set their own rates.   LCM’s are multiplied by expected loss costs in a given state to get a final base rate.  The burden to make sure base rates are adequate therefore fundamentally shifts from the insurers to the Florida Office of Insurance Regulation with the guidance and recommendation of the NCCI.

While it is highly unlikely, the State is well within their rights to adopt no rate increase and then it is up to the carriers that write business in the State to decide if they can make money here or not.

The OIR has scheduled a town hall hearing in Tallahassee on August 16’th, 2016 at 9:00am.  After this meeting, there is no specific time frame whereby the OIR needs to accept revise or reject the NCCI recommendation.  It is my guess that the State will move swiftly as the effective date of the proposed rate filing is 10.1 (which the OIR could also revise as deemed fit).

So for now, the numbers and impact will be argued as to the need of this sharp increase. Good chance the State could get a “second opinion” in some manner to that of the NCCI as they have done in the past.  Many legislators will be rallied to help reduce  the heavy impact this type of a rate hike will have on small business in Florida.

Politics and mathematics.

More as we get it – Hope you had a Happy 4’th…



NCCI Amends Pending Florida Workers Compensation Rate Filing To +19.6% Proposed Effective October 1, 2016

106 E. College Ave, Tallahassee, FL 32301
Telephone: 850-322-4047 Fax: 561-893-5106

NCCI Amends Pending Florida Workers Compensation Rate Filing
To +19.6% Proposed Effective October 1, 2016

Overview of Court Decisions
On April 28, 2016, the Florida Supreme Court issued an opinion in the case of Castellanos vs. Next Door Company, et al., No. SC13-2082 (“Castellanos”) declaring Section 440.34, Florida Statutes, unconstitutional. The anticipated impact of the
decision is the elimination of the statutory caps on claimant attorney fees and a return to hourly fees.

On June 9, 2016, the Florida Supreme Court issued its opinion in the case of Bradley Westphal vs. City of St. Petersburg, etc, et al, No. SC13-1930 (“Westphal”) declaring the 104-week limitation on temporary total disability benefits established in
Section 440.15(2)(a), Florida Statutes, unconstitutional. The anticipated impact of the decision is a combined 260-week limitation on temporary disability benefits (temporary total disability and/or temporary partial disability).

NCCI Proposes Rate Increase
On May 27, 2016, NCCI submitted its filing to the Office of Insurance Regulation (OIR). It included components for two law changes – the first-year impact for Castellanos of +15% and an impact of +1.8% in response to SB 1402 which ratified updates to the Florida Workers’ Compensation Health Care Provider Reimbursement Manual.

On June 30, 2016, NCCI amended the above-mentioned filing to include a third component as a result of the Westphal decision. NCCI estimates that the impact of Westphal will be an increase in overall Florida workers compensation system
costs of +2.2%. At the direction of the OIR, NCCI amended the effective date of the filing to October 1, 2016.

The estimates for the Castellanos and Westphal decisions do not include the following:
􀁸  Impacts related to the First District Court of Appeal decision dated April 20, 2016 known as Miles v. City of Edgewater Police Department (“Miles”) declaring unconstitutional certain restrictions on claimant paid attorney fees. After Miles, claimant attorney fees can be earned regardless of whether benefits are secured. Depending on the scenario, the
source of claimant attorney fees could be the claimant, the employer/carrier, or both. Claimant attorneys may now have the potential to earn greater compensation than that which would result from the Castellanos decision on its own, putting
additional upward pressure on system costs in Florida. NCCI is unable to separately determine the Miles impact.
􀁸  The entire unfunded liability created in the state due to the retroactive nature of the Castellanos and Westphal court
decisions. (1)
􀁸  Unanticipated cost impacts not otherwise reflected in this filing that may emerge over time such as additional stakeholder behavioral changes or interactions that may result in changes to workers compensation benefits or practices in Florida.

The combined impact of the three components is +19.6% or $714M (+19.6% x $3.645B). NCCI proposes that the increased rates will apply to new and renewal policies that are effective on or after October 1, 2016. Additionally, NCCI proposes that the increased rates will apply to all policies in effect on October 1, 2016 on a pro-rata basis through the remainder of the term of these policies. Currently, Florida has a voluntary pure loss cost of 0.99 that is comparable to other states in the Southeast (2) ranging from 0.84 to 1.14. If the rate filing is approved as filed increasing rates by 19.6%, Florida at 1.18 would rank as the highest state in the Southeast.

The OIR is expected to schedule a public hearing to be held in August. NCCI will not comment further on the pending rate filing prior to the public hearing.

1 The Castellanos and Westphal components of this filing only address the expected increase in Florida workers compensation system costs for accidents
occurring on or after October 1, 2016. However, the decisions in Castellanos and Westphal are also expected to increase overall system costs in the state
for accidents occurring prior to October 1, 2016 that remain open or are re-opened. Because workers compensation ratemaking is prospective only, insurers
are not afforded the opportunity to recoup premium to cover such unforeseen increases in system costs. Therefore, it is expected that a significant unfunded
liability will be created due to the retroactive impacts of these court decisions. NCCI is currently in the process of estimating the unfunded liability and will
provide further information at a later date.
2 Using Florida’s payroll distribution. Southeast region includes FL, AL, GA, LA, MS, NC, SC, and TN.

What Next for Florida Workers’ Compensation Rates?

We still have no formal update since the National Council of Compensation Insurance (“NCCI”) withdrew their rate filing…

…that the Florida Office of Insurance Regulation responded to with this press release:

…which in essence recognized the rate filing that the NCCI had submitted in late May to address the Castellanos v Next Door case as well as the increased Florida medical fee schedule.  The big deal here is capping of plaintiff attorney fees.


Westphal v City of St Petersburg – another case that now extends the ability for an injured worker to obtain benefits from 2 years to 5 years.  The NCCI promptly withdrew their filing to reassess this third hit to the system.

The plaintiff attorneys are pleased, businesses are scared and the jury is still out…

Morgan & Morgan chimes in on worker’s comp rulings

What we do know is that before the Westphal case, the NCCI thought that a Florida workers’ compensation rate increase of 17.1% was necessary.  Westphal obviously brings more exposure to insurers by increasing the collection of temporary benefits, but the NCCI has not yet formalized what this should mean to Florida rates.  The resubmitted rate filing I am guessing will be plus 20%…

Only 26 business days until a proposed August 1 effective date for all policyholders.

I’m hoping we will get some guidance soon and will distribute it as it comes –


NCCI to Amend August 1st Rate Filing Increase of 17.1% Upwards

Today the National Council of Compensation Insurance (“NCCI”) announced they would amend their current Florida rate increase to be effective August 1, 2016 in order to add a 3rd component based on the “Bradley Westphal vs City of St. Petersburg” case discussed below.  In short, exposure to employers and their insurers for indemnity benefits to claimants who have not yet reached “Maximum Medical Improvement” has increased from two to five years.  NCCI will crunch numbers to see what the enhancement of indemnity benefits in Florida means to the go-forward rate-making process.

The first rate filing into the Florida Office of Insurance Regulation and from the National Council of Compensation Insurance targeted an August 1, 2016 rate increase of 17.1% to all in-force Florida workers’ compensation policies:

  • 1st: “Castellanos vs. The Next Door Company” – whereby the Florida Supreme Court found that the mandatory attorney fee schedule for workers’ compensation plaintiff attorneys was judged to be unconstitutional as a violation of due process under both the Florida and United States Constitutions. In essence, workers’ compensation just became far more attractive to the plaintiff’s bar and thus an increase in rates of 15% has been requested.
  • 2nd: Updates within the Florida Workers’ Compensation Healthcare Provider Reimbursement Manual (“HCPR Manual” – Floor Senate Bill 1402) – Increases to what doctors are allowed to bill a workers’ compensation file was updated as of July 1, 2016, causing another 1.8% increase in rate.

Today, the NCCI stood by the 17.1% increase already proposed, but also announced it would be amending the current rate filing into the State of Florida based on the additional financial exposure stemming from the case below:

  • 3rd: “Westphal vs City of St. Petersburg” – The 104 week total temporary disability benefits law is unconstitutional.  This decision revives the 260 week total temporary disability benefit.  See the Westphal summary below.  It immediately impacts open claims.  The NCCI will add this additional cost to the system when submitting an amended rate increase request to be effective August 1, 2016 to all in-force policies

We will continue to report news from the NCCI, the Florida Office of Insurance Regulation and the Florida legislature where I would expect this will head if the rate proposal goes further North.  The below from the NCCI today –



June 9, 2016

Tallahassee, Florida – Today, the Florida Supreme Court issued its opinion in the case of Bradley Westphal vs. City of St. Petersburg, etc, et al, No. SC13-1930 (“Westphal”).  The Supreme Court, in a 5-to-2 decision, concluded that the 104 week limitation on temporary total disability benefits established in section 440.15(2)(a) of the Florida Statutes is unconstitutional as it results in a statutory gap in benefits, in violation of the constitutional right of access to courts.

The Supreme Court’s decision revives the 260 week limitation on temporary total disability benefits that proceeded the 1994 amendments to section 440.15(2)(a) of the Florida Statutes, limiting temporary total disability benefits to 104 weeks. 

NCCI is currently evaluating the Westphal decision and will amend the pending rate filing currently under review by the Florida Office of Insurance Regulation.  Further details will be made available upon submission of the amended rate filing.

Telephone: 850-322-4047 Fax: 561-893-5106


 Chris Bailey

State Relations Executive

National Council on

Compensation Insurance

106 E College Avenue, Suite 900

Tallahassee, FL 32301

(C) 850-322-4047   

(F) 561-893-5106