Approved WC Legal Fees up 36 percent in 16-17, what will the 17-18 fiscal year look like?

Injured workers racked up nearly $186 million in approved legal fees in 2016-2017, a 36 percent increase from the previous year, a state report on the workers’ compensation insurance system shows.  This is with the Castellanos v. Next Door Company ruling, which repealed restrictive attorney fees caps, only being in place for 7 out of 12 month in the 16 -17 fiscal year.

In all, attorneys’ fees in the workers compensation system totaled nearly $440 million during the 2016-2017 fiscal year. The majority — nearly $254 million — were forked out by employers defending workers’ compensation claims.

Issued by the Office of the Judges of Compensation Claims, the 2016-2017 annual report notes that $185.6 million in approved legal fees for injured workers is the highest amount paid in nearly a decade and is attributable to a 2016 Florida Supreme Court ruling.

“Clearly, there is a trend suggested of increasing claimant attorneys’ fees in the wake of (the ruling),” the report, released last month, notes.

The report shows that in 2016-2017, more than $75 million in hourly fees were approved for claimants’ attorneys, a nearly 200 percent increase from the $25.8 million in hourly fees that were approved the previous year.

During the same period, the report shows that fees paid to workers’ compensation attorneys under legislatively approved fee caps decreased about 31 percent.

It is the second consecutive year that legal fees increased for injured workers and employers and reverses what had been a five-year trend of lower legal costs for both sides in workers’ compensation cases.

Workers’ compensation is a no-fault system meant to protect workers and employers. It is supposed to provide workers who are injured on the job access to medical benefits they need to be made whole. Those who are injured for at least eight days also are entitled to indemnity benefits, or lost wages. In exchange for providing those benefits, employers generally cannot be sued in court for causing injuries.

While the system is supposed to be self-executing, injured workers hire attorneys when there are disputes over the amounts of benefits they should receive.

Florida businesses faced some of the highest workers’ compensation costs in the country in the early 2000s. Business interests argued that attorney involvement — legal fees in the aggregate totaled $427 million in fiscal year 2002-2003 — was the reason for the high costs.

The Legislature responded by passing a sweeping rewrite of the workers’ compensation system in 2003 that, among other things, tied the recovery of plaintiff attorneys’ fees to percentages of the amount of recovered benefits. The law was tweaked in 2009 to make clear that workers’ compensation judges were precluded from awarding additional hourly fees for plaintiffs’ attorneys.

But in a 2016 ruling known as Castellanos v. Next Door Company, the Florida Supreme Court ruled that the restrictive fee caps violated injured workers’ due process rights and authorized judges to award fees outside the fee schedule if adhering to it yielded unreasonable results.

Business interests lobbied the Legislature earlier this year to, at a minimum, limit the hourly rates that attorneys could charge. But lawmakers did not approve a change.

Despite the marked increase in legal costs for 2016-2017, the report notes that when adjusted for inflation, aggregate attorneys’ fees in Florida workers’ compensation have decreased by more than $100 million over the past 14 years.


Insured Deadlines for Liquidating Guarantee Insurance Company

  • GIC’s insurance policies are cancelled effective December 27, 2017, unless otherwise terminated prior to that date; and
  • The claims filing deadline for filing claims in the GIC receivership proceeding is on May 28, 2018.

Florida’s fund will only pay claims for policies written in Florida. For other states where Guarantee did business “the processing and payment of pending workers’ compensation claims will be made in accordance with the statutes of each of those affected states,” a spokesman said.

Gurantee was licensed to sell worker’s compensation insurance in forty states and the District of Columbia, and wrote business in thirty-one states and the District of Columbia at the time of liquidation. 

Guarantee had approximately 8,600 active policies as of November 13, 2017, including 1,250 in Florida. Based on its 2016 annual report, the company wrote $279.9 million in gross premiums in 2016.

Guarantee was majority owned and founded by Steven Mariano, who also founded Patriot National Inc., a publicly traded insurance services company that counted Guarantee as one of its biggest customers. Mariano resigned from Patriot in July amid a falling stock price and shareholder lawsuits.

According to the Florida Office of Insurance Regulation, Guarantee Insurance Company’s board consented to being placed in receivership on November 13.

In a Nov. 17 letter to Florida’s Chief Financial Officer Jimmy Patronis, regulators determined that Guarantee had insufficient assets to pay all outstanding obligations. According to the letter, GIC’s actuary asked the company to increase its reserves, which caused the company to go from a $42.18 million surplus to a deficit of $236,775.

POLICY CANCELLATION:  GIC wrote workers’ compensation insurance policies.  Although licensed in forty states and the District of Columbia, the company had in-force policies in thirty-one states and the District of Columbia.  Under the liquidation order, all GIC policies are cancelled effective December 27, 2017, unless otherwise terminated prior to that date. 

PREMIUM ISSUES:    In accordance with Section 631.155, Florida Statutes, all premiums and unearned commissions you collected on behalf of GIC must be accounted for and paid directly to the Department within 30 days.  No agent, broker, premium finance company or other person may use premium monies owed to GIC for refund of unearned premium or for any purpose other than payment to the Department. Violation constitutes contempt of Court.  You have the right to appear before the Court and show cause if you feel that you are not required to account to the Department.

Premium Refunds/Unearned Premium: 

Guaranty Associations will pay covered unearned premium claims pursuant to each state’s applicable statutes after the Department completes its processing of the policy records, conducts any premium audits, and sends the unearned premium records to the applicable Guaranty Association.

CLAIMS ISSUES (FOR LOSSES INCURRED PRIOR TO 11/27/2017):  All policyholders should be informed that the deadline for filing claims in the GIC receivership is May 28, 2018.  Information regarding the method for filing a claim in the receivership proceeding will be available on the Department’s website,

With the entry of the liquidation order, the guaranty associations of the states where GIC wrote business are activated to help pay outstanding covered claims of those states’ GIC policyholders.  The processing and payment of pending claims will be made in accordance with the statutes of each of the affected states.  Some states exclude claims of high net worth insureds and claims under large deductible policies.  These claims will become the responsibility of the policyholder.  Contact your state guaranty association for additional details.

PLEASE NOTE REGARDING ALL CLAIMS PAYMENTS:  The Department is currently gathering claim files and claims data in order to forward the information to the appropriate Guaranty Associations. Please contact GIC using the contact information below to check the status of an existing claim and/or to file a new claim. The Department’s website,, will be updated once the transition is completed. At that time, new contact information will be posted to assist policyholders in filing a new claim or in following up on a pending claim.

Consumer/Claims Calls:

Until further notice, consumers with questions regarding GIC should contact the company as follows:

Guarantee Insurance Company – Direct Contact Information:

General Information:  800-948-2651 (toll free) or 954-556-1600 (main phone)

Claims (all States):  GIC Client Service Center: 1-877-886-4334 (toll free)

If you have any non-claims related questions regarding the receivership, please contact the Department using the “Contact Us” form at or by calling (850) 413-3081 or toll free at 1-800-882-3054. Additional information regarding GIC and the receivership process will be available soon on the Department’s website,  Copies of the Liquidation Order and other relevant information will be available on the Department’s website.

Your anticipated cooperation and assistance in these matters is greatly appreciated.

Section 631.341, Florida Statutes

631.341 Notice of insolvency to policyholders by insurer, general agent, or agent. —

(1) The receiver shall, immediately after appointment in any delinquency proceeding against an insurer in which the policies have been canceled, give written notice of such proceeding to each general agent and licensed agent of the insurer in this state. Each general agent and licensed agent of the insurer in this state shall forthwith give written notice of such proceeding to all subagents, producing agents, brokers, and service representatives writing business through such general agent or licensed agent, whether or not such subagents, producing agents, brokers, and servicing representatives are licensed or permitted by the insurer and whether or not they are operating under a written agency contract.

(2) Unless, within 15 days subsequent to the date of such notice, all agents referred to in subsection (1) have either replaced or reinsured in a solvent authorized insurer the insurance coverages placed by or through such agent in the delinquent insurer, such agents shall then, by registered or certified mail, or by e-mail with delivery receipt required, send to the last known address of any policyholder a written notice of the insolvency of the delinquent insurer.

(3) The license, permit, or certificate of authority of any person, firm, or corporation which fails to comply with the provisions of this section is subject to revocation as otherwise provided by law.

(4) If such person, firm, or corporation is not licensed or permitted or the holder of a certificate of authority under any section of this code, such person, firm, or corporation, or the officers and directors thereof, are, upon failure to comply with the provisions of this section, guilty of a misdemeanor of the first degree, punishable as provided in s. 775.082 or by a fine of not more than $5,000.

History. —s. 750, ch. 59-205; s. 15, ch. 70-27; s. 809(1st), ch. 82-243; s. 24, ch. 83-38; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 68, ch. 2002-206; s. 16, ch. 2015-180.




New Jersey Ins. Commissioner Approves 5.1% Rate Decrease and more

The New Jersey insurance commissioner has approved a 5.1% rate decrease for workers compensation premiums on a new and renewal basis, the Compensation Rating and Inspection Bureau said Wednesday in a letter to bureau members.

This decrease is effective Jan. 1, 2018.

New Jersey’s system works with statutory rates so all carriers will move to these new decreased rate sets.

Additionally, the maximum weekly benefit with respect to all types of injuries, except permanent partial disabilities, will be changed to $903 from $896. The minimum weekly benefit will be changed to $241 from $239.

In cases involving permanent partial disabilities, the present maximum weekly benefits ranging from $239 to $896 will increase to $241 and $903, respectively. The minimum weekly benefit for permanent partial injuries will remain at $35, the comp bureau said. 



Florida’s Workers’ Comp Rate Decrease By Industry

FORT MYERS, Fla., Nov. 27, 2017 /PRNewswire/ — What goes up must come down is a fundamental law of gravity and roller coasters.  But it is also starting to become an appropriate depiction for Florida workers’ compensation rates, according to Mark Webb, senior vice president of Lykes Insurance.

“In what is heralded as good news for employers, the Florida Insurance Commissioner approved an amended filing on Nov. 9, 2017 ordering an average decrease of 9.5 percent in workers’ compensation rates effective Jan.1, 2018,” says Webb. “This decrease was slightly more than the 9.3 percent decrease proposed by the NCCI in August.”

Webb notes that this is an average decrease. The actual decrease is allocated among classifications by industry as follows:

Office and Clerical -11.5 percent
Goods and Services -10.6 percent
Manufacturing -10.3 percent
Contracting -7.19 percent
Miscellaneous -8.3 percent

This decrease was filed based on a reduction in claim frequency over the two years prior to 2016.  However, it does not take into consideration the two Supreme Court decisions in 2016 that brought the 14.5 percent increase last December: the Castellanos and Westphal decisions.

These two cases resulted in retroactive changes to claimant attorney compensation and impairment benefits.  Few deny that these court decisions are and will continue bringing upward pressure on the cost of claims, and it seems unlikely that the Florida legislature will take any action on reforms to address this issue, especially in the wake of a rate decrease.  According to Logan McFaddin, Southeast Director for the Property Casualty Insurers Association of America, “Experience data relating to the impact of Castellanos and Westphal continues to mature and will likely be reflected in future rate filings.”

This sentiment was reflected in the order from the Insurance Commissioner that directed the NCCI in future recommended rate filings to provide a detailed analysis of the impact of Castellanos, including reopening of older claims, changes in reserves and settlement rates, changes in claim frequency and severity, increasing attorney involvement, and fees paid to attorneys.

One issue that needs to be acknowledged is the possibility of a mid-term cancellation and re-write of a workers’ compensation policy to take advantage of the new rates. While it is uncertain how willing insurance carriers will be to embrace this action, this should be evaluated on a case by case basis, because there are some reasons for concern over this strategy.

First, a mid-term change will eliminate any potential dividends that may be earned on a policy. Also, carriers may choose to apply a short rate cancellation penalty if a policy is cancelled and moved to another carrier. The short rate penalty is approximately 10 percent of the unearned premium, which, if applied, would completely negate any advantage of the 9.5 percent rate decrease. Finally, if rates do go back up next year, the policyholder would be moving up the date that the policy would be impacted by the higher rates.

“The bottom line is, as usual, uncertainty prevails,” Webb concludes. “With the uncertainty surrounding the market impact and future rates, it is important to not allow a rate decrease to bring complacency to the significance of safety and claims management in your workers’ compensation program.  We strongly suggest working with your advisors and advocates to help you prepare for whatever the future may hold for workers’ compensation.”


Workers’ Comp Drug Spend Continues to Drop, According to CompPharma’s 14th Annual Survey of Prescription Drug Management

MAGGIE VALLEY, N.C.–(BUSINESS WIRE)–CompPharma’s 14th Annual Survey of Prescription Drug Management in Workers’ Compensation showed an average 11 percent reduction in payers’ pharmacy spend, driven by a 13.3 percent reduction in opioid cost. The survey analyzed the 2016 pharmacy cost data of 23 workers’ compensation insurance carriers, third-party administrators, self-insured employers, and state funds.

Working with their pharmacy benefit managers, payers cut one of every six dollars in opioid spend, which the report called a “truly remarkable result.” In contrast, across all payer types, pain medication use declined by a scant 1 percent (Quintiles IMS).

“Clearly the efforts of workers’ comp regulators, payers, desk-level staff, PBMs and prescribers have paid off,” said Joseph Paduda, president of CompPharma, LLC. “While we have much left to do, this represents a dramatic improvement in the lives of thousands of patients.”

Payers are far from complacent, with all respondents expressing grave concerns about the risk of opioid addiction or dependency. Most are continuing to refine and improve programs to help patients address pain while minimizing use of opioids, relying on physician and/or pharmacist review of claims, early identification of potentially risky prescribing, and increased use of drug testing.

In contrast, compound drug utilization and spend has dropped dramatically and is no longer of great concern to payers.

A complimentary copy of the 2016 survey can be downloaded from

Florida Orders Workers’ Comp Rate Decrease of 9.8%

Florida Insurance Commissioner David Altmaier has ordered a statewide overall workers’ compensation rate decrease of 9.8 percent, a slightly higher decrease than the 9.6 percent decrease filed by the National Council on Compensation Insurance (NCCI) back in August.

Altmaier’s order disapproving NCCI’s 2018 rate filing was issued by the Florida Office of Insurance Regulation on Tuesday, and stated NCCI’s rate request be amended and refiled by Nov. 7, 2017.

Altmaier’s order cited NCCI’s 2 percent allowance for profit and contingencies in its rate filing as the reason for rates being disapproved. The order states that the refiling should contain a profit and contingencies provision no greater than 1.85 percent.

The rate decrease will come as a welcome surprise for many Florida businesses that were expecting additional rate increases after the Florida Supreme Court issued two decisions – Castellanos v. Next Door Company and Westphal v. City of St. Petersburg, – in 2016 that sent rates up by double digits this year.

“Using new data, this experience based filing proposes a decrease in rate level based on data from policy years 2014 and 2015 valued as of year-end 2016,” the order states. “While some of the experience used as the basis for this filing occurred before the recent Florida Supreme Court decisions, a portion of the experience period includes claims that occurred after the decisions.”

At a rate hearing in mid-October, NCCI said a decline in claims frequency due, in part, to safer workplaces, enhanced efficiencies in the workplace, increased use of automation, and innovative technologies were partly behind the recommended decrease. NCCI said this trend is not unique to Florida but countrywide, and is expected to continue in the future.

According to OIR’s order, from 2011 to 2015, the cumulative decreases in the indemnity and medical loss ratios were 19.9 percent and 12.3 percent, respectively. The primary reason for the declining loss ratios is a significant reduction in the lost-time claim frequency which declined by 45 percent from 2001 to 2015 with over 8 percent of the decline occurring in 2014 and 2015.

“Even after considering the impact of the Castellanos and Westphal decisions, other factors at work in the marketplace combined to contribute to the indicated decrease, which included reduced assessments, increases in investment income, decline in claim frequency, and lower loss adjustment expenses,” the order states.

However, the order also mandates that NCCI provide detailed analysis of the effects of the Castellanos decision by the Florida Supreme Court in future filings, which accounted for 10.1 percent of the 14.5 percent increase in Florida workers’ compensation rates this year.

“To ensure workers’ compensation rates are not excessive, inadequate or unfairly discriminatory … it is imperative that additional quantitative analysis be conducted to determine the effect the Castellanos decision is having on the Florida workers’ compensation market and the data used to support future rate filings,” the order states. “The analysis may include alternative data sources and should examine changes to the Florida workers’ compensation market that are attributed to or observed as a result of the recent court decision.”

Approval of a revised rate decrease is contingent on the amended filing being submitted with changes as stipulated within the order. If approved by OIR, the revised rate decrease would become effective on Jan. 1, 2018 for new and renewal business.

Read Order: Florida OIR Workers’ Compensation Insurance Rate Decrease

By Amy O’Connor of | November 2, 2017

Florida WC Rate Decrease Hearing Set for Tomorrow

The Florida Office of Insurance Regulation will be discussing on the 18th of October NCCI’s proposed rate decrease of 9.6%.  Agenda shown below.  If you have any comments that you would like the state to hear, you can email with the subject line of your e-mail should read “NCCI” up until the 25th of October.

WHEN: October 18, 2017, 1:00 p.m.
WHERE: 412 Knott Building
404 South Monroe Street
Florida Capitol Complex
Tallahassee, FL 32399
GENERAL SUBJECT MATTER TO BE CONSIDERED: National Council on Compensation Insurance (NCCI) has
proposed an overall average decrease in rate levels of 9.3% for the voluntary market for all new and renewal workers’
compensation insurance policies written in the State of Florida, effective January 1, 2018. The filing also requests a
decrease to the fixed expense cost applicable to every workers’ compensation policy in Florida from $200 to $160 which
when combined with the rate level decrease results in an overall average workers’ compensation premium decrease of
1. Opening Remarks Office of Insurance Regulation (Office)
a) Introduction of Office personnel
b) Introduction of participating parties
2. Presentation National Council on Compensation Insurance
3. Public Comment Open to the Public
4. Closing Remarks
5. Adjourn
Any comments or concerns not addressed at the public hearing may be forwarded to; the subject
line of your e-mail should read “NCCI”. The record will be open for public comment until October 25, 2017.

New Hampshire Workers’ Comp Rates May Decrease for Sixth Year in a Row

From InsuranceJournal: New Hampshire employers could pay less for their workers’ compensation insurance next year because of a filing that lowers the rates and loss cost factors insurers use to develop prices. This move would mark the sixth year in a row that New Hampshire workers’ compensation rates have decreased, according to a press release issued by the New Hampshire Insurance Department.

“A decrease in workers’ compensation rates means a decrease in costs to New Hampshire businesses.” said Insurance Department Commissioner Roger Sevigny in the release. “These considerable savings could be used to bring more workers, higher salaries and expanded operations to New Hampshire.”

The National Council on Compensation Insurance (NCCI) filed a rate proposal in August with the New Hampshire Insurance Department to reduce voluntary loss costs by 13.3%. The NCCI is a licensed rating and statistical organization that gathers data, analyzes industry trends, and prepares workers’ compensation rate filings for New Hampshire and many other states.

The loss cost is the portion of an employer’s insurance premium that pays claims costs for work-related injuries. It is ultimately used by insurers to set rates and premiums in the voluntary market. All insurers writing voluntary workers’ compensation in New Hampshire are required to use the new loss costs, along with a loading to cover company expenses.

The NCCI has filed a decrease of 10.3% for the assigned risk, or “residual,” market. The residual market ensures access to workers’ compensation for companies that are not able to buy coverage on the open market. About 9% of workers’ compensation insurance is obtained this way, according to the press release.

The New Hampshire Insurance Department has scheduled a public rate hearing for 10 a.m. September 21 to give NCCI an opportunity to discuss the filing and interested parties and other stakeholders the ability to provide testimony or comments. The hearing will be held in the Insurance Department’s Conference Room 274.

After the hearing and a short public comment period, Commissioner Sevigny will issue a decision on the filing, and the new rates will apply to policies effective January 1, 2018.

“The decrease in workers’ compensation rates is great news for job creators and seekers all across the Granite State,” said Governor Chris Sununu in the release. “This will increase New Hampshire’s advantage with regards to attracting, retaining and growing jobs.”

The New Hampshire Insurance Department’s mission is to promote and protect the public good by ensuring the existence of a safe and competitive insurance marketplace through the development and enforcement of the insurance laws of the State of New Hampshire.

Source: Insurance Journal East