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  This is with the Castellanos v. Next Door Company ruling, which repealed restrictive attorney fees caps, only being in place for 7 out of 12 month in the 16 -17 fiscal year.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.

Source: https://www.news4jax.com/news/florida/legal-fees-increase-in-workers-comp-system

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.”

Source: http://markets.businessinsider.com/news/stocks/Dealing-with-the-Workers-Compensation-Roller-Coaster-1009678544

Patriot National Stock Drops 60% After Disclosure of Forbearance Agreement

Latest on Patriot National as posted by Seeking Alpha….

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About: Patriot National, Inc. (PN)|By: Carl Surran, SA News Editor

Patriot National (PN -64.1%) plunges by more than 60% after disclosing it has entered into a forbearance agreement with its lenders, and that much of its revenue and cash flow will cease.

PN is in default of its credit Agreement due to the failure to deliver timely financial statements, non-payment of interest due Nov. 1 and the failure to comply with financial covenants.

Based on the company’s deteriorating financial condition, PN says it is terminating ~250 employees, or one-third of its workforce.

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 https://tinyurl.com/CP2017RxSurvey.

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 InsuranceJournal.com | November 2, 2017

NAPEO Forms Cybersecurity Task Force

As an fyi, NAPEO has formed  a Cybersecurity Task Force to better understand the exposures of PEO and how to mitigate them.  A very timely and critical task force that I am very proud to be a part of – This is by far the most misunderstood exposure to PEO today.

“NAPEO recognizes the critical business and compliance risks faced by our members concerning cybersecurity. Although many member resources such as PEO Insider and various conferences have featured helpful information and programs for members on this topic, NAPEO recognized more is needed and formed the NAPEO Cybersecurity Task Force to help fill that gap. The Cybersecurity Task Force is comprised of a cross section of professionals with expertise in insurance, law, technology and the business environment of PEOs. Its primary mission is develop a set of best practices which NAPEO members could use to strengthen their compliance efforts and minimize their legal and business risks. The Task Force’s first step will be to survey members to gain a deeper insight into the cybersecurity concerns and exposures of members, which will be used to help shape the best practices the task force will produce. For more information, please contact Farrah Fielder.”

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 ratehearings@floir.com with the subject line of your e-mail should read “NCCI” up until the 25th of October.

PUBLIC HEARING AGENDA
NATIONAL COUNCIL ON COMPENSATION INSURANCE
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
9.6%.
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 ratehearings@floir.com; the subject
line of your e-mail should read “NCCI”. The record will be open for public comment until October 25, 2017.

PRESIDENT SIGNS ACA EXECUTIVE ORDER AND IMMEDIATELY FOLLOWS WITH ANOTHER BIG ANNOUNCEMENT ON ACA

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On Oct. 12, 2017, President Trump signed an executive order intended to change certain rules under the ACA, expanding access to association health plans, health reimbursement arrangements (HRAs) and short-term, limited-duration insurance. The executive order does not make any changes to existing regulations, but directs federal agencies to consider new regulations or guidance to implement the order’s policies. This Health Care Bulletin provides an overview of the executive order.  Click the attached document to continue reading…

President Signs Executive Order Designed to Change ACA Rules

On Oct. 12, 2017, the White House announced that it will no longer reimburse insurers for cost-sharing reductions made available to low-income individuals through the Exchanges under the Affordable Care Act (ACA), effective immediately. Because Congress did not pass an appropriation for this expense, the Trump administration has taken the position that it cannot lawfully make the cost-sharing reduction payments.

This decision follows the U.S. House of Representatives’ position in a lawsuit it filed against the Obama administration in 2014 challenging the federal government’s authority to fund these cost-sharing reductions. Click the attached document to continue reading…

White House Announces ACA Subsidies Will End 10-13-17