Florida E-Mod System v. Court of Appeals
The Florida E-Mod system took a massive hit last week when a Court of Appeals decided that the state’s limit on Temporary Total benefits were unconstitutional.
I find these types of decisions repugnant as try to “socially legislate” Workers Compensation benefits ends us creating Workers Compensation crises. One bad decision such as this can wreck the whole system.
One has to remember that the insurance carriers have underwritten claims where the 106 week Total Temporary (TTD) benefit maximum was solidly in place. Now, the plaintiff bar will be lining up to feed at the new trough that this decision has unfortunately made for the state of Florida.
How do the carriers make up for this new “social legislation?” They can just change their Loss Cost Multipliers (LCM’s) to fit the situation. However, the carriers will likely have to greatly increase the LCM’s as they will be attempting to make up ground as they will likely have to pay extra benefits on claims where there were no premiums paid for any TTD benefits.
This situation can cause the Florida Workers Comp system to snowball back to when their whole Workers Comp system was in chaos. Insurance carriers can quickly start to “cherry pick” their insureds leaving certain Workers Comp markets and employers to fend for themselves.
I had worked under one of these situations in the past. In the 1990’s a NC Supreme Court decision ruled that medical benefits for non-settled Workers Comp claims could never be closed out. This “social legislation” caused some of the major carriers to leave the state. The remaining carriers charged very high rates as they had no accounted for any Workers Comp claim since the 1930’s as a possibly reopened file.
From the article –
- During oral arguments last month, Allen Winsor, an attorney for the state, defended the benefits limits and said they have to be viewed within the “broad picture” of the workers compensation insurance system. He said lawmakers approved the limits as a way to reduce costs at a time when businesses struggled to afford insurance.
- The judges stopped short of addressing other parts of the workers compensation system, but attorneys who represent workers have long complained about steps the Legislature has taken to reduce insurance costs. Much of the debate has centered on 2003 changes that have led to an overall 56 percent drop in workers compensation insurance rates.
Plaintiff attorneys complained about reducing the costs of Workers Compensation to employers. How do employers make up the difference? They can either layoff workers or pass the cost onto the ultimate consumer. Hopefully the Florida E-Mod system will not incur any more heavy changes such as this one.
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