Fla. Governor, Lt. Governor Announce Workers’ Comp Reform

April 9, 2003

Florida Governor Jeb Bush and Lt. Governor Toni Jennings announced comprehensive workers’ compensation reforms at a rally of Florida homebuilders at the state’s Capitol. At the rally, Bush commented that part of creating a stable business climate in Florida requires reforming the state’s workers’ compensation system.

According to a statement released by the governor’s office, Bush told the homebuilders that “Florida’s current workers’ compensation system is crumbling under the weight of increasing cost, endless litigation and rampant fraud.” He added, “Florida’s businesses simply cannot afford to pay the skyrocketing workers compensation insurance costs any longer. Without these changes, workers’ compensation costs will continue to drive businesses out of the state, and even worse, out of business altogether.”

The governor expects his reform measures to provide a 15 percent decrease in insurance rates. These reductions would come from reducing attorneys’ fees, eliminating exemptions, and alternative dispute resolution reforms. His plan would increase benefits for temporarily injured workers and modify the standards for permanent and total disability and still provide savings.

Lt. Governor Jennings, who along with Governor Bush has championed solutions to Florida’s rising workers’ compensation costs, and helped reform the system, highlighted several of the problems with the current system.

“Florida’s workers’ compensation system has fallen far short of the purpose it was expected to achieve. Businesses, especially small businesses and not-for-profits, are having difficulty finding coverage, and the coverage they do have has increased dramatically in the past several years,” Jennings said. “Medical practitioners at times refuse to treat workers’ compensation patients because of the system’s poor reimbursement rates and administrative burdens. We cannot continue to operate under this system.”

Components of Bush’s worker’s compensation reform include:
* Increased Benefits For Injured Workers: The goal of any workers’ compensation system should be to provide timely and effective medical treatment and economic support to injured workers at affordable cost to employers. In keeping with that intent of the workers’ compensation system, Governor Bush proposes that the statutorily established benefits for temporarily injured workers be increased to the national average. This increase in benefits will reduce the incentive for temporarily injured workers to seek permanent disability status in order to receive even greater benefits.
* Increased Workplace Safety: Florida’s workers deserve to work in the safest workplaces possible. Governor Bush proposes a continuation of the current discount for employers who maintain a qualified workplace safety program. In addition, Governor Bush proposes increasing the availability of the University of South Florida’s SafetyFlorida program, which provides businesses with safety consultation and guidance.
* Speedier Claim Resolution: As first envisioned, the workers’ compensation system was intended to provide injured workers with swift claim resolution so that they could quickly obtain their benefits. The current system is not achieving this goal, as a result of the current hourly fee compensation system for attorneys. Hourly fees promote delaying claim resolution to increase attorney fees. Governor Bush recommends eliminating the hourly fee and replacing it with the contingency fee system, which provides attorneys with proper compensation based on the benefits received.
* Improved Access To Quality Medical Care: Of the 40 states that have medical fees schedules, Florida has the lowest reimbursement levels, which on average are 17 percent below Medicare reimbursement levels. As a result, more experienced doctors do not treat injured workers. Governor Bush proposes increasing the reimbursement schedule for doctors treating injured workers. The governor also proposes more stringent reviews to ensure that doctors are not unnecessarily treating patients for personal financial gain.
* Reduce Tort Litigation: Many employers find themselves subject to lawsuits, in addition to workers’ compensation claims. This is the result of loopholes and exceptions to workers’ compensation liability. Governor Bush proposes that current law be amended to clarify when workers’ compensation liability is to be exclusive. Governor Bush proposes restoring horizontal tort immunity for construction job site subcontractors. This will prevent subcontractors from having to purchase expensive liability insurance to protect themselves from lawsuits by other subcontractors on the same work site. The high cost of liability insurance, in addition to their workers’ compensation policies, unnecessarily exacerbates construction costs and is ultimately passed on to consumers.
* Exemptions: Exemptions currently in place for construction companies are being abused, despite reform last year by the Legislature. Governor Bush recommends eliminating these exemptions while maintaining the current exemption for small businesses.
* Quicker Resolution Of Medical Disputes: Providing workers with quick resolution of medical disputes is critical. Governor Bush proposes a system that will ensure disputes are quickly resolved by giving doctors a greater say as to whether medical treatment is necessary and allowing doctor peer review.
* Reduced Workers’ Compensation Fraud: Fraud continues to plague Florida’s workers’ compensation system. Employers can under-report wages and misclassify employees, employees can fraudulently claim non-existent injuries, and construction companies can abuse the exemption process. Governor Bush proposes increasing penalties against both employers and employees for fraudulently gaming the workers’ compensation system. The governor also proposes increasing the authority of the Division of Workers’ Compensation to impose sanctions against carriers and employers.
* Increased Oversight And Enforcement: Governor Bush proposes the Department of Financial Services be given broad regulatory authority to investigate, audit and sanction carriers.

In May 2002, the governor issued an executive order creating the commission on Workers’ Compensation Reform. He charged the commission to study and make policy recommendations regarding the availability and affordability of workers’ compensation claims, changes necessary to reduce the cost of workers’ compensation insurance and the adequacy of benefits for injured workers.

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