Florida Insurers, Employers Scrambling After Court Ruling on Workers’ Compensation Benefit

A Florida district court judge’s ruling that declared unconstitutional a 104-week limitation on injured workers’ temporary benefits left insurers and employers scrambling to come up with a legislative solution.

The Florida First District Court of Appeals handed down the decision in the case [Bradley Westphal v. City of St. Petersburg, No. 1D12-3563, February 28, 2013]. It dramatically upped injured workers’ temporary indemnity benefits from 104 weeks to 260 weeks.

The decision represents one of the most significant changes to the state’s workers’ compensation law since it was last reformed in 2003. Since then, rates have dropped by 56 percent. Now insurers and business groups are searching for ways to avoid potential increases.

“Absolutely, it is at the top of our list and we are analyzing it to see what corrective action we can take,” said Donovan Brown, counsel for the Property Casualty Insurers Association.

The case has its genesis in a 2009 workplace accident that left City of St. Petersburg firefighter and paramedic Bradley Westphal with severe injuries to his legs and in need of multiple back surgeries. Under state law, Westphal was eligible for 104 weeks of temporary benefits, a time period that was designed to compensate workers while they heal and then return to work or reach their maximum medical improvement status and become eligible for permanent benefits.

Westphal exhausted his temporary benefits and yet was refused permanent benefits because his physicians could not determine the prospects for his long term recovery. He was left without benefits despite the fact that his doctors advised him not to work.

District Court Judge Bradford Thomas wrote that this statutory gap between temporary and permanent benefits violated Westphal’s constitutional right to access the courts and “receive justice without denial or delay.”

Under the current benefit scheme, Thomas wrote, injured workers can be left financially unprotected for an undetermined period of time, which goes against the intent of the workers’ compensation law and is unjust.

“This system of redress does not comport with any notion of natural justice, and its result is repugnant to fundamental fairness, because it relegates a severely injured worker to a legal twilight zone of economic and familial ruin,” wrote Thomas.

Thomas, in addition to ruling on the specifics of the Westphal case, also took the state to task for sharply limiting temporary benefits over the course of years. In 1991, lawmakers reduced temporary benefits from 350 weeks to 260 weeks. In 1994, lawmakers cut temporary benefits even further to its current 104-week limit.

Thomas noted that in Georgia injured workers can receive up to 400 weeks of temporary benefits, while in Alabama and Louisiana there is no limit. South Carolina, North Carolina, and Mississippi set temporary benefit limits at more than 400 weeks.

“When the 104-week limit on Florida’s temporary total disability is compared to limits in other jurisdictions, it becomes readily apparent that the current limit is not adequate and does not comport with principles of natural justice,” wrote Thomas.

The decision to strike down the 104-week benefit limit means that the previous law once again takes effect. Thus, the 104-week benefit is replaced by the 260-week limit.

Thomas’ decision, which will likely be appealed by the City of St. Petersburg, has sent shock waves through the industry as insurers fear a major increase in rates while defense attorneys assess its impact on open claims.

From the industry standpoint, many are glad the ruling came down now, which will at least give lawmakers 60 days to review the decision this year.

“Arguably, it is better for it to come out now so at least we will have an opportunity to do something this session instead of having to eat it for 10 months,” said William Stander, president of WHISPER Inc., an insurance lobbying firm.

Insurance representatives admit there is no clear answer on how to change the law in such a way that it will reverse the ruling. The ruling calls for the state to either expand temporary benefits or expand eligibility for permanent benefits. Either change, however, would lead to higher rates.

Topics Florida Carriers Legislation Commercial Lines Workers' Compensation Talent Business Insurance