Below is an article (opinion) that was printed in the Ocala Star Banner sent in by Clark Yandle of Yandle Building Materials. Clark thought this article would be of interest to FBMA members.
In Florida, the issue of workers’ compensation insurance rarely grabs headlines. Yet the money involved is huge: Last year, employers paid billions of dollars in premium to cover workers injured on the job; for almost all of these employers, such insurance is mandatory.
That’s why state law gives businesses the right to know how those rates are set. But the public was shut out of the ratesetting process this year, event though more interested parties knew there was likely to be a big increase after the state Supreme Court struck down parts of the state worker’s comp law.
That’s exactly what happened. On Dec. 1, workers’ comp rates went up by an average of 14.5 percent.
Where did the numbers behind that increase come from? Details are sketchy – according to a Tallahassee circuit judge, illegally so. Meetings between the National Council on Compensation Insurance, which represents Florida workers comp carriers, and state insurance regulators should have been public, along with the documents supporting the increase. Instead, NCCI made the ludicrous claim that its negotiations with the state should be exempt from state government-in-the-Sunshine laws because, instead of appointing a “committee” of financials experts described in the open-meetings law, all the work was essentially accomplished by a single actuary.
If true, that claim should undermine confidence in NCCI’s initial recommendation of 19.6 percent increase. Nor, according to Leon County Circuit Judge Karen Gievers, does it allow the firm and the state Office of Insurance Commissioner to wriggle out of the legal requirement to conduct ratesetting activities in public.
Even after the insurance commissioner knocked the proposed rate increase down to 14.5 percent, Florida businesses have ample reason to be dubious. NCCI claimed that the majority of the rate increase was ties to an April Supreme Court decision, Castellanos vs. Next Door Co., that weakened a 2009 law strictly capping attorney’s fees in workers compensation disputes. NCCI predicted that insurance companies would need a 15 percent increase to deal with increased claims and litigation over attorney fees. Two other decisions would push rates up another 4.6 percent, NCCI claimed.
But an analysis by Stephen Alexander, a Crawfordville actuary, claims NCCI’s recommendation was based on several broadly drawn assumptions that were nearly impossible to question – because documentation was mostly kept secret, he said in written testimony disputing the increase. Even when the full 259-page rate filing was released, it lacked significant data.
Alexander isn’t a purely independent observer – he was hired by James Fee a Miami attorney who handles workers’ compensation cases. And Fee certainly has a motive to attack the rule: The sharp rate increase has created a politically convenient cudgel for the state’s largest business organizations to push for new restrictions on legal fees in workers’ comp cases. That the insurance commissioner’s office knocked the proposed increase down to the final 14.5 percent rate suggests that state officials saw some flaws in NCCI’s calculations as well. But it’s hard to say more, since negotiations were secret. It all seems suspiciously cozy – and completely deaf to the voices of dozens of actual business owners across Florida who wrote the insurance commissioner’s office pleading for a more gradual increase… and a better explanation of this one. So now, across Florida, businesses large and small are facing hundreds of millions of dollars in increased premiums – based on documentation they never had a chance to see, let alone challenge, and secret negotiations that should have been open. This is not the way Florida is supposed to do the public’s business. In the coming session, lawmakers should make that clear.