Newsletter: Legislative Report.  Vol. 1. Issue 5

May 2003

Legislature Fails to Pass Workers' Compensation Reform - Mary Ann Stiles

The bad news is that the business community of this state has lost in its efforts for the third year in a row to reform workers' compensation. The Florida Legislature ended at 6:20 p.m. on May 2, 2003 without the Senate taking up the bill that was sent to the Senate by the House this morning. The House had refused to concur in the Senate amendments. The House bill was the bill pushed by the business community and the insurance industry. It would have lowered rates by -14.15% with an additional rate reduction for the construction industry of -4% for a total of -18.15% for construction.

In a state that has the highest rates in the nation; where permanent total claims are 5 times higher than the national average; where hospital outpatient care is the most expensive in the nation; and where attorneys cause a 40% increase per claim than an attorney in any other state due to the excessive hourly rates no other state allows; and, where fraud is rampant because of the exemptions in the construction industry, the business community still failed.

The good news is that the issue of workers' compensation will most likely be the subject of a Special Session to deal with that issue. Although it was announced that the Legislature will be back for a Special Session on May 12th to address budget issues and will stay here through May 23rd, no mention was made of taking up workers' compensation at that time. The Governor has made this issue a high priority in his administration and has insisted that rates be reduced by -15% across the board.

Many misconceptions, misinterpretations, and statements that, at the very least, were misleading regarding workers' compensation, coupled with the fact that the House and the Senate failed to reach agreement on several major issues, killed workers' compensation reform for the session.

If the business community over the next month does not stand up and be heard in their local communities and let each legislator in its district know that your business cannot afford the high rates that are being charged; that your business is having to cut back on expenses and personnel and that the other businesses that you compete with do not even bother to carry coverage; and, if we do not make our voices louder than the claimants' attorneys, we will not be successful in getting a meaningful bill passed during Special Session either.

The number of claimants' attorneys and defense attorneys standing outside both chambers to grab Senators and Representatives when they came out the door to convince them not to do anything this session or at least allow a higher attorneys fee than the House allowed, was simply astounding. This was my 30th year lobbying workers' compensation and I have never seen the likes of it.

If we do not make our voices heard, a bill might pass Special Session, but it will not resolve the major problems with the Florida's workers compensation law. Rates will continue to climb, insurance carriers will not write in this state, new businesses will not move to Florida and some businesses that are currently operating in Florida will fold.

Please make your position known to those who vote.

History of House Bill 1837 on Workers' Compensation Reform - Mary Ann Stiles, Tamela I. Perdue

The House of Representatives considered workers' compensation over the course of two days during the legislative session. The House first considered CS/HB 1837 regarding workers' compensation on Friday, April 25, 2003, but completed its work on this issue Monday, April 28, 2003. In the end, the House completed its work on a bill that provided a -14.15% cost savings to Florida's employers, with another -4%, or total -18.2% savings for the construction industry. It was supported by the employers and carriers throughout the state.

The bill as it initially came out of the House Insurance Committee increased costs by 10.4%. To correct this, the House State Administration Committee adopted a strike all amendment to reduce costs, which was introduced by Representatives Mack, Ross, Berfield, and Brown, who were involved with this issue throughout the committee process. Rep. Mack had originally filed a workers compensation bill that was supported by a Coalition of Business and Insurance Industry. When the committee substitute arrived on the floor of the House, it eliminated the exemptions in the construction industry, except for up to 3 corporate officers owning 10% each of the corporation. CS/HB 1837 also adjusted the current structure of the JUA to bring available and affordable coverage to more employers. The bill corrected the Turner decision and required a showing of intent to harm through clear and convincing evidence before allowing an employer to be sued civilly, in addition to the workers' compensation benefits being provided. It provided for a very tight definition of permanent total disability and eliminated the social security standard to determine such benefits in Florida. It also provided that attorneys fees would be paid based on a statutory formula of 18/13/8/5 percentage to create a contingency fee without hourly rates to claimants' attorneys. It provided for an offer of judgment 30 days prior to final hearing. The bill corrected the Burger King and Wilkins decisions for the payment of supplemental benefits and stopped all supplemental benefits paid for impairments higher than 20%. It also cleaned up the definition of how to calculate the average weekly wage by eliminating the 91 day requirement, eliminated the week of injury from calculation and required that wages would be calculated on 75% rather than 90% of l3 weeks. The bill also clarified the time lines for mediations, including that mediation is not to be scheduled before expiration of the 30 days in which the employer/carrier can respond to a petition for benefits, but insuring that the final hearing occurs within 210 days after the petition is filed.

Several amendments were filed on the House floor attempting to eliminate many of the areas of critical concern to the business community and insurance industry. These efforts failed. Additional amendments were filed to change the calculation of impairment benefits after maximum medical improvement; increased fees paid to physicians while at the same time reducing out patient expenses incurred at hospitals; and changed the formula by which pharmacies are paid.

All was going well until the amendment process took an unexpected turn when Representative Seiler sponsored an amendment, supported by the claimant's attorneys and Representative Berfield, which unexpectedly passed, allowing defense attorney fees to be equal to claimant attorney fees. The consequence of this move was to re-introduce hourly rate attorney fees. Once this amendment passed, the House adjourned for the weekend with no further amendments, motions or debate on the bill. Accordingly, the bill and all pending amendments were rolled over to Third Reading, available for final passage on Tuesday, April 29, 2003, following a two-day waiting period. Prior to that amendment, the House had a bill that reduced rates by -15% plus an additional -4% for the construction industry. The result of that amendment reduced the savings on rates to -10% savings plus an additional -4% savings for the construction industry

The House leaders spent a good part of the weekend crafting an amendment that would reinstate the savings. These efforts were led by Representatives Goodlette, Bense, Brown, Ross, Seiler and Clarke. The results were: (1) stop permanent total benefits at age 75 rather than 65 plus 5 years; eliminate the word "part time" from the definition of sedentary employment in permanent total cases; (2) eliminate the attorneys fees provision adopted on Friday and increase the formula for attorneys fees to 20/15/10/5 with no exceptions for hourly rates; and (3) enhance training and education to include securing a GED, and provide such education to those who are unable to earn at least 80% of their compensation rate, and provide that these benefits are not in addition to the l04 weeks already provided in the statute for temporary disability benefits. These benefits would be paid for by the Workers Compensation Administrative Trust Fund.

The bill as amended provided for an increase in medical fees to 110% of Medicare for physicians and 140% of Medicare for surgical services. The hospital fee reimbursement schedule is reduced to cover the cost of providing these increases to the doctors, in order to bring good doctors back into the system. This issue alone creates a cost increase of +1.4%, but is necessary to provide quality health care to injured workers. Another medical issue addressed is the increase of chiropractic visits to 24 visits or 12 weeks, whichever is earlier. These costs are offset by the decrease in outpatient and pharmacy payments.

The House bill also included employee leasing companies in the definition of "employer" for purposes of providing workers' compensation coverage.

There were also administrative measures in the bill written to ensure that disputes are resolved more quickly and efficiently with stiffer penalties on employers and carriers who deny benefits to injured workers that should be paid.

CS/HB 1837, overwhelmingly passed the House on Thursday, May 1, 2003, by a vote of 104-10. This bill has a -14.15% savings, plus an additional -4% savings for the construction industry, for a total of -18.15%.

The bill then went to the Senate and the Senate took up the House bill, instead of SB 1132. Even though the House warned that if the Senate sent back any amendments on it bill, the Senate adopted 4 substantive amendments and two title amendments that reduced the savings to less than -14.15%.

The Senate amendments that were adopted were:

1. A late filed amendment by Senator Alexander changed the house language on attorneys' fees from the current statutory formula of 20% of the first %5,000; l5% of the next $5,000; l0% of the remaining amount of benefits secured during the first l0 years and 5% of the benefits secured after l0 years, without any exceptions for hourly rates. They then adopted a formula of 20% of the first $5000; l5% of the remaining amount during the first l0 years after the date the claim is filed. In lieu of that formula, the judge can approve a fee not to exceed $l,500 at a maximum hourly rate of $l50 per hour, if the benefits secured are less than $l0,000. In those cases where the carrier denies an injury and the claimant prevails on compensability, in lieu of the attorneys fees equal to l5% of all benefits secured, the judge may award up to $l,500 based on a maximum rate of $l50 an hour.
2. A second late filed amendment filed by Senators Clary and Atwater made significant changes to the JUA. The JUA is to be actuarially sound and must not be competitive with the voluntary market, therefore allowing the JUA to be the last resort for coverage. The plan creates Tiers One and Two that can not exceed 125% of approved rates. Tier One must include employers whose premium does not exceed $20,000 and an no lost time claims nor incurred medical only claims exceeding 50% of the premium in the preceding two years. Tier Two must include employers who are unable find coverage in the voluntary market but have an experience mod factor of l.05 or less, and employers that are charitable and nonprofit organizations. A third tier is created for all other employers. This tier must be actuarially sound and be self supporting. If the plan issues assessable policies such insures in Tier Three is liable on a pro rata basis for any deficits. If Tiers One or Two have a deficit, the department shall transfer a one time allocation of an amount not to exceed $5 million, subject to appropriation by the Legislature. After the transfer, if a deficit exists, the plan can levy assessments upon all workers compensation policy holders not to exceed 2% of each policy holder's annual premium in any calendar year. Such assessments shall be collected by the carrier as a separate line item, in addition to the premiums charged by the insurers. If a deficit exists in Tier Three, the deficit may be funded through increased premiums charged to insureds of the plan.
3. An Amendment by Senator Campbell weakened the House Mental or Nervous injuries language by eliminating the language that provided that in no event shall benefits for a mental or nervous injury be paid for more than 3 months after the date of maximum medical improvement.
4. Senator Posey filed an amendment that clarified what an affiliated person is who is delinquent in paying a stop-work order and penalty assessment to make it more difficult for someone to get around the order or assessment.
5. Senator Posey also filed an amendment which passed on voice vote to allow the Chief Financial Officer to contract with state attorneys in the three largest judicial circuits to prosecute criminal violations of the workers compensation law to be paid from the Workers Compensation Trust Fund. The amendment further allows the employer or carrier to request from the unemployment compensation records, wages of an employee reported by any employer. The employer must consent as must any employer who paid the wages to the employee subsequent to the date of accident. Further requires an annual report to the Legislature from the Department of Financial Services regarding the joint performance of the workers compensation fraud and enforcing compliance with the workers' compensation coverage requirements under Chapter 440.

The bill next went back in messages to the House. The House refused to concur in the Senate amendments and sent the bill back to the Senate asking them to recede from the amendments. The Senate, however, did not take up this House message prior to the sine die, marking the end of the regular legislative session. Therefore, no workers' compensation reform measures passed and current law continues to be in effect.

The Governor has already announced plans to call the Legislature into special session this summer, requiring them to craft workers' compensation reform that is needed by the employers and businesses of this state.

STATE BUDGET: ON AGAIN, OFF AGAIN - George Sheldon

With one week left to go in the regular legislative session, a budget deal between the House and Senate remains elusive. Both houses have passed their respective budgets with a wide gap in total expenditures. The Senate spending plan was close to one billion dollars higher than the House plan, but didn't specify where the additional revenue would be found to pay for that budget.

Early in the week, Senate President Jim King offered the first olive branch of the session to the House proposing that the Senate reduce its budget to a point that it would exceed the House plan by $475 million. The House responded with a proposal to increase certain fees and fines, reducing the difference between the two bills to somewhere in the neighborhood of $175 million.

All day Friday, legislators waited hoping against hope that additional progress could be made allowing the conferees to meet over the weekend. With that hope, the word went out that just maybe the budget could be resolved before the Friday deadline. Hour by hour went by until President King announced to the senators that everyone was going home for the weekend -- no deal in the making.

Maybe the weekend will cool the differences, but don't count on it. In order to adjourn with a budget in time, the budget would have to go to the printer no later than Tuesday of next week - a tough goal to meet. Even if the leaders decide on an amount of total revenue, the details of the budget details must be worked out. In years past, when things appeared going nowhere, the logjam broke. Possible this year - yes; likely - no.

If there is no budget deal next week, count on adjournment Friday and a special session beginning June 1.

BUSINESS LEGISLATION UPDATE - Rayford Taylor

MINIMUM WAGE

Senate Bill 54, by Senator Lee Constantine, prohibits political subdivisions of the state of Florida from requiring employers operating in Florida to pay a minimum wage other than that established by the Federal government, passed the Florida Senate by a vote of 22-13. The bill went to the House of Representatives, where was adopted by a vote of 84-32. This action by the Legislature will mean Florida employers will not be faced with having to be concerned about different minimum wage requirements being established in different counties in Florida, or with the fact they are required to pay higher minimum wages for certain jobs, while their competitors in another state do not.

TAXATION

House Bill 1839, by the House Finance and Tax Committee and Representative Randy Johnson, passed the House of Representatives this week by a vote of 113-0. The bill amend Florida's Tax Code to conform to the changes made by the U.S. Congress in 2002 to the U.S. Internal Revenue Code. The Senate adopted the bill by a 40-0 vote. These bills simplify the paying of taxes by Florida corporations because it keeps Florida's corporate income tax laws consistent with the Federal system, so businesses can "piggy back" of their Federal tax return when preparing their tax returns for Florida.

PRIVATE PROPERTY RIGHTS

In 1995, the Florida Legislature passed the Bert Harris Private Property Rights Act, which provided some projection to property owners who were faced with possible government over-regulation of their property. Because of a court decision which weakened an important section of that law, there have been bills introduced to strengthen that law. Senate Bill 1184 by Senators Ken Pruitt and Steven Geller passed the Florida Senate this week by a vote of 35 to 2. The bill was awaiting consideration by the House of Representatives when the session ended. These bills, if they had passed, would have provided additional protection to landowners and businesses who are faced with governmental over-regulation.

UNEMPLOYMENT COMPENSATION

Last week a subcommittee of the Senate Appropriations Committee voted for Senate Bill 470 by Senators Debbie Wasserman Schultz and Alex Diaz de la Portilla relating to unemployment compensation. The bill increases the amount of unemployment compensation benefits by various amounts for people who receive such benefits between October 1, 2003 and June 30, 2005. The bill was not considered by the House of Representatives, so it died without additional consideration.

No Deal in 60 Days; It Could be a Long, Hot Summer - George Sheldon

After sixty days of wrangling, hot tempers and delay after delay, the 2003 legislative session with most major issues unresolved. No workers compensation reform, no resolution of medical malpractice, no agreement on the constitutional mandated class size reduction or smoking ban - most significantly, no state budget.
As Governor Bush put it Friday night, "Sixty days ago, the House and Senate convened in Tallahassee to do the people's business. Hindered by a lack of trust and communication, they failed to complete much of the work critical to all Floridians."

So, where do we go from here? Governor Bush has called a special session sixteen day special session starting May 12 to deal with the budget impasse, but gives indication he will call other special sessions over the course of the summer to deal with the two constitutional mandates of class size reduction and the smoking ban, medical malpractice and workers compensation reform. The constitutional mandates must be dealt with prior to July 1.

There is always the possibility that deals could be reached during the budget session on the other outstanding issues, but that would take agreement by two-thirds of both houses to expand the call to include other items. So it is most likely that this will be a long, hot summer in Tallahassee.

Early on the difference between the House and Senate budget plans was $1.4 billion. A glimmer of hope appeared two weeks out from the end of the regular session when Senate President Jim King offered to lower the difference to $475 million. Speaker Johnnie Byrd tentatively agreed, but even that fell through. By Friday of last week as the session ended, President King backed off his demand for additional revenue which could mean a quick resolution of the budget differences, but predicted the public outcry as the cuts in services begin to be felt necessitating another fall special session.

Attorney General Charlie Crist and some legislative leaders hope to also revive a bill to give the attorney general greater authority to investigate discrimination com-plaints. The legislation passed the both houses of the legislature by overwhelming numbers, but died in the waning days when Senator Dan Webster objected to the removal of a Senate provision requiring that businesses accused of discriminatory practices be able to go to court within 30 days to find out the precise nature of the charges against them.

One piece of legislation did pass in the waning hours and was signed by the Governor extending the medically needy program for two more months until a budget agreement could be reached, otherwise 27,000 Floridians would have lost benefits.

Maybe a week out of Tallahassee will cool tempers and bring resolution, but count on a long, hot summer in any case.

Motorcycle Tag Bill to Benefit Prevent Blindness Florida - George Sheldon

Stiles, Taylor & Grace has lobbied to help Prevent Blindness Florida in its efforts at vision screening and delivery of services. With so many important issues unresolved in the recent legislative session, the House and Senate were able to agree on legislation creating the first motorcycle prestige license tag. Proceeds from the tag will be made available to Prevent Blindness Florida, the Centers for Independent Living, the ABLE Trust, and the Spinal Cord Injury Trust Fund. The legislation passed in the final hours of the session, was ordered engrossed and enrolled and is on its way to the governor for signature. The Governor is expected to sign the legislation, so for those of you with the motorcycle bug be sure to do your part by buying the first motorcycle prestige license tag in Florida when they come out later in the summer.