FL: Potential Impact of Attorney’s Fees on Future Rates

Bruce Burk

Tampa, FL (WorkersCompensation.com) – Workers’ Compensation Rates in Florida are projected to go down once again. As previously reported, NCCI filed a proposal that would decrease the average rate by 5.4% beginning next year. That news came despite two cases in recent years that have affected attorney’s fees.

The data which led to this rate decrease included the time period after the Castellanos case came out which said that the caps on attorney’s fees were unconstitutional. Many believed that this decision would have caused an increase in rates because it would in theory mean that the carrier paid fees would be larger thus increasing overall claim payouts.

However, given this rate decrease, that prediction seemed to be wrong. The marketplace could have possibly adjusted to the possibility that employer/carrier paid fees would be higher by changing how claims are handled or reserved. Moreover, the Castellanos case only comes into play when the claimant obtains a denied benefit, which isn’t relevant in every case.

The Castellanos case and how it changed workers’ compensation attorney’s fees in Florida cannot he discussed without also discussing the Miles case. Miles v. City of Edgewater addresses the reasonableness of a fee based on a retainer signed the claimant. A customary Miles fee is 25% of the washout but many attorneys seek higher fees. Some judges approve the fees in excess of 25%, others do not. This case also has an impact on rates because it lays the groundwork for attorney’s fees which are in excess of the statutory fee. One would expect the increased maximum compensation rate which is published every year to also have an impact but based on the rate decreases over the past few years it has not seemed to made a difference.

NCCI attributed the decline in rates to fewer industrial accidents. With the increase in workplace safety programs and the decrease in manual labor positions, one would expect a decrease in workplace injuries. Many attribute the decrease in manual labor positions to automation.

By contrast, some speculate that the decreased rate is based on the fact that the overall U.S. economy is good. On one hand, with the unemployment rate so low, one could theorize that this means more people on the job which means a statistically greater chance of industrial accidents. However, if more people have health insurance in a good economy, they may not seek a workers’ compensation claim and instead treat under their health insurance.

The effects of the Castellanos case may not be fully understood. It can take subsequent appellate cases to understand the true impact of the case, and it has only been about three years since the decision. It may take several more years before the full legal effects impact insurance rates.

However, the proposed rate amounts could fluctuate depending on what the Office of Insurance Regulation has to say.

Rates going down means that businesses can save a little money in premiums which in turn means they can have some extra money available to grow their businesses, increase salaries, or save for the future. We will have to watch and see if this proposed rates end up being close to the official one when it comes out.

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