Advertisement
  1. Business

Q&A: Business task force leaders argue for a Florida workers' compensation fix

Debbie Harvey of Ron Jon Surf Shop and Steve Knopik of Bealls co-chair the Florida Chamber group trying to get a cap reinstated on attorneys’ fees in workers’ comp cases.
Debbie Harvey of Ron Jon Surf Shop and Steve Knopik of Bealls co-chair the Florida Chamber group trying to get a cap reinstated on attorneys’ fees in workers’ comp cases.
Published Aug. 12, 2016

Persistent fears of an economic slowdown, a turbulent political season and now Zika are all nagging employers statewide.

But there's a less-publicized concern that the Florida Chamber of Commerce warns could strangle small businesses, dampen investment and cause Florida's jobs recovery to stop in its tracks: a spike in workers' compensation rates.

The first domino comes Tuesday: State insurance regulators are holding a public hearing in Tallahassee on a request by the leading group for workers' comp insurers to raise rates statewide nearly 20 percent starting in October. Much of that is tied to a Florida Supreme Court decision in April that declared a mandatory cap on attorneys' fees for such cases was unconstitutional.

Workers' advocates hailed the court's ruling, saying the cap had dissuaded attorneys from taking cases on behalf of injured Floridians, leaving them with little relief. Plaintiffs' attorneys said they've been fighting for years for workers to have better access to the courts to argue their cases — and the high court's decision validated that effort.

Some business leaders saw it another way — as a job killer both for existing companies and those considering a move here.

"So far, Florida has been adding jobs, but this is something that could curtail it in a big way," said Debbie Harvey, president and chief operating officer of Ron Jon Surf Shop.

Harvey and Steve Knopik, CEO of Bradenton-based Bealls Inc., are co-chairing a chamber task force charged with both raising awareness and finding solutions for the workers' comp problem.

Unable to persuade state lawmakers to call a special session, they're now crafting a legislative fix for the regular session that begins in January. The Tampa Bay Times recently talked separately with both of the co-chairs to get the business point of view on the issue. Here are excerpts:

What's the goal of the task force?

Knopik: To try and get back to where we were before all this happened. In my view, the workers' compensation situation in Florida was working pretty well over the last several years. Prior to 2003, Florida was one of the most costly workers' comp systems in the United States. After those (legislative) reforms, things normalized, and in terms of costs per dollar of payroll, Florida was right in the middle and the cost structure had stabilized. In any particular year, you could expect some modest increases but nothing crazy.

Harvey: Our rates had gone down 60 percent since the reforms had been put in place. Our main goal is to build awareness. We'd like businesses to know what's coming at them. Small businesses, in particular, are very busy and may not realize what's coming.

We want workers to get the care they need and we want them to get back to work. We don't want … to get into a protracted legal fight that doesn't do the worker or us any good.

What have you discovered so far?

Knopik: It's not surprising at all, but the truth is that litigation makes it worse. … There are certainly cases where someone would just as soon go on disability rather than go back to work.

Harvey: What we wanted to see is what the level of concern is (among businesses). And people are highly concerned. It's like anything else. If we had property insurance going up 20 percent or health going up 20 percent. All of these are the costs of doing business.

How impactful is a one-time increase of 20 percent?

Harvey: It would prevent a company that has 150 workers from hiring one more. And what we're all very worried about is this is just the start. You could have another 15 percent later on top of a 19 percent increase. It's a compound effect.

Knopik: Look at all the small and medium-sized businesses and multiply that by 19.6 percent. … If you do the math, that's $714 million. That's going to leave a mark on the economy.

The other thing that has largely evaded notice by the press and many people is the fact that these decisions are retroactive.

So there are old cases out there for sure that will be opened back up so the lawyers can say, "I wasn't properly compensated for my work." The retroactive impact the NCCI (National Council on Compensation Insurance) has said could be $1 billion. There's no doubt that could have a chilling impact on the economy … and on businesses looking to come into the state. … Business margins generally aren't so rich you can just absorb something like this.

The call for a special session fell on deaf ears. This is a business-friendly Legislature. Why isn't there more support?

Knopik: The reality is that most legislators and most legislative leaders are focused on the election campaigns. You have the primaries coming up and then the general, and the amount of time that is associated with a special session is significant.

Harvey: At the end of the last session, there was a lot of talk about Enterprise Florida funding and people talking about their re-election campaigns. I think they were just ready for a break. They could address this at the next session, but unfortunately the rates will go into effect (before lawmakers meet).

Knopik: The first organizational (committees for the regular session) are in November. I would be surprised if most legislators … don't realize the economic gravity of this particular subject and don't recognize it as a relatively high priority. … The insurance industry is on the hook for $1 billion retroactively; the business community is on the hook for $715 million a year going forward. We've got reasons for everybody to be up in arms.

What if the Legislature does nothing?

Harvey: I think there needs to be a legislative remedy. The courts have already kind of spoken. … We need to get the right fix; not a quick fix.

Knopik: There are something like 30 states with statutorily imposed (attorney fee caps). If they say it's okay, why is it not okay in Florida? I have to conclude it has something to do with the mind-set of the Supreme Court. There may be judicial relief from this type of precedent. But let's hope to goodness we don't have to wait that long.

Hasn't the cap kept attorneys from taking valid workers' comp cases?

Knopik: There's no doubt you can find cases where that has occurred, but I'm of the mind-set those are outliers.

Yet watch late-night TV … and you'll see the lawyers out there promoting their services for people injured in accidents.

Most people find satisfaction in doing something productive. When someone is hurt and not doing what they normally do — if you're at home and watching TV and down in the dumps, it's easy to prey on someone's fears.

But given the Supreme Court ruling, is there a happy medium that can be reached? Some compromise? Like having a higher cap on attorney fees?

Knopik: I'm thinking that's where we're headed. The realist in me tells me to put the toothpaste back in the tube is impossible.

At the same time, I viscerally believe the workers' compensation system in Florida had been working. So I'd have a big argument for someone to say the system is totally busted and broken down because of an odd case here or there.

Harvey: I think the attorney fees, if not capped, should get tied into the (degree) of injuries. The lawyer shouldn't make a lot of money for a $500 case.

Contact Jeff Harrington at jharrington@tampabay.com. Follow @JeffMHarrington.