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Insurers frame workers' comp change

Lawyers appear to have lost the battle, in which lobbyists and money shaped legislation overhauling the system.

Published May 11, 2003

TALLAHASSEE - Florida lawmakers are poised to make the most significant changes to the state's workers' compensation law in nearly a decade, delivering on the wishes made by insurance companies.

An army of lobbyists and millions in campaign cash helped insurance companies prevail over lawyers, who staged an equally intense effort.

The House and Senate could not agree on a plan during their regular 60-day session. But they are expected to work out a compromise on the House plan during a special two-week session that starts Monday.

Insurance lobbyists say their plan is the simplest way to lower rates and ease a crisis that has sent insurance rates skyrocketing and slowed benefits to workers.

Still, they are upfront about the politics of lawmaking.

"Certainly, the elected officials have to run for office and it's no secret that the cost of campaigning is going up," said insurance lobbyist Art Simon, a former Florida lawmaker. "I think one of the reasons interest groups contribute is that they know damn well the other side is going to contribute."

Lawyers actually outspent insurance groups, but tracking their contributions is more difficult. Some lawyers represent workers, while others represent myriad interests - including insurance companies.

Insurance companies gave at least $2-million to House and Senate members since the beginning of 2002, while lawyers contributed at least $3.7-million, a St. Petersburg Times computer analysis found. The true amounts given to legislators are undoubtably higher: Campaign finance records contain thousands of records with donors listing no occupation or affiliation. Some donors used generic work titles like "consultant."

Though legislators say they aren't influenced by donations, their votes sometimes go toward the side that gave the most cash.

Rep. Don Brown, for example, a Republican insurance agent from De Funiak Springs, has been the strongest advocate in the House for the insurance industry's plan. Last year he received more than $23,000 from insurance companies and agents, about three times what he took from lawyers. He raised about $140,000 altogether to get re-elected.

Rep. Stacy Ritter, meanwhile, a Democratic lawyer from Coral Springs, voted against the House bill. She received more than $147,000 from attorneys, or more than 10 times what she took from insurance companies and agents. She raised more than $500,000 last year to keep her seat.

Two groups that invested far less in last year's election are the small businesses that pay soaring insurance premiums and the workers who rely on benefits when they are injured.

"All the special interest groups are spending millions to lobby, and the person that loses out the most is the average citizen," said Ben Wilcox, director of Common Cause Florida, a nonpartisan advocate for government reform.

High rates, low benefits

Introduced in the 1930s, workers' compensation was intended to provide medical benefits and lost wages to workers injured on the job. Employers, who are required by law to carry insurance, are supposed to receive immunity from most lawsuits. But the system began to have problems 25 years ago and the state has attempted 17 revisions since.

Although most Floridians played by the rules, a few learned to exploit the system. Some workers avoided returning to the job by exaggerating their injuries. Some lawyers filed excessive lawsuits. Some doctors ordered unnecessary tests to boost bills. Some insurance companies delayed and denied benefits.

Now the state boasts the nation's second-highest rates with some of the lowest benefits. That prompted Gov. Jeb Bush to make workers' compensation a priority this year. It's also a top priority of Florida businesses of all sizes.

Faced with escalating jury awards, employers tend to settle claims quickly to avoid higher insurance premiums.

"If there's a claim that's big, there's always a lawyer involved," said David Laxer, owner of Bern's Steak House and Sidebern's, two of Tampa's busiest restaurants.

Laxer's company pays nearly $180,000 a year in insurance premiums to cover 290 employees. Sharp knifes, hot flames and slippery floors make for a precarious environment. Still, Laxer's two restaurants average just 12 accidents a year. But simple cuts and burns can run a few thousand dollars in claims. One worker slipped in a wine cellar, costing his insurance company $16,000 (the employee returned to work quickly and in decent shape).

For all that, Laxer might have covered the damages with half the money he spent on insurance. But there is always the risk of someone getting permanently injured. Besides, state law requires he carry workers' compensation insurance.

Unless the law changes, Laxer said, he'll almost certainly pay more. Rates will continue to rise.

"You feel trapped," Laxer said. "I don't think I can pass those increases on to our customers. It's out of your control."

Insurers' road map

In deciding how to fix the problem, House and Senate members followed a road map provided by insurance companies.

The plan seeks to reduce the number of permanent, total disability claims, the most expensive to cover. Under the proposed law, losing an arm in a factory would no longer be considered "catastrophic" - a category that could qualify for permanent disability benefits. Instead, a worker would have to lose both hands, arms, legs, eyes, or a combination to receive the highest level of benefits.

Injured workers also would face a more difficult time hiring a lawyer, putting insurance companies in a better position to deny claims.

Associated Industries of Florida, which lobbies for some of Florida's biggest businesses, has made rewriting the state's workers' compensation law its highest priority. It also has a financial stake: AIF owns a workers' compensation insurance company.

The group's lobbyists helped draft legislation, provided projections for how to lower rates, and gave lawmakers cheat sheets for voting on amendments.

Insurance lobbyists complain that the current workers' compensation system is abused: Some workers use it as a retirement plan, lawyers drive up premiums with lawsuits and the number of permanent, total disability claims is on the rise - three times the national average.

"With regard to workers' compensation, the data speaks for itself," said Simon, the AIF lobbyist.

Lawyers and advocates for injured workers also offered written instructions but had less luck. Lawsuits could be avoided altogether if insurance companies paid claims faster, they said. Limiting their right to sue only gives insurers more leverage.

While lawyers appear to be losing the workers' compensation fight, they are not expected to leave the Capitol empty-handed. They gained some sympathy from lawmakers trying to rein in automobile insurance fraud and forced a stalemate in the medical malpractice debate.

And in workers' compensation, workers' representatives scored some victories. Death and funeral benefits would rise, as well as impairment benefits paid to workers who can no longer perform their former line of work but can regain some other employment.

The House also expanded the bill to include some worker benefits and added training to help injured workers return to work. The bill also penalizes insurance companies that delay payments.

But lawmakers decided against limiting the amount of money insurance companies pay their own attorneys. One House member used the word "dastardly" to describe a part of the bill that grants immunity to businesses that fail to inform workers about dangerous conditions unless a worker can prove a boss intended for them to get hurt.

Danger of being hurt

As for more impairment benefits, advocates for workers say those are not going to help people with permanent disabilities.

"If you get hurt in Florida, die!" said Dwayne Sealy, Secretary-Treasurer for the Florida AFL-CIO. "That's the only way to collect benefits."

Some of the insurance industry's demands made even conservative legislators hesitate.

Rep. John Carassas, R-Belleair, thinks there should be no cutoff age for permanent total disability benefits. The House bill sets it at 75.

"We can talk about percentages and cost all day long," said Carassas, a lawyer. "But to leave someone . . . out of the equation and act like they don't exist is not right."

Two of the three authors of this year's legislation work in the industry.

Rep. Dennis Ross, R-Lakeland, led the special House committee assigned to revise the law and was considered the most knowledgeable member in the Legislature on the subject. He also is a lawyer who represents insurance companies.

Brown, the insurance agent from De Funiak Springs, helped Ross draft the bill.

Ross said that if workers' comp rates were low, it might raise a red flag to see so many industry proposals pass.

"But the fact that rates are going up, the fact that carriers are leaving the state, is an indication that in order to reform the statute, you are going to probably redo some reforms that benefit those carriers and those employers," Ross said.

[Last modified May 11, 2003, 01:46:21]

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