Fred Karlinsky Comments in the Miami Herald on the Landmark Emma Murray Florida Supreme Court Workers Comp Decision
Date Published: 10-24-2008
Posted on Fri, Oct. 24, 2008
BY BEATRICE E. GARCIA A Florida Supreme Court decision issued Thursday will remove a significant reform measure from the state's worker compensation insurance laws, possibly significantly increasing the cost of coverage for all businesses in the state. The court overturned the First District Court of Appeal decision in the case of Emma Murray v. Mariners Health/ACE USA, ruling that an attorney representing injured employees, Bruce Sutter of Port Charlotte, should collect ``reasonable fees.''
Court ruling may increase workers' compensation costs for businesses
''That was a major component of the new legislation and it was a significant change in how attorneys were paid,'' said Fred Karlinsky, a partner with Colodny, Fass, Talenfeld, Karlinsky & Abate, which represents several insurers working in Florida.
The workers' comp law changes were passed five years ago 'to help the business community because the cost of workers' comp insurance was unsustainable in Florida,'' he added.
Florida's workers' comp insurance costs were among the highest in the country before the law changes. Since 2003, insurance costs have dropped significantly. Last week, the Office of Insurance Regulation announced an 18.6 percent decrease in workers' comp rates for next year, offering businesses savings of about $610 million. Rates have dropped more than 60 percent in the past five years, OIR said.
VERY BAD TIME
Businesses fear the cost of the insurance coverage will be astronomical once again at a time when profits are already scarce due to the slowdown in the economy. Insurers worry that rates won't be adequate now to cover such a potential increased costs.
''This is going to be devastating in the market we're in right now,'' said Bob Hilson, owner of Bob Hilson Roofing in Homestead. Already, Hilson has had to cut his staff by half and he has seen profit margins trimmed as the economy has slowed.
Fort Lauderdale-based trash hauler Republic Services is certain the Florida Supreme Court ruling will lead to higher lawyers' fees.
''I think you will have a situation where attorneys will have a greater incentive not to settle cases, to incur greater legal expenses through protracted litigation, which ultimately hurts business,'' said Will Flower, Republic's spokesman. ``At the end of the day, this is going to result in higher costs for the customer.''
Republic, which employs 980 people in the tri-county area, provides trash hauling for cities and commercial establishments. In South Florida, Republic operates garbage companies All Service Refuse and All Service Miami-Dade and recycling company Envirocycle.
Baptist Health South Florida, which has about 12,500 workers, is also worried.
'It would appear this ruling would drive up the cost of workers' compensation for employers,'' said Maribeth Rouseff, an assistant vice president in charge of employee health services.
Baptist Health South Florida had 145 workers' comp claims last year; the number that resulted in lawsuits was in single digits, Rouseff said.
''Employers really need to redouble their efforts to create a safe work environment for their employees,'' she said.
Walter Banks, owner of the Lago Mar Resort and Club on Fort Lauderdale beach, said his premiums are now around $150,000, down from more than $200,000 five years ago.
''They could very well go back to what they were in 2003,'' said Banks, who has 200 employees.
Sutter did not immediately return a phone message from The Associated Press left at his home Thursday night. Workers' compensation lawyers have argued that injured workers are losing out on benefits they are entitled to without legal representation.
RULING EXPECTED
Barney Bishop, president of Associated Industries of Florida, which lobbies for small- and medium-sized businesses in Tallahassee, said his group had been expecting an adverse opinion from the state Supreme Court.
Bishop is hopeful legislators will revamp the workers' comp law during the 2009 session. There was talk in Tallahassee Thursday that the workers' comp issue could be added if a special session is called later this year to deal with the state budget deficit.
Late Thursday, OIR only said that it's reviewing the court decision to see what impact it will have on workers' comp system as a whole and on future rates.
''This decision could not be more ill-timed as Florida is in the grip of a brutal economy. The threat of potentially higher compensation insurance rates can only further cripple our businesses and cost vitally needed jobs,'' said Bob Lotane, spokesman for the National Association of Insurance and Financial Advisors-Florida, which represents independent and captive agents.
Miami Herald business reporters Patrick Danner and Scott Andron and The Associated Press contributed to this report.
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