Senate Banking & Insurance Committee Reviews the Effects of Emma Murray

Feb 4, 2009

On Tuesday, February 3, 2009, the Florida Senate Banking and Insurance Committee (“Committee”) met in Tallahassee and discussed the effects of the Florida Supreme Court case Emma Murray v. Mariner Health, Inc. as part of its agenda.  The Emma Murray decision invalidated the attorney fee schedule set forth in section 440.34(1), F.S. because the fee schedule did not meet the “reasonable” attorney fee requirement in 440.34(3), F.S.

Committee Staff Director Steve Burgess provided a brief review of Senate Bill 50-A, the 2003 passage of which created the workers’ compensation attorney fee schedule law.  Prior to the Emma Murray case, Florida experienced six consecutive workers’ compensation rate decreases.

Mr. Burgess noted that the Emma Murray decision clarified the ambiguity between 440.34(1) and 440.34(3), F.S.  He also reported that while the National Council on Compensation Insurance (“NCCI”) filed a 8.9 percent rate increase for 2009, the Florida Office of Insurance Regulation (“OIR”) ultimately approved only a 6.4 percent filing for NCCI.

NCCI State Relations Executive Lori Lovern gave a presentation on Florida workers’ compensation in 2009.  NCCI is an advisory organization that collects, validates and summarizes workers’ compensation data and provides it to the OIR.  Typically, the NCCI will make annual rate filings.  However, it can make additional filings when circumstances (such as the Emma Murray decision) dictate.  Ms. Lovern stated that attorney involvement prior to Senate Bill 50-A was significantly higher in Florida than in other states.

Several Committee members asked Ms. Lovern questions and provided comments during her testimony.  The following is a brief summary of this dialogue:

Senator Jeremy Ring:  The restrictive attorney fee provision leads to lower claims because attorneys cannot afford to take cases that pay $8 an hour, as was the case in Emma Murray.  Ms. Lovern noted that “post-50-A claims” were on par with national trends, which indicates that case numbers are not down.

Chairman Garrett Richter:  Are claims reduced due to the unemployment increases?  Ms. Lovern noted that unemployment generally leads to fewer claims.

Senator Mike Fasano:  Did SB 50-A reduce workers’ compensation fraud cases?  Ms. Lovern stated that it did.

Senator J.D. Alexander:  Workers’ compensation is a no-fault system with intended limited representation.  The goal is to get injured workers back to work as quickly as possible.

Ms. Loven concluded her testimony by noting that the next NCCI rate filing is scheduled for August.  If there is not a legislative “fix” to the Emma Murray case, then rate increases likely will continue.

OIR Actuary Jim Watford briefly reviewed the OIR’s response to the NCCI rate filing.  The OIR did not attribute rate increases to additional claim frequencies.  However, Mr. Watford noted that NCCI’s review of claim frequency was inadequate.  As a result, the OIR denied the 8.9 percent increase, but approved a 6.4 percent increase effective April 1, 2009.  Senator Fasano asked about future year rate impacts.  Mr. Watford stated that the current laws likely would result in future rate increases.

Deputy Chief Judge of Compensation Claims David Langham provided a report on the post-Emma Murray impact on workers’ compensation cases.  He stated that there has been a decline in fees for settlements and noted that lately, employment termination clauses of settlements are less likely attributable to the economic climate, therefore underscoring the need for certainty and predictability in establishing attorney fees.  Senator Mike Bennett noted that payment of $8 per hour for attorney services is unreasonable.

Following the presentation by Mr. Langham, the meeting adjourned.


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