By
Jon L. Shebel
President & CEO
June, 2003
Mary Ann Stiles, Esquire, General Counsel of Associated
Industries of Florida and President & CEO of Stiles, Taylor
& Grace, P.A., was once again the leader of the business
community’s workers’ compensation reform effort, as she has
been since the 1970’s. Stiles was the major drafter of the
business community’s proposed legislation, most of which
passed. She also put together a major coalition from within the
business and insurance communities, and led the coalition to the
successful passage of the most significant workers’
compensation reform bill anyone can remember. For Stiles, it was
an effort of four long years. |
In December of 1993, the late Governor Lawton Chiles
walked into a legislative committee room filled with representatives of
both the House and the Senate late one evening and told them that if
they did not pass workers’ compensation reform, he would call them
back into another special session. Everyone knew this meant they would
be meeting the week before Christmas. Chiles outlined a series of key
points he expected to be in the workers’ compensation bill. The
Legislature reacted within the next day in a positive fashion. At the
last minute, however, the trial lawyers traded off worker’s benefits
in order to retain their level of fees into the law. It has been almost
ten years since the Legislature has address workers’ compensation.
Fast forward to 2003 and the Legislature, again in
special session, hears from Governor Jeb Bush that he is very serious
about passing a workers’ compensation law revision. Everyone knows
that if the Legislature does not react, the Governor will call them back
into special session. Bush goes even a step further and has the House
and Senate leaders sign an agreement that they will pass a bill
encompassing key points which the Governor demands be in the bill. The
result - the best workers’ compensation reform ever!
For the past six years, the business community has
been urging the Legislature to change the law to stop the attorney
driven system from being out of control. Businesses aimed at the
outrageous attorneys’ fees, whereby plaintiff workers’ compensation
lawyers are paid on an “hourly basis,” which is unheard of in any
type of plaintiff law in the nation.
Thanks to Governor Bush, Senate President Jim King,
and House Speaker Johnnie Byrd, there is now a new workers’
compensation law in Florida which should finally bring equity in this
vital system. If all three of these gentlemen had not played the
significant and tremendous role that they did over the past year, there
simply would have been no workers’ compensation reform. Florida
employers would have continued to pay among the highest premiums in the
nation. Now rates will come down!
The business community owes a debt of gratitude to
Governor Bush, President King, and Speaker Byrd for their tremendous
leadership in passing workers’ compensation legislation this year
which will definitely lower rates.
The various parties involved, including the Governor,
Speaker, President, Coalition of Business & Insurance Industry, NCCI,
unions and The Trial Bar, all played very interesting roles in this
reform.
The Governor
Governor Jeb Bush appointed a Governor’s Commission
on Workers’ Compensation during 2002 to review the law and make
recommendations to the Governor and Legislature prior to the 2003
Session of the Legislature. The Governor’s Commission traveled
extensively throughout the state, took testimony from all parties, and
concluded their work with a wide ranging report. Much of the report
encompassed issues identified by the business community for the past six
years but there were also new issues.
The Governor highlighted his intent that the workers’
compensation law be amended in the right way for over a year at every
opportunity. When the Legislature failed to agree on a bill during the
Regular Session, the Governor forced the issue during Special Session A
and took the unique approach of asking the President, the Speaker, and
all of the key legislators working on workers’ compensation to sign a
pledge ensuring that they would pass a bill during the special session
that encompassed all of the key points outlined by the Governor. All of
his points were ones that the business community had been seeking to
pass for over six years. They were based on data that had been developed
to show that these were key areas where problems existed that skewed the
law. Never before had anyone ever heard of a governor asking legislators
to sign such a document, but it certainly worked.
Without the Governor’s leadership in the workers’
compensation area over the past year, it definitely would not have
received the high profile that it did and probably would not have passed
through the Senate, although it did have strong support in the House.
Governor Jeb Bush
The Speaker
Speaker of the House Johnnie Byrd (R-Plant City) let
everyone know that he fully intended to pass a workers’ compensation
bill that would lower rates and at the same time be fair to injured
workers. The Speaker was relentless in his pursuit of this goal
throughout the session, and the House, on almost a strictly partisan
basis, complied with the Speaker’s desires and sent a bill to the
Senate that would correct the system. The bill followed closely those
issues advocated by the business community, and the Speaker held firm
throughout the Regular and Special Sessions on the bill that the House
had developed.
Without Speaker Byrd’s firm stand on workers’
compensation, there probably would have not been workers’ compensation
reform this year.
House Speaker
Johnnie Byrd
(R- Plant City)
The President
President Jim King (R-Jacksonville) advised the
Senate that they were going to pass a workers’ compensation reform
bill. The Senate, which calls itself the more deliberative of the two
houses of the Legislature, had not received any instructions from
President King during the entire session in the form that he put his
direction to them on workers’ compensation. The President of the
Senate cannot simply dictate to the Senate what they are going to do
because it is simply not the nature of this body of the Legislature. In
this instance, Senator King did just that - he told the Senators that
they were going to pass workers’ compensation reform, and the Senate
started heading in that direction.
Time and again some Senators, even from the President’s
own party (Republican), tried to go astray and head off real workers’
compensation reform. Each time, President King put them back on course
and was strong enough to carry this all the way through to the passage
of a real reform bill during the special session. Senator King was the
only member of the Senate who was dedicated to passing workers’
compensation reform. In the final analysis, the Senators from his own
party followed him while all of the Democrats voted in opposition. The
Senate, as a body, obviously did not want to pass workers’
compensation reform in the manner that it was passed. It was only
through Senator King’s persistent efforts that reform was enacted.
Senate President
Jim King
(R- Jacksonville)
House Members
In the House of Representatives, the business
community owes a great debt to those key House members who backed up and
implemented Speaker Byrd’s desire for workers’ compensation reform.
Representative J. Dudley Goodlette (R-Naples) was the “go-to man”
and the coordinator of “getting the job done.” Representative Allan
Bense (R-Panama City), a businessman who understands what it means to
pay high workers’ compensation rates, was there all the way, backing
up the Speaker and Representative Goodlette. Representative Dennis Ross
(R-Lakeland) was the leadership technician prior to and during the early
days of the session. Representative Don Brown
(R-DeFuniak Springs) became the real technician in the later days of the
session. Everyone was very impressed with his deep knowledge of
insurance, in general, and of the workers’ compensation law in
particular, as he put all the technical pieces together to create a bill
that followed the dictates of the data and the desires of the House
leadership. Representatives Connie Mack (R-Ft. Lauderdale) and Donna
Clarke (R-Sarasota) worked hard on their Republican colleagues to keep
the majority party headed in the right direction with regard to reform.
Representative Ross, a workers’ compensation
defense lawyer, was viewed as the most knowledgeable person on
workers’ compensation in the House. Unfortunately, when the House
leadership was ready to move their bill forward, Representative Ross was
continuing to negotiate with the Senate and some of the interest
groups. The House leadership was ready to move and did so. This is where Representative Brown
moved in to take over the formation of the technical aspects of the
bill.
The opposition in the House came from the Democrats.
The leaders of the opposition were Representatives Stacey Ritter
(D-Coral Springs), Dan Gelber (D-Miami Beach), Bill Galvano
(R-Bradenton), Kevin Ambler (R-Tampa), and Susan Bucher (D-West Palm
Beach). The opponents spouted the script of the trial lawyers throughout
the session. In the final analysis, the House voted along party lines
with the exception of three Democrats who voted for the bill
(Representatives Ed Jennings (D-Gainesville), Sheri McInvale
(D-Orlando), and Roger Wishner (D-Plantation)) and, thanks to the
leadership of the House Republicans, a bill was passed which followed
along the lines of what had been advocated by the business community and
documented by data. The House rejected the trial lawyers arguments and
accepted those of the business and insurance communities based on data.
The Senators
The Senators who assisted President King the most in
getting a real reform bill through the Senate were Senators JD Alexander
(R-Winter Haven), Tom Lee (R-Bradenton), Paula Dockery (R-Lakeland), and Jeff
Atwater (R-Palm Beach Gardens). These Senators, always ardent supporters of
the President, came into play later in the session after the initial Senators
in charge failed to come forth with a bill which King would accept as one that
would enact real reform. Their leadership and expertise in the law and its
ramifications were key to passage of a real reform bill.Early in the session, Senators Bill Posey (R-Rockledge),
Charlie Clary (R-Destin), and Jeff
Atwater (R-Palm Beach Gardens), took the
lead in trying to put together a workers’ compensation reform bill. Quite
frankly, Senators Posey and Clary were led astray by the trial lawyers and
concentrated on areas such as a state run insurance company, open rating, and
other items advocated by The Trial Bar to mislead the Legislature. Senator
Atwater disagreed with the approach advocated by the trial lawyers and
supported the approach of business based on data. Senators Posey and Clary got
off course from where the data showed everyone they should be heading. This
ultimately put the three senators in the posture of not having a bill that
would enact real reform. Interestingly, many of the directions in which
Senators Posey and Clary wanted to go, were those that have been pursued by
the State of California over the last 20 years with disastrous results. As the
session drew on, it was Senators Alexander, Lee, Dockery, and Atwater who
stepped to the forefront as the leaders in workers’ compensation. To his
credit, Senator Clary joined in to head it in the right direction. Senator
Posey never got there and is still advocating reforms which would not, in
reality, create reforms.
Opposing real workers’ compensation reform were Senators
Skip Campbell (D-Tamarac), a trial lawyer and one of the Senate’s most
articulate members, Debbie Wasserman-Schultz (D-Pembroke Pines), probably the
Senate’s most liberal member and a great friend of the unions and trial bar,
Tony Hill (D-Jacksonville), a union organizer, and Rod Smith (D-Gainesville),
a very distinguished lawyer who, at many times is called upon to be the legal
advisor to both parties in the Senate. Basically, the workers’ compensation
lawyers (both plaintiff and defense) were providing these Senators and others
with very misleading information - in other words, they lied constantly to the
Senators and the House members. This created great confusion among some very
knowledgeable Senators who ended up opposing the bill.
In the Senate, the vote was straight down party lines with
the Republicans of President King’s party prevailing.
Business and Insurance
The business community has been trying to amend the
workers’ compensation law for the last six years unsuccessfully.
Associated Industries of Florida has always taken the lead on workers’
compensation. It became obvious that if reform was going to succeed, it
was going to take an effort by the entire business and insurance
communities. After the 2001 Session of the Legislature, when a bill
failed in the final hours, which was very much like the bill that
ultimately passed this year, we decided to form a “coalition” of
business and insurance leaders to pursue reform.
Mary Ann Stiles, General Counsel of Associated
Industries of Florida, was given the responsibility to form and lead
this coalition. What evolved was the “Coalition of Business &
Insurance Industry,” which started working diligently with a
cross-section of all the major business organizations in Florida and all
the major carriers writing workers’ compensation in our state. (See
list of “Coalition” active participants on last page.)
The Coalition started its work in 2001 and worked
diligently through the 2002 Session and was unsuccessful in passing a
bill in that session. The Coalition, immediately after the 2002 Session,
started once again and has worked around the clock through the passage
of the bill this year. The members of the Coalition were led by Mary Ann
Stiles and an executive committee composed of Tom Koval, General Counsel
of FCCI, and Gary Guzzo of Foley & Lardner. The activities of these
three in plotting the course of action, drafting bills and amendments,
and preparing and directing the distribution of talk sheets and other
data to assist Legislators, was invaluable. The “around the clock”
e-mails at all hours of the day and night from Stiles will long be
remembered by members of the Coalition.
In fact, the work of the Coalition may well be the
“finest days” of cooperation among all of the business associations,
businesses and insurance companies that anyone can remember. The bottom
line is - it worked! It also showed the various business organizations
that they can, in fact, work together and succeed.
Through the Coalition, there was instant action and
reaction over the last two years, and particularly during the times the
Legislature has been in session. The diversity of the Coalition and the
different access to data and key business and insurance leaders was
invaluable in being able to pull data and key contact people together at
a moment’s notice, while directing attention towards Legislators to
lobby them and provide them with the data that they were requesting.
The business and insurance leaders knew from the
outset that the key thing in reforming the law was to get rid of the
hourly attorneys’ fees because this was driving the cost to the
detriment of employers and injured workers. It took a massive amount of
data collection and analysis to prove this point, and the Coalition was
instrumental in providing this. The main cost driver, attorneys’ fees,
was the main thrust of the Coalition to correct by putting plaintiff
lawyers on a system whereby they receive a percentage of the recovery of
the injured worker. This was accomplished and this more than anything
will lead to cost reductions in the system and enable workers’ to
receive more timely benefits, as the lawyers will not simply drag the
cases on for years so they can bill hourly rates.
The Trial Lawyers
It is important in workers’ compensation to
identify the “trial lawyers” in terms of the law and from the
business person’s point of view as to who is working for and against
business in the legislative process. The “trial lawyers,” who we
talk about, are both plaintiff and defense lawyers. One would normally
think that your defense lawyer is working for you as a business person
and as an insurance company. In terms of the legislative process, we
have always found that this is definitely not the case.
Both plaintiff and defense lawyers have continuously
opposed real legislative reform in workers’ compensation. While there
may be the occasional defense lawyer who advocates real workers’
compensation reform, we have never met one and have never seen one in
Tallahassee when workers’ compensation is being debated in the
Legislature with the exception of our General Counsel, Mary Ann Stiles,
of Stiles, Taylor & Grace, P.A. in Tampa. Mary Ann has led every
legislative reform for the business community since the 1970’s. So the
next time your defense lawyer tells you “I was with you,” have him
call us, because we certainly do not remember anyone from the defense
bar lobbying for real workers’ compensation reform.
The trial lawyers were their own worst enemies during
2003 in their opposition to workers’ compensation reform. First of
all, the Governor, the Speaker, and the President had all decided they
were going to enact legislative reform. So in reality, the trial lawyers
were fighting an uphill battle. They were still their own worst enemy by
using the worn out tactic and trying to use the same old arguments that
everything was due to “bad investments of insurance companies.” This
is the same argument that they use in opposition to tort reform and
medical malpractice reform. In fact they are using it at the present
time to oppose the impending special session of the Legislature on
medical malpractice. The trial bar advocated the creation of a state
insurance company, open rating for workers’ compensation, and other
worn out arguments. What they advocated was going in the direction of
states like California, which have a disaster on their hands in workers’
compensation because they did create a state insurance mechanism which
the present state Insurance Commissioner is trying to slow down because
of his concern with regard to solvency. The pitch of the trial lawyers
is based on lies and deceit, as usual. Either they do not really know
the workers’ compensation law, which to some extent is true, or they
simply lie with regard to what the present law says and what proposed
measures would do. To the credit of the business community, all of the
arguments used by business and insurance were based on data. None of the
trial lawyers’ arguments were based on data. In the end, the
Legislators wanted to know “what does the data say?” This is a
compliment to the Legislature, and we believe that more and more in the
years ahead, they will want to know the data on the various issues
rather than the emotional and untruthful arguments which The Trial Bar
puts forth.
As stated above, the real issue in the whole workers’
compensation reform battle was attorneys’ fees. For the past eight
years, workers’ compensation plaintiff lawyers have been paid on an
hourly basis rather than on a percentage of the award basis, which is
the case throughout the entire tort law nationwide. Getting paid on an
hourly basis, as a plaintiff lawyer does, gives them incentive to keep
cases going for years so they can “write down” hours spent on a
particular file. There is no incentive to settle a case in the best
interest of their client when they are receiving an hourly fee. Rather,
the incentive is to keep the file open and to keep billing hours against
the file rather than settling the case in best interests of their
client. The hourly rate definitely set up a conflict of interest between
the plaintiff lawyer and his client. But it was one that was very
lucrative to the plaintiff lawyer, and therefore, they went all out
during recent legislative sessions to defeat the move of business and
the insurance industry to eliminate the hourly rate. The hourly rate was
also very good for defense lawyers since it ensured that their hourly
rates would be more because the cases stayed open longer. Ultimately,
all of this works to the detriment of the employers, who pays the
workers’ compensation premium, and the injured worker who wants and
needs the payment on a timely basis of benefits.
In effect, the hourly rate for plaintiff lawyers in
workers’ compensation pitted the plaintiff lawyer against his client
and the defense lawyers against his client. They will all deny this, but
we all know they don’t tell the truth.
National Council on Compensation Insurance (NCCI)
The National Council on Compensation Insurance (NCCI)
is the rating entity for the State of Florida. NCCI collects and
analyzes all the relative data on workers’ compensation and provides
rating information to the Governor and the Legislature and annually
files proposed rates with the Office of Insurance Regulation.
The work of NCCI is done by actuaries who are trained
to analyze data and come up with answers. Most people don’t even know
what actuaries do. For those who do, they will tell you that if you
place a set of numbers in a room before two actuaries, they will never
reach the same conclusion. That is why NCCI and others who utilize
actuaries have a number of them so that they can come to a consensus.
Throughout the Legislative Session and Special Session, NCCI provided,
as always, the value of various provisions being put before the
Legislature. In other words, NCCI would advise the Legislature that
particular language would cause an increase or decrease in rates and
would give the appropriate amount. Any organization that does this is
going to be criticized. Over the years, the business community, the
insurance industry, and legislators have all criticized NCCI and other
actuarial consultants as to the accuracy of their numbers. The bottom
line is NCCI has the proper systems in place, the trained actuaries to
do the work, and they have the responsibility to provide the numbers
which everyone has to rely on as a “range” of what particular
language will do in terms of increasing or lowering rates.
The Legislators who did not receive the answers they
wanted were critical of NCCI, while those who felt the numbers favored
their position were in support. This is the way it will always be,
whether it is NCCI or some other entity that provides the numbers. There
has been talk by some Legislators who did not like what the numbers
said, that they want another entity to provide the numbers in the
future. In fact, the Senate will be looking at NCCI in a study during
the interim to determine what they do and how they do it. This is
good!!! The Legislature needs to understand how NCCI operates and how
they arrive at the numbers. Once there is a better understanding, there
will be more comfort.
In the past, Associated Industries has, at times,
been critical of the work of NCCI, and we may well be so in the future.
The bottom line is, as long as the systems are correct and the data is
properly collected, NCCI, the only rating entity of its type in the
nation, has over the years done a commendable job. They did so during
the last session, and once the Legislature understands that the numbers
are the midpoint of ranges and not exact specific numbers in the
methodology which NCCI uses, there will definitely be more comfort.
The creation of a state entity or another entity to
provide workers’ compensation data to the Governor and the Legislature
is definitely not warranted.
Lori Lovgren, Esquire, State Relations Executive, was
the key contact for NCCI with the legislators and the Office of the
Governor. She took a daily beating from those who did not view the
latest NCCI rating as furthering their cause, but she did a very
competent and professional job throughout.
What’s Next???
There are those in the Legislature (the ones who
lost) who are trying to come back very rapidly to undo the workers’
compensation reforms which have just been enacted. In the Senate, there
are Republicans as well as Democrats who want to conduct their own
studies that are intended to provide the basis to undo the reforms. We
don’t really see Senate President Jim King being interested in letting
the Senate undo a significant and good reform bill.
In the House, it is obvious that the leadership is
firm in its support of the bill that ultimately passed since most of the
language is the original House bill. Since it takes two houses of the
Legislature to pass a bill, we frankly don’t see any eroding of the
major provisions of the new workers’ compensation law, but the
business community must be present at all of the interim meetings to
provide explanation and data as to why the bill that passed should be
retained in its present form. In other words, before the Governor has
even signed the workers’ compensation bill into law, there are those
in the Legislature - in the minority, but in both parties - who want to
undo the reform and return to certain provisions of the old law. It was
mainly attorneys’ fees that caused the problems that we have just
tried to resolve, and it is, once again, the attorneys who are pushing
to undo the reform.
We really hope that “What’s Next???” is that
the Legislature continues on to take care of the other major problems of
the state, and allows the reform bill to start working. As the years go
on, there will certainly need for future amendments to the law, but it
would be unthinkable to pass a major reform bill in 2003 and to start
tinkering with it in 2004 in ways that everyone knows would be
detrimental to the interests of employers and injured workers.
Oh, by the way... it goes without saying, but I will
say it here just as a reminder, that the workers' compensation attorneys
will certainly challenge the constitutionality of the law in the Circuit
Court. AIF general counsel, Mary Ann Stile, is standing by to
defend the law as she has each and every time they have challenged
legislative enactments over the past twenty five years which were good
for employers. So the saga continues.
"COALITION OF BUSINESS &
INSURANCE INDUSTRY"
Key Participants
Alliance of American
Insurers
David Anderson
William H. Stander
American Insurance Association
Cecil Pearce
Amerisure Companies
Jim Gibson
Associated Builders & Contractors of Florida, Inc.
Richard Watson
Associated Industries Insurance Services, Inc.
Shirley McCanney
Dan McGarvey
Elissa Pacheco
Frank T. White
Associated Industries of Florida
Jon L. Shebel
Art Simon
Badcock Home Furniture & More
Wogan S. Badcock, III
Katherine Geohagan
Bankers Insurance Group, Inc.
Marjorie A. Catalano
The Boeing Company
Christine Coakley
Capital City Consulting, LLC
Gerald C. Wester
Carlton Fields, P.A.
G. Allen Brown
Rheb Harbison
Michael H. Olenick
CNA Financial Corporation
Linda M. Powers
CNA Insurance
Robert Wolfe
Comp Options Insurance Company
Gary Myers
DuPont Company
Tami S. Jackson
FCCI Insurance Group
G.W. Jacobs
Tom Koval
First Commercial Insurance Company
Reginald E. Beane
Florida Association of Counties
Lee M. Killinger
Florida Association of Insurance Agents
S. James Brainerd
Keri M. Rayborn
Florida Chamber of Commerce
Leslie Dughi
Paul A. Ledford
Florida Combined Life Insurance Company
Judi Stubbs
Florida Farm Bureau Federation
Rade T. Musulin
Florida Insurance Council, Inc.
Guy Marvin, III
|
Florida League of
Cities
Kraig A. Conn
John C. Thomas
Florida Retail Federation
Bill Herrle
Florida Roofing, Sheet Metal & A/C Contractors Assn
Anna Cam Fentriss
Foley & Lardner
Gary Guzzo
Fred A. Martin & Associates, Inc.
Frederick A. Martin
The Hartford
Robert K. Yass
Hill & Knowlton, Inc.
Michael Zagorac, Jr.
Katz, Kutter, Alderman, Bryant & Yon, P.A.
Edward L. Kutter
Liberty Mutual Insurance Group
Donald D'Errico
Maria Izquierdo
Mang, Rhett & Minnick
Doug Mang
Massie & Scott, P.A.
James C. Massie
National Federation of Independent Business -FLA
Stephen R. Birtman
Progress Energy Florida, Inc.
Sally Everett
Publix Super Markets, Inc.
Ed Shivers
Alan Bender
Crystal Chancey
Sedgwick Claims Management Services, Inc.
Michael Browning
Spearman Management, Inc.
Guy M. Spearman, III
State Farm Insurance Companies
Vincent J. Rio, III
Stiles, Taylor & Grace, P.A.
Mary Ann Stiles
Rayford Taylor
Tami Perdue
United Services Automobile Association
Robert A. Henderson
Wal-Mart Stores, Inc.
Robert Bolding
Workforce of Florida, Inc.
Andra Cornelius
Zenith Insurance Company
David Hoppen
Lisa Krouse
John J. Tickner
Zurich North America
Robert H. Rheel
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