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Legal challenges, rising medical costs could increase Florida comp costs

Posted On: Jan. 19, 2016 12:00 AM CST

Escalating medical costs and a series of pending lawsuits challenging Florida's workers compensation law could potentially reverse a trend of falling workers comp rates in the state, the Florida Office of Insurance Regulation said Friday.

Florida workers comp rates fell 4.7% from last year as of Jan. 1, marking the fourth consecutive workers comp rate decrease in the state, the insurance department said in its workers comp annual report. The department said that the recent rate cut reflects a 60.3% decrease in Florida comp rates since the state enacted workers comp reforms in 2003.

The 2003 reforms eliminated permanent partial disability benefits and capped attorney fees, among other changes.

The insurance department noted that medical facility fees and physician dispensing have contributed to rising medical costs in Florida.

Fees from inpatient and outpatient hospital care, as well as ambulatory surgical centers, represented 46.6% of Florida workers comp medical costs in 2014, the insurance department report said. Those fees represented 36.6% of workers comp medical costs nationwide in 2014, according to the report.

Meanwhile, medications represented 15.5% of Florida workers comp medical costs in 2014, compared with 11.6% of comp medical costs nationwide that year, the report said.

The insurance department said prescription costs could be reduced in the state by restrictions on physician drug dispensing, introducing a state prescription drug formulary, lowering Florida reimbursement rates for prescription drugs and strengthening Florida's prescription drug monitoring program.

The report also noted that several lawsuits challenging the constitutionality of Florida's workers comp law have “potential to increase costs materially” in the state.

That includes Marvin Castellanos v. Next Door Co. et. al., which challenges the constitutionality of Florida's cap on attorney fees for workers compensation claimants, and Daniel Stahl v. Hialeah Hospital, which questions whether the state's workers comp system is adequate in light of the elimination of PPD benefits in 2003. Workers comp watchers are waiting for the Florida Supreme Court to issue rulings in both of those cases.