Thursday, April 19, 2012

Florida Does It's Own Private Idaho

We know that legislators don't think a whole lot about workers' compensation. For the most part, work comp to our elected officials is viewed the same by law makers as most business owners see it - an irritating expense that isn't understood, takes up unnecessary time and resources, and adds no value to the operation.

Florida Governor Rick Scott certainly indicates that's how he views an industry responsible for a couple billion dollars of economic activity in his state by line item vetoing $195,000 from the state budget of $70 billion that was marked to fund the annual benchmark study by the Workers Compensation Research Institute (WCRI).

The money would have come from the Florida Workers' Compensation Administration Trust Fund, which is financed by premium assessments paid by employers. 

As I have opined in the past, I have a problem when a specific funding source for a specific service is treated like general fund money - employers paid for the research and now they are not getting what they paid for.

The Florida Division of Workers' Compensation (DWC) used to provide information to law makers about the functioning of the system, but on April 6, Scott signed Senate Bill 140, which repeals the requirement that DWC issue annual reports to lawmakers.

Florida does not have its own rate making agency and relies upon the services of National Council on Compensation Insurance, Inc. (NCCI) to take care of statistical analysis and rate making recommendations to the insurance department. NCCI takes in a lot of data about the health of the system and uses that data to determine if carriers in the state for which rates are being recommended can continue doing business in an adequate fashion to ensure liquidity and capacity. But NCCI's function is as a rate making agency, not as a public policy analyzer, like what WCRI provides.

Removal of funding for WCRI study and DWC's reporting now means that the only source of information about the health of the system in Florida is the rate making service provided by NCCI.

That would be like saying that the only newspaper in Florida is going to be the Miami Herald.

Persons responsible for making decisions, particularly law makers, are now deprived of important, independent, information that otherwise is not of particular interest to rate makers.

The WCRI provides vital statistical comparison analysis of key states that have influence on the rest of the nation's workers' compensation practices in a manner quite different than NCCI. WCRI's annual benchmark reports, because of comparison analysis with numerous states, provides trending that otherwise might fly off the radar on topics that are not of interest to rate makers.

For instance, during this past year WCRI reporting was instrumental in understanding not only the scope of prescription drug issues, but how they are trending across states, and showing the migration of activity, for instance, from Florida to Georgia, as measures were implemented to control prescription abuses.

And its not often that business and labor agree on something, but the availability of an independent source of information on the state's work comp system is one where there is shared concern.

In a statement issued late Wednesday, the Florida Insurance Council said insurers were "disappointed".

"The vetoed funds would have allowed WCRI to include Florida in its multi-state comparisons on multiple workers' compensation issues for policymakers. The Department of Financial Services believes it has all of the data necessary for Florida," the Council said in the statement. "The department, however, does not have the multi-state access of WCRI. This was money allocated from the WC Administrative Trust Fund that is funded by assessments on policyholders, not general revenue."

And Ricardo Morales, president of Florida Workers' Advocates (FWA), a claimants' attorneys' group, said potential removal from the annual WCRI study leaves the National Council on Compensation Insurance (NCCI), Florida's rate maker, as the sole source of annual reports on workers' compensation, which would place too much reliance on NCCI.

Judge David Langham, deputy chief judge of the state Office of Judges of Workers' Compensation Claims, told WorkCompCentral that lawmakers and state officials need a multi-state comparison to make policy decisions.

"In order to have consistency, you've got to be able to compare statistics state-to-state and region-to-region," Langham said. "Only an agency like WCRI brings that to the table."

WCRI Executive Director Richard A. Victor said the withdrawal of state funding for the studies "appears to be only a phenomenon in Florida."

Without a good comparison, and the ability to note trends not just in one state, but across several comprable states, deprives policymakers of important information that would influence legislation and business operations.

Maybe Florida, hanging down there at the lower eastern portion of the nation, sort of isolated due to its extensive Gulf and Eastern shorelines, is feeling a little B-52's "Private Idaho":

Don't let the chlorine in your eyes
Blind you to the awful surprise
That's waitin' for you at
The bottom of the bottomless blue blue blue pool.

Florida - don't "be blind to the big surprise, Swimming round and round like the deadly hand, Of a radium clock, at the bottom, of the pool."


  1. David - excellent points all. I'd suggest that Scott's decision reflects two critical points.

    1. state officials are often ill- or un-informed about the issues they are voting on. This was evidenced in FL's recent defeat of legislation intended to reduce employers' costs and taxpayers' burden by eliminating upcharging on repackaged drugs. The questions asked by legislators, and the ease with with ACHS et al obfuscated the issues, were proof positive of the legislators' blind ignorance.

    2. re Scott, to quote Mr Carville, elections have consequences. How would his opponent, Alex Sink, handled this? undoubtedly she would never have vetoed this necessary funding.

  2. Thanks Joe. I suspect you're right on both points...