The Next Wave
Jun 15, 2016


The Florida Supreme Court delivered its long-awaited ruling in the case of Westphal v. The City of St. Petersburg this week.  In a 5-2 decision, the court struck down a provision of the Florida Workers' Compensation Act (Act) that cuts off disability benefits to a worker who is totally disabled but is still not eligible for a permanent award because the worker has not reached maximum medical improvement.  This was the second time in the last two months that the state's high court declared portions of the Florida Workers' Compensation Act unconstitutional.


The high court determined that the Act's 104-week cap unconstitutionally denied injured workers access to courts because it deprived them of disability benefits for an indefinite period.  Such a cap rendered the Act an unreasonable alternative to tort litigation to claim these benefits.  The majority decision revived the pre-1994 statute that provided a lengthier cap of 260 weeks of temporary total disability benefits.  Florida employers will now face temporary indemnity exposure for up to 5 years instead of 2 years, as injured workers return to maximum medical improvement and employment.


The National Council on Compensation Insurance (NCCI), an organization that makes rating recommendation to the states, is expected to address rate increases again in the short term.  The NCCI was already scheduled to testify about a 17.1% proposed increase to Florida workers' compensation insurance rates in Florida based the Florida Supreme Court's ruling in the Castellanos case decided this spring. 



The House Ways and Means Committee heard testimony this week on measures designed to build efficiency and solvency within Medicare and its secondary payer system.  Representative Dave Reichert (R-WA) testified in favor of the Worker's Compensation Medicare Set Aside Act (H.R. 2649), a bill that would create a statutory framework around the submission and CMS approval of Medicare set-asides.  The bill remains pending before the Committee.


In related news, CMS issued an alert this week stating its intent to revisit the use of set asides for cases involving liability and no-fault coverage lines.   We will continue to work with CMS and the MSP stakeholder community on these developing issues.



Governor Doug Ducey's Regulatory Review Council approved this week a plan to adopt and implement the Official Disability Guidelines and the ODG Drug Formulary in workers' compensation cases.  The guidelines will be effective on October 1, 2016.  The rules will feature new ways to employ evidence-based medicine to reduce chronic pain and influence opioid utilization.   


The Senate passed legislation last week to modernize the Toxic Substance Control Act.  With House approval last month, the bill is on its way to President Obama for his signature.  The Act will authorize the Environmental Protection Agency to begin conducting tests on some 64,000 chemicals, 20 chemicals at a time.  This new law, lauded by the scientific and manufacturing communities, would impose a review deadline of seven years per chemical and would allow the agency's regulations to preempt state-level rules.  President Obama is expected to promptly sign the bill in to law.


The Way was in Washington this week advancing the legislative agenda of the Risk and Insurance Management Society (RIMS) during the group's Legislative Summit.  The three main pieces of legislation on the RIMS 2016 agenda include the Data Security and Breach Notification Act of 2015 (S. 177), the ADA Education and Reform Act (H.R. 3765), and the Captive Insurers Clarification Act (S. 1561).  Each measure seeks ways to enhance clarity, efficiency, and predictability for issues affecting the risk management community.  It was great to be part of a team leading the way through important risk-related legislation, including preliminary discussions regarding the reauthorization of the National Flood Insurance Program.


Chairman of the House Financial Services Committee Jeb Hensarling (R-TX) outlined the Financial Choice Act, which aims to reform the financial regulations derived from the Dodd-Frank Act.  The proposal would limit the role of regulators in overseeing the country's biggest banks and would preclude the Treasury's Financial Stability and Oversight Council from labeling non-banks and insurers as "Systematically Important Financial Institutions", which currently triggers significant federal oversight.


Speaking of the Treasury, several former ranking members of that U.S Department were celebrated for their roles in shaping monetary policy Sunday evening in New York City.  We hope this makes you smile!


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