Our state's workers' compensation system was created in 1911 as a kind of tort reform. Workers injured on the job receive defined medical and wage loss benefits regardless of fault, and employers receive immunity from lawsuits for on-the-job injuries. It's a system that in theory is designed to avoid litigation, providing "sure and certain" relief to injured workers without the need for attorney representation and adversarial judicial processes.
A century later, we know it hasn't always worked out that way. Representing workers' comp claimants is a lucrative cottage industry in the legal profession, with its own powerful lobbying and political arm, and increased attorney involvement and adversarial delay in the resolution of claims is one of the lesser examined cost drivers weighing down the system.
An op-ed this morning in the San Francisco Examiner uses the broader debate over health care reform as a point of departure to explore the success Florida has had controlling workers' comp costs by curbing lawsuit abuse:
In 2002, according to the National Council on Compensation Insurance, Florida had the highest workers' compensation premium rates of any state. Employers' costs were rising much faster than either medical costs or wages.
In 2003, Florida passed lawsuit abuse reforms to tackle the issue of excessive litigation. The workers' compensation rates and costs declined 60.5 percent, at a time when costs increased in the neighboring Gulf states.
The new law required attorneys in most workers' comp cases to base their fees on the value of benefits they secured for their clients -- measured by the amount ultimately awarded to the claimant above the initial offer by the employer or insurer to settle the claim.
This gave employers and insurers an incentive to make their best settlement offers at the start. It also discouraged attorneys from representing claimants when it was unlikely their work would add significantly to the final award.
Overall, analysis of the claims data shows that, from 2003 to 2008, limits on attorneys' fees reduced Florida's workers' compensation system costs 28.6 percent. This accounts for a large component of the 60.5 percent decline in employers' insurance premiums.
By 2009, Florida workers' comp rates were among the lowest in the country for similar occupations. The time required to resolve claims fell significantly, whether or not attorneys were involved. This reduced overall costs and it also reduced the average time before workers returned to gainful employment.
We have similar problems in Washington. Likely we'd find success with a similar solution.
