Mark Roman | June 14, 2016 | Insurance Companies
A St. Petersburg firefighter, Bradley Westphal, won a huge legal victory for himself and other injured workers in Florida last week. The Florida Supreme Court found that a “doughnut hole” in the workers’ compensation system which deprived Westphal of benefits was unconstitutional and could not stand.
Westphal was seriously injured when he lifted heavy furniture while fighting a fire. Because there was a chance that his condition would improve with time and treatment, he received temporary wage benefits. There was just one problem: the temporary benefits expired after two years. Even though Westphal was still disabled when he hit the two-year anniversary of his injury, state law permitted his employer to simply cut him off.
Naturally, this benefits cutoff left Westphal and his family in a jam. Westphal sued for the additional pay benefits, and his case went all the way to the Florida Supreme Court.
The Court decided that a law which allowed an employer to stop paying a clearly injured employee did not meet constitutional standards. To put it another way, the workers’ comp system could not refuse to pay a deserving worker just to save costs. Because there was a wrong, there had to be a remedy.
The victory for Westphal follows a ruling a few months ago where the Supreme Court invalidated restrictions on attorney fees for injured workers. These two decisions have put two small chinks in the armor of a workers’ comp scheme which is generally favorable to employers.
Predictably, the insurance and corporate industries are howling already. Industry groups are claiming that the Westphal decision alone could cost workers compensation insurers millions of dollars in “new” costs. In fact, a national council serving insurers projects that Westphal and its ripple effects could cost the state workers compensation system an additional $65 million, or almost three percent.
There is good reason to be skeptical of such figures. First, Mr. Westphal’s situation – in which he was still disabled after two years, but also had some hope of improving his condition – is pretty rare. After two years, most workers are medically as good as they will get following injury. Thus, the class of workers affected, and the resulting costs, are likely to be pretty low in the scheme of things.
Second, this type of sky-is-falling projection is common among industries who want to create alarm among lawmakers. They are also financially beneficial to insurance companies, who love any forecast that allows them to charge higher premiums. Industry leaders routinely wring their hands after unfavorable court decisions, but their dire predictions rarely come to pass. More often, the system just adapts to the small change and moves on.
Third, it is worth considering that the costs at issue in Westphal were not really new. A worker who cannot return to his or her job always gets deprived of a paycheck. Someone always bears a loss. Before the Court’s decision in Westphal, the costs were just foisted on workers and their families rather than employers.
In the end, all the Court really did was put some of the compensation back into the workers compensation system. As one of the Florida Supreme Court justices wrote, “Florida needs a valid Workers’ Compensation program, but the charade is over. Enough is enough, and Florida workers deserve better.”
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