Florida ‘draws a line in the sand,’ tightens workers’ comp enforcement

In October, 2003, when the Florida Legislature approved an updated workers’ compensation program, legislators “drew a line in the sand,” and decided to go after employers not paying their fair share into the system, according to Andrew Sabolic, chief of the Florida Bureau of Employer Compliance.

“For years they have been hearing from employers that were playing by the rules, saying there were too many employers not paying workers’ compensation,” Sabolic explained. “When that happens, it drives up the rates for everyone else and they end up subsidizing employers who are not following the law. The legislators said, ‘We have to do something about this, we are tired of hearing about it.'”

With this “line in the sand” in mind, Sabolic, along with Tanner Holloman, director of the Division of Workers’ Compensation Compliance and Jeff Korte, chief of the Division of Workers’ Compensation Fraud, presented a series of town hall meetings across the state recently in Fort Myers, Tampa and Orlando, Fla. to draw attention to the state’s workers’ compensation requirement.

Legislators’ dealings

Sabolic explained that workers’ compensation referendums occur every 10 to 15 years, because they are usually a “blood bath” within the Legislature.

“Legislators do not like to have to deal with workers’ compensation injuries, insurance carriers, hospitals, chiropractors and trial attorneys, because each wants a different outcome,” Sabolic explained. “When such a referendum occurs, politicians want to please everyone and can’t, due to an imperfect system,” Sabolic continued. “It’s almost impossible to balance employer’s needs with those of an injured worker.”

Due to the increased authority given to the Florida Bureau of Employer Compliance, and due better resources, more employers are aware of their obligations under the law and at the same time they have a better understanding of the consequences of not obtaining coverage, Sabolic said.

Payment plan approved
In July 2004, the Legislature gave the division the ability to enter into a periodic payment plan with employers that includes penalties and a lot of employers are taking advantage of that, according to the insurance officials. Consequently, in 2004, the department assessed $46 million in penalties.

“We used to be regulators and now we are a financial organization as well,” Sabolic quipped. “We have about $20 million encumbered through periodic payments, so we are also a bank, charging no interest, but keeping track of it all.

Stop-work orders
“If we find an employer without coverage, or that is under-reporting or concealing payroll, or misclassifying employees; for instance if a contractor has 20 roofers but they are all classified as clerical office people, we have the ability to issue stop-work-orders for this type of violation,” Sabolic said. “The monetary penalty has also increased to one-and-a-half times the amount the employer would have paid in workers’ comp.”

Sabolic said that before he will remove the stop-work order the employer must prove the firm has come into compliance with the law and paid the penalty.

Sabolic stressed the benefits of compliance, reminding his audience that the Bureau of Compliance has a “zero tolerance” policy toward companies attempting to circumvent regulations.

“Workers’ comp insurance is essential,” he said. “Just imagine if you are injured on the job without workers’ compensation insurance. Workers’ compensation protects you and your loved ones in case of such injuries, but what if you found out that your employer did not cover you? The workers’ only resort is to sue the employer, but there are no guarantees he will pay.”

Sabolic said the bottom line is that his department is going after employers who violate the law and put workers in jeopardy. He said such actions skirted the system and in the end costs other employers more.

He said that under new provisions his department can assess penalties and that he will not hesitate to issue a stop-work order if the law has been violated. Sabolic said that, to their credit, legislators provided 35 additional state-wide investigators, which doubled the statewide investigative force to 71.

“You might think that is a lot, but in Florida there are between 500,000 to 1 million job sites, and that is the universe we work in,” Sabolic explained. “On those job sites we do not know if an employer has workers’ compensation or not until we go out and investigate.”

Gov. Jeb Bush formed a workers’ compensation reform committee whose goal was to review the system. It was to recommend ways to reduce workers’ compensation rates, increase affordability and availability, and encourage companies to write coverage in Florida.

45 pages of recommendations
Eight months later, in January, 2003, the committee submitted 45 pages of recommendations to the Legislature, which adopted 75 to 80 percent of them.

“That was the most significant reform Florida experienced in 10 years,” Sabolic said.

The Legislature gave the Bureau of Compliance the authority to monitor claims, authorize treatment and benefits and penalize anyone who broke the rules.

“Prior to 2003 Florida had the highest workers’ compensation claims rate in the nation,” Sabolic explained. “In the year after the changes were made in the system, the annual rate for all employees dropped 14 percent, resulting in a $450 million in savings.”

On Jan. 1, 2005, there was another overall decrease of 5 percent, and effective Jan. 1, 2006 rates will again drop, by 13.5 percent.

The Department of Financial Services has an online database at www.fldfs.com that lists businesses that have been issued stop-work orders. Sabolic advised insurance companies and contractors to make sure a company they are doing business with is not on the list.

Topics Florida Workers' Compensation