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Workers' Compensation Insurance

Workers Comp History in Florida

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Martin Summers

Insurance Agent

Florida moved slowly in enacting a workers’ compensation law primarily because Florida had a smaller work force, virtually no manufacturing, and no major problems until the “Great Depression” of the 1930’s. Florida industry was limited and consisted primarily of phosphate mining, agricultural harvesting of fruits and vegetables, tobacco, cattle and logging. In addition, there was a steady movement of people, mostly unemployed, moving down from the north for the Florida sunshine. During the depression, Florida started an aggressive campaign to attract business to the warmer, more economical climate. A “workmen’s” compensation law was necessary to meet the demands of the increased employment in the state and also attracted other business to move their operations to Florida. Prospective employers knew that they would be open to lawsuits from workers injured on the job and desired the “tradeoff.” Lawsuits were also on the rise and workers demanded protection. Governor David Sholtz recognized the necessity for this legislation and this new law was signed May 23,1935 as House Bill 29.

The New Act provided for creation of a Florida Industrial Commission, which began actual operations in June 1935. The Commission consisted of three members and was responsible for administering the provisions of the workmen’s compensation law, making studies and investigations with respect to safety provisions and the causes of injuries in employment. They were authorized to make rules and regulations dealing with workmen’s compensation. The cost of administering the law was raised by a tax on workmen’s compensation insurance premiums and upon self-insurers. This method of financing the cost of administering the law still exists today.

The way the law was structured regarding benefits to the injured worker is interesting. Initially, no compensation was allowed for the first fourteen days of the disability. Compensation for disability was not to exceed $18.00 per week nor be less than $4.00 per week. Compensation for disability was paid at the rate of 50% to 60% of the employee’s average weekly earnings. Medical treatment was furnished at a cost not to exceed $250.00, unless there was surgery and then the maximum expense would be $500.00. Under no circumstances would compensation be paid for more then 350 weeks nor would the total amount paid exceed $5,000.00. The employments not included under the act were domestic servants, agriculture and horticultural farm labor. In the first year of the Florida Industrial Commission, 10,977 cases of “workmen’s” compensation were reported in Florida’s 67 counties. Half of those were from Jacksonville and Miami. The total benefits paid were approximately $290,434.00.

Between 1935 and 1978 few major changes were made in Florida’s workman’s compensation system. The first medical fee schedule was adopted in 1938. The special disability trust fund was established in 1955. Also referred to as the “second injury fund”, the purpose of the fund is to encourage employers to hire workers with disabilities.

In 1978, major changes in the state workmen’s compensation system were underway in the state legislature. The law had basically been a “fixed benefit” system, with workers paid on the basis of the severity and type of injury related to a fixed schedule of benefits. Those who were able to return to work received lump sum payments while those who could not work were limited to the schedules. This system was replaced by the “wage loss concept” under the new compensation act. Now called workers’ compensation instead of “workmen’s” compensation, this new act was to apply to all claims for injury arising out of accidents occurring on or after August 1,1979. The Bureau of Workmen’s Compensation under the Department Of Commerce was expanded and replaced by the Division of Workers’ Compensation under the newly created Department Of Labor And Employment Security, which was vested with extensive powers. This major reform actually reduced premiums for employers from 1978 through 1982 nearly 23%. They were to be the last reductions for over a decade as the wage loss concept proved not to be the answer to lowering costs.

By 1988 another major “clean up” effort was the talk of the state Legislators. Consequently, new reforms were adopted in 1989, followed by major changes in the benefit structure during the 1990 session. Also, in 1990, the Bureau Of Workers’ Compensation Fraud was established in the Department Of Insurance to combat fraud within the system and the Bureau Of Safety within the Division Of Workers’ Compensation was upgraded to full division status to fill the needs of customers for safety inspections and program establishment. The Workers’ Compensation Drug Free Workplace Program was added to the law this same year recognizing the role that drugs and alcohol played in accidents on the job.

In 1993, wage loss was replaced by impairment income and supplemental benefits. The 1993 reform act introduced our system to Managed Health Care Arrangements (MCA’s). The closing years of the 20th Century brought many changes especially as litigation and medical care continued to be a problem not only in Florida but on a national level as well. In the 1993 Reform Act and still today, the emphasis is placed on reemployment, getting the injured worker back to work as soon as able, which reduces cost and increases productivity.

In 2003, our law again underwent a major reform, with changes to the Permanent Total, Impairment Income and Death Benefit structures, construction industry exemptions, compliance enforcement, medical services, as well as examination and investigation of carrier and claim handling entities. The Department of Insurance and Department of Banking and Finance were also merged into the new Department of Financial Services effective January 1, 2003.

Workers’ compensation insurance has developed and evolved throughout history and there will continue to be changes to this line of insurance as the work environment progresses, but workers’ compensation is still here for the working citizens of Florida and their employers.

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