NCPA - National Center for Policy Analysis


October 1, 2009

In 2003, Florida passed lawsuit abuse reforms to tackle the issue of excessive litigation.  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, says N. Michael Helvacian, a senior fellow with the National Center for Policy Analysis.

As a result:

  • The workers' compensation rates and costs declined 60.5 percent, at a time when costs increased in the neighboring Gulf States.
  • This gave employers and insurers an incentive to make their best settlement offers at the start.
  • It 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, says Helvacian:

  • 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.
  • The reforms also included controls on treatment, which slowed the rise in medical costs.

As a result of the changes, over the 2003 to 2008 period, the rate of increase in medical costs in Florida's workers' comp system was about a third less than in other neighboring states, says Helvacian.

Florida's experience shows the ability of lawsuit abuse reform to reduce litigation costs without harm to the injured.  Applied nationwide, such reforms could potentially shave billions of dollars off the nation's health care bills while improving the quality of patient care, says Helvacian.

Source: Michael Helvacian, "Lawsuit Abuse Reform is Working for Florida," Washington Examiner, September 30, 2009.


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