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National Council On Compensation Insurance v. Fee

Florida Court of Appeals, First District

May 9, 2017



         An appeal from the Circuit Court for Leon County. Karen A. Gievers, Judge.

          Thomas J. Maida, James A. McKee, Benjamin J. Grossman, and Nicholas R. Paquette of Foley & Lardner LLP, Tallahassee, for Appellant National Council on Compensation Insurance, Inc.; Shaw P. Stiller, Chief Assistant General Counsel, and C. Timothy Gray and Lacy End-Of-Horn, Assistant General Counsels, for Appellants Florida Office of Insurance Regulation and David Altmaier.

          John K. Shubin, Salvatore H. Fasulo, Lauren G. Brunswick, and Mark E. Grafton of Shubin & Bass, P.A., Miami, for Appellee.

          Andrea Flynn Mogensen of Law Office of Andrea Flynn Mogensen, P.A., Sarasota, for Amicus Curiae The Florida Press Association, The First Amendment Foundation, and The Associated Press, Inc.

          Richard A. Sicking of Touby, Chait & Sicking, P.L., Coral Gables, for Amicus Curiae Florida Professional Firefighters, Inc.

          ROWE, J.

         The National Council on Compensation Insurance (NCCI) and the Office of Insurance Regulation (OIR) appeal the trial court's order invalidating OIR's approval of a 14.5% increase in workers' compensation insurance rates. For the reasons that follow, we reverse the order in its entirety.

         I. Facts

         OIR regulates all insurance activities in Florida, including all activities relating to workers' compensation insurance. Insurance companies writing workers' compensation insurance policies in Florida must seek approval from OIR when setting or changing insurance rates by filing a rate proposal. OIR reviews filings seeking a rate change to determine if the proposed rate is "excessive, inadequate, or unfairly discriminatory . . . in accordance with generally accepted and reasonable actuarial techniques." § 627.062(3)(b), Fla. Stat. (2015). In determining whether the rate proposal should be approved, OIR may examine the statistical data supporting the proposed rate, and it may hold a public hearing. §§ 627.091(2), .101, Fla. Stat. (2015). OIR takes official action on rate filings through its agency head, the Commissioner of Insurance Regulation, currently David Altmaier. See §§ 20.121(3)(a)1., (4), Fla. Stat. (2015).

         Insurers have the option of directly filing rate change proposals with OIR or joining a licensed rating organization that will file the proposals on their behalf. § 627.091(4), Fla. Stat. (2015). A rating organization is defined as "every person, other than an authorized insurer, whether located within or outside this state, who has as his or her object or purpose the making of rates, rating plans, or rating systems." § 627.041(3), Fla. Stat. (2015). NCCI is a licensed rating organization operating in more than forty states. And it represents and files rate proposals on behalf of most of the workers' compensation insurers in Florida.[1] Before 1991, the responsibility for establishing rates fell to NCCI's Classification and Ratings Committee. NCCI had such a committee in each state in which it operated, including Florida. These rate-determination committees were composed of representatives of competing workers' compensation insurers who would meet periodically to fix the rates to be submitted for approval to insurance regulators. The committees were disbanded in 1991. Since then, no specific committee at NCCI has been assigned responsibility for overseeing, reviewing, or preparing rate filings. In Florida, the responsibility for rate determinations falls to a single employee of NCCI, one of its actuaries - Jay Rosen.

         Before filing a rate proposal with OIR, Rosen analyzes certain data to determine whether there is a need for a change in insurance rates. After he decides that a rate change is needed, a Technical Peer Review meeting is convened where other NCCI actuaries challenge Rosen's conclusions in order to assist him in defending his recommended rate proposal. The next step in the process is a Phase II meeting where Rosen provides an overview to other actuaries and members of NCCI's regulatory division explaining how he arrived at his rate proposal. After these meetings, Rosen prepares the documents that are filed with OIR.

          II. Procedural History

         NCCI announced in a May 2016 press release that, as a consequence of the supreme court's decision in Castellanos v. Next Door Company, 192 So.3d 431 (Fla. 2016), which declared unconstitutional the statutory cap on claimants' attorneys' fees in workers' compensation cases, a significant increase in workers' compensation insurance rates would be necessary. Following this announcement, James F. Fee, Jr., an attorney and the sole owner of a law firm that purchases workers' compensation insurance in Florida, requested from NCCI "all pertinent information relating to all NCCI rate and rule filings affecting Florida Workers' Compensation premiums that were in effect for the calendar years 2006 through 2016." Fee made this request shortly before NCCI submitted a proposal to OIR for a 17.1% increase in the overall statewide workers' compensation insurance rate; he made a second records request after the proposal was submitted. NCCI responded by providing Fee with the records it submitted to OIR with its rate filing.

         Before OIR could act on NCCI's rate filing, the supreme court decided Westphal v. City of St. Petersburg, 194 So.3d 311 (Fla. 2016), holding that the 104-week statutory limit on temporary total disability benefits was unconstitutional, and reinstating a 206-week limitation on these benefits. NCCI responded to the Westphal decision by amending its filing to propose a rate increase of 19.6% to go into effect on October 1, 2016. After NCCI amended its filing, OIR provided notice that it would conduct a public hearing on the proposed rate increase. Fee then made another request to NCCI, seeking any information related to the amended rate filing and any additional information related to his prior requests. Two weeks later, NCCI provided Fee with documents it submitted to OIR associated with its 2016 amended rate filing. Days later, OIR published on the internet all of NCCI's rate filings from 2006 through 2016.

         Fee then filed suit against NCCI, OIR, and Commissioner Altmaier and sought to enjoin the public hearing on NCCI's amended rate filing. Fee alleged that (1) NCCI violated the Sunshine Law, section 286.011, Florida Statutes (2015), by failing to provide notice of or a meaningful opportunity to participate in committee meetings where its rate proposals were discussed; (2) the amended rate filing was void ab initio due to violations of the Sunshine Law; (3) NCCI violated section 627.291(1), Florida Statutes, by denying Fee access to records regarding the rate proposal; and (4) NCCI violated the Public Records Act by failing to respond to Fee's records requests.

         Despite the pending complaint, the public hearing proceeded as scheduled on August 16, 2016. At the four-hour hearing, every person who filled out a speaker card spoke, including an actuary Fee hired to present testimony in opposition to the proposed rate increase. OIR also allowed for additional commentary by holding open the time for written public comments for an extra seven days. But after reviewing NCCI's rate proposal and considering public comments on the proposal, OIR rejected the proposed 19.6% increase as unjustified. OIR determined that only a 14.5% rate increase was appropriate. NCCI then ...

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