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Florida law imposes strict timelines on insurance companies to accept or deny workers’ compensation claims after they are reported. Insurance companies must accept or deny compensability within 14 days after an accident is reported or a Petition for Benefits is filed. Even though this is a heavy burden on an insurance company, there are valid policy reasons why the law requires a quick and timely decision.  An issue arises when the carriers don’t have enough information to make a decision within 14 days.

Insurance Companies May Not Immediately Know Whether a Claim Should Be Paid

An insurance company cannot always make a decision within 14 days because that may not allow enough time for a thorough investigation. In order to be eligible for workers' compensation benefits, an employee must have sustained an injury by accident that arises out of the course and scope of employment and that accident must be the major contributing cause of the need for treatment. Fourteen days is a relatively short period of time for insurance companies to fully review the circumstances of a work injury and reach a determination about whether the employee is entitled to benefits, especially when there may be medical records to obtain or witnesses to interview.

There Is Some Opportunity for a Continued Investigation 

The law allows an insurance company to elect to continue to investigate a workers’ compensation claim and determine whether it should be paid beyond the 14^th day, however, this flexibility should not come at the employee’s expense, who would otherwise need to wait for a benefits decision. Florida law gives insurance companies an option for additional time  to perform a thorough investigation, so long as they are paying benefits to employees in the meantime. In Florida, the extended time period in which an insurer can continue to investigate is 120 days. That’s why the rule is generally known as the “120-Day Rule,” and the letter insurance companies must send to trigger this extra time is known as a “120-Day Letter.” During this time, an insurance company can continue to investigate an employee’s medical records or other relevant information.  

The insurance company must notify the employee of their decision to elect to pay and investigate via a letter. This letter must state that the insurance company is continuing to investigate the claim, and benefits will be paid until a final decision is reached within 120 days. If the insurance company does not send this letter, but provides benefits, it may not be able to continue to deny benefits in the future if additional information is obtained.

Failure to Send a 120-Day Letter Has Consequences

The actual notice to continue the investigation is crucial. In one Florida case, the employer/insurance carrier prevailed in front of the Judge of Compensation Claims because the judge agreed with the insurance company that the employee's injuries were largely pre-existing. However, the First District Court of Appeals reversed the judge’s decision because it found that the insurance company never sent the letter informing the employee that it would continue to investigate the claim. Since the insurance company did not reserve the right to investigate further, it lost the ability to deny the claim.

If an insurance company ultimately decides to deny a claim, it cannot attempt to claw back the benefits that it has already paid. These benefits are the price the insurance company would need to pay for the additional time to investigate the claim. If an insurance company does not provide a formal denial within the 120-day period, the accident would be deemed to be accepted.  

Extra Investigation Can Help the Employer’s Case

The additional time to investigate can be helpful to insurance companies and employers. By bringing all information that the Employer has to the Carrier immediately, the insurance carrier can timely investigate the accident and make the correct determination on compensability and entitlement to benefits.  Too often employers do not provide information they have, such as video of an accident, supervisor’s observations of the employee or prior similar complaints to coworkers at the time the accident is initially reported.  This information might make the carrier election to pay and investigate the accident, rather than just accepting it outright. 

In Florida, the temporary disability portion of workers' compensation benefits can last for up to five years, with the possibility of permanent disability. When you add medical expenses to the indemnity payments, an insurance company may be obligated to pay hundreds of thousands of dollars if it accepts an accident as compensable. 

An insurance company may find it helpful to take the time to perform additional investigation. If it denies a claim within the normal 14-day period, there are penalties and interest due if a Judge ultimately disagrees with their denial as well as attorney fees if the employee hires an attorney.  If they rush a formal decision regarding a worker’s claim in order to comply with an already tight statutory deadline, they could be putting themselves in an even worse legal situation. 

In many cases, an insurance company would need additional facts - either about what happened in the accident or the employee's condition - in order to make a decision. It may be worth it for an insurer to pay benefits while continuing to learn more about a worker’s claim. In the meantime, the insurance company should continue to be transparent and communicate with the employee in anticipation of its final decision.