COMPLIANCE ECONOMIC REVIEW
Pursuant to section 120.745(5), Florida Statutes
Rule Chapter 69L-56, F.A.C., Electronic Data Interchange (EDI) Requirements for
Proof of Coverage and Claims (Non-Medical)
DEPARTMENT OF FINANCIAL SERVICES
DIVISION OF WORKERS’ COMPENSATION
April 2013
JUSTIFICATION FOR THE RULE
Section 440.593, F.S., allows the department to establish an electronic reporting system. The section
states:
(1) The department may establish an electronic reporting system requiring or authorizing an
employer or carrier to submit required forms, reports, or other information electronically rather
than by other means. The department may establish different deadlines for submitting forms,
reports, or information to the department, or to its authorized agent, via the electronic reporting
system than are otherwise required when reporting information by other means.
(2) The department may require any carrier to submit data electronically, either directly or
through a third-party vendor, and may require any carrier or vendor submitting data to the
department electronically to be certified by the department. The department may specify
performance requirements for any carrier or vendor submitting data electronically.
(3) The department may revoke the certification of any carrier or vendor determined by the
department to be in noncompliance with performance standards prescribed by rule for electronic
submissions.
(4) The department may assess a civil penalty, not to exceed $500 for each violation, as
prescribed by rule.
(5) The department may adopt rules to administer this section.
The Legislature, through the enactment of this statute, clearly foresaw the need for the department to
transition from a labor intensive, paper reporting process to an electronic data reporting platform in
order to more effectively and efficiently administer Florida’s workers’ compensation system. Without
the electronic data reporting system, the department would be required to hire many more employees
to handle the paper forms, be limited in enforcing employer compliance with the coverage
requirements, and be limited in ensuring carriers were meeting their statutory performance standards
for providing timely and accurate benefits to injured workers and payments to health care providers.
This rule was originally created to require Insurers and Claim Administrators to file required paper forms via
an electronic method with the Division of Workers’ Compensation for Proof of Coverage and Claims, in
accordance with 440.593, F.S. All proof of coverage data, claims data and medical bills were originally
collected on paper forms. If the data now submitted electronically were submitted on paper, the annual
stack of documents would be almost six times the height of Florida’s 22-story Capitol building.
The electronic formats mandated by this rule are national standard Electronic Data Interchange (EDI)
transactions developed by the International Association of Industrial Accident Boards and Commission
(IAIABC). The IAIABC EDI development committees created and implemented these standards. The
committees consist of representatives from national workers’ compensation insurers and third party
administrators, as well as other state jurisdictions and vendors. The Division has been an active participant
in the development and maintenance of these national standards. Every existing and new requirement in
the standard has been extensively vetted with all the national participants, including the Insurers and Claim
Administrators. After the initial programming investment, implementing a national standard for the
electronic reporting of workers’ compensation data saves the claim administrators money because each
state that adopts the national standard will be accepting the same electronic format.
In the Executive Summary of its 2012 Workers’ Compensation Annual Report, the Office of Insurance
Regulation made the following findings regarding the workers’ compensation marketplace:
Based on a comparative analysis across a variety of economic measures, the workers’ compensation
market is competitive.
a.
The workers’ compensation market in Florida is served by a large number of independent
insurers and none of the insurers has sufficient market share to exercise any meaningful control
over the price of workers’ compensation insurance.
b. The Herfindahl-Hirschman Index (a measure of market concentration) indicates that the market
is not overly concentrated.
c. There are no significant barriers for the entry and existence of insurers into the Florida workers’
compensation market and based on the record of new entrants and voluntary withdrawals with
no market disruptions, the Florida workers’ compensation market is competitive, well
capitalized and robust.
In addition, despite three rate increases after seven years of decreases, workers’ compensation rates are
still, on average, 56% below what they were in 2003.
The rule incorporates and adopts national and uniform claim and policy information electronic reporting
standards. Therefore, insurance carriers do not have to develop multiple data reporting platforms.
Since all rule subparts were adopted in May, 2005 or earlier, carriers would experience significant data
reporting costs should the Department transition back to paper reporting and/or develop a Floridaspecific electronic reporting system.
Section 120.745(5)(b), F.S. states:
Any agency rule, including subparts, reviewed pursuant to Executive Order 2011-01 are exempt
from the compliance economic review if the review found that the rule:
1. Does not unnecessarily restrict entry into a profession or occupation;
2. Does not adversely affect the availability of professional or occupational services to the
public;
3. Does not unreasonably affect job creation or job retention;
4. Does not place unreasonable restrictions on individuals attempting to find employment;
5. Does not impose burdensome costs on businesses; or
6. Is justifiable when the overall cost-effectiveness and economic impact of the regulation,
including indirect costs to consumers, is considered.
Rule Chapter 69L-56, F.A.C., meets the criteria to be exempt from a compliance economic review
because it is justifiable when the overall cost-effectiveness and economic impact of the regulation is
considered.