Workers’ Compensation Recommendations Passed by General Assembly; Changes Seek to Reduce Business Costs and Expand Job Opportunities

DOVER, Del., (June 20, 2013) – Last night, Delaware’s General Assembly approved the recommendations made by the Workers’ Compensation Task Force, which worked for four months to address the dramatic increase in Delaware’s workers compensation premiums over the past two years, after four consecutive years of decreases that totaled over 40%.   The Task Force’s recommendations are designed to reduce costs for Delaware businesses, so that those businesses can better compete with businesses in neighboring states and employ more Delawareans.

HB 175 passed the Senate 21-0 after passing the House on June 6 (39 yes, 2 absent). 

Lt. Governor Denn, Chair of Delaware’s Workers’ Compensation Task Force, said, “We did an incredible amount of important work in a very short time and I want to thank each member of the task force for their efforts.  These changes will make a real difference in Delaware in helping people return to work more quickly and efficiently.”

“This collaborative effort once again demonstrates why Delaware’s greatest advantage is its close-knit community.  Business leaders, labor representatives, medical professionals and elected officials came together to quickly resolve a challenge and maintain an environment where businesses can flourish,” said Governor Jack Markell. “I commend Lt. Governor Denn for his leadership of the task force.  His guidance ensured that the task force acted swiftly to rein in costs for our state’s businesses, strengthen workplace safety and encourage injured individuals to return to work.”

Created by House Joint Resolution 3, the Workers Compensation Task Force was created on January 30, 2013 by the Delaware General Assembly and the Governor, and charged with an expedited review of Delaware law relating to workers compensation, the impact that the 2007 amendments to that law had upon workers compensation premiums, the reasons for recent increases in workers compensation premiums, and whether any additional changes to statutes, regulations, or practices are required to control growth in premiums.   

“I believe the results of the task force will have a substantial positive impact on workers’ compensation rates going forward,” said Rep. Bryon Short, D-Brandywine Hundred, lead House sponsor of the bill. “The recommendations will result in a better understanding on the data and cost drivers for workers’ compensation and will ensure that those rates are held as low as possible while ensuring they protect our workers.”

“The changes we’re making with this legislation address the immediate problem of dramatic workers’ compensation increases that our business community faced,” said Senate President Pro Tem Patricia Blevins, D-Elsmere, who served on the task force that helped create the bill. “We also think it takes steps to stabilize the program.”

The task force concluded that a number of statutory and regulatory changes were required in order to avoid significant future increases in workers compensation premiums.  The task force took the view that the 2007 statutory amendments and subsequent regulatory work done by the Health Care Advisory Panel had initially been effective in both controlling premiums and ensuring that injured workers continued to have prompt access to qualified doctors to treat their workplace injuries.  Therefore, the task force’s recommendations focus on revisions and improvements to the 2007 statute, not a wholesale rejection of that law and replacement of it with an entirely new system. 

State Rep. Ruth Briggs King, R-Georgetown, a member of the Workers’ Compensation Task Force, stated, “I am pleased that House Bill 175 has moved through the legislative process and awaits the Governor’s signature.  This was a team effort with many stakeholders at the table.  We were committed to finding solutions following the rise in premium rates that so many of our small businesses have been impacted by since 2011.  The reforms laid out in this measure should provide some relief for our business community.  I am also encouraged that the legislation calls for the task force to remain in place to continue looking for additional cost-saving opportunities in the future.”

“The members of the task force put a lot of time and effort into it, and I think the business community in the state is going to see some real savings,” said Sen. Gerald Hocker, R-Ocean View.  “The two big positives I take out of this process are getting employees back to work and getting hospital charges under control. I think a lot of good has come out of this.”

The task force’s recommendations fall into four areas:

  1. Place tighter controls on workers compensation medical costs.  These recommendations include a two-year inflation freeze on the fee schedule for medical treatment of workers compensation recipients, a permanent reduction in the inflation rate allowed for hospital treatment of workers compensation recipients, and reductions in allowed reimbursements in a variety of medical categories.
  2. Ensure that insurance carriers’ requests for rate increases receive a high level of scrutiny.  These recommendations include the retention of a part-time attorney to represent businesses during the workers compensation rate-setting process, and a system to ensure that insurers are diligently enforcing the state’s medical cost controls.
  3. Make the state’s laws encouraging injured workers to return to work more effective; and
  4. Improve the state’s workplace safety program to both increase its usage and ensure that is accurately determines which workplaces are using appropriate safety practices.

Additionally, the General Assembly accepted the task force’s suggestion that they be kept in existence on a temporary basis, both so that it can consider some issues that it did not have time to discuss during the short time that it had to make recommendations, and so that it can monitor the impact of its recommendations and suggest stricter measures with respect to medical costs if necessary.  If the implemented recommendations do not result in manageable increases in workers compensation premiums, the task force believes that more significant changes should be considered both with respect to the levels and methods of paying medical claims, and the system for calculating injured workers permanency and lost wage claims. 

A copy of the final report and all information from the meetings can be found at