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Delaware Enacts Workers’ Compensation Reform

10/21/2013 | Construction Blog

Construction companies and owners in Delaware have complained about the soaring costs associated with workers’ compensation policies and claims for years. New legislation has given them some sought after relief.

Governor Jack Markell recently signed bipartisan legislation that many hope will reverse the trend of rising premiums. The legislation seeks to incorporate four main recommendations developed by the task force charged with addressing the problem:

    (1) Place more strict controls on medical costs;

    (2) More closely scrutinize rate increase requests by insurers;

    (3) Help injured workers get back to work, and thus in off benefits, more quickly; and

    (4) Improve Delaware’s workplace safety program.

To achieve these goals, the new law freezes inflation on the rates for medical treatment under the statute for 2 years. It also permanently reduces the rate of inflation on hospital treatment in the workers’ compensation setting and reduces reimbursements in a number of categories. Finally, the new law requires that the business community have an attorney involved in the rate setting process for workers’ compensation scales and that the a system be implemented to ensure insurers are enforcing the state’s cost control mandates.

With the short term rate freezes, workers’ compensation premiums will likely come down in the short run. Judgment on the long term effects of the new law will have to wait until the provisions are given 4-5 years to impact the market though.