Defense Digest

The Delaware Workers' Compensation Act was amended and unanimously passed by both Houses of the General Assembly and signed by the Governor on January 17, 2007. Since that time additional amendments have been passed and a few issues have been litigated.

On May 23, 2007, the Governor signed into law an amendment to the statute expanding the exemption from workers' compensation coverage to individuals who are members of limited liability companies. Previously, the statute afforded workers' compensation coverage exemption to officers who are stockholders of corporations, but it has now extended that coverage to limited liability companies. The amendment also clarifies the obligations of independent contractors and subcontractors in the construction industry with respect to maintaining workers' compensation insurance, allowing the option for up to four executive officers who are stockholders of a corporate entity or four individuals who are members of a limited liability company to be exempted from workers' compensation coverage. This amendment is applicable to insurance policies issued or renewed on or after July 17, 2007.

This amendment requires that a contracting entity obtain from an independent contractor or subcontractor a certificate of insurance or notice of exemption of executive officers or limited liability company members. The amendment clarifies that this section of the workers' compensation statue does not create an employer-employee relationship, statutory or otherwise, between the contracting entity and the subcontractor, independent contractor or their employees. The contracting entity shall not be deemed the employer of any independent contractor or subcontractor or their employees but shall be deemed to insure any workers' compensation claims arising under the Act.

On July 17, 2007, the Governor signed into law an amendment that adjusts certain workers' compensation reimbursement amounts to hospitals and surgical centers.

This amendment provides that hospital fees billed for inpatient and outpatient services provided to injured workers pursuant to the workers' compensation statute shall be reimbursed at a rate equal to 85 percent of each hospital's actual charges for such services as of October 31, 2006. The amendment also clarifies that Ambulatory Surgical Treatment Center ("ASTC") fees shall be reimbursed at a rate equal to 85 percent of each ASTC's actual charges for such services as of October 31, 2006, subject to annual adjustment.

The new law focuses primarily on creating a self-executing process for the submission and payment of medical and other healthcare bills. The focus of the Act is on providing cost certainty, uniformity of forms, and prompt payment. The Act calls for the establishment of a Health Care Advisory Panel to establish clear schedules of maximum acceptable charges with annual adjustments pegged to the consumer price index with the schedules and protocols freely accessible via the Department of Labor's website.

The Act provides for the development of healthcare practice guidelines and best practice standards, as well as the implementation of certification for healthcare providers treating injured workers. The Act also provides for the adoption of forms for a consistent and uniform reporting system among employees, employers, workers' compensation insurance carriers, and healthcare providers. In addition to the establishment of the standards for the billing and payment of healthcare services, the Act anticipates the implementation of a utilization review procedure in compensable cases. The changes regarding the payment and processing of healthcare expenses do not take effect immediately. The effective dates are triggered by the first meeting of the Health Care Advisory Committee and the compilation of the necessary medical data. The Health Care Advisory Committee first met in May of 2007. They currently have completed the proposed fee schedule and forms required under the Act. The proposed fee schedule and forms will be the subject of a public hearing scheduled for November 5, 2007, at 4:00 p.m. It is anticipated the proposed fee schedule and forms will be approved and become effective by the date required in the Act. Even though the schedule and the forms will be effective, it is anticipated they will not be implemented until the best practice standards and healthcare provider certification becomes effective.

The recently amended workers' compensation statute established a new and simpler process for the calculation of an employee's average weekly wage. In Joseph Bennett v. Rizzo and Sons, IAB # 1293995, the issue before the Board was whether Mr. Rizzo fell under the former statutory system that was in effect at the time of his injury or whether his wages should be calculated by the new system in effect at the time the matter was being heard by the Board. The Board found that the appropriate method of calculating the injured worker's average weekly wage is the system in effect at the time of the industrial accident. The rationale is, two similarly situated injured workers would be treated differently regarding the calculation of wages based on when the injury occurred and when the hearing before the Board took place. According to the Board's decision, there is nothing in the recent legislation which requires the application of the average weekly wage section of the statute retroactively. The Board's approach bases the average weekly wage calculation using the wages earned by the injured worker at the time of the accident rather than some future time. It should be noted that the Board, in a footnote, acknowledged that the parties could use either method of calculation upon agreement.

*Keri is an associate in the Wilmington, Delaware, office and may be reached at (302) 552-4372 or klmorris@mdwcg.com.