Delaware Updates Procedures to Terminate Workers’ Compensation Benefits: What Businesses Need to Know

Weber Gallagher Simpson Stapleton Fires & Newby LLP

On June 29, 2022, Delaware Senate Bill 315 unanimously passed a floor vote in the State House (having previously passed in the State Senate); when signed into law by Governor Carney, the bill will amend § 2347 of the Workers’ Compensation Act, including updating pleading requirements for Petitions for Review, expanding acceptable methods of service for Petitions, and codifying the Industrial Accident Board’s current “Read-in Termination” hearing process. Additionally, the bill will codify the process surrounding wage replacement benefits paid by the Workers’ Compensation Fund during the pendency of Petitions for Review.

Senate Bill 315, entitled “An Act to Ament [sic] Title 19 of the Delaware Code Relating to Workers’ Compensation” (the Act), was introduced in the State Senate on June 7, 2022. The stated purpose of the Act, which amends a single section of the Workers’ Compensation Statute, is to “clarify and modernize” 19 Del. C. § 2347, entitled “Review by Board of agreements or awards; grounds; modification of award.”

The proposed changes impact how often the Industrial Accident Board may review an agreement or award by changing the minimum time between reviews from “6 months” to “26 weeks” and clarifies that no two hearings to review an agreement or award may be held more often than every twenty-six weeks.

The Act also clarifies and expands the pleading requirements for Petitions for Review of Compensation Agreements. Currently, § 2347 only requires proof of service by certified mail for the Department of Labor to accept a Petition for Review. Most significantly, the changes will require the employer to submit the medical evidence that underlies the basis for the Petition with the Petition filing. Petitions for Review and Petitions to terminate benefits for failure to sign agreements and receipts must include the documents in question. 

After a Petition is filed, the Board will have five business days to notify the Petitioner whether the Petition is accepted or rejected, and, if rejected, why it was rejected.

The Act will also expand allowable forms of service, no longer demanding certified mail.  Instead, employers could also serve through any private mailing service with evidence of proof of receipt or via anyone authorized to serve subpoenas under the Workers’ Compensation Statute. Where both parties are represented, petitioners will be allowed to serve Petitions on the other party’s attorney electronically where the receiving attorney acknowledges on the face of the Petition that the same was received.

The lion’s share of the Act’s text is dedicated to clarifying the process surrounding the assumption of indemnity payments by the Workers’ Compensation Fund (the Fund) when a Petition for Review is pending. The new proposed text clarifies that once a Petition for Review is accepted by the Department, the Fund shall pay benefits to the claimant, based on the rate of the current approved agreement, retroactively to the day the Petition was accepted. Where no agreement exists, the Fund pays whatever the employer had been paying in benefits, except where that figure was not properly calculated under the provisions 19 Del. C. § 2302(b) prescribing the method for calculating average weekly wage. In such a case, the Fund will pay at the proper rate according to statute. The Fund will also adjust compensation rates to pay partial disability if the employee returns to work in a reduced capacity. Payment from the Fund will continue until the parties consent to the termination of benefits, the Petition is withdrawn, or the Board rules on the Petition.

Importantly, the Act addresses a rising concern of employers by clarifying the rules regarding if and how the Fund is entitled to compensation from the employer when a Petition is resolved.  Under the Act, § 2347 will clarify that whenever the parties settle the issues of a Petition without a hearing or an employee consents to termination, the employer must “withdraw” its Petition for the purposes of new subsection § 2347(k)(3). Under that subsection, the employer is required to repay the Fund the amount it paid out upon written request from the Fund.  By contrast, if the Board dismisses the employer’s Petition, the Board will determine the rate and period of repayment to the Fund, which the employer must comply within 30 days of the final ruling or written demand by the Fund. 

The Act will also include new niche provisions governing benefits paid by the Fund when the employee suffers a new incapacitating event while the Petition is pending.

We anticipate this new law may raise many questions and welcome you to reach out to our Delaware workers’ compensation practice for guidance.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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