Submitted pursuant to House Bill 175, 147th General Assembly

DOVER, Del. – This afternoon, Lt. Governor Denn, Chair of Delaware’s Workers’ Compensation Task Force, and business and legislative leaders made recommendations to Governor Markell and the General Assembly to stop the large workers compensation rate increases that are burdening Delaware businesses.

Governor Markell said of today’s report and recommendations, “I applaud the Lt. Governor’s work on this extremely important issue for Delaware’s business community. His leadership ensured that the task force acted swiftly and effectively to address the high rates that have burdened our employers. The bipartisan reform package outlined today represents the culmination of a great deal of work, commitment and compromise by everyone involved with the task force.”

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. As detailed in the task force’s prior report, Delaware’s workers’ compensation premiums had risen by calendar year 2006 to be the third most expensive in the country. The primary reason for Delaware’s high premiums was generally agreed to be medical costs – the Delaware Compensation Rating Bureau (DCRB) indicated that in 2006, medical costs were 60% of total workers compensation system costs in Delaware, as compared to 40% in surrounding states.

The task force delivered its first set of recommendations in May 2013, and those recommendations were consolidated into House Bill 175 which passed the Delaware House of Representatives and Delaware State Senate unanimously. Among the provisions of House Bill 175 was one that continued the existence of this task force through June 30, 2014.

The task force’s recommendations fall into three areas:

1. Heightened Oversight of Insurance Carriers. These recommendations include consolidating the Data Collection Committee and the Health Care Advisory Panel into a single committee and a Ratepayer Advocate to be hired and overseen by the Workers’ Compensation Oversight Panel, with staff support to be provided by the Department of Labor.

2. Stricter Control on Medical Costs. These recommendations include directing the Workers’ Compensation Oversight Panel to create a new medical fee schedule, using multipliers of medical codes used by the Centers for Medicare and Medicaid Services, which results in a 33% savings from all providers (to be phased in over a three year period) and recommending that the General Assembly (through the Workers’ Compensation Oversight Panel) monitor both the rate impact of these recommendations and their impact upon providers as the recommendations are phased in, and make statutory adjustments in the fee schedule if appropriate.

3. Consideration of New Rating Organization. The task force recommends that DOI undertake a formal assessment of whether there should be a change in the rating organization used by Delaware insurance carriers, and include members of the task force who have expressed concerns about the current situation in that formal assessment.

“Lt. Gov. Denn deserves much of the credit for this proposal, without his expertise and leadership we might still be struggling with this issue,” said Senate President Pro Tem Patricia Blevins, D-Elsmere. “It is our hope that this proposal will result in real savings to businesses that have been struggling with ever-skyrocketing workers’ compensation rate increases.”

State Representative Ruth Briggs King (R-Georgetown), a member of the task force, said, “This bill is the result of months of work with employers, health care providers and insurers. I believe a great deal of thought and consideration went into crafting this legislation, which I believe will help reduce the uncertainty and escalating premiums for Delaware’s small businesses.”

“I think we had an excellent group of task force members, committed to helping the business community, and I can’t thank them enough for all of their hard work,” said Senator Gerald Hocker (R-Ocean View), both a panel member and the owner of several Sussex County businesses. “It turned out to be a great idea to keep this task force together for another year, and I think the legislation that comes out of this effort is going to provide significant cost savings to the employers of the state of Delaware.”

“The members of the Worker’s Compensation Task Force have taken on the task of improving critical elements to Delaware’s competitiveness when it comes to job creation and business expansion,” said Rep. Bryon Short, D-Brandywine Hundred. “Through great effort, we have tackled one of the most important factors driving up workers compensation costs for Delaware’s employers. I believe the adoption of a relative value units-based fee schedule will have a meaningful impact on the premiums paid in Delaware. Our work is not done. Other important areas resulting in high premiums for Delaware businesses need to be examined in the coming year, and we will continue to look out for businesses and the workers they employ.”

“It was not easy to get to this point in making changes to the workers compensation payment system,” said Rich Heffron, President of the Delaware State Chamber of Commerce. “Through the dedication and hard work of my fellow Task Force members – along with Lt. Governor Denn’s leadership – today we are able to propose changes that can be expected to lower Delaware’s workers compensation rates. We still need to determine why Delaware’s cases take longer to settle, and how insurance companies calculate their reserves, but that is for a future Task Force to examine.”

A copy of the report is included, as are separate statements from the Delaware Compensation Rating Bureau, Medical Society of Delaware, and the Delaware Department of Insurance, included at their request.

Liberty Insurance Corp. and LMI Insurance Corp. Target 2014

Medical Society of Delaware’s May 9, 2014 Workers’ Comp Task Force Statement

Lt. Governor Denn’s DOI Workers’ Compensation Task Force Letter from May 12, 2014

DCRB Comments to May 14, 2014 Task Force Report

Workers Comp Report Presented May 15, 2014

DOVER, Del. – Today, Lieutenant Governor Matt Denn announced the two schools honored with the 5th annual “Lt. Governor’s Excellence in Parental Involvement Award” during a press conference in Kent County.

The 2014 winners of the award are Postlethwait Middle and Dover High School. The two winners were picked by a committee of parents, teachers, administrators, and representatives from the business community.

“I created the award in 2010 with the State Chamber of Commerce as a way to enhance parental engagement in our schools,” said Lt. Governor Denn. “Each year, I am encouraged by the ideas that schools continue to create to help get parents more involved. As a parent, it is hard to always know everything that is happening at school, but it is our responsibility to take more active roles in supporting our children and their schools. When we do, everyone succeeds, and I applaud Postlethwait and Dover HS for creating these programs to get more parents in the doors.”

Postlethwait Middle School is doing a variety of things to get parents more involved. Throughout the year, Postlethwait hosts a variety of themed parent nights during which parents and students participate in various content-based activities. Postlethwait hosted a Fifer Fall Fest for the 2013-14 school year had over 800 participants representing 205 Postlethwait families (25% of their total student population).

“Postlethwait Middle School is very honored and proud to have been selected for this prestigious award,” said Principal Derek Prillaman. “This recognition is a true reflection of our entire learning community – many committed groups and individuals worked together to provide special programs and opportunities for our students and families throughout the school year and during the summer months. We’re committed to continuing these efforts and expanding upon our positive relationships with our parents, students and the Postlethwait community.”

Dover High School began the Parent Academy in 2012, which hosts workshops and events offered based on parent feedback. Now district-wide, more than 50 parent workshops and events have been offered district wide since August 2012. Dover High also has PACEParent and Community Engagement Center, the mission of which is to mobilize parents, schools and communities in the Capital School District towards positive change relating to parent involvement, school improvement and community engagement. From January 2013 through today, the parent center has provided services to more than 700 families.

Dover High School Principal Evelyn Edny said, “There is nothing more powerful than families being involved in the education of a student! In high school, parental involvement takes on many forms: It’s a single mom being able to provide a quiet place to study while also providing food and shelter; it’s the grandparent who can make it to a game or awards ceremony; it’s the parent who knows the first and last names of their teen’s friends; it’s the parent who works hand-and- hand communicating and partnering with the school to produce good citizens.”

LIEUTENANT GOVERNOR AND STATE LEGISLATORS PROPOSE TO MAKE EARLY TEACHER HIRING PROGRAM PERMANENT

The original sponsors of Delaware’s pilot program to allow school districts to make earlier hiring offers to new teachers have introduced legislation to make the pilot program a permanent one. The pilot program has demonstrated extraordinary success in allowing Delaware school districts to better compete with surrounding states for new teachers and adequately train those new teachers before the start of the school year.

House Bill 259 will make permanent the pilot program originally created in 2011, which required the state’s Department of Education to estimate each school district’s enrollment for the following school year in May, and guarantee state funds to each district sufficient to cover 98% of the state’s share of hiring the teachers justified by that enrollment estimate. The pilot program was created through legislation implementing the recommendations of a task force chaired by Lieutenant Governor Matt Denn and State Senator David Sokola.

“Our task force findings were very straightforward,” said Lieutenant Governor Denn. “The school districts told us that they were holding back on early hiring because they couldn’t risk getting less state money than they expected. And the consequence was that they were losing teaching candidates to other states that were making firm offers earlier in the year. Our solution was to guarantee the districts the vast majority of their money in May, and the results have been striking.”

The University of Delaware’s Institute for Public Administration, in its ninth annual Delaware Teacher and Administrator Supply and Demand Survey Analysis Report[1], quantified the change in early teacher hiring caused by the pilot program: the percentage of school district teachers who were hired after July 31st dropped from 64.3% in the 2010-2011 school year, to 48.6% in 2011-2012 and 46.5% in 2012-2013. Delaware Teacher and Administrator Supply and Demand Survey Analysis Report, June 2013, at p. 12. This significant drop in the percentage of late-hired teachers was directly attributed by the University of Delaware to the pilot early teacher hiring program:

What has led to the reduction in later teacher hiring in Delaware? The most obvious answer is Senate Bill 164 with House Amendment 1, the extension of SB 16. SB 16 requires that projections of enrollment be made by April 15 and that the State will guarantee that school districts receive funds equivalent to 98 percent of these projections. This bill was aimed at decreasing late teacher hiring, and it appears to have had the desired effect.

(Delaware Teacher and Administrator Supply and Demand Survey Analysis Report at p. 50).

State Representative Darryl Scott, prime sponsor of House Bill 259 and one of the original sponsors of the 2011 pilot program, said, “Our goal is to hire the very best teachers and have them prepared to start the first day of school. Early unit counts have proven to be an effective tool for our school districts in accomplishing this goal and removing the sunset provision keeps this tool available to our school districts.”

Senator Sokola, the Senate sponsor of House Bill 259 and the original sponsor Senate Bill 16, added, “In my work, I understand the importance of testing and validating data. I’m pleased that the data have validated this experiment in giving our schools more flexibility in hiring top-quality teachers and that we’re making it permanent.”

Other original sponsors of Senate Bill 16 who are co-sponsoring the legislation making it permanent are Representative Debra Heffernan and Representative Earl Jaques.

[1] The report can be found on-line at http://www.ipa.udel.edu/publications/teacher_supply13.pdf.

WILMNGTON – If you are the parent of a child in Delaware who receives health coverage through UnitedHealthcare, you recently received a letter stating that the current contract relationship between UnitedHealthcare and the Nemours Foundation (including A.I. duPont Children’s Hospital) is scheduled to expire on April 1, 2014.

I remain hopeful that UnitedHealthcare and Nemours will resolve their business differences so that UnitedHealthcare policyholders can continue to have A.I. duPont Children’s Hospital and Nemours pediatricians as in-network providers.  It is in the best interests of both parties and of the children they serve to resolve this issue quickly so that the care for these children is not interrupted or terminated.    Along with the Delaware Department of Health and Social Services, I stand ready to work with both parties on resolving this in the next few weeks.

However, because neither UnitedHealthcare nor Nemours appears to be making serious efforts to resolve their differences – despite the best efforts of the state – it is also important that parents make plans to ensure that their children receive appropriate medical care after April 1, 2014.  There is no “grace” period. Unless you take active steps in advance, services provided by Nemours will not be covered.  We suggest the following to make sure you are prepared:

• Children receiving Medicaid or CHIP benefits administered by United Healthcare.  Parents of children receiving Medicaid or CHIP benefits administered by UnitedHealthcare can ensure that their children continue to have access to Nemours pediatricians and A.I. duPont Hospital by calling the Delaware Medicaid Health Benefit Manager at 1-800-996-9969 and asking to switch their Managed Care Organization to DPCI.  The deadline for transfers is March 15, 2014. Parents who wish to remain with United Healthcare will need to select a new pediatric provider if they currently receive services from Nemours.

• Children whose parents receive self-insured health insurance benefits administered by UnitedHealthcare through a private employer.  There are two different ways that Delawareans receive health benefits overseen by UnitedHealthcare through their jobs.  Some Delawareans work for companies that are self-insured and hire UnitedHealthcare to administer their self-funded health benefit plans.  You can find out if your company is self-insured by asking your HR or personnel department.  Some of these self-insured companies use more than one insurance carrier to administer their benefits.  If your company uses more than one carrier, you should ask your HR department if the company is willing to allow you to switch to another carrier that has Nemours in-network outside the normal open enrollment period.  If your company does not use more than one carrier, you should talk to your HR department about any medical conditions your child has that make it important that s/he be seen at A.I. duPont Children’s Hospital, so your employer can make an informed decision about how to address the situation with UnitedHealthcare.

• Children whose parents receive health insurance from UnitedHealthcare through employer group health insurance or individually purchased health insurance.  If you are a UnitedHealthcare policyholder, through your employer or through a policy that you purchased directly from UnitedHealthcare, you have legal rights that are part of the insurance contract.  These rights include a minimal level of medical care that your child is entitled to receive.  If you have a child who is seen at A.I. duPont Children’s Hospital, you should immediately find out what UnitedHealthcare’s plan is for your child’s future medical care.  If you do not receive a prompt response or are unsatisfied with the response, you should contact the Delaware Insurance Department at 1-800-282-8611 or 302-674-7310 to receive help in enforcing your legal rights.

In January, Lt. Gov. Denn spoke to the Greater Kent County Committee about how Delaware moves ahead after coming back from the worst economic crisis to hit the state since the Great Depression. In three editorials over the next few months, he will share his thoughts regarding the economy, controlling business costs and education.

The national Bureau of Labor Statistics put our unemployment rate in Delaware at 6.5 percent in November. That’s the best it’s been in five years — it essentially puts us back to where we were when the national economy crashed in late 2008. Some people say that number is deceptive because the labor force is smaller now, but the labor-force number goes up and down over time — our state labor force today is larger than it was in November, 2010.

How does that unemployment rate compare to our neighbors? Maryland is right around where we are at 6.4 percent — but with a full 25 percent of its non-farm workforce in recession-proof government work, compared to 14.7 percent of ours. Pennsylvania’s unemployment rate is 7.3 percent. New Jersey’s unemployment rate is 7.8 percent. New York’s is 7.4 percent. Connecticut’s is 7.6 percent. Rhode Island’s is 9 percent.

Are we the best in the country? No. Are we even close to satisfied with being the best in the region? Absolutely not — we won’t be satisfied until every Delawarean who wants work can find it. But as we look ahead to determine how we will build on our success, we should appreciate how far we’ve come and the better place from where we start.

When we are at our best in Delaware in creating economic opportunity, we are doing three things well. First, we are making our state an attractive place for anyone to do business. We recognize that no one — least of all government agencies — bats a thousand guessing winners and losers in these unpredictable economic times, and we have to make sure that the fundamentals of our economy are such that we are an attractive place to move and grow for all types of employers.

Second, while we are strengthening our overall profile as a state to do business, we need to be smart about those economic areas where we have, or could work to have, strategic advantages, and pay special attention to those areas.

And third, when there are particular companies that are interested in locating or expanding here and offer the real prospect of putting Delawareans to work, we need to be extremely responsive to them. We can’t lose our focus on any of these three areas — it doesn’t matter, for example, how nimble or responsive we are to potential new employers, if the underlying economic environment in our state isn’t attractive to them.

Working with Chairman Gary Stockbridge, I recently announced that the state’s Workforce Investment Board is seeking permission from the federal government to implement a new program that would dramatically increase the workforce training funds made available to small businesses willing to hire and train new employees, and all businesses willing to hire and train Delawareans who have been unemployed for long periods of time.

If approved by the United States Department of Labor, the new program will allow the state to pay 90 percent of a new employee’s wages if that employee is hired by a business of 50 or fewer people or the new employee has been unemployed for over 26 weeks.

The program would be funded with existing federal workforce investment funds. The subsidy would last as long as the employee was receiving specialized training from the employer, and employers participating in the program would be required to demonstrate a commitment to keeping employees in the workplace after the expiration of the grant.

The program already exists in Delaware, but because it requires a 50-percent salary match from employers, it is not widely used.

It is a great opportunity for us to give our small businesses another tool to hire new workers and give them valuable training, and also a way for us to incentivize hiring of some of our neighbors who have been out of work for a long time. The best part is we can do it using job-training money that we already receive from the federal government.

The fundamentals are easily stated but hard to do. The governor and I hear them over and over from employers. Employers want a well- educated and trained workforce — students graduating from high school, college graduates, and adults who have learned skills after finishing school. Employers want a low cost of doing business. They want to be in a state that has a good quality of life — where they and their employees will want to live. And they want a supportive government, not one that necessarily gives them everything they want but one that listens and understands that for business, time is money.

On those fundamentals, we have solid progress to report but still a lot of work to do together.

Matt Denn
Lieutenant Governor