CHAPTER 116

FORMERLY

SENATE BILL NO. 26

AS AMENDED BY SENATE AMENDMENT NOS. 1 AND 2 AND HOUSE AMENDMENT NO. 1

AND SENATE AMENDMENT NO. 3

AN ACT TO AMEND TITLE 19 OF THE DELAWARE CODE RELATING TO WORKMEN'S COMPENSATION INSURERS' SUBROGATION RIGHTS AND TITLE 21 OF THE DELAWARE CODE RELATING TO INSURANCE BENEFITS.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:

Section 1. Amend §2363 of Chapter 23, Title 19 of the Delaware Code by deleting the last sentence of subsection (e) and substituting in lieu thereof the following new sentence:

Any recovery against the third party for damages resulting from personal injuries or death only, after deducting expenses of recovery, shall first reimburse the employer or its workmen's compensation insurance carrier for any amounts paid or payable under the Workmen's Compensation Act to date of recovery, and the balance shall forthwith be paid to the employee or his dependents or personal representative and shall be treated as an advance payment by the employer on account of any future payment of compensation benefits, except that for items of expense which are precluded from being introduced into evidence at trial by 21 Del, C, §2118, reimbursement shall be had only from the third party liability insurer and shall be limited to the maximum amounts of the third party's liability insurance coverage available for the injured party, after the injured party's claim has been settled or otherwise resolved."

Section 2. Amend Chapter 21, Title 21 of the Delaware Code by adding a new §2118B as follows:

"§2118B. processing and Payment of Insurance Benefits,

(a) The purpose of this Section is to ensure reasonably prompt processing and payment of sums owed by insurers to their policyholders and other persons covered by their policies pursuant to §2118 of this Chapter, and to prevent the financial hardship and damage to personal credit ratings that can result from the unjustifiable delays of such payments.

(a) When an insurer is notified by the claimant that he or she desires to file an initial claim for benefits pursuant to §2118(a)(2), the insurer shall, no later than ten (10) days following the insurer's receipt of said notification, provide that claimant with a form for filing such a claim. For purposes of this subsection an insurer shall be deemed to have provided a claimant with a form for filing a claim when the insurer deposits such a form in an envelope addressed to such claimant with the United States Postal Service and with postage affixed for first class (or better) delivery. If an insurer fails to comply with the provisions of this subsection, the insurer shall pay the claimant a sum equal to one percent (1%) of the amount due as of the date on which the claim was required to be provided for each day beyond the prescribed period for compliance, not to exceed five thousand dollars.

(a) When an insurer receives a written request for payment of a claim for benefits pursuant to §2118(a)(2), the insurer shall promptly process the claim and shall, no later than thirty (30) days following the insurer's receipt of said written request for first-party insurance benefits and documentation that the treatment or expense is compensable pursuant to §2118(a), make payment of the amount of claimed benefits that are due to the claimant or, if said claim is wholly or partly denied, provide the claimant with a written explanation of the reasons for such denial. If an insurer fails to comply with the provisions of this subsection, then the amount of unpaid benefits due from the insurer to the claimant shall be increased at the monthly rate of:

(1) 1.5 percent from the 31st day through the 60th day; and

(2) 2 percent from the 61st day through the 120th day; and(3) 2.5 percent after the 121st day.

(d) If an insurer fails to comply with subsection (b) or (c) of this Section, the claimant may recover the amount due through a civil action in any court of competent jurisdiction or through a Delaware Insurance Commissioner's Arbitration Proceeding, consistent with §2118(j)(1)-(9) of Title 21, at the option of the claimant. Any judgment entered for a claimant in a civil action or arbitration proceeding brought under this section shall include, in addition to the amount due and any additional amount provided for by subsections (b) and (c) of this section, an award for the costs of the action and the prosecution of the action, including reasonable attorney's fees; provided, however, that the costs of the action and the prosecution of the action, including reasonable attorney's fees shall only be awarded if it is found that the insurer acted in bad faith. The burden of proving that the insurer acted in bad faith shall be on the claimant. Any sums other than the original claim paid under this subsection shall not reduce the amount of coverage available under the insurance policy that is the basis for the claim.

(e) If an action pursuant to subsection (d) is not filed within 90 days of the date of denial or the date when benefits are due as provided for in subsection (c) of this Section, the penalties prescribed in that subsection shall begin to run from the date of the filing of said action.

(f) The remedies provided by this section are in addition to all other remedies available to the claimant under state and federal statutory or common law."

Section 3. Amend Section 2118, Chapter 21 of the Delaware Code by deleting from subsection (j) the following language:

"within 90 days from the date an offer of settlement or denial of coverage or liability has been made by an insurer".

Section 4. This legislation shall become effective 90 days after enactment.

Approved July 8, 1993.