Ron Jackson, Southeast region vice president for the American Insurance Association, says the act is “the right approach to providing much needed reform to Tennessee's workers' compensation system.”

The AIA is particularly supportive of a provision to create an administrative adjudicatory system.

“This provision, along with others improving the flow of medical information and authorizing the adoption of medical treatment guidelines, will significantly improve the workers' compensation system if properly implemented,” Jackson says.

Opponents of the bill have questioned the ability of the Tennessee Department of Labor to effectively administer such a system, the perceived drastic reduction of workers' compensation benefits, and possible chilling effect on the filing of new claims in the future, according to Fredrick R. Baker, a lawyer at Wimberly Lawson Wright Daves & Jones, PLLC, in Cookeville, Tenn.

Since the new law will not go into effect until July 1, 2014, the Tennessee legislature will have another session to tinker with the bill, Baker adds.

Under the existing system, Tennessee claims are handled by a hybrid system where the first part of the claim (temporary disability benefits, medical benefits, mediation) is administered by the Tennessee Department of Labor. The second part of the claim (the adjudication of permanent disability and future medical expenses) is handled by the trial courts.

Under the new system, the trial courts will no longer have a role, Baker explains.

All issues of temporary and permanent workers' compensation benefits will be decided by the new Court of Workers' Compensation Claims, whose judges will be appointed by the Administrator of the Division of Workers' Compensation. The Tennessee Supreme Court will remain as the ultimate level of appeal.

Baker said another significant change in the law involves removal of a provision of current law that mandates that settlement of claims be “remedial in nature” and the law is to be construed “equitably.” This means ”close issues are typically decided in favor of the injured worker,” Baker says.

However, under the reform bill the remedial construction has been eliminated, meaning that the law should be applied impartially, favoring neither the employee nor employer, Baker summizes. The calculation of permanent indemnity benefits is also significantly changing under the new law, he adds.