The Massachusetts Supreme Judicial Court recently addressed the question of equity when an employer that is insured gives notice of a workplace injury to only one of two insurers, failing to notify the other. The court in this case held that when two workers’ compensation insurance policies cover the same loss for an employee’s injury, the insurer that paid has a right of equitable contribution, and the employer cannot prevent the paying insurer from exercising this right by intentionally notifying only one of the insurers.
An individual who worked for Progression, Inc. was seriously injured in a motor vehicle collision while traveling for business. Progression bought two workers’ compensation insurance policies from two different insurers, the Insurance Company of the State of Pennsylvania (ISOP), and Great Northern Insurance Company. Both were primary coverage policies, rather than excess policies.
After his injury, the employee timely notified Progression of his injury and pursued a workers’ compensation claim. Progression only notified ISOP, not Great Northern. ISOP began to pay workers’ compensation under the policy.
After ISOP learned that Great Northern provided compensation to Progression, they requested contribution but were denied. ISOP then filed a complaint against Great Northern, but the judge of the District Court granted Great Northern’s summary judgment motion on the ground that the obligation of equitable contribution only arises when the insured makes a claim. ISOP appealed, and the First Circuit certified the question of whether equitable contribution provides for reimbursement to an insurer that paid more than its share of the obligation.
The court stated that the selection of who bears the loss should not be left to the loss claimant, in this case, the employer. Equitable contribution prevents the unfair result of the company that pays first being required to cover the entire loss. The doctrine also serves to deprive insurance companies of any incentive to avoid paying a just claim in hopes that the claimant obtains full payment from a co-indemnitor.
Here, Great Northern argued that Progression, the employer, purposely tendered the injured worker’s claim only to ISOP. The company argued that since Progression did not give notice to Great Northern that an injury took place, the terms of the workers’ compensation insurance policy had not been met. Therefore, the workers’ compensation insurance company claimed it had no duty to cover the loss suffered by the Progression employee. Since there was no duty to provide coverage, they contended there was no equitable contribution.
The court stated that Great Northern was arguing for “selective tender.” This is an exception to the equitable contribution doctrine, and it excuses an insurer from contributing to the settlement of a claim. The court rejected this doctrine.
Workers’ compensation insurance is set forth by statute. These laws provide that injured employees shall be paid compensation by the insurance company. It may be that the employer purchases the workers’ compensation policy, but the insurer is liable to the employee and does not reimburse the employer.
The court made clear that the employee is to notify, in writing, his employer or the insurance company after an incident. The employer then notifies their workers’ compensation insurer, and a failure to do so does not bar an employee from receiving compensation. In other words, by notifying his or her employer of the injury, the employee maintains their entitlement to workers’ compensation benefits.
According to the court, once the injured employee notified his employer, Progression, of the injury, Great Northern’s obligation to defend and indemnify the claim was triggered. Any provision in Great Northern’s policy that requires the employer to give notice of the injury in order for the claim to be covered is contrary to Massachusetts law, and the court stated it is null and void.
In conclusion, the court answered “no” to the question of whether an insurer is foreclosed from obtaining equitable contribution from the other insurer when two different workers’ compensation insurers issue coverage for the same loss.
At Pulgini & Norton, an experienced Boston workers’ compensation attorney can provide legal guidance and strong advocacy on behalf of your right to compensation following a work-related injury. We provide a free, confidential consultation with a dedicated workers’ compensation lawyer. Call our office today to discuss your claim at (781) 843-2200 or contact us online.
More Blog Posts:
Reviewing Board Holds Massachusetts Employees Must be Protected When Employers Cannot Meet Financial Obligations to Compensate for Work-Related Injury, Massachusetts Workers’ Compensation Lawyer Blog, September 8, 2016
Massachusetts Workers’ Compensation Benefits Upheld for Employee with Policy Goal of Protecting Employee and Self-Insured Employer, Massachusetts Workers’ Compensation Lawyer Blog, August 11, 2016