Reviewing Board Holds Massachusetts Employees Must be Protected When Employers Cannot Meet Financial Obligations to Compensate for Work-Related Injury

Recently, the Massachusetts Reviewing Board of Industrial Accidents issued a decision in favor of an injured worker who received partial and total incapacity benefits until her employer went bankrupt and then received payment from a bondholder for a limited period of time.  The employee sought payment of her § 34A and cost of living benefits. The Workers’ Compensation Trust Fund (WCTF), Commercial Union Insurance Company/One Beacon Insurance Company (reinsurer), and the employee appealed a decision that ordered the WCTF to pay the employee ongoing § 34A and cost of living (COLA) benefits, and ordered the reinsurer to reimburse the WCTF for payment of these benefits.

The employee had suffered a work-related injury on September 2, 1982, and was entitled to and paid § 34A permanent and total incapacity benefits before and after her employer went bankrupt. After bankruptcy, the bondholder paid her benefits under March 4, 2013.

The Workers’ Compensation Trust Fund argued that the self-insurer was not uninsured and therefore did not require their payment. The reinsurer argued that it was not obligated to pay the employee benefits directly. The Board stated that reinsurers are obligated by the Workers’ Compensation Act to further guarantee a self-insurer’s ability to pay benefits to injured workers. Employers that provide additional coverage as set forth by law are sometimes referred to as reinsurers.

The Board stated that self-insurers under the Workers’ Compensation Act must have a license either by complying with § 25A(2) or by obtaining a bond and reinsurance.  Here, the employer was required to have reinsurance to further guarantee their ability to pay benefits to injured employees.

The employee filed a claim against the reinsurer to receive her payment of § 34A and COLA benefits from the date that her benefits stopped. At a conference, the insurer was ordered to pay the employee § 34A benefits, and both parties appealed.  At the hearing, the WCTF was joined.

The reinsurer denied any obligation to pay the employee benefits directly, and the WCTF also denied liability, on the ground that the self-insurer was not an uninsured employer.  Here, the Board stated that reinsurers, as set forth by statute, must pay benefits due to injured workers once bond funds are depleted. Section 25A(2) protects injured employees of defunct self-insurers.

The Board cited the case of Janocha v. Malden Mill Industries, Inc., 30 Mass. Workers’ Comp. Rep. _ (August 1, 2016). There, the court stated there are three tiers of protection for employees.  The Board stated that a reinsurer is obligated under the Act to provide a further guarantee of a self-insurer’s ability to pay benefits owed to injured workers.  Reinsurers are not to reimburse the bondholder, since that depletes the amount available to injured workers.

The administrative law judge ordered the WCTF to pay the employee § 34A and COLA benefits from March 4, 2013 to date, and continuing. The judge ordered the reinsurer to reimburse the WCTF.

On review, the Board cited Janocha, again stating there is no such thing as an uninsured self-insurer.  Both Janocha and Massachusetts law required the reversal of the decision requiring the WCTF to pay the employee’s benefits directly.  Here, the employer could not meet their financial obligations, and the injured worker must be protected.

The Board stated the insurer was liable for direct payments of § 34A and COLA benefits to the employee from March 4, 2013 forward.  The insurer can seek reimbursement from the WCTF for COLA payments made from the date of injury to the employee.

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:

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

Massachusetts Reviewing Board Holds Employee Has Right to Compensation, Even When Employer Files for Bankruptcy, Massachusetts Workers’ Compensation Lawyer Blog, July 7, 2016

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