Supreme Judicial Court Holds that Massachusetts Insurers Insolvency Fund can Recoup Costs from Bank for Workers’ Compensation Claim

In a recent opinion by the Supreme Judicial Court, the central issue was whether the Massachusetts Insurers Insolvency Fund (Fund) could recover for costs paid on behalf of a high-net-worth insured employer. The court found in favor of the Fund, noting policy considerations as well as the notion that themoney benefits had been paid “on behalf of” the Bank.  In their analysis, the court looked at the relationship created between the Fund and the employer, stating that the insurer acts under a contract to satisfy the legal obligation of the employer.

The facts of this case indicated that a bank employee suffered injuries while lifting coin-filled bags.  She sought and received workers’ compensation benefits, first under section 34 for temporary total incapacity benefits and then section 35 benefits for partial incapacity.  After her entitlement to section 35 benefits was exhausted, she sought permanent and total disability compensation.  The Fund agreed to pay her future medical costs from the injury, as well as a lump sum payment of $85,000.  They then sought to recoup payments from the Bank.

The Bank refused to pay, and the Fund sought a judgment making the Bank liable for expenses and future costs related to the employee’s workers’ compensation claim.  The Superior Court granted the Bank’s motion for summary judgment. In their decision, the court noted that funds set forth by the Fund and received by the employee would not be “on behalf of” the insured employer, and therefore the Fund was not entitled to recoup payment.

In their discussion, the Supreme Court looked at Massachusetts law, specifically Mass. Gen. Laws ch. 175D, 17(3). They stated that the Fund stands in place of an insolvent insurer. In this case, the issue was whether the payments had been made to the employee “on behalf of the insured.”

The Bank contended that it was the liability of the insurer to pay compensation to injured individuals. But the Court stated that “on behalf” is defined as “in the interest of,” meaning that the insurer is acting in the interest of the employer in order to meet the employer’s legal obligation.  The Fund made these payments to the employee “on behalf of” the insured, the Bank.

In reversing the judgment of the Superior Court, the Supreme Court also noted that public policy supported its decision in favor of the Fund.

At the Law Offices of Attorney Michael O. Smith, we provide experienced and effective representation for injured individuals pursuing workers’ compensation benefits.  If you or someone you love has been injured in a job site accident, you may be entitled to compensation for your medical expenses, lost wages from work, and other costs.  We provide a free consultation with an experienced Boston workers’ compensation attorney, and our office can be reached at (617) 263-0060.

More Blog Posts:

Maximum Partial Incapacity Benefits Awarded to Massachusetts Employee in Reviewing Board Decision, Based on Policy Considerations Not to Deny Benefits to Seriously Injured Workers, Boston Workers’ Compensation Attorney Blog, October 27, 2016

Navigating the complex process of filing a workers compensation claim in Massachusetts, Boston Workers’ Compensation Attorney Blog,March 4, 2016