In two separate rulings, the Massachusetts Supreme Judicial Court has found that an insurer in runoff and the state’s insolvency fund were both wrongly denied certain payments they are entitled from the state’s workers’ compensation fund.
The high court found that under the Massachusetts workers’ compensation act Arrowood Indemnity is entitled to reimbursements from the Massachusetts Workers’ Compensation Trust Fund for some of the second injury claims that it has paid, even though the insurer is now in runoff. While a company like Arrowood in runoff is no longer issuing new policies, it continues to pay claims under its old policies.
In the second case, the court said the Massachusetts Insurers Insolvency Fund (MIIF), which pays claims on behalf of insolvent insurers, is entitled to cost of living adjustment (COLA) payments from trust fund.
In both cases, the court found that the fund administrator, the Department of Industrial Accidents (DIA) ,misinterpreted the plain language of the workers’ compensation law in denying the payments and reversed the DIA denials. According to the high court’s Arrowood opinion, while the law explicitly excludes three types of insurance organizations from second injury claim reimbursements, an insurer in run-off is not one of the three that are excluded. Also, in its insolvency fund opinion, the high court said DIA incorrectly determined that MIIF is not an insurer for purposes of COLA payments.
Arrowood Case
In the Arrowood case, the high court agreed with the appeals court that insurers in “run-off” are not precluded by statute from receiving second-injury reimbursements when they have paid out the associated workers’ compensation benefits to an injured employee. Neither the plain language of the statutory reimbursement exclusions nor the statutory enforcement mechanism as a whole supports the board’s interpretation, the high court concluded.
The trust fund pays previously injured employees who sustain a further work-related injury second injury that is exacerbated by the prior injury, a portion of the compensation to which they are entitled. The purpose of the fund is “to encourage the employment of persons who have previously suffered certain defined personal injuries by relieving the employer or the insurer from the burden of paying the entire compensation for further disability of the employee due to the combined effect of his previous injury and one later received in the course of his employment.”
