In re Wadsworth

• Decision Date: 16 March 2012
• Docket Number: SJC–10909.
• Citation: 461 Mass. 675,963 N.E.2d 1181
• Parties: Scott WADSWORTH'S CASE.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

461 Mass. 675

963 N.E.2d 1181

Scott WADSWORTH'S CASE.

SJC–10909.

Supreme Judicial Court of Massachusetts, Suffolk.

Submitted Nov. 8, 2011.Decided March 16, 2012.

William C. Harpin, Wakefield, for the employee.

Martin T. Sullivan, Boston, for the insurer.

Deborah Kohl, Fall River, & Kathleen G. Sumner, for Workers' Injury Law & Advocacy Group, amicus curiae, submitted a brief.

Present: IRELAND, C.J., SPINA, CORDY, BOTSFORD, & GANTS, JJ.

GANTS, J.

On December 12, 1980, when Scott Wadsworth (employee) was twenty-two years old, his right hand was crushed in a metal rolling machine in the course of his employment with the New England Concrete Pipe Corporation (employer) in Massachusetts. The employee received workers' compensation benefits under G.L. c. 152, § 34, for his temporary and total incapacity for work from December 15, 1980, to May 2, 1988. In 1989, he found employment in Connecticut with Wholesale Auto Supply, where he worked initially as a driver and later as “counter person.” After working in pain for many years and after a knuckle of his right index finger was replaced with an artificial joint, he underwent a medical procedure on July 1, 2003, to relieve his severe pain, which left him with unremitting “stabbing, stinging, burning pain in his right hand and arm.” In December, 2003, the employee applied for total and permanent disability benefits under G.L. c. 152, § 34A, as of July 1, 2003. He also claimed under G.L. c. 152, § 51, that, when he was injured in 1980, he was of “such age and experience ... that, under natural conditions, in the open labor market, his wage would be expected to increase,” and that he was entitled to have this fact considered in determining the average weekly wage used in the calculation of benefits. In addition, he claimed under G.L. c. 152, § 35B, that he was entitled to receive compensation at the rate in effect on July 1, 2003, because he was permanently disabled from a subsequent injury that was a recurrence of his 1980 injury after having returned to work for a period of at least two months.¹ The workers' compensation insurer cross-claimed for recoupment of $34,169.73 in temporary disability benefits paid to the employee from 1985 to 1988 in excess of the statutory cap of $45,000 then in effect.

On June 12, 2007, an administrative judge of the Department of Industrial Accidents (department) concluded that the employee has been totally and permanently incapacitated as of July 1, 2003, and awarded him total and permanent incapacity benefits under § 34A. He also found under § 51 that, “if not for the horrific industrial injury,” his wages on the open market “would be expected to have increased considerably.” The administrative judge concluded under § 35B that the amount of compensation should be determined at the rate in effect on July 1, 2003, because the injury to the employee's hand caused by the industrial injury in 1980 had worsened after he had been employed at the automotive supply store and left him totally disabled as of that date. The administrative judge ordered the insurer to pay the employee total and permanent disability benefits from July 1, 2003, based on an average weekly wage of $900, at a weekly compensation rate of $600, which would be subject to normal cost-of-living adjustments from that date through the operation of G.L. c. 152, § 34B. He also determined that the insurer was not entitled to any recoupment.²

The insurer appealed from this decision to the department's reviewing board (board), which affirmed the administrative judge's finding of permanent and total incapacity under § 34A but reversed his determination of average weekly wages and the resulting rate of weekly compensation. In particular, the board ruled that the employee did not meet the prerequisites to adjust upward his applicable weekly wage under § 51, because there was no evidence “that the employee's wages would have increased due to the acquisition of any particular skill anticipated at the time of his injury,” or “of any time frame within which such increase reasonably might be expected.” ³ Because the administrative judge's finding that the employee was entitled to an increase in applicable wages under § 51 was not “anchored in the evidence,” the board declared the finding to be arbitrary and capricious. The board also concluded that, because the employee's recurrence of disability occurred while he was employed in Connecticut, his out-of-State wages could not be used under § 35B as the average weekly wage from which to calculate benefits. ⁴ The board concluded that his total and permanent disability benefits must be based on the average weekly wage he earned when he was initially injured on December 12, 1980 ($309.65), which, at the applicable two-thirds compensation rate, see G.L. c. 152, § 34A, would yield a weekly benefit amount of $206.43, plus cost-of-living adjustments under § 34B. The board also vacated as arbitrary the administrative judge's denial of recoupment because it did not rest on any subsidiary findings, and reserved the insurer's right to renew its claim for recoupment through a separate complaint filed with the department or in the Superior Court.⁵

The Appeals Court affirmed “the board's reversal of the award of § 51 and § 35B benefits because the claimant had not acquired skills, undertaken training, or introduced other evidence predictive of a rising wage pattern or potentiality as of the time of his injury and because his final earnings arose from employment outside the Massachusetts workers' compensation system.” Wadsworth's Case, 78 Mass.App.Ct. 101, 110, 935 N.E.2d 333 (2010). The Appeals Court also affirmed the board's decision to vacate the denial of recoupment, but ordered any consideration of recoupment “to proceed under the equitable standard of laches.” Id. We granted the employee's application for further appellate review.

We affirm in part and reverse in part the board's decision. In short, we conclude that the board was not arbitrary or capricious in deciding that there was insufficient evidence to find that the employee was entitled under § 51 to compensation based on an amount greater than his average weekly wage. But we conclude that the board erred in finding that the employee's compensation should be based on the average weekly wage he earned when injured in 1980 rather than, under § 35B, the out-of-State average weekly wage he earned when that injury recurred in 2003. We recognize that, in reaching this finding, the board (and the Appeals Court) relied on what they understood to be controlling precedent in Letteney's Case, 429 Mass. 280, 285, 707 N.E.2d 1071 (1999), that out- of-State wages may not be used to calculate workers' compensation benefits. We limit the holding in that case to out-of-State wages earned after suffering latent injuries (such as from exposure to asbestos) that do not result in eligibility for incapacity benefits for at least five years under G.L. c. 152, § 35C. We also affirm the board's decision to vacate the denial of recoupment for the insurer's overpayment of temporary total disability benefits between 1985 and 1988, but note that, should the insurer decide to renew its claim for recoupment in a separate complaint filed with the department under G.L. c. 152, § 10, or in the Superior Court under G.L. c. 152, § 11D, its claim may prevail only if recoupment is equitable in the circumstances, including but not limited to the equitable defense of laches.⁶

Standard of review. We review a board's decision regarding workers' compensation benefits under the usual standard for appeal from a final decision of an administrative agency set forth in G.L. c. 30A, § 14(7), except that we do not review whether the board's decision was supported by substantial evidence. G.L. c. 152, § 12(2). Sikorski's Case, 455 Mass. 477, 479–480, 918 N.E.2d 30 (2009). In the context of this case, we may reverse or modify the board's decision where it is based on an error of law, or is arbitrary or capricious. See G.L. c. 30A, § 14(7) ( c ), ( g ). Because the board may reverse the decision of an administrative judge only where it is “beyond the scope of his authority, arbitrary or capricious, or contrary to law,” G.L. c. 152, § 11C, where the board reverses an administrative judge based on a finding of fact, we must determine whether the board was arbitrary or capricious in concluding that the administrative judge was arbitrary or capricious. “The board, as the agency charged with administering the workers' compensation law, is entitled to substantial deference in its reasonable interpretation of the statute.” Sikorski's Case, supra at 480, 918 N.E.2d 30. See Gateley's Case, 415 Mass. 397, 399, 613 N.E.2d 918 (1993).

Discussion. We address three questions on appeal. First, was the board's decision that the evidence at the hearing did not support a finding that the employee was entitled to a wage enhancement under § 51 arbitrary or capricious? Second, was the employee entitled under § 35B to compensation at the rate in effect at the time of his subsequent injury in 2003 based on his out-of-State wages? Third, was the board's remand on the issue of recoupment arbitrary or capricious and, if not, what standard should govern in determining whether recoupment is equitable? We address each question in turn.

1. Wage enhancement under § 51. With certain exceptions, workers' compensation “is awarded for impairment of earning capacity and not for injury as such.” Evans's Case, 299 Mass. 435, 436, 13 N.E.2d 27 (1938). Stated differently, workers' compensation benefits generally do not compensate an injury but, rather, compensate for the loss of earning capacity during the period of disablement or incapacity that results from the injury.⁷

Section 51 reads:

“Whenever an employee is injured under circumstances entitling him to compensation, if it be established that the injured employee was of such age and experience when...