American Mut. Liability Ins. Co. v. Com.

• Decision Date: 26 December 1979
• Citation: 379 Mass. 398,398 N.E.2d 491
• Parties: AMERICAN MUTUAL LIABILITY INSURANCE COMPANY v. COMMONWEALTH.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 491

398 N.E.2d 491

379 Mass. 398

AMERICAN MUTUAL LIABILITY INSURANCE COMPANY v. COMMONWEALTH.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued Sept. 14, 1979.

Decided Dec. 26, 1979.

Ronald C. Kidd, Springfield, for plaintiff.

Richard E. Daly, Sp. Asst. Atty. Gen., Salem, for the Commonwealth.

Before HENNESSEY, C. J., and QUIRICO, BRAUCHER, LIACOS and ABRAMS, JJ.

ABRAMS, Justice.

The question presented is whether the plaintiff, American Mutual Liability Insurance Company (American Mutual), the Workmen's Compensation insurer, is entitled to reimbursement from the Commonwealth's Second Injury Fund (G.L. c. 152, § 37, ¹ as appearing in St.1973, c. 855, § 2), where the insurer's claim is based on an injury which occurred prior to the effective date of the amendment. We hold that reimbursement is proper due to the operation of G.L. c. 152, § 2A. ²

We briefly summarize the evidence presented to the Industrial Accident Board (board). ³ Amos McLeod, the insured worker in this case, first injured his back in 1961 while working in Connecticut. Between January, 1962, and April, 1963, McLeod underwent multiple operative procedures for two ruptured intervertebral discs, and ultimately underwent a spinal fusion in the lower back area.

McLeod was not able to return to work until 1968, when he was hired by Springfield Steel Erectors as a truck driver and equipment handler. On April 20, 1972, he again injured his back when he slipped on a rock while lifting a heavy piece of equipment. McLeod continued to work until May 5, 1972, but has not returned to work since that date. On April 28, 1976, the board ordered the insurer to pay him total disability plus dependency benefits from May 5, 1972, to date and continuing. The plaintiff has been paying the compensation as ordered.

When the payments made by the plaintiff exceeded 104 weeks ⁴ the plaintiff petitioned the board, under § 37, for reimbursement of fifty per cent of the compensation it had been ordered to pay. In its decision of March 31, 1978, the board found that "the employee had a known physical impairment due to previous accidents which was likely to be and was a hindrance or obstacle to his employment and which resulted in a disability substantially greater by reason of the combined effects of such impairment and the subsequent injury in 1972." ⁵ The board ruled that § 37 was applicable to the instant case because of the statute's procedural nature, and ordered the State Treasurer to reimburse American Mutual fifty per cent of the amount of compensation paid to McLeod after the first 104 weeks of disability.

Pursuant to G.L. c. 152, § 11, the Commonwealth timely filed an appeal in Superior Court and thereafter the insurer moved for entry of judgment. The court below reversed the board's order and dismissed the petition, holding that the board's factual findings were supported by sufficient evidence, but that the parties' rights were fixed at the time of the injury, April 20, 1972, prior to the effective date of the amendment to § 37. ⁶ Citing Price v. Railway Express Agency, Inc., 322 Mass. 476, 78 N.E.2d 13 (1948), the court ruled that the amendment was substantive and declined to give it retroactive effect. American Mutual appealed from the judgment, and we granted American Mutual's application for direct appellate review. We reverse.

The statutory provision for the Massachusetts Second Injury Fund is contained in G.L. c. 152, §§ 37 and 65. ⁷ 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." ⁸ McLean's Case, 326 Mass. 72, 74, 93 N.E.2d 233, 235 (1950) (construing former version of § 37). See Fallon's Case, 322 Mass. 61, 62, 76 N.E.2d 144 (1947); 2 A. Larson, Workmen's Compensation § 59.32, at 10-294 (1976). As originally enacted, the Massachusetts Second Injury Fund provided relief in only a limited class of cases where the previous personal injury resulted in the actual or functional loss of hand, foot, or eye, and a subsequent injury of the same type resulted in further disability. ⁹ An insurer was entitled to be reimbursed by the State Treasurer for fifty per cent of the amount of the compensation paid to such a person. ¹⁰

This scheme remained virtually unchanged until 1973, though not for want of effort. ¹¹ Statute 1973, c. 855, § 2, amended the Second Injury Fund by extending its coverage to all types of physical impairment. The purpose of the amendment was to encourage the hiring or retention of handicapped or previously injured employees. ¹²

The Commonwealth's basic position is that the amendment to § 37 creates new substantive rights, and, as such it is limited to prospective operation only in accordance with the traditional rules of statutory construction. See, e. g., City Council of Waltham v. Vinciullo, 364 Mass. 624, 626, 307 N.E.2d 316 (1974); Yates v. General Motors Acceptance Corp., 356 Mass. 529, 531, 254 N.E.2d 785 (1969); Hanscom v. Malden & Melrose Gas Light Co., 220 Mass. 1, 3, 107 N.E. 426 (1914). It is clear that § 37 would be substantive in nature and therefore prospective only if G.L. c. 152, § 2A, were not applicable.

General Laws c. 152, § 2A, provides, however, a special rule to determine the scope of amendments to the Workmen's Compensation Act, thereby replacing the application of the general rule. Section 2A provides, in essence, that any amendment which increases the amount of compensation paid to an employee, or his dependents, shall be deemed substantive and shall apply only to injuries occurring on and after the date of that act and that all other amendments "unless otherwise expressly provided" shall be deemed procedural and shall apply retroactively. Based on this section, the insurance company argues that since the amendment in this case does not affect or increase the amount payable to Amos McLeod, the claim is not substantive and is, therefore, retroactive under the provisions of § 2A. We agree.

In contending that G.L. c. 152, § 2A, is not applicable, the Commonwealth relies on Price v. Railway Express Agency, Inc., 322 Mass. 476, 78 N.E.2d 13 (1948). In Price, the plaintiff made a claim against his employer under a section not in effect at the time of the employee's injury. The pertinent section brought the defendant employer within the scope of the Workmen's Compensation Act, when prior to its enactment, and at the time of the injury, the employer was not within the scope of the act. The plaintiff employee argued that since the claim did not involve an increase in the amount of compensation paid (but rather a new claim not previously existing), that, under § 2A, the section would be procedural and therefore should be retroactive. We denied relief because retroactive application of § 2A would have resulted in an increase in the compensation burden of the Employer. Such a result was found to be contrary to the legislative purpose behind § 2A, which "limits the award to one who had a compensable claim to the amount fixed at the time of his injury" and which "prohibits the imposition of an additional burden . . . (i. e., an) increase in compensation." Id. at 484, 78 N.E.2d at 19.

Cases applying § 2A after Price have applied amendments to G.L. c. 152 retroactively unless the amendment increased the amount of compensation to be paid to a worker. See, e. g., Steuterman's Case, 323 Mass. 454, 457, 82 N.E.2d 601 (1948); Beausoleil's Case, 321 Mass. 344, 346-347, 73 N.E.2d 461 (1947) (increases in compensation due worker prospective only). Cf. Riordan's Case, 362 Mass. 882, 289 N.E.2d 838 (1962); Khachadoorian's Case, 329 Mass. 625, 629, 110 N.E.2d 115 (1953); Goddu's Case, 323 Mass. 397, 399-400, 82 N.E.2d 232 (1948) (matters of proof retroactive). Contrast Murphy's Case, 352 Mass. 233, 234-235, 224 N.E.2d 462 (1967) (increase in rate of interest applied to pending case).

On the record before us, retroactive application of § 37, as amended, will lead neither to an increase in any existing compensation obligation, nor to the creation of new employee claims for compensation. The Commonwealth concedes that § 37 "does not specifically increase the amount payable to an injured employee . . . ." Rather, it provides for reimbursement to those insurers and self-insurers who are under a continuing obligation to pay compensation for second injuries which occurred prior to the effective date of the act. The record does not bear out the Commonwealth's claim that rights other than those belonging to the Commonwealth will be impaired. "(W)here a State enacts retroactive legislation impairing its own rights, it cannot be heard to complain . . . ." Greenaway's Case, 319 Mass. 121, 123, 65 N.E.2d 16, 18 (1946). The Legislature clearly has the authority to place additional burdens on the Second Injury Fund if it wishes to do so. Cf. Leveille's Case, 353 Mass. 667, 670, 233 N.E.2d 895 (1968); Greenaway's Case, supra.

The Commonwealth also argues that if the purpose of the act is to encourage the employment or re-employment of handicapped workers, then retroactive application of the act could not affect the hiring of anyone in the past. Even if this were clearly so, ¹³ it is for the Legislature to determine what means would best effectuate its purpose. If the Legislature wanted to limit the operation of the amended § 37 to cases arising after its effective date, it could have done so specifically. "(W)e assume, as we must, that the Legislature was aware of the existing statutes (i. e., G.L. c. 152, § 2A) in enacting (c. 855)." Hadley v. Amherst, 372 Mass. 46, 51, 360 N.E.2d 623, 626 (1977). Devney's Case, 223 Mass. 270, 271, 111 N.E. 788 (1916).

Next, the Commonwealth suggests that the provision...