CNA Insurance Companies v. Sliski

• Decision Date: 04 December 2000
• Citation: 744 NE 2d 634,433 Mass. 491
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: CNA INSURANCE COMPANIES v. JAMES SLISKI.

433 Mass. 491

744 NE 2d 634

CNA INSURANCE COMPANIES v. JAMES SLISKI.

Supreme Judicial Court of Massachusetts, Hampden.

December 4, 2000.

March 15, 2001.

Present: MARSHALL, C.J., GREANEY, IRELAND, SPINA, COWIN, & SOSMAN, JJ.

John F. Burke, Jr., for the plaintiff.

Paul F. Schneider (Charles R. Casartello, Jr., with him) for the defendant.

MARSHALL, C.J.

In this declaratory judgment action, CNA Insurance Companies (CNA) seeks to establish that it is not responsible to an injured worker for payment of double compensation under G. L. c. 152, § 28, of the workers' compensation act (act) for the alleged serious and wilful misconduct of the worker's employer because the employer is insolvent and unable to repay CNA as provided in the statute.¹ A judge in the Superior Court concluded that CNA must pay the double compensation and entered a final declaratory judgment to that effect. CNA appealed and we transferred the case to this court on our own motion. We affirm the judgment.

1. On June 9, 1988, when James Sliski was eighteen years old, he fell through an elevator shaft at work and suffered spinal injuries that left him a paraplegic. At the time of his injuries, Sliski was employed by Doane & Williams, Inc. (Doane & Williams), which was insured by CNA. CNA accepted liability for Sliski's injury and commenced payment of weekly workers' compensation benefits pursuant to G. L. c. 152, § 34.²

Sliski alleged that his injuries were the result of serious and wilful misconduct by Doane & Williams, and on March 23, 1989, he filed with the Department of Industrial Accidents (department) a claim for double compensation pursuant to G. L. c. 152, § 28. Notice of the claim was given to both CNA and Doane & Williams, but the record does not indicate what, if any, action was taken on that claim. In 1991, Doane & Williams ceased to do business, and its assets were sold in lieu of foreclosure by a secured creditor. On June 2, 1992, Sliski refiled his claim for double compensation. CNA filed a denial of the refiled claim on June 5, 1992, and subsequently filed with the department a motion to dismiss, raising the statute of limitations and laches as defenses, and claiming that it was not liable for payment of double compensation to Sliski because its insured had become insolvent. An administrative judge in the department denied the motion on June 8, 1993. Sliski's § 28 claim remains pending before the department and has been stayed pending the outcome of this action.

2. CNA argues that, because double compensation is available to an employee only on a showing of serious and wilful misconduct by the employer, the purpose of the provision is to punish the employer and to deter other employers from engaging in such misconduct. To require CNA to make such payments to Sliski with no possibility of repayment by Doane & Williams, it argues, defeats the punitive purpose of the statute, violates the public policy against providing insurance coverage for punitive damages, and violates its due process rights. It likens the § 28 double compensation to multiple damage awards for a wilful and knowing violation of G. L. c. 93A, §§ 9 and 11, which we have acknowledged are avowedly punitive. Kapp v. Arbella Mut. Ins. Co., 426 Mass. 683, 686 (1998).

The language of the statute suggests that the purpose of § 28 is to benefit an injured worker, not to punish the employer, for it describes the double payments as "extra compensation." G. L. c. 152, § 28. See Hoffman v. Howmedica, Inc., 373 Mass. 32, 37 (1977) (statutory language principal source of insight into legislative purpose). See also Thayer's Case, 345 Mass. 36, 43 (1962) ("extra or double award which enures to the benefit of the injured employee under § 28 constitutes, in our opinion, compensation as that term is used in the [act]"). In Boardman's Case, 365 Mass. 185, 193 (1974), this court noted in passing that the doubling provision of § 28 "may have a punitive aspect." But we were not asked in that case to decide whether § 28 was punitive, and any suggestion to that effect does not reflect the legislative intent as evidenced by the legislative history that we discuss below.

We have long recognized that the workers' compensation statute was enacted as a "humanitarian measure" in response to strong public sentiment that the remedies afforded by actions of tort at common law did not provide adequate protection to workers who were the victims of industrial accidents. Young v. Duncan, 218 Mass. 346, 349 (1914). LaClair v. Silberline Mfg. Co., 379 Mass. 21, 27 (1979). We have stressed that the statute should be given a broad interpretation, viewed in light of that purpose. Roberge's Case, 330 Mass. 506, 509 (1953). Against that general background we turn to the legislative history of § 28.

Section 28 has existed in essentially the same form since the statute was first enacted in 1911. See St. 1911, c. 751, Part II, § 3.³ Prior to enactment in 1911, the Commission on Compensation for Industrial Accidents submitted a report to the Legislature describing the nature of the proposed new workers' compensation laws, stating they were "not intended to be punitive in any sense, but [were] founded on the principle that the whole community for which production is carried on should bear the burden of all the costs of production" (emphasis added). 1911 House Doc. No. 300, at 2-3.

Then, in 1912, the Massachusetts Commission on Compensation for Industrial Accidents again submitted a report to the Legislature describing the history of the legislation, and providing a commentary on the new act. See Report of the Massachusetts Commission on Compensation for Industrial Accidents (July 1, 1912) (unnumbered). See also Ferriter v. Daniel O'Connell's Sons, 381 Mass. 501, 519-525 n.21 (1980). Commenting specifically on what is now § 28, the commission noted that this section "grants double compensation for injuries occasioned by the serious and wilful misconduct of the employer," adding that the provision was made because the commission "thought it equitable to provide a double compensation for the injuries occasioned by serious and wilful misconduct of the employer." Report of the Massachusetts Commission on Compensation for Industrial Accidents, supra at 48. There is no hint of any punitive intent. Rather, the sole focus was on the equitable compensation of injured workers. We recognize, as does the dissent, that the award of double compensation is determined "by the character of the employer's conduct." Post at 499. A worker who is injured by the "serious and wilful misconduct" of an employer must forgo the recovery of tort damages that would likely be far more substantial and a common-law claim with a greater likelihood of success than his recovery or claim could be for injuries resulting from an employer's mere negligent conduct. The Legislature could, and in our judgment did, conclude that it would be equitable to award such a worker double compensation in recognition of the greater value of the common-law claim given up. These were not punitive damages by some other name. See post at 500.

In light of this unambiguous history, we conclude that the purpose of § 28 has never been punitive. See Assessors of Newton v. Pickwick Ltd., 351 Mass. 621, 625 (1967) ("a construction [of a statute which] would completely negate legislative intent ... is to be avoided"). One respected commentator has reached the same conclusion:

"The double compensation paid the employee where the injury is the result of the employer's serious and wilful misconduct is not ... a `penalty.' It is compensation, in the generic sense, encompassing all monetary payments under the act. Proceedings under [§] 28, therefore, should be subject to the general rule of liberal construction applicable to other cases under the act...."

L. Locke, Workmen's Compensation § 286, at 327 (2d ed. 1981). Because we conclude that § 28 is not punitive, we need not consider CNA's due process claim that rests on such an assumption. For the same reason, there is no merit to CNA's argument that it would be against public policy to require CNA to pay "punitive" damages targeted at the employer. Public policy, as articulated by the Legislature, clearly places on CNA the obligation to pay this double compensation, however it is characterized.

3. Our conclusion that § 28 double compensation is not punitive does not end our inquiry, for we still must decide whether the risk of an employer's insolvency should be borne by the insurer or by the injured employee. Both CNA and Sliski argue that the language of the statute compels the result each seeks. But resort to that familiar rule of construction sheds little light here. The statute unambiguously mandates double payment to the injured employee by the insurer if the employer is insured. See West's Case, 313 Mass. 146, 154 (1943) (under § 28, claim for double compensation "in the first instance is to be paid by the insurer"). See also L. Locke, Workmen's Compensation, supra at § 289, at 341. However, the statute then provides that the employer "shall repay to the insurer the extra compensation paid to the employee." G. L. c. 152, § 28.

CNA asserts that the statute "clearly places the ultimate responsibility of making the § 28 payment on the employer and not the insurer." But the text of § 28 does not mandate that result: it is silent as to the allocation of risk where the employer itself is insolvent.⁴ The legislative scheme as a whole, and the legislative history of the specific provision at issue, however, suggest a resolution. The purpose of the workers' compensation laws in general, and § 28 in particular, is properly effectuated by placing the risk of the employer's insolvency on the insurer, and not the injured employee.

"The history of workmen's compensation in this Commonwealth shows that the Legislature gradually but consistently has enlarged the scope of the laws pertaining to it, and that the courts...