Garth Findlay's Case.

• Decision Date: 24 June 2010
• Docket Number: No. 09-P-306.,09-P-306.
• Parties: Garth FINDLAY'S CASE.
• Court: Appeals Court of Massachusetts

77 Mass.App.Ct. 108

928 N.E.2d 954

Garth FINDLAY'S CASE.

No. 09-P-306.

Appeals Court of Massachusetts Suffolk.

Argued Nov. 12, 2009.

Decided June 24, 2010.

Edward A. Gottlieb, Boston, for Garth Findlay.

Gerald T. MacCurtain, for Liberty Mutual Insurance Company.

Present: DUFFLY, GREEN, & KATZMANN, JJ.

KATZMANN, J.

Garth Findlay, a self-employed sole proprietor, appeals from a decision of the reviewing board of the Department of Industrial Accidents (the board) upholding the decision of an administrative judge (the AJ) dismissing his claim under a provision of the Workers' Compensation Act (the Act), G.L. c. 152, § 1(4). We affirm.

Background. In 2001, Findlay, a carpenter doing business as Jog Construction Company (Jog), first purchased a workers' compensation insurance policy (policy) from Liberty Mutual Insurance Company (Liberty Mutual). The real estate management company that managed the properties where Findlay worked as a contractor required that he present a workers' compensation policy for his business prior to working. A “Partners, Officers and Others Exclusion Endorsement,” attached to the policy, specifically excluded Findlay himself from coverage. Because Jog had no payroll of covered employees, the premium for the policy was the minimum. At that time, no provision under Massachusetts law allowed Findlay, a sole proprietor, to be considered an employee of his business under the Act.¹ Prior to 2002, a person self-employed as a sole proprietor could not be deemed an “employee” of the sole proprietorship because the Act “[could not] be supposed to have contemplated any such combination of employer and employee status in one person.” Ryder's Case, 341 Mass. 661, 665, 171 N.E.2d 475 (1961), quoting from Larson, Workmen's Compensation Law § 54.31.² See Findlen v. Taunton, 13 Mass.App.Ct. 1041, 1042, 433 N.E.2d 1259 (1982) (partnership not required to carry workers' compensation insurance for its partners); Chute v. Charles Chute Painting Co., 11 Mass. Workers' Comp. Rep. 239, 241-242 (1997) (applying rule of Ryder's Case to sole proprietor).

In 2002, the Legislature overturned the rule in Ryder's Case, supra. The statute now reads, in pertinent part, that “[f]or the purpose of this chapter, a sole proprietor at his option ... shall be an employee. A sole proprietor ... may elect coverage by securing insurance with a carrier.” G.L. c. 152, § 1(4), sixth par., inserted by St.2002, c. 169. Setting out specific procedures for sole proprietors to affirmatively elect to be treated as employees, the Department of Industrial Accidents (department) promulgated a regulation implementing the 2002 amendment shortly after its enactment. ³ See 452 Code Mass. Regs. § 8.07 (2002) (regulation).⁴

On September 25, 2005, Findlay severely cut his hand with a saw while on the job. Between the time of the statutory amendment and the accident, Findlay (who had not been notified of the amendment by Liberty Mutual) had renewed his policy several times in substantially the same form.⁵ After the accident, he filed a claim for benefits under the policy, which Liberty Mutual denied. In 2007, the department held a hearing limited to the issue of Findlay's coverage as an employee under the policy. The AJ found that Findlay failed to notify Liberty Mutual that he sought to be covered as an employee, so the policy did not cover him.⁶ The AJ dismissed Findlay's claim. Findlay appealed to the board, which affirmed the AJ's decision. He now brings this appeal.

Discussion. “Pursuant to G.L. c. 152, § 12(2), we review a decision of the ... board under the standards of the Administrative Procedure Act, G.L. c. 30A, § 14(7)( a )-( d ), ( f ), and ( g ). We may set aside or modify the decision of the ... board if the decision is, among other things, ‘[b]ased on an error of law,’ ‘[m]ade upon unlawful procedure,’ or ‘[a]rbitrary or capricious, an abuse of discretion, or otherwise not in accordance with law.’ ” Haslam's Case, 451 Mass. 101, 106, 883 N.E.2d 949 (2008), quoting from G.L. c. 30A, § 14(7)( c ), ( d ), ( g ). “Where a statute is involved, ‘[a]lthough “[t]he interpretation of a statute by the agency charged with primary responsibility for administering it is entitled to substantial deference,” ultimately the “duty of statutory interpretation is for the courts.” ’ ” (Citations omitted.) Carpenter's Case, 456 Mass. 436, 439, 923 N.E.2d 1026 (2010), quoting from Moss's Case, 451 Mass. 704, 709, 889 N.E.2d 43 (2008).

In affirming the AJ, the board concluded that Findlay cannot be considered a covered “employee” under the Act because he failed to comply with the department's regulation requiring self-employed sole proprietors to take affirmative steps in writing on company letterhead to elect to obtain coverage as an employee of the sole proprietorship under the Act. See 452 Code Mass. Regs. § 8.07(2)-(4); note 4 supra. Findlay does not dispute his failure to comply with the regulation, but argues that he meets the “unambiguous” statutory definition of a covered “employee” and that the regulation conflicts with § 1(4) of the Act.

a Application of G.L. c. 152, § 1(4), and regulation. Every employer in the Commonwealth, subject to certain exceptions not applicable here, is required to self-insure or obtain workers' compensation insurance for their employees. See G.L. c. 152, § 25A; Sellers's Case, 452 Mass. 804, 812, 898 N.E.2d 494 (2008). In the latter case, an employee injured on the job will be entitled to claim benefits from the workers' compensation insurance carrier. See, e.g., G.L. c. 152, §§ 34, 34A, 35.

As a prerequisite to any determination of benefits, an injured claimant must show that he or she is a covered employee. An “employee” is defined, subject to certain exclusions, as “every person in the service of another under any contract of hire.” G.L. c. 152, § 1(4). In certain situations, such as this case, the injured person is self-employed, i.e., a sole proprietor. As we have noted, the controlling provision of the Act provides that “[f]or the purpose of this chapter, a sole proprietor at his option ... shall be an employee. A sole proprietor ... may elect coverage by securing insurance with a carrier.” G.L. c. 152, § 1(4), sixth par. Findlay argues that despite his noncompliance with the regulation, he meets the statutory definition of a covered “employee” and is therefore entitled to coverage under the policy. Citing the general proposition that the Act “is to be construed broadly to include as many employees as its terms will permit,” Murphy's Case, 63 Mass.App.Ct. 774, 776, 829 N.E.2d 1156 (2005), quoting from Warren's Case, 326 Mass. 718, 719, 97 N.E.2d 184 (1951), Findlay focuses on the second sentence of § 1(4), sixth par., and argues that he “elect[ed] coverage” as an “employee” because he is a sole proprietor who “secur[ed] insurance with a carrier.”

At the outset, we note that “[a] court will not declare a regulation void unless its provisions cannot, in any appropriate way, be interpreted in harmony with the legislative mandate.” Student No. 9 v. Board of Educ., 440 Mass. 752, 763, 802 N.E.2d 105 (2004). Moreover, heightened deference is accorded to an agency's contemporaneous interpretation of an enactment. See Biogen IDEC MA, Inc. v. Treasurer & Receiver Gen., 454 Mass. 174, 187, 908 N.E.2d 740 (2009). Here, as we have noted, it is undisputed that Findlay did not comply with the regulation. Even if the statute were unclear-and we assume for the sake of discussion that it is-Findlay cannot show that the regulation is in conflict with the statute. As such, his claim that he is entitled to coverage has no merit. See Pulsone v. Public Employee Retirement Admn. Commn., 60 Mass.App.Ct. 791, 796-798, 806 N.E.2d 121 (2004).

Regarding the statute, the issue before us is whether the language of the Act reasonably can be read to require a sole proprietor, to be covered as an employee, to make an affirmative election in the form of notice to the insurer that personal coverage is sought.⁷ “[I]f the Legislature has not directly addressed the issue and the statute is capable of more than one rational interpretation, we proceed to determine whether the agency's interpretation may ‘be reconciled with the governing legislation.’ ” Biogen IDEC MA, Inc. v. Treasurer & Receiver Gen., 454 Mass. at 187, 908 N.E.2d 740, quoting from Goldberg v. Board of Health of Granby, 444 Mass. 627, 633, 830 N.E.2d 207 (2005). For the reasons set forth below, the statutory language can be read consistently with a legislative determination to require a self-employed sole proprietor to secure coverage with an insurer specifically as an employee of the sole proprietorship in order to obtain personal benefits from the insurer under a workers' compensation policy. In short, the department did not act unreasonably in interpreting the Act in a manner requiring that Findlay make an affirmative election with Liberty Mutual to be treated as an employee.

First, we note that none of the parties here disputes that the Legislature changed the law in order to allow sole proprietors to be included as covered “employees.” However, Findlay's construction, even if otherwise rational, may run counter to the “general principle of statutory interpretation ... that ‘every word in a statute should be given meaning,’ ... and no word is considered superfluous.” Lopes's Case, 74 Mass.App.Ct. 227, 229-230, 905 N.E.2d 577 (2009), quoting from Boone v. Commerce Ins. Co., 451 Mass. 192, 196, 884 N.E.2d 483 (2008). Findlay's interpretation would result in a self-employed individual being covered as an employee of the sole proprietorship merely by buying insurance as an employer, even where the sole proprietorship has hired other employees, without making an affirmative election to be treated as an employee. Such an interpretation, while not irrational, sits uncomfortably with G.L. c. 152, § 25A, which requires sole proprietors to provide for workers' compensation...