HDH Corp. v. Atlantic Charter Ins. Co.
| Decision Date | 15 August 1996 |
| Docket Number | No. 95-P-1896,95-P-1896 |
| Citation | 668 N.E.2d 872,41 Mass.App.Ct. 131 |
| Parties | , 69 Empl. Prac. Dec. P 44,461 HDH CORPORATION v. ATLANTIC CHARTER INSURANCE CO. & another. 1 |
| Court | Appeals Court of Massachusetts |
Henry F. Furman, Boston, for plaintiff.
Alvin S. Nathanson, Boston, for defendants.
Before DREBEN, GILLERMAN and LAURENCE, JJ.
A former employee of the plaintiff HDH Corporation, claiming emotional distress caused by sexual discrimination and wrongful termination, brought an action against HDH seeking damages in the Superior Court. The husband of the employee claimed loss of consortium in the same action. HDH promptly notified its workers' compensation and employers' liability insurer, the defendant Atlantic Charter Insurance Co. (Atlantic), and requested it to defend the action. At first, the insurer acknowledged that the workers' compensation policy covered the lawsuit, but then indicated that it did not. After HDH assumed the defense of the action, the matter went to binding arbitration; the arbitrator found that the employee had been wrongfully terminated. HDH paid the amounts awarded--$120,000 to the employee and $25,000 to her husband for loss of consortium and then brought this action against the defendants to recover the amounts paid, legal fees, and G.L. c. 93A damages.
The defendants moved for summary judgment claiming that there was no coverage under either part one, the workers' compensation portion of the policy or part two, the employers' liability portion. They argued that coverage under part one applied only to benefits payable under the workers' compensation statute and not to common law damages outside the act. Moreover, since the employee had not given the statutory notice of her intent to claim her right of action at common law, 2 HDH acted at its own peril by choosing to defend such claims on the merits without asserting the absolute defense of exclusivity. Its failure to assert the defense constituted a waiver barring it from seeking indemnification or reimbursement. As to the employers' liability portion of the policy, there was no coverage because of an explicit exclusion of "damages arising out of the discharge of, coercion of, or discrimination against any employee in violation of law."
A judge of the Superior Court, noting that the plaintiff had conceded that the exclusivity provisions of the workers' compensation statute applied, allowed the defendants' motions for summary judgment stating: "Since the ex-employee had no common law cause of action, the plaintiff should have invoked the absolute defense of exclusivity in the action brought by the ex-employee."
While we agree that the employee's remedy for emotional injury as a result of the plaintiff's bad faith termination of her employment as well as her husband's claim for loss of consortium was barred by the exclusivity provision of the workers' compensation act, see note 2, supra; Simmons v. Merchants Mut. Ins. Co., 394 Mass. 1007, 1008, 476 N.E.2d 221 (1985), summary judgment for the insurer should not have entered on this record.
The relevant portions of the workers' compensation part of the policy provide:
Under Sterilite Corp. v. Continental Cas. Co., 17 Mass.App.Ct. 316, 318, 458 N.E.2d 338 (1983), an insurer has a duty to defend if the allegations of the complaint, reasonably read, appear to state a claim covered by the terms of the insurance policy. Here, the complaint in the underlying action alleges two bases for the employee's claims: discrimination and wrongful termination. Neither is covered by part two because of the policy's exclusion. While the discrimination claim may also not be covered by part one, see College-Town v. Massachusetts Commn. Against Discrimination, 400 Mass. 156, 169, 508 N.E.2d 587 (1987), where the court in dictum stated "we do not agree that damages in this case resulting from the violation of G.L. c. 151B, § 4, are compensable exclusively under the Workmen's Compensation Act," the claim for emotional injury resulting from her wrongful termination, as we have indicated, is one exclusively within the act. Simmons v. Merchants Mut. Ins. Co., 394 Mass. at 1008, 476 N.E.2d 221.
The defendant insurer would have the policy provide the duty to defend only against claimants seeking benefits required under the workers' compensation statute by and through the Industrial Accident Board. In other words, the employee's choice of the wrong forum, in its view, relieved the insurer of any duty to defend.
The insurer's position does not accord with the act or Massachusetts case law. Section 25 of c. 152, set forth in the margin, 3 places a duty on the insurer, if certain conditions are met, to reimburse the employer for amounts the employer is required by a judgment of a court to pay to an employee as damages on account of personal injury. A rider to the policy specifically recognizes the section's applicability by the following language: "Our liability to you under Section 25 of Chapter 152 of the General Laws of Massachusetts is not subject to the limit of liability that applies to Part Two (Employers Liability Insurance)."
Although discussed by the plaintiff, both before the motion judge and in its brief on appeal, neither the judge nor the defendant insurer makes mention of that provision. For all that appears, the plaintiff may have met the conditions of the provision, and the insurer may be liable directly under § 25.
Our case law also does not limit the workers' compensation insurer's duty to defend as Atlantic would suggest. In Peerless Ins. Co. v. Hartford Ins. Co., 34 Mass.App.Ct. 534, 536, 613 N.E.2d 125 (1993), the underlying claim was a wrongful death action against the employer, but the complaint "assiduously avoided" mentioning that the decedent was an employee of the defendant, and alleged simply that the defendant had negligently maintained equipment thereby contributing to the decedent's fatal accident. We recognized that, read literally, the complaint did not implicate workers' compensation or employer liability coverage under the policy issued by Hartford, yet we pointed out, "surely a wholly...
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Saltzman v. Town of Hanson
...(1st Cir.2003) (dismissing intentional infliction of emotional distress claim as precluded by WCA); HDH Corp. v. Atlantic Charter Ins. Co., 41 Mass.App.Ct. 131, 668 N.E.2d 872, 874 (1996) (employee's remedy for emotional injury based on bad faith termination is barred by WCA's exclusivity p......
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Saltzman v. Town of Hanson
...15-16 (1st Cir. 2003) (dismissing intentional infliction of emotional distress claim as precluded by WCA); HDH Corp. v. Atlantic Charter Ins. Co., 668 N.E.2d 872, 874 (Mass. 1996) (employee's remedy for emotional injury based on bad faith termination is barred by WCA's exclusivity provision......
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HDH Corp. v. Atlantic Charter Ins. Co.
...policy's express exclusion of damages arising out of the discharge or discrimination of an employee. HDH Corp. v. Atlantic Charter Ins. Co., 41 Mass.App.Ct. 131, 668 N.E.2d 872 (1996). See, e.g., Lusalon, Inc. v. Hartford Accident & Indem. Co., 400 Mass. 767, 773, 511 N.E.2d 595 (1987) (no ......
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Peerless Ins Co. v. Hatford Ins. Co.
...a reason for refusing to defend. Id. at 536-537. We followed our Peerless holding in a subsequent case, HDH Corp. v. Atlantic Charter Ins. Co., 41 Mass. App. Ct. 131, 134-135 (1996). On further appellate review, however, that decision was reversed, see 425 Mass. 433 (1997). The latter decis......