In re Bruce Spaniol's Case

• Decision Date: 30 July 2013
• Citation: 466 Mass. 102,992 N.E.2d 1028
• Parties: Bruce SPANIOL'S CASE.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

466 Mass. 102

992 N.E.2d 1028

Bruce SPANIOL'S CASE.

Supreme Judicial Court of Massachusetts, Suffolk.

Submitted April 2, 2013.

Decided July 30, 2013.

Held Invalid

452 CMR 1.02

Kimberly Davis Crear for the insurer.

Charles E. Berg, South Easton, for the employee.

Paul M. Moretti, for Property Casualty Insurers' Association of America, amicus curiae, submitted a brief.

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

SPINA, J.

At issue in this case is whether a provision of the Workers' Compensation Act (act) pertaining to attorney's fees, G.L. c. 152, § 13A (10), allows an insurer to withhold up to twenty-two per cent of an employee's compensation award for specific injuries under G.L. c. 152, § 36, to offset the insurer's payment of the attorney's fees incurred by the employee. We conclude that it does not. Therefore, we reverse the decision of the reviewing board (board) of the Department of Industrial Accidents (department), which reached a contrary conclusion.

1. Statutory and regulatory framework.General Laws c. 152, § 13A (10), provides, in relevant part:

“The attorneys' fees specified in this section shall be the only fees payable for any services provided to employees under this chapter unless otherwise provided by an arbitration agreement pursuant to section ten B. In any instance in which an attorney's fee under subsection (1) to (6), inclusive, is due as a result of a cash award being made to the employee either voluntarily, or pursuant to an order or decision, the insurer may reduce the amount payable to the employee within the first month from the date of the voluntary payment [,] order or decision, by the amount owed the claimant's attorney; provided, however, that the amount paid to the employee shall not be reduced to a sum less than seventy-eight percent of what the employee would have received within that month if no attorney's fee were payable” (emphasis added).

General Laws c. 152, § 5, vests the Commissioner of Industrial Accidents (commissioner) with the authority to “promulgate rules and regulations consistent with this chapter for carrying out the functions of the department.” See Solomon v. School Comm. of Boston, 395 Mass. 12, 16, 478 N.E.2d 137 (1985) (agency charged with enforcing statute authorized to define terms when Legislature silent, and properly promulgated regulations have force of law). In accordance with this authority, the commissioner promulgated 452 Code Mass. Regs. § 1.02 (2008), which defines the term “cash award,” as used in § 13A (10), to mean “any specific compensation benefits payable under [ ]G.L. c. 152, § 36 or § 36A and any weekly benefits payable under [ ]G.L. c. 152 of an amount that exceeds the weekly amount being paid the employee for the week immediately prior to the date of the voluntary payment, order or decision.” Further, the phrase “Amount Payable to the Employee Within the First Month from the Date of the Voluntary Payment, Order or Decision,” as used in § 13A (10), has been defined in 452 Code Mass. Regs. § 1.02 (2008) to mean “any compensation due the employee under the terms of the voluntary payment, order or decision pursuant to [ ]G.L. c. 152, § 36 or § 36A and any future weekly benefits pursuant to [ ]G.L. c. 152 due the employee for the first 30 days subsequent to the date of the execution of a voluntary payment or the issuance of an order or decision.”

2. Background. On December 24, 2003, Bruce Spaniol (employee) sustained injuries

to his right knee, shoulder, and head when he slipped and fell during the course of his employment at Fairview Commons Nursing & Rehabilitation Center, a member of Berkshire Healthcare Systems, Inc. (employer). He began to receive workers' compensation benefits under G.L. c. 152, § 34, for total incapacity.

On April 22, 2005, the employee filed a claim against his employer's workers' compensation insurer, A.I.M. Mutual Insurance Company (insurer), for medical benefits pursuant to G.L. c. 152, §§ 13 and 30.¹ On September 11, 2006, he filed an additional claim seeking compensation for specific injuries under G.L. c. 152, § 36. An administrative judge of the department held a conference with the parties pursuant to G.L. c. 152, § 10A, and subsequently issued a conference order denying the employee's claim for specific compensation. The employee filed a timely appeal, and a hearing was scheduled before the administrative judge for November 19, 2007. That day, instead of proceeding with the hearing, the parties signed an “Agreement to Pay Compensation,” which provided for the payment of $7,602.77 to the employee for specific permanent injuries under § 36, plus attorney's fees in the amount of $2,500, and reasonable costs.

The insurer issued the employee a check for $5,930.16. This amount represented the specific compensation award of $7,602.77, minus a twenty-two per cent reduction ($1,672.61), taken pursuant to § 13A (10), to partially offset the insurer's payment of the employee's attorney's fees. In response to this offset, the employee filed a claim under G.L. c. 152, §§ 8 and 14, for reimbursement of the $1,672.61 deducted from his compensation award, and for the imposition of penalties on the insurer. The administrative judge held a conference with the parties pursuant to G.L. c. 152, § 10A, and subsequently issued a conference order dated July 8, 2008, denying the employee's claim. The employee filed a timely appeal.

A de novo hearing was held on February 19, 2009, at which the employee argued that § 13A (10) does not apply to compensation awarded for specific injuries under § 36, that he was entitled to reimbursement of the deducted attorney's fees, and that penalties should be imposed on the insurer. The administrative judge issued a decision on April 7, 2009, in which he concluded that the employee's interpretation of § 13A (10) was correct. The administrative judge stated that, in light of the humanitarian nature of the act and its beneficent design, it would be contrary to the intent of § 36 to reduce “an already paltry benefit” for permanent injuries by twenty-two per cent. Further, the language of § 13A (10), providing for attorney's fees “as a result of a cash award being made to the employee,” suggests an ongoing payment of benefits, not a single retroactive payment such as would be made for a specific injury under § 36. G.L. c. 152, § 13A (10). In the administrative judge's view, a different construction of this statutory language could result in an employee bearing full responsibility for the payment of attorney's fees, notwithstanding the fact that the provisions of § 13A express the Legislature's intent to have an insurer bear the costs of an injured employee's representation. Accordingly, the administrative judge ordered the insurer to reimburse the employee $1,672.61 for the deduction taken from his specific compensation award. The administrative judge denied the employee's requestfor the imposition of penalties on the insurer on the grounds that the legal issue presented was one of first impression, and the insurer had proceeded in good faith. Both parties appealed.

By decision dated January 4, 2011, the board reversed the decision of the administrative judge, concluding that § 13A (10) and 452 Code Mass. Regs. § 1.02 allowed the insurer to withhold up to twenty-two per cent of the employee's specific compensationaward to offset his attorney's fees. The employee appealed.² The Appeals Court reversed the board's decision. See Spaniol's Case, 81 Mass.App.Ct. 437, 963 N.E.2d 1201 (2012). We granted the insurer's application for further appellate review to consider the interplay between § 13A (10) and § 36.³

3. Standard of review. We review the board's decision in accordance with the standards set forth in G.L. c. 30A, § 14(7), governing appeals from final administrative agency decisions, but we do not consider whether the board's decision was supported by substantial evidence. See G.L. c. 152, § 12(2); Wadsworth's Case, 461 Mass. 675, 679, 963 N.E.2d 1181 (2012); Sikorski's Case, 455 Mass. 477, 479–480, 918 N.E.2d 30 (2009). We may reverse or modify the board's decision where, among other reasons, it is based on an error of law, or is arbitrary, capricious, or otherwise not in accordance with law. See G.L. c. 30A, § 14(7) ( c ), ( g ). “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). However, the duty of statutory interpretation ultimately is for the courts. See Higgins's Case, 460 Mass. 50, 53, 948 N.E.2d 1228 (2011); Moss's Case, 451 Mass. 704, 709, 889 N.E.2d 43 (2008).

4. Discussion. The employee contends that although § 13A (10) permits, in certain circumstances, an insurer to partially offset the amount of workers' compensation benefits payable to an injured employee by the amount the insurer statutorily owes to the employee's attorney, this cost-saving provision was intended to apply only to prospective periodic payments of benefits, not to an award of compensation for specific injuries under § 36. We agree.

It has long been recognized that the act “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.” Neff v. Commissioner of the Dep't of Indus. Accs., 421 Mass. 70, 73, 653 N.E.2d 556 (1995), quoting Young v. Duncan, 218 Mass. 346, 349, 106 N.E. 1 (1914). It is designed to provide financial compensation for the impairment of an injured worker's earning capacity. See Sellers's Case, 452 Mass. 804, 810, 898 N.E.2d 494 (2008), and cases cited. See also McCarty's Case, 445 Mass. 361, 362–363, 837 N.E.2d 669 (2005) (permanently or partially incapacitated employee entitled to receive compensation...