In re Robert Janocha's Case

• Decision Date: 02 November 2017
• Docket Number: No. 16–P–1181,16–P–1181
• Citation: 93 Mass.App.Ct. 179,100 N.E.3d 740
• Parties: Robert JANOCHA'S CASE.
• Court: Appeals Court of Massachusetts

93 Mass.App.Ct. 179
100 N.E.3d 740

Robert JANOCHA'S CASE.

No. 16–P–1181

Appeals Court of Massachusetts, Suffolk..

November 2, 2017
May 2, 2018

Jonathan D. Hacker, of the District of Columbia (John J. Canniff, III, also present) for ACE American Insurance Company.

Douglas S. Martland, Assistant Attorney General, for Workers' Compensation Trust Fund.

Robert H. Barry, Jr., North Andover, for the employee.

Rachel J. Eisenhaure, Boston, for Self–Insurance Institute of America, Inc., amicus curiae, submitted a brief.

Present: Neyman, Henry, & Lemire, JJ.

LEMIRE, J.

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93 Mass.App.Ct. 179

This is an appeal by ACE American Insurance Company (ACE), from a decision of the reviewing board (board) of the Department of Industrial Accidents (department). The board held that ACE, rather than the Workers' Compensation Trust Fund (trust fund), was responsible for the continued payment of compensation benefits to Robert Janocha (employee) because G. L. c. 152, § 25A(2)(c ), of the Workers' Compensation Act (act), G. L. c. 152, as amended, requires ACE as a reinsurer

93 Mass.App.Ct. 180

to pay benefits in the event of exhaustion of a self-insurer's surety bond. We affirm.

Factual and procedural background. All parties agree that there are no material facts in dispute. The employee worked for Malden Mills Industries, Inc. (employer), until the date of his workplace injury. The employee's injury resulted in permanent and total incapacity for work, and the employee is entitled to benefits under the act.

On the date of the employee's injury, the employer was an approved self-insurer pursuant to G. L. c. 152, § 25A(2). In accordance with § 25A(2)(b ), the employer also held a surety bond in the amount of $2.4 million¹ with Safeco Insurance Company of America (Safeco or bond holder). In addition, the employer maintained a reinsurance policy with ACE in accordance with § 25A(2)(c ).² The reinsurance policy between the employer and ACE contained a retention provision in the amount of $400,000.³ All terms of the bond and the reinsurance policy were approved by the department in accordance with § 25A(2) during initial approval and after every yearly review.

From the employee's date of injury until the employer's bankruptcy in 2007, the employer as the self-insurer issued direct benefit payments to the employee. Following the employer's insolvency, the bond holder issued direct benefit payments to the employee. In 2012, the $2.4 million bond became exhausted and payments to

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the employee ceased.⁴ On the date of exhaustion, and on the date of oral argument, the employee had not reached the $400,000 retention floor contained within the reinsurance contract.

93 Mass.App.Ct. 181

Upon the exhaustion of the bond, the employee filed a claim with the department against ACE for resumption of benefits.⁵ After a full evidentiary hearing, the administrative judge ruled that once the employer's bond was exhausted, the employer became "uninsured in violation of [the statute]" under the provisions of G. L. c. 152, § 65(2)(e ), as amended by St. 1991, c. 398, § 85. The administrative judge concluded that this interpretation of the act made the trust fund the "responsible party for providing workers' compensation benefits" and that ACE was not required to make payments until the employee's benefits reached the $400,000 retention amount. The trust fund appealed to the board.

The board reversed the administrative judge, interpreting § 65(2)(e ) to apply only where an employer is uninsured "on the date ... of injury." Accordingly, the board ordered ACE to make direct payments to the employee upon the exhaustion of the bond, and to reimburse the trust fund for any payments it had made that were not covered by reimbursement from Safeco. The board also ruled that § 25A(2)(c ) required ACE to pay the employee's benefits because in the event of bond exhaustion, the reinsurer must act as a "further guarantee of a self-insurer's ability to pay the [employee's] benefits" (emphasis added).⁶ Relying on Insurance Co. of the State of Pa. v. Great Northern Ins. Co., 473 Mass. 745, 750, 45 N.E.3d 1283 (2016) ( Great Northern ), the board also voided the $400,000 retention provision as a matter of law because it is in direct conflict with ACE's "statutory obligation to assure that benefits are received by the employee." ACE appealed the board's decision to this court pursuant to G. L. c. 152, § 12(2).⁷

Standard of review. We review the board's decision in accordance with the standards set forth in

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G. L. c. 30A, § 14(7)(a )-(d ), (f ), and (g ). See Scheffler's Case, 419 Mass. 251, 257–258, 643 N.E.2d 1023 (1994). "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, 455 Mass. 477, 480, 918 N.E.2d 30 (2009). However, this principle is one of deference, not abdication, and "ultimately the duty of statutory interpretation is for the courts."

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Carpenter's Case, 456 Mass. 436, 439, 923 N.E.2d 1026 (2010) (quotation omitted).

Discussion. 1. Trust fund's liability. General Laws c. 152, § 65, establishes the trust fund as a State administered fund that compensates injured employees and reimburses insurers for payment of benefits under statutorily defined circumstances. ACE contends that nothing in § 65(2)(e ), or the act as a whole, supports the board's interpretation that "uninsured in violation of [the act]" means uninsured on the date of injury. After an independent review of the text, structure, and purpose of the act, we agree with the board's interpretation of § 65(2)(e ).

"[A] statute must be interpreted according to the intent of the Legislature ascertained from all its words construed by the ordinary and approved usage of the language, considered in connection with the cause of its enactment, the mischief or imperfection to be remedied and the main object to be accomplished, to the end that the purpose of its framers may be effectuated." Scheffler's Case, 419 Mass. at 255, 643 N.E.2d 1023, quoting from Board of Educ. v. Assessor of Worcester, 368 Mass. 511, 513, 333 N.E.2d 450 (1975). Additionally, the act must be analyzed "as a whole ... so that the various portions taken together shall constitute a harmonious and consistent legislative enactment." Spaniol's Case, 466 Mass. 102, 107, 992 N.E.2d 1028 (2013), quoting from Price v. Railway Express Agency, Inc., 322 Mass. 476, 480, 78 N.E.2d 13 (1948).

Section 65(2)(e ) conditions payment of benefits by the trust fund to a qualifying employee whose employer is "uninsured in violation of this chapter." While the act contains an extensive list of definitions, nothing in the chapter expressly defines the word "uninsured," and § 65(2)(e ) does not specifically identify the applicable operative date of the employer's uninsured status. Despite the absence of a definition connecting the employer's uninsured status to the date of the employee's injury, viewing the statute as a whole, it is clear that the date of injury is essential to determining who is eligible to receive benefits as well as who is obligated to pay them. Because § 65(2) is the sole source of the trust fund's obligation to pay workers' compensation benefits,

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examining the provisions that surround § 65(2)(e ) provides clarity as to whether ‘uninsured’ implicitly means uninsured on the date of injury. See People for the Ethical Treatment of Animals, Inc. v. Department of Agric. Resources, 477 Mass. 280, 287–288, 76 N.E.3d 227 (2017), quoting from Kenney v. Building Commr. of Melrose, 315 Mass. 291, 295, 52 N.E.2d 683 (1943) ("A general term in a statute or ordinance takes meaning from the setting in which it is employed").

We begin with § 65(2)(a )-(b ). Section 65(2)(a ) refers to § 34B and § 65(2)(b ) refers to § 35C. This court has concluded that both of those cross-referenced sections expressly look to the date of workplace injury when considering the insurer or self-insurer's right to reimbursement from the trust fund for benefits paid to employees under these provisions. See, e.g., Beatty's Case, 84 Mass. App. Ct. 565, 568, 998 N.E.2d 1032 (2013) (" Section 34B [c ] goes on to narrow the right to reimbursement by the date of injury").

The date of injury is also implicitly important for other cross-referenced provisions in § 65(2). Section 65(2)(c ), (f ), and (g ), by means of § 37, § 26, and § 37A, respectively, authorizes certain reimbursements from the trust fund to the insurer or self-insurer for payments to an employee who has suffered a personal injury "arising out of and in the course of his employment." G. L. c. 152, § 26. A plain and ordinary reading of the "arising out of" condition, which is contained in § 26,

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