BOARD Nos. 06114994, 01829294Commonwealth of Massachusetts Department of Industrial Accidents
Filed: October 31, 1997
REVIEWING BOARD DECISION
(Judges Wilson, Fischel and Levine)
APPEARANCES
William N. Batty, Jr., Esq., for the employee at hearing and on brief
Steven B. Stein, Esq., for the employee on brief
Allen Whitestone, Esq., for the insurer, Liberty Mutual
Jean M. Shea, Esq., for the insurer, Liberty Mutual, at hearing and on brief
James W. Stone, Esq., on brief for the insurer, Mass. Bay
WILSON, J.
Liberty Mutual, which insured the employer under the workers’ compensation law of New Hampshire, appeals from a decision in which an administrative judge, pursuant to G.L. c. 152, ordered it to pay an injured employee compensation benefits and penalties for frivolous defense and late payment. Liberty Mutual contends that Massachusetts Bay Self-Insurance Group (Mass. Bay), which insured the employer under the Massachusetts workers’ compensation law, should pay Massachusetts benefits. We agree and reverse the decision.
The underlying facts are straightforward and not in dispute. The employee lives in Massachusetts. She entered into a contract of hire with the employer, a non-profit Massachusetts organization, at its headquarters in Boston, Massachusetts. The employee’s paychecks were issued from the employer’s Boston headquarters, and were drawn on a Massachusetts bank. (Dec. 6.) On July 19, 1994, the employee was injured in the course of her employment at the employer’s facility, a summer camp in Bradford, New Hampshire. She was treated at Concord Hospital in Concord, New Hampshire, and released the same day. (Dec. 7-8.) The employee reported her injury to the employer, and a First Report of Injury was filed with the State of New Hampshire. (Dec. 8.)
On the date of injury, the employer carried two policies of workers’ compensation insurance. (Dec. 7.) The Mass. Bay policy was limited to Massachusetts; it provided no workers’ compensation coverage under other states’ laws. (Mass. Bay Ex. 2.) The Liberty Mutual policy, which covered New Hampshire, also provided coverage for some other states, but it specifically excluded coverage under the laws of Massachusetts. (Liberty Mutual Ex. 2.)[1]
Liberty Mutual paid some of the employee’s medical bills under its New Hampshire policy. The employee, having returned home to the Commonwealth, filed a claim in the Massachusetts Department of Industrial Accidents against Liberty Mutual for weekly incapacity benefits and further medical benefits (Dec. 8.) Liberty Mutual denied the claim on the basis of lack of coverage, among other defenses. (Dec. 8-9; Liberty Mutual Ex. 2.) The employee then filed a similar claim against Mass. Bay. (Dec. 9.)
At the § 10A conference on October 20, 1995, the only issue in dispute was the matter of which insurer should pay the claim, as the period of work related incapacity and amount of all benefits owed were stipulated by the parties. (Dec. 8.) The judge issued a conference order against Liberty Mutual. Liberty Mutual appealed that order, and filed a Motion for Reconsideration. (Dec. 9.) On November 17, 1995, the employee requested a status conference because Liberty Mutual had not as yet complied with the judge’s conference order of payment. On November 27, 1995, the judge held a status conference to address all extant issues. (Dec. 10.) At the status conference, Liberty Mutual gave the following explanation for its refusal to pay the conference order:
1. Liberty Mutual Insurance Company is not an insurer pursuant to the Act. Under Section 1 (7) an insurer is any insurance company `which has contracted with an employer to pay the compensation provided for by this Chapter. . .’; 2. Liberty Mutual Insurance Company insures the employer for New Hampshire benefits in accordance with that state’s law and regulatory agency’s directive. . . . Liberty Mutual Insurance Company can pay no benefits under Massachusetts law or in accordance with an order of the Massachusetts Department of Industrial Accidents.
(Dec. 11.) Mass. Bay agreed to accept an amended order, by which it paid the benefits ordered pursuant to § 15A, while appealing that order to an evidentiary hearing. (Dec. 12.)
As a result of the de novo hearing, the judge concluded that Liberty Mutual provided Massachusetts coverage for the employee’s injury under its New Hampshire policy. The judge reasoned that Liberty Mutual had waived its defense of no coverage by failing to assert that in its original denial of the employee’s New Hampshire claim, and by paying medical benefits under the New Hampshire workers’ compensation law. (Dec. 18.) The judge also reasoned that the coverage of this industrial accident should reflect the insurance premiums paid, which are based on the employer’s payroll. The Liberty Mutual policy premiums were based, in part, on the payroll of the employer’s New Hampshire facility where the employee had been injured. (Dec. 15.) The judge accordingly ordered Liberty Mutual to pay the stipulated benefits owed under G.L.c. 152. (Dec. 21.) The judge further concluded that Liberty Mutual had failed to timely pay the conference order, and ordered it to pay the employee a penalty of $10,000 pursuant to G.L.c. 152, § 8 (1). (Dec. 20-21.) The judge concluded as well that Liberty Mutual had defended the claim without reasonable ground, and ordered that it pay the employee’s and Mass. Bay’s attorney’s fees and costs. (Dec. 20, 22.) Finally, the judge doubled the employee’s attorney’s fees due to the complexity of the issues. (Dec. 22.) Liberty Mutual appeals to the reviewing board.
Liberty Mutual contends, and we agree, that each and every order against it is contrary to law.
“As a general rule, a dispute concerning the proper interpretation of an insurance policy raises only a question of law.”[2] Somerset Savings Bank v. Chicago Title Ins. Co., 420 Mass. 422, 427 (1995). “A policy of insurance whose provisions are plainly and definitely expressed in appropriate language must be enforced in accordance with its terms.” Cody v. Connecticut General LifeIns. Co., 387 Mass. 142, 146 (1982), quoting Hyfer v. MetropolitanLife Ins. Co., 318 Mass. 175, 179 (1945). The Liberty Mutual policy in this case unambiguously excluded Massachusetts coverage.[3]
In stark contrast, the Mass. Bay policy specifically provided Massachusetts coverage. The employee, a resident of the Commonwealth, sought benefits in Massachusetts under G.L.c. 152 for her injury while working for the Massachusetts employer under a Massachusetts contract of hire. To be sure, it has been long established that “an employee working under a Massachusetts contract of hire may receive compensation here for injury sustained while temporarily employed in another State.” Lavoie’s Case,334 Mass. 403, 406 (1956), citing Pederzoli’s Case, 269 Mass. 550
(1930). But the only policy available for the payment of benefits in Massachusetts was that of Mass. Bay.
Indeed, the fundamental problem in the decision is its disregard of the statutory definition of “insurer:” “any insurance company . . . which has contracted with an employer to pay the compensation provided for by this chapter.” G.L.c. 152, § 1 (7). Liberty Mutual was not an “insurer” in Massachusetts under that definition, and no order of payment from the Massachusetts Department of Industrial Accidents could issue against it. Absent specific conduct that estops an insurer from denying coverage under the Massachusetts law, a contract for workers’ compensation insurance under a foreign statute cannot be deemed to provide coverage under G.L.c. 152. See American Country Ins. Co. v.Bernhard Woodwork, Ltd., 412 Mass. 734, 741 (1992) (Illinois workers’ compensation policy held to provide Massachusetts coverage where insurer failed to correct misrepresentation made by its agent/broker as to existence of all-states endorsement never included in binder); Luster v. Poly Medical Lab, Inc.,
2 Mass. Workers’ Comp. Rep. 81, 83 (1988). See also Barrett v. TransformerService, Inc., 374 Mass. 704, 711-712 (1978) (“[T]he policy written for the insured was confined in its body to liability pursuant to the laws of New Hampshire and New York,” and insurer’s denial of Massachusetts coverage was binding in litigation against uninsured employer).
The judge seemed to suggest an estoppel theory when he found that Liberty Mutual had waived its defense of lack of coverage under Massachusetts law by its payment of medical benefits and failure to deny New Hampshire coverage. To put this payment into proper context, however, Liberty Mutual paid those benefits and “failed to dispute coverage” in the employee’s claim against it inNew Hampshire, where it contracted to pay benefits. (Dec. 18.) Liberty Mutual’s conduct regarding this claim under its policy with the employer to cover liability for workers’ compensation under the laws of New Hampshire simply cannot, as a matter of law and fundamental fairness, be held against it in a proceeding in Massachusetts. There was no waiver or estoppel here.
The judge also reasoned that the payment of premiums based on the wages of this employee dictated which insurer should pay for the injury. (Dec. 15.) The payment of premiums does not control coverage. See Hayes’s Case, 348 Mass. 447, 450-452 (1965) (premium, based on incorrect characterization of trustee of employer business trust as employee, was reimbursed after coverage for the trustee’s work-related injury was denied on the basis that he could not also be an employee). After its yearly audit, Mass. Bay’s premium likely would be adjusted to reflect the coverage of the employee. See Hayes Case, id. at 450; Employers Mutual LiabilityIns. Co. v. Merrimac Mills Co., 325 Mass. 676, 681-682
(1950).
Having concluded that Liberty Mutual was not liable for Massachusetts compensation benefits under its New Hampshire insurance policy, it follows that the judge’s order of § 14 penalties for frivolous defense cannot stand. We also reverse the order of § 8 (1) penalties against Liberty Mutual for refusing to pay the conference order. Where the amended conference order substituted Mass. Bay for Liberty Mutual and Liberty Mutual was never subject to liability under the Massachusetts law, it cannot be held to have violated that law in any way by its refusal to pay. The judge’s order that Liberty Mutual reimburse Mass. Bay under § 15A and for its costs of litigation is unfounded as well.
The decision is reversed. Mass. Bay is hereby ordered to pay all amounts due to the employee in conformance with the stipulation of the parties. Mass. Bay is also ordered to pay the employee’s attorney the fee awarded.
So ordered.
_________________________________ Sara Holmes Wilson Administrative Law Judge
_________________________________ Carolynn N. Fischel Administrative Law Judge
_________________________________ Fredrick E. Levine Administrative Law Judge
Filed: October 31, 1997