Michael Ahaesy, Employee v. The Flatley Company, Employer, Zurich American Insurance Co., Insurer

BOARD No. 081236-89Commonwealth of Massachusetts Department of Industrial Accidents
Filed: March 29, 1996


(Judges Wilson, McCarthy and Fischel)


Paul M. Moretti, Esq., for the insurer

Patrick E. Lowney, Esq. for the employee


The insurer appeals from a decision of an administrative judge dismissing the insurer’s claim for penalties for fraud under the provisions of G.L.c. 152, § 14 (2) (St. 1985, c. 572, § 29), applicable to the May 23, 1989 date of injury in this case. We do not reach the merits of the insurer’s appeal, because the judge had no jurisdiction to hear the fraud claim in the first place. We therefore vacate the judge’s subsidiary and general findings regarding the fraud issue, and dismiss the insurer’s § 14 fraud claim.

While the insurer was paying temporary, total incapacity benefits for the employee’s May 23, 1989 lower back injury, it came to the insurer’s attention that the employee was working again. As a result, the insurer unilaterally discontinued benefits in August 1991. The employee then claimed ongoing § 34 benefits, and alleged that the insurer’s discontinuance was illegal. The insurer denied payment of the claims, and further responded by bringing its own claim for penalties under the fraud provisions of G.L.c. 152, § 14 (2) (St. 1985, c. 572, § 29).[1] From the denial of payment of all claims at conference, both parties appealed to a hearing de novo. (Dec. 1-2.)

As a result of the hearing, the judge concluded that the employee was not entitled to further weekly compensation benefits, and that the insurer’s August 1991 discontinuance had not been illegal. More relevant to this appeal, however, was the judge’s finding that the employee had not engaged in fraudulent activity within the purview of § 14(2).[2] The insurer seeks to have us reverse the judge’s decision regarding the fraud issue. We decline to do so.

The applicable version of § 14, that which was in effect on the May 23, 1989 date of injury, and was still in effect during the commission of the allegedly fraudulent acts from July through September 1991, vested exclusive jurisdiction for the hearing of such claims in the Superior Court. See G.L.c. 152, § 14 (2) (St. 1985, c. 572, § 29) (“Any action provided in this subsection shallbe brought . . . in the superior court. . . .”)[3] The judge in this case simply did not have jurisdiction over the subject matter of fraud, regardless of the parties’ seeming consent to having it heard at the Board. We therefore vacate the judge’s findings and conclusion on the § 14 fraud claim.

We award the employee’s attorney a fee of $1000.00, pursuant to G.L.c. 152, § 13A.

So ordered.

_______________________ Sara Holmes Wilson Administrative Law Judge
________________________ Carolynn N. Fischel Administrative Law Judge
________________________ William A. McCarthy Administrative Law Judge

Filed: March 29, 1996

[1] General Laws c. 152, § 14 (2) (St. 1985, c. 572, § 29) states in its entirety:

“If it is determined that any party has brought, prosecuted, or defended proceedings with the intent to defraud, the party shall be assessed, in addition to the whole costs of such proceedings and attorney’s fees, a penalty, payable to the aggrieved insurer or employee, in an amount not less than the average weekly wage in the commonwealth multiplied by three. Any employee who has received payments for compensation pursuant to a claim found to be fraudulent under this subsection shall reimburse the amount of such payments with interest to the insurer. Any action provided in this subsection shall be brought by an employee, employer or insurer in the superior court department of the trial court for the county in which the injury occurred or in the county of Suffolk, provided, however, that if presented to the superior court for the county of Suffolk, the court may, on motion of any party in interest, order the case removed to the superior court for the county in which the injury occurred.” (Emphasis added.)

[2] The judge referred to the subsection that he was applying as § 14 (3) rather than (2). This subsection could not apply for two reasons. First, there was no subsection (3) on either the date of injury or at the time of the alleged fraudulent activity, July through September 1991. See St. 1991, c. 398, § 104 (1991 amendments to § 14 applicable only to fraudulent activity taking place after effective date of those amendments). Second, the new subsection (3) addresses criminal remedies for fraudulent activity, jurisdiction over which clearly does not lie within the Industrial Accident Board.
[3] The record reflects that the employer and insurer already have filed a complaint in Superior Court alleging fraud against the employee. (Employee’s Ex. 5.)