MARTINEAU v. SHEAFFER EASTON/TEXTRON, No. 16314-86 (Jan. 15, 1997)

BOARD No. 16314-86Commonwealth of Massachusetts Department of Industrial Accidents
Filed: January 15, 1997

AMENDED REVIEWING BOARD DECISION

(Judges Fischel, Wilson and Kirby)

APPEARANCES

Pasquale J. Ventola, Esq., for the employee.

John R. Cowie, Jr., Esq., for the insurer.

FISCHEL, J.

This case is before the reviewing board on cross appeals. The insurer appeals from the judge’s denial of its request for discontinuance of § 35 partial incapacity compensation payments pursuant to § 35E. The employee contends the judge erred in failing to award G.L.c. 152, § 50 interest and § 14 penalties on the § 35F cost of living supplement to weekly compensation awarded.[1] We agree with the employee that the judge should have awarded § 50 interest and § 14 penalties. See Graziano v. Polaroid Corp.,
9 Mass. Workers’ Comp. Rep. 729 (1995). We find no merit to the insurer’s appeal. The decision is affirmed in part, and reversed in part for the reasons herein indicated.

The employee, who had worked for the same employer under several different corporate identities for over 20 years, sustained an accepted injury to his back on March 26, 1986. (Dec. 307.) At the time of the hearing below he was receiving § 35 partial incapacity compensation in the amount of $102.96 per week based on an average weekly wage of $304.45 with a $150.00 earning capacity. (Dec. 307-308.)

On June 4, 1993, the employee celebrated his 65th birthday. (Dec. 308.) The insurer filed a complaint for discontinuance of the § 35 compensation pursuant to the provisions of § 35E.[2] (Dec. 307.) A conference on the matter was conducted on November 15, 1993. Id. On that date the judge allowed the employee to join the issue of his entitlement to a supplement to weekly compensation (cost of living adjustments, or COLA) pursuant to § 35F. Id. He issued a conference denial of the claims of both parties, who cross appealed for a hearing denovo.[3] Id.

Following the evidentiary hearing, the judge filed a decision on March 29, 1995 denying the insurer’s request for discontinuance. (Dec. 313.) He ordered the insurer to make § 35F supplemental cost of living payments, but denied the claim for § 14 penalties against the insurer. (Dec. 313-314.) Again, both parties cross appealed.

In his brief on review the employee argues error in the judge’s failure to address the employee’s claim for § 50 interest as set forth in his issues statement below, and further error in the judge’s failure to award § 14 costs concomitant with the order to pay statutorily mandated § 35F benefits. (Employee’s brief, 3, 5-8.) In all other respects the employee urges that we affirm the judge’s decision. In its initial brief on review the insurer appeals from the judge’s denial of its request to discontinue § 35 partial incapacity compensation benefits, arguing that it was arbitrary and capricious for the judge to fail to terminate compensation pursuant to § 35E. (Insurer’s brief, 2, 4-7.) In its reply brief, the insurer addresses the § 14 issue and argues that interest under § 50 is not payable on an award of § 35F supplemental benefits.

Section 35F, which is applicable to this March 26, 1986 work injury, provides in pertinent part:

Any person receiving or entitled to receive benefits under section thirty-five whose benefits are based on a date of personal injury at least thirty-six months prior to the review date shall be paid, without application, a supplement to weekly compensation to the extent such supplement shall not reduce any benefits such person is receiving pursuant to federal social security law.

Section 35F, as added by St. 1985, c. 572, § 45.[4] The judge, noting that the insurer offered no evidence to contradict the employee’s claim of entitlement, awarded the employee cost of living supplemental payments effective October 1, 1989. (Dec. 311.) See Gaetani v. Krofta Eng’g,
10 Mass. Workers’ Comp. Rep. 127, 128 (1996). See generally, L. Locke, Workmen’s Compensation § 8.10, at 197-200 (L. Nason R. Wall Supp. 1995).

The employee argues that when § 35F cost of living adjustments were awarded in the decision, it was error for the judge to fail to order claimed § 50 interest. (Employee’s brief, 3.) General Laws c. 152, § 50, for claims such as this one filed on or after December 23, 1991, provides, in pertinent part:

Whenever payments of any kind are not made within sixty days of being claimed . . . and an order or decision requires that such payments be made, interest . . . on all sums due from the date of the receipt of the notice of the claim by the department to the date of payment shall be required by such order or decision.

St. 1991, c. 398, § 77.[5]

The language of § 50 applies to “payments of any kind”, and thus encompasses the payment of COLA adjustments. The insurer is thus required by § 50 to pay interest on the accumulated § 35F COLA awarded, from the “date of the receipt of the notice of the claim by the department.”[6] See Keehnle v. Eagle Publishing Co.,
9 Mass, Workers’ Comp. Rep. 737, 739-740 (1995).

The employee next argues that the judge erred in failing to assess § 14 penalties against the insurer. On November 15, 1993, the date the judge allowed the joinder of the claim for penalties, § 14 (1)(a) read, in pertinent part:

1) . . . if any administrative judge or administrative law judge determines that any proceedings have been brought, prosecuted, or defended by an insurer without reasonable grounds:
(a) the whole cost of the proceedings shall be assessed upon the insurer. . . .

The judge made the following findings as to the § 14 issue in relation to the § 35F claim:

The plain meaning of [§ 35F], buttressed as it is with the Massachusetts Practice Series, Volume 29, makes a denial of the claim [for § 35F payments] suspect. The insurer’s failure to offer any evidence in support of their denial brings them closer to the § 14 line. However, I do not find the insurer’s conduct to be so egregious as to merit a finding under § 14.

The language of § 14 does not require conduct to be egregious, but applies when “proceedings have been . . . defended by an insurer without reasonable grounds. . . .” The question of applicability of § 14 when COLA is not paid by an insurer “without application” was addressed in Graziano v. PolaroidCorp., 9 Mass. Workers’ Comp. Rep. 729 (1995), where we stated:

Although COLA payments were to be paid without application, no COLA was paid. . . . The employee was obligated to file claim where, by statute, none should have been necessary. The self-insurer did not pay the claim upon receipt, and the claim went on to conciliation . . . . The self-insurer in this case resisted payment of the COLA supplement until after the conciliation took place. The COLA then due was not paid for the more than sixty days after the claim was filed. In our view this was defense without reasonable ground.
Accordingly we reverse the denial of the claim under § 14 and return the case to the hearing judge to assess the whole cost of the conciliation proceeding against the insurer. We deem this to be necessary to effectuate the intent of the legislature that [COLA] benefits be paid automatically. . . .

Id. at 732 (emphasis added). Following the rule as set forth inGraziano v. Polaroid Corp., supra, we reverse the judge’s denial of the employee’s § 14 claim.[7]

The insurer on appeal argues that the decision of the judge is arbitrary, capricious and contrary to the law in its application of § 35E. On that issue, the judge noted the testimony of the employee that prior to the 1986 work injury he had every intention of continuing in the work force because he and his wife needed the health care benefits provided through his employment. (Dec. 308.) The judge found this evidence to be buttressed by the testimony of former union president, Joseph Puleri, who testified that there was no mandatory retirement age for union workers. (Dec. 309.) The judge found most important the testimony of attorney Samuel Lavin that in the 34 years the employee’s wife worked for Lavin, Lavin had never provided her with health or retirement benefits. (Dec. 309.) Lavin testified, and the judge credited, that in conversations with the employee Lavin understood that the employee intended to work as long as he could, past age 65, in order to maintain his benefit package, including medical benefits. (Dec. 309-310.) The judge found credible the testimony of the witnesses presented by the employee. (Dec. 310, 313.) He found that the employee did not intend to retire at age 65, since to do so would cause “a significant hardship” in the loss of health insurance benefits. (Dec. 310.) He concluded that the employee had satisfied his burden of showing that but for the 1986 injury, he would still be working. (Dec. 310.)

The judge’s findings are sufficient to support his conclusion that § 35E is not applicable to this employee. SeeHarmon v. Harmon’s Paint Wallpaper,
8 Mass. Workers’ Comp. Rep. 432 (1994). The judge’s decision on the § 35E issue is affirmed.

The insurer is ordered to pay § 50 interest to the employee as provided herein. The conclusion as to § 14 is reversed. The insurer is ordered to pay the whole cost of the proceedings pursuant to § 14 (1)(a). If the parties are unable to agree as to the sums due in interest and costs, claim may be filed. The insurer is ordered to pay counsel fees pursuant to § 13A(6) in the amount of $1000.00, plus necessary expenses.

So ordered.

____________________________ Carolynn N. Fischel Administrative Law Judge
____________________________ Sara Holmes Wilson Administrative Law Judge
____________________________ Edward P. Kirby Administrative Law Judge

Filed: January 15, 1997