Court: Arbella Can’t Recoup from Trust Fund in Massachusetts Case

February 4, 2011

Massachusetts insurer Arbella cannot recoup from the state’s Workers’ Compensation Trust Fund a substantial portion of a $67,500 settlement with an injured carpenter, the Appeals Court has ruled.

The ruling stems from a 2006 settlement with Keiran Kelly, who had injured his back at work and sustained a significant disability. Kelly filed claims with Arbella for temporary total incapacity and partial incapacity — but not for a permanent total incapacity, a key distinction.

Arbella denied the claims and an administrative appeal followed. Over the course of the litigation, Arbella settled all claims with Kelly for $67,500, and then sought reimbursement for 75 percent of the settlement from the Workers’ Compensation Trust Fund, which reimburses insurers in some instances where workers have a permanent, total incapacity.

A state administrative judge denied Arbella’s request for reimbursement, finding that the details in the settlement documents and medical records of Kelly’s injury — which did not prevent him from seeking work in another profession — showed that Arbella was ineligible for reimbursement.

The administrative judge also found that the settlement figure was substantially lower than the nearly $1.44 million Kelly could have sought for a permanent and total incapacity — suggesting that the neither party viewed the injury as permanent and total.

The Appeals Court agreed with the administrative judge, finding that Arbella was not entitled to reimbursement.

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